International Corporate and Contract Law - Gold Iron Inc - Essay Example

?Download the original attachment International Corporate and Contract law Introduction: International Corporate law is a large body of administrative law, statutory law, case law, and contract law that govern worldwide business dealings. It consists of the law of multiple nations and therefore it experienced legal counsel. Many lawyers are expert and experienced in universal business law but at the same time only very few of them are skilled specifically in “international corporate law” (Nelson, 2006). Among the issues involved in worldwide business matters are laws connected to international conventions and treaties. Contract and business law are increasingly composite and at the present they affect every industry and all types of commercial contract; from entering into an agreement, to ensure the validity of purchase circumstances. A contract law is generally an agreement enforceable through law. For the legal contract law to become legal, it must satisfy certain legal necessities. There are various courses of contracts which, though ideal so far it relates to structure, consideration and contract, are not specified. All the agreements are deemed to be contracts, if the agreements are prepared by the free consent of the parties, capable to contract, for a legal consideration with a legal objective, and are not specifically declared as invalid. The following are considered as the necessary elements of a valid contract: agreement, intention to create a legal relationship, free and genuine consent, and parties competent to contract, legal consideration, legal object, agreements not declared void or illegal, certainty of meaning, possibility of performance and the necessary legal formalities. In this particular problem scenario, there is no written agreement among the parties to the agreement so this is not a valid contract. As a case in point, John is not liable to pay compensation to Gold Iron Inc. As he, John John, claims that he did not enter into any binding agreement wit the firm, and that his signature produced by the Gold Iron Inc. was forged. “The Contract Act is the law of those agreements which create obligations, and in case of a breach of a promise by one party to the agreement, the other has a legal remedy.” (Law of Contracts n.d). The Fact of the Case: In this case, Gold Iron Inc, which is a steel manufacturer company, is incorporated in Pennsylvania (USA). John, is an Italian citizen, is an engineering consultant who has spent much of the time traveling round the earth. When he is not at work, he spends his time with his family in Italy and also with his mistress in England. John’s assets are mostly located in England. During his journey he happened to meet the president of Gold Iron Inc that is Mr. Unwin at a conference in New York. As a result of this relationship is that John agreed to carry out some consultancy work on behalf of Gold Iron Inc. John, on the other hand, claims that he did not go into any kind of binding agreement and that his signature was forged. The Agreement enclosed a clause of dispute resolution that says: Any argument arising out of this agreement consisting of questions regarding its validity and existence will be exclusively referred to the courts in English, and that the governing rule of this agreement shall be Italian law too. After few months Gold Iron Inc started legal proceedings against John in the courts of Italy for breach of contract. In the course of the actions John’s lawyer claimed that Gold Iron Inc was intentionally seeking to delude the court by forged written proof. The court decided that the proof was not forged and completed that John was in breach of contract. The Italian court handed down a verdict in December in Gold Iron Inc’s favour, ordering John to pay compensation of €5 million. “Since a very substantial body of European contractual and commercial law derives its inspiration from Roman law, it is appropriate that modern Italian law be taken as representative of the contract and commercial law of modern Europe. This is not a new concept and is based upon the Roman concept of an international "Lex Mercatoria", long a goal within the trading areas of Europe and now a substantial reality.” (Contracts And Commercial Law n.d). The term contract is an agreement between two or more groups which can be obligatory at law. The equivalent legal ethics generally apply at universal law to every group of contracts. The strict request of the universal rule is influenced by the doctrine of equity, designed by the judges to manage unconscionable contractual outcomes and promote justice. Statute rule has reinstated or altered the universal law concerning variety of features of contract law. As the contracts law in any state, the contract law in Italy also has certain characteristics. The contracts turn out to be valid only if it satisfies all the legal requirements. One of the main requirements is that it must bind all the parties to the contract. Issues of the case: Whether the agreement between Gold Iron Inc and John is valid? Whether Gold Iron Inc can file a complaint against John for breach of contract? Whether the counter-claim made by the John against Gold Iron is a valid claim? Whether Gold Iron can file a complaint against John for his counter claim in England court? Argument on behalf of the Gold Iron Inc:               In this problem scenario the argument made by Gold Iron Inc is that there is a breach of contact on the part of the other party so that the party is liable to pay the compensations to settle the breach of contract. A breach of