Contract law and neoclassical contract law - Essay Example

?Contract Law and Neo ical Contract Law Contract law is made up of certain rules that are set to govern the connection, substance and legitimacy of a formal agreement between two or more parties- which may include individuals or organizations- for the purpose of selling of goods or services, or exchange of business interests12. Contract law is applicable to these and many other business activities between multiple parties who want to enter into a valid agreement or contract for the accomplishment of their business objectives. This agreement contains such rules that are also recognized by the law which means that if one party is offended when the other party breaks the rule, then the former party has all rights to submit petition in the court of law against the later party and can sue it. Before signing the agreement, the two parties may want to hold pre-emptive discussions or negotiations. These discussions are not part of the contract but only a preliminary exchange of views. For example, if a bookstore is displaying books with price tags on its shelves, then before the contract between the seller and the buyer is formalized, the seller may go into bargain and bring the seller down to a lower price. Once the price is confirmed, the buyer then pas the price and enters into a contract. The contract law, on one hand, tends to protect the law from breaking and on the other, defines terms and conditions when a dispute occurs. According to Larson3, a contract must involve mutual consent of the two parties, offer and acceptance, mutual exchange of something of value, delivery, good faith, and no violation of the public policy. The present status of contract law is referred to as neoclassical contract law and it addresses the downsides of the classical contract law. Macneil4 defines neoclassical contracting as the one that offers “a different contracting relation that preserves trading but provides for additional governance structure”. So, there is a third party involved that solves the disputes and brings about settlement between the two parties involved in the agreement. According to Williamson5, “perceptive parties reject classical contract law and move into a neoclassical contracting regime because this better facilitates continuity and promotes efficient adaptation”. The two parties remain autonomous but the contract is interceded by a third party regulatory agency6. Examples from Relevant Areas of Contract Law Internet Sales Contract Regulations One good example of the application of contract law is the online market. The Internet Sales Contract Regulations have specifically been designed for the consumers who are either the residents of Alberta or engage in e-commerce with companies located inside Alberta. This contract deals with only those goods and services which are worth more than $50 bought or sold for personal use. The regulation deals with formal business transactions within companies and not with a single individual. There are certain disclosure statements stated in the regulations that instruct the online vendor or seller to provide certain information to the consumer before making the transaction. This information is very vital for the consumer’s satisfaction so that he knows that he is entering into a safe and protected contract with the company and that there is no chance of any fraudulent activity. This information is to be printed on the website. The company is liable to provide the consumer with a copy of the contract made either in the electronic form or in paper, according to the consumer’s requirement. Consumer Protection Legislation The EU’s contract law, referred to as consumer protection legislation, consists of several Acts that ensure the protection of consumer guaranteed from the seller’s side. These Acts include Fair Trading Act 1973 (ensures fair e-commerce), Supply of Goods (Implied Terms) Act 1973 (deals with hire-purchase contracts), Sale of Goods Act 1979 (describes the rights of the seller), Supply of Goods and Services Act 1982 (describes the responsibilities of the seller), Consumer Protection Act 1987 (deals with product liability, consumer’s safety and misleading prices), Data Protection Act 1984 (deals with the protection of information saved on computers), and Sale and Supply of Goods Act 1994 (deals with the seller’s responsibilities). Consumer Protection from Unfair Trading Regulations 2008 (CPRs) This neoclassical contract law was brought into existence on 26 May, 2008, so as to efficiently cope with unwarranted trading and fraudulent business activities by providing a widespread scaffold. These CPRs “transpose into UK law the EU Unfair Commercial Practices Directive (UCPD)”7. The CPRs framework basically deals with restricting the traders to get involved in any illegal activity which has the target to use the consumer and his information without his consent, or to provide the consumer with incorrect information about the product. The rules put forth in CPRs target at misleading actions and unfair or aggressive commercial practices, and apply a penalty (fine or imprisonment) upon the rogue traders who, according to the Consumer Protection from Unfair Trading Regulations 20088, provide “unclear, unintelligible, ambiguous or untimely” information to the consumers about the “existence or nature of the product” and its main characteristics, and hide the motives and nature of the commercial