Types of Contracts in the Business Context - Literature review Example

xxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxx Elements of forming a valid contract and the importance of each element Contracts are legally bidding agreements between two or more parties (Emerson, 2009). Contracts have the following aspects; there must be an offer to do something, and it has to be accepted by the parties involved. A contract also has legal consequences and a consideration .In case any of this aspects are missing the agreement cannot be legally bidding. There are different forms in which contracts can be made namely verbally, in written form or a mixture of both written and verbal agreement (Emerson, 2009). An offer can be written or verbally made. It is the definite expression that begins a contract. It has to be definite in its intentions and also be clearing clearly stated. An offer can be terminated when the time frame in which it was accepted elapsed or before it is accepted by the other parties. What is offered has to be accepted without any conditions. If any other terms are formed a counter offer is made and it can either be accepted or rejected (Emerson, 2009). The formation of terms indicates the acceptance of the offer. Acceptance can be made in writing, verbally or by an action that indicates the acceptance of the offer. Acceptance of an offer confirms the method stipulated in the offer to be effective. Parties to the contract must know that the agreement can be enforced by the law. Parties entering into the contract must be ready to make legal relations. However if the parties to the contract decide that they do not want to be legally bound they must state that clearly so that the contract is not enforceable by the law. A consideration is also referred to as a benefit of value. A consideration involves the exchange of something that is valuable. Normally it is usually a payment but can be anything of value. One party promises to do something and in return the other party provide the benefit of value. The law expects that all the parties involved in a contract have the capacity to contract. The law does not consider minors, mentally unstable persons, drunk or persons under the influence of drugs to have the contracting capability. The law also expects that it must be the intent of all parties to a contract to get into it .The object of the contract should also be legally accepted. Some states laws make contracts in restraint of price fixing, monopolies and trade illegal. The law recognizes that legally bidding contracts can be made in written form, verbally or a mixture of both. However written contracts are more preferred because; the parties involved in making the contract may change over time, the terms are put down for all to see, there is less need of memory to rely on what was initially agreed on, writing ensures that precise language is used in defining the terms to the contract and there are less chances of conflicting assumptions and misunderstanding. Types of contracts in the business context There are different types of contracts in business law depending on the various legal transactions involved. It making is always advisable to seek legal advice before getting into accepting or making a contract. There are a number of business contracts like; void and voidable contracts, implied contracts, express contracts, executed contracts, bilateral and unilateral contracts,leases,employment contracts, licensing contracts, sales contracts,aleatory contracts but to name a few (Boundy, 2010). Adhesion contracts are contracts that are drafted by a party who has a higher bargaining power. The other party has an option to either accept the contract or reject it .This often happens in monopolistic markets. Aleatory types of contracts come into effect in the event that natural calamities happen or uncertain events. In this type of contract both parties may assume the risks. Examples of such contracts are fire and vehicle insurance policies (Boundy, 2010). Bilateral and unilateral contracts involve two entities that exchange a mutual and reciprocal promise that triggers the execution of an act, obligation or transaction. It is also called two sided contract .A unilateral contract involves the making of a promise by one party. The offered promises to perform a certain stated act if the offerree agrees to perform an agreed act .In this kind of contract it’s important to note that the offeree cannot be sued for falling to perform his act since he does not promise anything. A lease is a contract between a tenant and a landlord (Boundy, 2010). It specifies the terms under which the tenant has to use the landlords’ property. Leases expire after the time frame that is stipulated on the contract and on expiry the contract is invalid .Such a contract can however be renewed. An employment contract is a legal agreement between an employer and the employees. It outlines the benefits, pay and duration of employment. A licensing agreement is an pact between an outside party and the intellectual owner of a property. The outside owner gets the right to use the named property in a capacity specified in the agreement. A sales contract is an agreement between two parties .It outlines the terms of a financial transaction and the fact ownership of a commodity has been transferred from seller to buyer. Sales contracts help ensure the steady flow of supplies that are necessary for the running of a