contract takes place where any of the party to a contract fails to carry out, exactly and precisely, his obligations in the contract. This can obtain in different forms. Gold Iron Inc started actions against John for breach of contract in the Italian courts. The court decided that the all the proof produced by the Gold Iron was not forged, and it finally concluded that John was in breach of contract. In December the Italian court handed down a decision in favor of Gold Iron Inc’s ordering John to pay compensation of €5 million. Payment for damage is the one of the basic remedy obtainable for a breach of contract. It is a universal law remedy that is available, that can be claimed as of right by the guiltless party. “As a consequence of the first limb of the rule in Hadley v Baxendale, the party in breach is deemed to expect the normal consequences of the breach, whether he actually expected them or not.” (Breach of Contract and Remedies n.d). Negotiations may be the amalgamation of either the synchronous or asynchronous contact and occupy a wide variety of means of delivery for example; it can be done in the course of the fact to face interaction, telephone, emails etc. And also Consensus Ad item which refers to the mind set of the every parties to the contract in the course of the email correspondences also is very much essential to become the valid contract among the parties to the contract. The contract turns out to be valid only if it fulfills entire legal requirement. The agreement makes void if they are not appropriately communicated with each other. In this particular case there is only the mutual, oral agreement among the parties to the agreement. Argument on Behalf of the John: During the course of the actions, John’s lawyer alleged that  Gold Iron inc was intentionally seeking to misinform the court with forged written evidence. ”Forgery” in a strict sense is a legal term and it’s use as a conclusion should probably be avoided by the questioned document examiner.  Often a signature in of itself may be valid, but the manner in which it has been acquired or affixed to the document, or the sequence of events involved in its use are fraudulent.” (Signatures and Forgery n.d). Shortly subsequent to the commencement of the Italian actions, John started proceedings in opposition to Gold Iron Inc in London and New York with a view to attaining a judgment in his favor. Gold Iron Inc decides to challenge the authority of the English, courts in London and courts in New York, as well as but took no additional part in the actions.  In November (i.e., one month prior to the Italian court handling its decision) the New York court gave its verdict in support of John to the effect that he was not in breach of the contract and he was rewarded € 3 Million for his counter-claim in opposition to Gold Iron. Rule: There is no valid contract between Gold Iron Inc and John in this case, since both parties to the agreement have not agreed on same facet in the same sense. In other words, there is no exact and perfect agreement on the part John at the time of entering into agreement. In the case of British Steel v Cleveland Bridge (1981) 24 BLR 94, Robert Goff J., a similar circumstances arouse when the negotiation work was in development and claims stimulate, in the absence of a valid contract. “At trial Cleveland Bridge’s case was that there was a concluded contract between the parties with the result that they were entitled to claim damages for breach of contract. British Steel’s case was that no contract existed and that they were entitled to the sum claimed as a quantum meruit” http://www.crownofficechambers.com/downloads/134.pdf On the other hand, in the case of AC Controls Limited v British Broadcasting Corporation [2002] EWHC 3132, HHJ, the real conduct among the parties to the LOI was observed and it was held that when the detailed conditions of the letter of intent were correctly interpreted, the monetary limit did not apply and ACC was entitled to claim the complete value of the work it had carried out. “It was held that the spending cap was not intended to limit the amount that ACC could recover, but was intended to operate as a trigger entitling the BBC to terminate the contract any time after the cap was reached. ACC was required to carry on working and was entitled to payment of a reasonable value for the work done.” (Quantum Meruit 2006). The contract turns out to be valid only if it accomplished all the legal requirements. Contract is the agreement that is enforceable by law, and so it may be either for tender or for acceptance. The offer turn out to be valid only if it meets the entire requirement specified in the contract law. It is as what follows, ?       May be through to a particular person, a group of personnel, or to the complete globe; ?       Must be conversed by way of the offeror and offeree; ?       Must be differentiated from contact and an ‘request to contract; ?       