Obligations in Trade Law - Case Study Example

Introduction "An obligation is a requirement to take some of action. It can be legal or moral. There are also obligations in other normativecontexts, such as obligations of etiquette, social obligations, and possibly the In terms of politics, obligations are requirements that are to fulfill. These are generally in the form of legal obligations, which incur a penalty for lack of fulfillment, although certain people are obliged to carry out certain actions for other reasons as well, which can be due to tradition or social reasons. Obligations vary from person to person, for example, a person holding a political office will generally have far more obligations than an average adult citizen, who themselves will have more obligations than a child." (wikipedia) Obligations cover very wide spectra of trade law, which in real life situations show different and numerous variations. In five different examples we shall try to explain complexity of issues that they cover. According to US Senate "obligation is an order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period." (US Senate reference glossary) EXAMPLE 1 Dispute Bravo Shearing Ltd (BSL) are manufacturers of tube cutting machinery and have advised in Tube World their latest tube shear at 980.000 Laurel and Hardy Ltd (LH) are manufacturers of welded stainless steel tubing and on seeing the advertisement request further information from BSL, who send a brochure complete with price list. On the price list the shear is listed is listed at 900.000. L&H dispatch a letter stating that they wish to purchase the shear for the list price. BSL have now contacted L&H and advised them that the price in the list is incorrect and that the correct price is 980.000 L&H insist that they have a contract at 900.000 Solution Commercial ads are not considered valid offers, same as general price lists. Obligational offer is document which is obligational for the seller of the product. "There are also obligations in other normative contexts, such as obligations of etiquette, social obligations, and possibly the obligation to spell words correctly" (Law Dictionary and Research guide). On the other hand, if price list is sent specifically on request of potential customer requesting the offer for specific product, than it can be considered as valid offer, and at that moment mailer of the offer or price list has become obligatory document. Therefore, L&H has right to buy tube shear for 900.000 EXAMPLE 2 Dispute L&H have made an offer to PW Metals for the sale of 500 lengths of tube at a price of 1.85/meter. PW Metals have faxed back asking if L&H "may accept a price of 1.80/meter."L&H did not respond, and a week later sold the material to Premier Ltd. PW Metals have now contacted L&H requesting a delivery date for the tubes. Solution PW Metals are right when claiming that they have valid contract for delivery of 500 lengths of tube at price of 1.85/meter, unless that date of validity expiration has been clearly stated on the offer that has been sent by L&H, AND that validity period has expired on the moment when PW requested delivery date for the tubes. The fact that PW Metals asked for price reduction does not have any effect on the validity of previous offer. EXAMPLE 3 Dispute L&H have made an offer by fax machine for 100 lengths of tube to Whitehouse Stockings Ltd (WSL) at 2.30 pm on Monday, 19th of November. After consideration WSL decide to take up the offer and fax back an acceptance at 5.12 pm on the same day, and place a copy of the acceptance in the post that night. Unknown to the either party the fax acceptance falls down a gap in the desk behind the fax machine and is not seen by anyone at L&H. The following morning L&H sell the 100 lengths to Pentagon Steel and there will be no replacements available for several months. At 10 am the post is opened at L&H and they notice the acceptance, upon which they advise WSL of what has happened. WSL claim that they have a valid contract. Solution "Offer is a bid from the buyer to the seller to buy goods at a stated price. The seller may accept, decline, or give the buyer a counter-offer." (Google glossary) WSL definitely have valid contract, since it is not their problem that fax machine in the offices of L&H is situated in a way that received message can fall in the gap in the desk. WSL conducted everything needed to establish valid contract, they have sent fax message on the very same day of the reception of the offer, and have sent copy of the acceptance that night. EXAMPLE 4 Dispute Downing Street Construction (DCS) has been awarded a contract to build an animal research lab for Camox University. They have ordered 2000 tonnes of tubes from L&H at 350/tonne. L&H have now run into financial difficulties and have notified DSL that they cannot complete the project at the current price and would need 420/tonne. Knowing that there is heavy penalty clause for non-completion to schedule, DSC agree to the new price. L&H complete delivery, however, now DSC are refusing to pay claiming that L&H were contractually bound to deliver tubes at 350/tonne. Solution Acceptance of DSC on price increase represents appendix of the original contract, and in this case L&H has right to apply higher price, the one that DSC has agreed to. However, if DCS decided not to accept higher price risking of penalty due to non-completition of job for Camox University, DCS would have right for compensation from L&H based on breaking of contract. EXAMPLE 5 Dispute Additionally Camox have received numerous treats from an animal rights activist group. Worried about this they request extra police protection, however, local chief superintendent believes that current police levels are adequate. However Camox are insistent and the police agree to extra police levels for a pavement of 500 per hour of extra policing, to be invoiced quarterly. When the first invoice arrives Camox refuse to pay stating that the police are only doing what they have a duty to undertake anyway. Solution "The term police is most commonly associated with police departments of a state that are authorized to exercise the police power of that state within a defined legal or territorial area of responsibility" (Wikipedia-police) Police as state organization funded and equipped from state budget is not commercial organization and can not rent their forces on commercial basis. Local chief superintendent had to decide on basis of his estimates and experience weather to increase police forces or not Also, he was supposed to recommend local security guard company which would be responsible for higher level of security around Camox university. Conclusion All contracts in modern trade are made on obligations of interested parties. Due to complexity of an issue, in real life situations different problems may occur. Common practice is to resolve this situations with mutual agreement, but very often problems are solved by court decision. Bibliography: 1. Wikipedia - Obligations http://en.wikipedia.org/wiki/Obligation 2. Law Dictionary and Research guide http://www.123exp-law.com/t/03784133220/ 3. US Senate Refference Glossary http://www.senate.gov/reference/glossary_term/obligation.htm 4. Wikipedia-police http://en.wikipedia.org/wiki/Police 5. Google glossary http://www.google.hr/searchhl=hr&defl=en&q=define:offer&sa=X&oi=glossary_definition&ct=title Read More