Optimal Property Rights in Financial Contracting - Assignment Example

Law for business al Affiliation) Part A In all the contracts that Steve entered into, there was no involvement of Garry and he carried them secretly. In all the contracts that Steve entered into, there was no involvement of a third party as one member of partnership was not aware of the contracts. Steve uses credit in the name of the partnership for personal activities. This goes against the partnership act which brings out the fact that when one partner pledges the credit of the firm for a purpose apparently not connected with the firm’s ordinary course of business, the firm is not bound, unless he is, in fact, specially authorized by the other partners; but this section does not affect any personal liability which may arise against any other partner who has so conducted himself as to give reasonable ground to the party dealing with the partner first mentioned for believing him to be so authorized1.There are rights that the third party has and enable the party to enforce agreements against the firm. The enforcement of a term by the third party is when the terms of the contract provides that the party is subjected to subsection and the term that is given by the firm significances to discuss a benefit that the party will obtain. Any claim that can be made by the third parties may not be well defended by the partnership since not all the partners were involved. The subjection that the third party is able to get may not apply when if on a proper coming to an agreement appears that the parties that were involved did not have the intention to have the term being enforceable by the law 2. In the enforcements that are made, the third party must be well identified by the partners in the contract with fine details including name and as a member of a given class or as answering a given description3. There is no need of the person to be in existence when the agreement of the purchases is entered into. The laws of third party involvement in a contract need the subject to be subjected to and also do it according to other relevant terms of the contract. In contracts that Steve involved in, there was no consideration of other terms of partnership that they were in. in exercising rights of enforcement by a third party, there is availability to the third party remedy that would be available to him if there was breach in the contract that was entered to if the third party was already part of the contract. The other rules that apply to the third party are with rules that relate to damages, specific performance and injunctions. There are terms of contracts that restrict the liability4. In the contracts, the third parties are able to enforce the terms which shall be construed as a reference through making himself available of the excursion or limitation. Enforcement of terms against a firm involves the promisor and the promise. When the third party is found to have rights to enforce agreement against a firm, the parties that are involved in the contract through agreement are not able to rescind the contract that they already involved in. There is no variation that can be made in a way to alter the entities under the agreement. These cannot be done without the consent when the third party has passed information about his assent to the term agreed to the promisor5. It also occur when the promisor is much aware that the third party has relied on the terms that are available or when the promisor can with reason be expected to have predicted that the third party would rely mainly on the terms and the third party has not changed but relied on the terms. Execution can be done in any manner in the firm’s name showing the intension of a person binding the firm6. Partners that are by the act of the firm does not affect any general rule of the law that is related to the excursion of deeds or those that are related to negotiable instruments. When the third parties that were involved in agreements with Steve would have been aware of the situation, they would opt not to involve in the contracts when they knew that Steve did not involve Garry as another member of their partnership. Acts bring both the partners, Steve and Garry to be not responsible for all the agreements with the third party. All the third parties if come to realize that Garry was not involved would claim their rights as the third party to enforce agreements against the partnership7. Part B In the case study, David is liable for the debt that is needed by Elizabeth. David becomes liable since he is a member of the partnership and is liable for all transactions that happened in his presence and out of his presence. Though he was away when the transaction with Elizabeth was done, he is still seen as being responsible as he is a viable member of the partnership8. The clients that were involved in the transaction of Elizabeth’s amount were not notified about the departure of David. David’s name was in the circular that was sent by the recruit and Elizabeth carried out the transaction with consideration that David was an active member of the partnership. This makes David to be liable for the debt. Liability of a partner comes since partnership is inseparable from its owners. Due to this, each partner except in limited partnership is personally liable for all amounts that may come out due to obligations that are related to the business. The liability enables creditors to go after individual personal property in order to ensure that the debts that the partnership has gets paid. Liability in partnership also brings one to be bound by all the transactions that are made by any of the partners and any partner can be held personally responsible for anything that occurs due to the transactions9. According to the partnership act, each partner is seen to have joint and several liabilities. The partners have the limited liability that is similar to that of shareholders of a