Must be obvious and plain. Analysis of the case: In this particular case, the contact is not valid contract. This in the absence of a valid agreement between Gold Iron Inc and John, the former does not have any constitution rights over the latter in terms of the breach of contract. The contract becomes valid only if it fulfills all the fundamental elements of the contract. In this case there is no written agreement between the parties to the contact regarding the terms and condition of the contract. Therefore, this is an invalid contract. It is an “A formal agreement that is illegitimate and unenforceable from the moment it is created.” (Void Contract 2012). All the proof and evidence produced by the Gold Iron Inc is forged. It was Gold Iron Inc filed a complaint against John in Italian court, court ordering John to pay compensation of €5 million. But later John filed a counter claim in English court and court made judgment in favour of John and ordering that Gold Iron Inc pay compensation of €3million. A country’s legal frame work establishes the rules that manage the conduct of business in addition to the standards and norms that services and goods have to fulfill. “Common law” (Common Law and Civil Law n.d). The international law integrates the complete subordinate lawful schemes and regulates the worldwide business affairs and the relations between subordinate functionaries. Nationwide legalized schemes consist of private international laws which are only a small part of the global law. “In addition to the established principles of international law, new concepts have begun to develop. These new concepts include (1) the precautionary principle; (2) intergenerational equity ;( 3) common heritage and common concern; and the polluter pays principle.” (Jurgielewicz 1996). In this case Gold Iron Inc forged signature as an evidence and submitted it to the Italian court. Such kind of proof and evidence or the contact with the other parties is not valid. Forgery is a kind of criminal offence and therefore Gold Iron is liable to pay €3million to John. "Forgery is a crime when it includes the representation of handwriting of another and the act of uttering as true and genuine any forged writing knowing the same to be forged with intent to prejudice, damage, and defraud any person." State v. May 93 Idaho 343, 461 P. 2d 126, 129.” (Understanding the The Crime of Energy n.d). Fundamental Elements of Valid Contract: 1)      Agreement: As mentioned above, to form a contract there should be an agreement. An agreement consists of two elements called offer and acceptance. The essence of an agreement is the meeting of the minds of the parties in full and final agreement; otherwise known as, be consensus ad idem. The term 'agreement' defined in Section 2 (e) of the Contract Law is fundamentally and entirely identical in nature i.e., prior to an agreement between two parties, and there should be consensus ad idem among the parties of the contract. The case of Sunnam Sattiah vs. State Of Andhra Pradesh on 19 March, 1979, states that there should be no contract unless there is consensus ad idem. The minds of the parties involved in a contract should meet in complete and ultimate agreement with regard to the subject matter of agreement. For example, if A, who is the owner of two pet dogs named Julie and Rocky, plans to sell Julie to B, and if B thinks he is purchasing a horse. There is no identity of mind or consensus ad idem between A and B. As a result, no contract is formed. In order to establish the existence of consensus ad idem, in any specified agreement, it is quite common to use the language of offer and acceptance. “Thus if A says to B, "Will you purchase my blue car for Rs.10, 000? And B says "yes" to it, there is consensus ad idem and an agreement comes into existence” (Will-Purchase n.d) 2). Intention to Create Legal Relationship Case: Mr. Balfour was an engineer in Ceylon (now Sri Lanka). Mrs. Balfour was also resided with him. They both returned to England on vacation. But Mrs. Balfour fell ill, and doctor advised her to reside there due to her weak health condition. As Mr. Balfour was about to leave, he promised her to send ?30 per month until she returned to Ceylon. Mr. Balfour later wrote to his wife saying that it would be better if they remained apart. Mrs. Balfour sued him to continue with the monthly payment of ?30. She got a decree nisi and later she received an order for alimony. The court of appeal generally apprehended that there was no imposable agreement between them, even though the depth of their reasoning differed. The Courts never impose agreements on spouses on matters that engage their daily life. Agreements among husband and wife above the matters that influence their daily lives never come under any contractual interpretation, even when its relevance is understood. “The court held that as a matter of public policy it could not resolve disputes between spouses”. (Zehmer n.d). Yet, in the matter of agreements of entirely domestic or social nature, there would be some plan on the part of those involved, to form legal obligations. In such case, social agreement is proposed to have lawful consequences and, as a result, becomes a contract. 3)      Free and Genuine Consent The free and genuine consent of the parties is an essential element required to form an agreement. There should be a free and genuine consent from the contract parties, to form a valid contract. “It should not be obtained by misrepresentation, fraud, coercion, undue influence, or by mistake”. (Sharma n.d). For example, Alex has two cars, and one is silver and the other grey. He wants to sell his silver car. Jacob, who knows of Alex’s grey car only, offers to purchase it for Rs. 15,000. Alex accepts the offer, thinking that it as an offer for his silver car. Here, the assent is not genuine and free as both parties do not understand the same deal in its equal sense. 4)      Parties should be Competent to Contract As per Section 11, every person above 18 is capable of entering into a contract, as he has a sound mind, and  is not made ineligible by any law from contracting to which he is a subject. “One of the essential elements of a valid contract is that the parties to the contract must be competent to contract” (Roa 2008). There may be some faults in the ability of parties to contract. The fault in capacity can be due to factors pertaining to minority, idiocy, lunacy, status or drunkenness. If a party in an agreement has any of these faults, the agreement is unenforceable except in some peculiar situations which the law envisages. 