Specific Rules Relating to Standard Contracts - Essay Example

Contract Law What is the rational of the specific rules relating to Standard Contracts? What legal instruments could be provided to the client against the supplier, who has prepared the Standard Contract? Standard contracts are usually signed between two who are essentially not of the same level. One of the parties has an inherent superiority complex by sheer dint of its position, economic or social. Employers, Banks, Investors and people or institutions who are in good stead or position in society usually prepare Standard Contracts in their dealings with people, employees, customers and clients. Since Standard Contracts display an inherent certainty, they leave no scope for ambiguity. The Supplier who has made the Standard Contract (Employers, Banks, Investors and other such people) can impose their own clauses. They impose their own clauses and are adamant about any proposed change by the client. What makes provisions in agreements “standard” is the failure of the client to negotiate them and the willingness of those artists to accept such an off-putting reply that something is “standard.” ( IVAN HOFFMAN, B.A., J.D.) There are of course many provisions that should be included in any thorough agreement even though many of those provisions and their internal components remain fully negotiable.  But at the very least, money points, royalties, advances, reserves should be considered as fully fair game in all deals.              Other agreed terms, whilst not mandatory, have been subject to agreement between the negotiating parties nationally and should not therefore need amending in any way at local level. There are only a small number of terms which will be particular to each practice and which will need to be tailored to reflect the agreement. In the present scenario there is precious little that the client can do. There are not too many legal instruments could be provided to the client against the supplier, who has prepared the Standard Contract. As a rule, the standard conditions are valid in most circumstances. One exception maybe a condition within a Standard Contract which is, having regard to the totality of the terms of the contract and to the other circumstances – which deprives client or stands as unfair advantage of the supplier, which may bring about the deprivations of clients. Also a presumption of deprivation – a condition relieving the supplier fully or partially, of a responsibility he would have to bear under law but for that condition or unreasonably restricting the responsibility he would have to bear by virtue of that contract but for that condition. Another instrument of presumption of deprivation is a condition conferring on the supplier an unreasonable right to rescind, or to suspend or defer the performance of the contract or to alter any material obligation imposed on him by the contract. (The Israeli Standard Contract Law, Yaron Sahar, Adv IDC) 2. In the area of Contract law, substance should always be over the form” Do you agree? Please discuss, explain and provide examples from the issues discussed in the lectures. Substance should always be over the form. I agree to this dictum. The client should be fully aware of the substance inherent in the form. It is up to each party to be very knowledgeable about the substance of the deal or to be represented by someone who is.  Any failure of that party to either not be knowledgeable or to not be so represented is simply a failure of that party’s personal responsibility, that party’s responsibility to him, her or itself.  Blaming the Supplier in such a negotiation for making a good deal for themselves or a bad deal for the client is simply inappropriate.  The essence of a free and indeed capitalist society—each party taking responsibility for themselves, is what makes the system work. It is the direct opposite of a paternalistic, dictator (even if benevolent)- led society. ( IVAN HOFFMAN, B.A., J.D.) 3. Danny, Ron and Rachel are considering combining their efforts in promoting a new business idea, which would serve telecommunication companies. Please explain to the group what are the advantages of incorporating a limited company or a partnership alternatively. The Benefits of a Partnership Company are as follows : Partnership companies can be named anything Partnership companies have low legal hassles or complications Partnership companies attract low taxation for the company but personal taxes may be more Partnership companies are easy to form – all that is needed is a deed In partnership companies one has the provision for preparing accounts as required Partnership companies can be dissolved anytime without legal bindings Partnership companies are not subject to statutory norms The Disadvantages of a Partnership Company a are few and are listed below Partnership companies entail unlimited liability There is always a possibility of attachment of personal assets The Benefits of a Limited Company are as follows: Limited Companies entail limited liability only up to share holding In Limited Companies there is no possibility of attachment of personal assets The Limited Company is a separate legal entity The Limited Company attracts low personal taxation The directors of a Limited Company can take recourse to a corporate veil whil undertaking their business activities. The Disadvantages of a Limited Company are as follows: Forming a Limited Company involves a complicated and tedious procedure The name of a Limited Company has to be subject to the availability and consequent approval of the Company Law Board of that country The Limited Company attracts double taxation for the company Winding up procedures if ever required is very cumbersome and subject to legal bindings Limited Companies are bound to follow statutory dealings in its dictates Given all the above it would be better if these three men incorporated a Limited Company. They will be serving the IT sector in the Telecommunication sector and this would naturally entail a huge volume of work/ This would lead to increased personalised liability at a lower stage. 4. Ron is one of the directors of New Wave Ltd. An Israeli company focused on information technology. Ron is suspecting that the major shareholder of the Company is considering a confidential sale of the company’s highly valuable intellectual property to an offshore company controlled by him. What are the responsibilities of Ron as a director? What would you recommend him to do? When a company is formed it is inherently based on good faith amongst its directors. If that good faith is betrayed then the suspecting individual, in this case Ron, should either directly confront the offender or gather relevant proof and bring up the matter in a Meeting of the Board of Directors(BOD). The principle of Good Faith is `the queen of all provisions’ and in fact `the most important legislative provision of all’. (Contract Law, Gabriella Shaley, Pg 212). The principle of good faith has cast its net… over the whole legal system in Israel’. (Elton J. Contract Law Gabriela Shaley, Pg 213). Section 254 deals with the Rights and Obligation of Officers – Fudiciary Duty. It clearly states an office holder shall owe a fudiciary duty to the company, shall act in good faith and for the benefit of the company, including the following: He shall refrain from any act involving a conflict of interest between the fulfillment of his role in the company and the fulfillment of any other role of his own personal affairs; He shall refrain from any act involving competition with the business of the company; Ron’s responsibility as a director is to gather all necessary information and call a meeting of the Board of Directors to confront the major shareholder with this devious act. If at all this sale of the company’s highly confidential intellectual property is to be made all the directors must be aware of it. If the major shareholder refuses to comply then according to the company Act of Israel he can be asked to forgo his shares and resign form the company. The parties to a contract are not angels in respect to each other, but neither should they be wolves” (Barak J, Contract Law Gabriela Shaley, Pg 213) Read More