business. Good contracts are those that all considerations of the circumstances and issues that may arise have been carefully taken care of. Such contracts clearly cover matters such as; limits to what is required, roles that each party has to play, possible risks and the terms of payment. The use of implied terms and express terms in the business context Terms of a contract refers to all the points of agreement between the parties. Contract laws do not specify what the terms of a contract should be as this is the duty of the parties involved to decide. Contract laws however recognize two types of terms implied terms and express terms. Express terms are the terms that are specifically agreed upon by the parties either verbally or in written form. Implied terms are those terms that may not have been put down in written form or verbally agreed but are considered to be legally bidding. Their consideration comes into place due to common sense, past performance or as a result of standard commercial practice. Implied terms are more sensitive to deal with than express terms since they are not outlined .For instance peoples reasoning differs from time to time and this may explain the difference in the way things are done. It’s debatable how common sense is not common to all. On the issue of standard common practice, unless the contract entirely involves a new product each industry will have established customary practices that include recognized terminologies and quality standards. Past dealings act as reference want a change in the way they do their agreements. Consequences of green Pharmas termination of offer to sell to the public The termination of the offer by Green Pharma indicates that there is no contract between the company and the vendor. The vendor is only a loyal customer and it is his right to receive information about the goods that are available for sale by Green pharma. Green Pharma is supposed to publicize the cancellation of the s ale of moistening creams the same way; it was introduced to the market. That is through the trade journal. The offer is considered effective when the offerree receives it. Once a notice of revocation is issued, the offer to sell is also revoked and hence Green pharma is not supposed to fear if the vendor decides to sue the company. The issue of enforcement of a promise in the business context No, this promise cannot be enforced. This is because there is no offer, acceptance and consideration (Boundy, 2010).There is contract and hence action cannot be taken against Tania for failing to keep his promise. This promise cannot be enforced because the promise was made after the report was written. However if Tania could have entered into an agreement before the report is made and he promises an increase in 200 euros in her salary that month, then that would be legally binding. In this case there is an offer, acceptance and a consideration and hence a contract that is legally binding. Is Joes contract enforceable? No, this contract is not legally enforceable. It is important to note that it has been held by the courts that there can be no contract unless all the parties involved intended to get into one. Intent is considered to be expressed by outward action and not mere desires. In this case, the intent of both parties to contract is not seen and hence, no legal action can be taken against either of the parties. Albans purchase from Brenda’s garage Alban should consider renewing his contract with Brenda garage limited so that he can enjoy the benefit of having his car fixed in case it has a mechanical problem for the next two years. Even if his car was for his personal use, it is important that he still considers taking this special extended warranty. This is because the car does not generate any income and the expense of fixing it could be higher than the expense of catering for the two year cover. Effects of breach of conditions, warranty and innominate terms The breach of conditions, warranty and innominate terms will lead to the termination of a contract (Boundy, 2010). The parties that suffer losses as a result of the breach can claim for compensation. In case the parties fail to agree on the appropriate compensation, legal action can be sort. Effect of legality of exemption clauses Exemption clauses are clauses that are introduced in the making of a contract in order to limit the liability of a breach of a contract. Such a party puts that clause in such a way that incase of any liability ,he is not liable or is liable to a certain extent .The law does its best to level things for all the parties in such a case. The party that wants to rely on such a clause has to prove that the other party specifically agreed to it during the time the agreement was being made. For instance if Green pharma due to negligence produces commodities that lead to death of its consumers, legal action should be taken against the company. Even if the drugs are bought over the counter the company cannot argue that the drugs were purchased on willingly. Aspects of negligence claims The following are some elements that common law jurisdiction establishes in all negligence claims. Duty of care is not really based on negligence but on the implied warranty of fitness of a product. This aspect is applied together with the first principle of negligence that requires compensation to be made when reasonable foreseeable harm is committed. For instance in the event that a consumer buys