5). Lawful Consideration The agreement should be supported by both sides for consideration. Every party to the contract should offer or promise something and in return should receive something or the other promise. Consideration is the reward in favor of which the promise of the other is required. However, the consideration need not be in terms of money. If due consideration is not given for a promise, the promise will automatically become a nudum pactum or a bare promise. This is not enforceable by law. Besides, the consideration must be lawful and genuine. An example of lawful consideration is given here “A agrees to sell his house to B for Rs 10,000. Here B’s promise to pay the sum of Rs 10,000 is the consideration for A’s promise to sell the house, and A’s promise to sell the house is the consideration for B’s promise to pay Rs 10,000. These are lawful considerations” (Roa 2008). 6). Lawful Object The purpose of the contract must be legal, and not one which the law rejects. Any contract between two parties turns out to be a contract if it is prepared by the open approval of parties capable to contract, for a lawful object with a lawful consideration, and is not particularly confirmed to be cancelled. “Explosive Substances case in 1883 (the Act of 1883).” (In The Court Of Appeal Criminal Division 1984). A lawful object in this particular ground consequently drops within a deeply imperfect group. It cannot validate retraction from what the law permits in recognizing situations of danger. The court highlight the necessitates, in determining whether an object is lawful, to differentiate between its control and reason. Furthermore, the control for a lawful object must be interpreted as the control for a lawful object only. 7. Agreements Not Declared Illegal or Void There are certain contracts which are particularly stated unlawful or invalid by the law. In such situations, even if the contract acquires all the fundamentals of a suitable contract, the contract will not be implemented as lawful or legal. Some of the contract which are particularly stated void are contracts by way of legal procedures, contract for business, contracts by the way of marriage and contracts by means of venture. 8. Certainty of Meaning The meaning of the contract must be definite or accomplished by being completed in definite or else the contract will not have any legal backing. The contract is not implemented for need of certainty of meaning. If, in contrast, the special explanation of the matter is particularly declared, the contract would be implemented as there is no doubt in its meaning. “ANZ v Frost Holdings Pty Ltd [1989] VR 695” (Australian Contract Law 2010).  Frost had presented a suggestion to ANZ which was established in law but subject to alteration.  ANZ consequently informed Frost that it did not desire to continue. Frost declared a violation of contract.  This indicates that there was no contract on necessary conditions.  9). Possibility of Performance The conditions of the contract should be performable or that which can be performed. A contract to perform an act impracticable in itself cannot be enforced. All such action which is not possible of performance would not make a legal contract and they cannot be included in a legal contract. In real meaning, and there must be option act must be there to make a legal contract. “United States Court of Appeals, Second Circuit. - 936 F.2d 684” (In the United States Court Of Appeals for the Second Circuit 2008). An oral contract is not implemented when the system of performance called for by the contract consider the act to be finished over a period of time that goes beyond one year, however the contract itself does not openly exclude the chance of performance within one year. 10). Necessary Legal Formalities A contract might be oral or in letters. If, on the other hand, a particular kind of contract is made essential by law to be in writing, it must fulfill all the essential rules and regulations as to writing, implementation and evidence, if required. If these legal formalities are not put into effect, then the contract is not valid. “The Medico-Legal case” (Law Commission of India 201st Report n.d). This is the case of accident. The Doctor attends the patient only after making an agreement in writing. This agreement is made by the doctor to keep it for future reference with the intention of not allowing the other party to make it an issue in the future and to indicate that the doctor is not involved in it. Similarly if the patient is not serious and he want discharge from the hospital, it is done after getting it in writing from the patient that he has been informed about the probability of result, and despite that he is going on his own. “The general routine of medico legal examination in the UK is equal to that adopted in India” (Vibha n.d). Conclusion: In this particular problem scenario there is no valid contract among the parties in the contract. The contract becomes valid only if it fulfills the certain legal requirement otherwise such a contract will not become valid contract. In this case Gold Iron Inc produced before the court the proof of breach for contract which is nothing but the forged signature of Mr. John.  Forgery is a crime. So Gold Iron Inc is liable to pay € 3 Million to Mr. John.         Reference List Australian Contract Law (2010). 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