activities and sales process which leads to either disabling the consumer “to take an informed transactional decision” or forcing the consumer to take a decision which he would not have taken otherwise. This is referred to as aggressive commercial practices which are strictly dealt with under the CPRs. These regulations also emphasize upon giving the authority to an enforcement agency to carry out transactions with the traders and enter into an agreement with them so as to make sure that the regulations are being followed completely, and give the authorized officers permission to enter into the premises of the business with a warrant. Electronic Communications Privacy Act (ECPA) Another example of contract law is ECPA which was designed in the 1980s and enacted by the Congress. It applies penalties upon the persons who gain access to and make illegal use of the sensitive information that has been exchanged between the consumers and the online vendors through electronic communication techniques such as electronic mails, text messages, video conferences, chatting, and etcetera. Title I of ECPA deals with the protection of electronic communication that is transferred through voice, wire, sounds or signals; whereas, Title II, which is also referred to as Stored Communications Act (SCA), deals with the protection of stored communication like text messages and chats. Title III deals with the prohibition of using trap and trace devices that could record the electronic communication going on between the two parties without obtaining a search warrant for doing so. It is also obligatory for the Police to take the consent of the party involved prior to using his taped conversation. ECPA is said to have restricted the concept of online consumer profiling. Consumer profiles are made by the websites by the use of cookies which tend to store the consumer’s information when they visit a specific website. This information can then be illegally used by the websites which make online profiles of the consumers and make illegal use of their transactional information. The only exception here involved is that the consumer’s information can only be used with his consent. Federal Trade Commission Act (FTCA) FTCA was passed in 1914 by the Federal Trade Commission which is a consumer protection agency. FTC “collects complaints about companies, business practices, identity theft, and episodes of violence in the media”9. FTCA regulations are an example of neoclassical contracting and guarantee inquiries and investigations if a complaint is received from the consumer. It makes sure that unfair trade practices do not take place and that the ISPs follow the consumer privacy and protection regulations. According to FTC (2008), all complaints that are entered into a “Complaint Sentinel” which is an online database of complaints and various law enforcement agencies have access to this sentinel. FTC Bureau of Consumer Protection directly deals with the consumers online and records their complaints in no time so that the consumer gets satisfied that his problem will be dealt with. As a conclusion, regulation of contract laws has become one of the most important areas demanding special consideration so as to protect the rights of consumers. Many laws and legislations such as contract law have been passed “through a framework of domestic and international statutory regulation”10, since the new millennium started, regarding the importance of formal contracts between the two parties. This has helped in bringing order and standardization in the marketplace. These legislations will, of course, keep on getting adjusted according to the ever changing needs, demands and contributions of marketing so as to guarantee the transparency of business activities at all costs. Neoclassical contract law is one such law that ensures safe and valid agreement between companies and individuals and deals with disputes and disagreements with the help of regulatory agencies. References Beale, HG., Bishop, WD., and Furmston, MP. “Neoclassical Contract Law.” Contract: Cases and Materials, 5th edition. USA: Oxford University Press, 2007. 890p. Charman, Mary. Contract Law, 3rd edition. USA: Willan, 2005. Cheung, Sai On, Yiu, Kenneth TW., & Chim, Pui Shan. “How Relational are Construction Contracts?” J. Profl. Issues in Engrg. Educ. and Pract. 132.1 (2006): 48-56. Consumer Protection from Unfair Trading Resolutions 2008. “Misleading Actions.” Part 2: Prohibitions (Publication No. 1277). Office of Public Sector Information Online, 26 May 2008. Web. 9 Jan 2011. . Department for Business Innovation and Skills. “Consumer Protection Regulations.” Buying and Selling. BIS, 2009. 9 Jan 2011. < http://www.berr.gov.uk/whatwedo/consumers/buying-selling/CPRs/page52554.html>. Federal Trade Commission. “Before You Submit a Complaint.” Consumer Protection. FTC, 2008. 9 Jan 2011. . Larson, Aaron. “Contract Law- An Introduction.” ExpertLaw. Aaron Larson, 2003. Web. 10 Jan 2010. . Office of Communications. Online Protection: A Survey of Consumer, Industry and Regulatory Mechanisms and Systems. Ofcom Office of Communications Online, 2006. Web. 9 Jan 2011. < http://www.ofcom.org.uk/research/telecoms/reports/onlineprotection/report.pdf>. Richards, Paul. Law of Contract, 8th edition. USA: Pearson Longman, 2007. Williamson, Oliver E. “Comparative Economic Organization: The Analysis of Discrete Structural Alternatives.” High Beam Research. N.p., 1991. Web. 9 Jan 2011. Read More