corporation. According to partnership act, where by any illegal act or error of any partner acting in the normal sequence of the business of the firm, or with the right of his copartners, loss or injury is caused to any individual and through this, therefore the liability of the firm is brought out in a similar level as the partner is so temporary or neglecting to act10. In the act, it is stated that each and every partner in an organization is liable, together with the other partners, for all debts and responsibilities of the firm suffered while he is a partner, and after his death his land is also seen to be still liable in a during the time of management for such arrears and responsibilities so far as they remain dissatisfied, but subject to the previous payment of his own debts that are done separately11. In the partnership that David was involved, there was liability for all the debts that the partnership had. David was not available but was a member of the partnership making him responsible for the debt that was needed by Elizabeth. Part c Ryan had the offer of selling car parts. The offer that was there was valid since there was acceptance of Ryan’s offer before there was lapse in time. The offer was also accepted by Cars R Us before it was withdrawn. The contract that occurred between Ryan and Car R Us was valid since Car R Us accepted the terms and conditions that was presenter by Ryan before agreeing to be supplied with the car parts. The change that was made by Ryan was after the contract was made. The contract that was entered into by Ryan and Cars R Us was valid as there was intention of legal consequences. Contract between Ryan and Cars R Us to be valid since Cars R Us had agreed to pay the required amount before Ryan changed his mind. There was agreement on 500 dollars including mechanical cost by both the parties and Ryan changed mind for consideration to be 600 dollars after the terms and condition of the contract were already establish and communicated late to Cars R Us. Entering into a contract requires several terms and notifications there are made before any party that enters in the contract becomes liable for anything that the contract may cause. According to the partnership act, If the partners agree that between themselves that any constraint shall be placed on the control of any one or more of them to connect the firm, no act done in breaking of the agreement is binding on the organization with respect to persons having notice of the agreement.in the contract that was entered in by Ryan and Car R Us, some elements were not considered making the contract to be much valid as it would have all agreements without the change of mind12. The contract was entered into since there was agreement since all the parties were satisfied with the terms that the contract had. The element of offer in the contract was clear as there was willingness of both the parties to getting involved in the contract13. The contract however was not valid since the offer that was made was after a reasonable time in the situation. The value of the contract was great but could not last longer since there were changes in the stand that one of the parties had14. There was willingness to enter into agreement by both the parties that were involved. In a contract, there is consideration of invitation to treat. According to the law of contracts an invitation to pleasure is a simple declaration of willingness to come into agreement through negotiations and this makes it not to be an offer, and cannot be accepted so as to form a binding contract. An agreement is not created if there is an acceptance of the invitation to treat. Acceptance forms a basic in entering into a contract. Only that which has been offered can be accepted. Through this, the offer that is presented by a party should be accepted as it is without much terms and condition. In entering into a contract, there can be many offers and counter offers before the two parties can come to an agreement. When there have been negotiations on the contract, this makes the terms and conditions of the contract. In the contract that was entered into by Ryan and Cars R Us, there were consultations that were made before Cars R Us before it could settle for the contract15. After the consultation and agreements were made, the terms and conditions of the contract were established. This makes the contract be valid as there was offer and acceptance with the terms. It does not matter how the acceptance is made in a contract. It can be through writing or verbal agreement. Intention of legal consequence is an important element in entering in a contract. There was intention of creation of legal relations in the contract as there was understanding that the contract that was entered into could be enforced by law16. There is no need to expressly state that one understands and is willing and intends legal consequences to follow. When the parties that are entering into a contract are not legally bound by the law, it must be stated clearly in the contract not to be legally enforceable by law. A valid contract is always supported by a valuable consideration. In the consideration, each party promise to do something in return from the party that is to provide benefit of value. . Consideration that is to be in a contract is agreed on among the parties before the contract can be sealed. Bibliography Ayotte, Kenneth Michael, and Patrick Bolton. 2007. Optimal Property Rights In Financial Contracting. Cambridge, Mass.: National Bureau of Economic Research. Bachrach, George J, James D Ferrucci, and Dennis J Bartlett. The Contract Bond Suretys Subrogation Rights. Fried, Charles. 2008. Contract As Promise. Cambridge, Mass.: Harvard University Press. Kim, Heung Lyool. 2003. An Unbiased Estimation of the Impact of a Government Program in contracts. Stoke, Duncan. 2008 The Partnership Act 1895 as at 26 Jul 1985 Cambridge, Mass.: National Bureau of Economic Research. Read More