maize flour “the soko brand” from a retail shop .And on opening it in order to cook he finds a key inside .He can sue unga limited since the company has a duty of care to its customers. The presence of the nail in the flour is due to negligence .The rule of implied fitness of a product would go a long way in determining the kind of ruling that will be issued by the judge. Causation and remoteness in the tort for negligence Causation explains the consequences of a person’s harm as a result of another person’s negligence. It is said that one man’s negligence is too remote or is not a proximate cause to another man’s harm. Disparities on the issue of remoteness continue to trouble the judiciary as it makes a ruling on such cases (Boundy, 2010). Both remoteness and causation are vital in determining if the defendant’s negligence is the actual cause of a plaintiff’s injury. Most courts focus on the foreseeability of the harm caused. Juries are instructed by courts to consider if the harm caused was probable or natural consequence of the defendants negligence. The nature of liability by negligence Liability arises from the breach of duty. Expert witnesses are required in order to prove the breach of duty and hence liability to be taken for the harm caused by the failing party. For instance in a case where an expectant mother goes to hospital to deliver her baby and it happens that she loses her baby as she is in the waiting room waiting to be admitted. Such a person can sue the hospital for failing to offer her with help .Its due to the negligence of the hospital staff that she lost her baby. The hospital staff should have first given her priority before attending to other patients who are not in such a critical condition as she is in. In another scenario, where a power company accidentally leaves a live wire not well coated and a passerby is electrocuted to death. The power company should be liable to its negligence if an expert witness proves that indeed it’s due to the company’s negligence that the passerby was electrocuted and hence lost his life (Boundy, 2010). Legal requirements to hold employers liable for torts committed by the employees A tort is a legal wrong. Tort laws are a branch of civil and contract laws (Boundy, 2010). In order, for action to be taken against a plaintiff in the application of tort laws, there must be proof that tort was committed due to negligence or intentionally. Laws of tort deal with obligations. Tortious liability is compulsorily enforced by the law. Employers must therefore be very clear in the agreements they make with their employees .Once employers commit a legal wrong, they can be held liable for their actions. Principles in the expression of level of duty (a)By a learner driver The learner driver is supposed to ensure that he does not cause any accidents. It’s by obeying all the instructions given to him by his teacher. A learner driver is also expected to drive with care and not be wreck less as this can damage the vehicle he is using. (b)A Chinese herbal doctor working in England The Chinese doctor is expected to give prescriptions to his patients in a language that they can understand. He is also expected by the law to obtain a license to practice in that country. It is the duty of the doctor to preserve life. (c) A junior doctor in hospital It is his duty to preserve life and render services without any impartiality or discrimination. He also has a duty to receive advice and take orders from his superiors. Green Pharmas liability to tort It is the responsibility of Green pharma to ensure that his work premises are safe to use by his customers and workers. He is therefore liable to any risk that occurs to his clients as a result of negligence. Green pharma is supposed to hire services from qualified trained personnel .This is to avoid any risks that could arise as a result of hiring under trained or under qualified personell.Such a problem like electrocution could have been avoided if a qualified electrician was hired to do to do the job. Green pharma would however not be liable to any risk that occurred at his premises if he had d hired a qualified electrician and also put up a notice that persons entering the premise do so at their own risk. Is Green Pharma liable to an accident caused by john, the van driver? Green pharma would be held responsible since van involved in the accident belongs to the company. The accident is caused by the negligence of John who is an employee at Green pharma.The company takes liability of any negligence by its staff as they go about carrying out the activities of the company. Kelly should therefore claim for compensation from the company. Green Pharms liability to the security guards act to Mr Mattis Green pharm has a duty to maintain security and calmness outside its premises. However, this should not be ensured at the expense of causing harm to the public. Green pharm should really define to its security persons what it really means by keeping order by force .The company should compensate the Mr. Mattis fully. The company should take care of his medical bills. References EMERSON, R. W. (2009). Business law. Hauppauge, N.Y., Barrons Educational Series. CAMPBELL, D., & CAMPBELL, C. T. (2009). Legal aspects of doing business in Europe. Salzburg, Austria, Yorkhill Law Publishing. BOUNDY, C. (2010). Business contracts handbook. Farnham, Surrey, England, Gower Pub. http://site.ebrary.com/id/10356310. Read More