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Commercial contracting - Essay Example

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Commercial Contracting The Transco Company is a manufacturer and seller of widgets, having 50% share in the national market. Minerva plc had approached Transco for purchasing widgets, as these constituted an important component of their manufacturing business…
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Commercial contracting
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Download file to see previous pages For advising Transco regarding these issues, the following discussion, relating to the terms used in the letters from Minerva and Hedge Plc have been taken up for discussion. Essay 1 Subject to Contract The formation of contracts is a process that is subject to continual change. This process has gradually acquired considerable intricacy and involves much higher stakes. Nevertheless, some features of this process have remained unchanged. For instance, the negotiators are interested at reaching an agreement and are keen to gain the maximum profit from it. These objectives are inherently contradictory; because, a party that is interested in effecting an agreement might be required to behave in a manner that diminishes its profits.1 It has been a long standing practice to employ the device of subject to contract in contractual negotiations. This expedient prevents the emergence of contractual liabilities, during contractual deliberations. Its use in correspondence that transpires before a contract is formed connotes the absence of contractual liability till such time as a contract is formed.2 The subsequent conduct of the parties to an agreement, primarily determines the outcome of the condition subject to contract. ...
Furthermore, this term cannot be employed to indicate that no binding contract can be formed. In addition to the written words and negotiations the conduct of the parties also determines the existence of a binding contract.4 As a result, any instruction to commence work, prior to arriving at a final agreement, should be dealt with great care. In Regalian Properties plc v London Dockland Development Corpn [1995] it was held that an offer that had been accepted, subject to contract was not binding in nature. In this case, the plaintiff was a property developer who made its offer via a letter entitled subject to contract. 5 Due to difficulties envisaged in acquiring the land by the defendant and other reasons, the contract proved difficult to materialise. The plaintiff claimed heavy damages, which the court rejected, as the work had been undertaken on the basis of subject to contract, which implied the absence of a contract betwixt the plaintiff and the defendant. The plaintiff had incurred considerable expenditure, in the anticipation of procuring the contract. The court held that the plaintiff’s actions had been at its own risk, as there was no binding contract between the plaintiff and the defendant.6 Thus, subject to contract provides a stratagem for circumventing liability in such claims. In Confetti Records v Warner Music UK Ltd [2003], it was ruled by the court that the inclusion of a track from the album did not constitute an infringement of copyright. The inclusion of the term subject to contract indicates that the party has no intention to confer a binding nature on deal memo. However, the act of sending the track and invoice by the claimants was to be considered a valid offer. If the defendant had ...Download file to see next pagesRead More
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