Making and Breaking the Business Law - Case Study Example

Part A A contract is an agreement which is enforceable by law and which creates rights and duties between the parties involved (Klein & Viljoen 2002). A contract can also be a promise between two parties where one has to do something for the other in return for something like payment. According to Harvey v Facey [1893] AC552, every contract consists of an offer made by one party and accepted by the other. It can be noted that a contract can be in verbal or written form but the most important thing is that there would be an agreement to perform duties especially between two parties involved. This is usually binding and legally enforceable if the agreement has been made but in some cases, it has to be noted that not all agreements between people are binding. In order to be binding in law, the agreement must comply with a number of essential components and if one of the essentials is absent, then the contract is null and void (Gibson 1988). First and foremost, the agreement must be lawful and a contract can only be valid if it has been entered by people with the legal capacity to contract. An agreement to contract entered into between an adult and minor is null and void. The law does not allow minors to enter into agreements whereby they will be expected to fulfil certain contractual obligations by virtue of their limited capacity to fully make meaningful decisions on their own. The minors are treated as people with limited capacity to fulfil the duties in a contract given that their age is too young to be tasked with such a duty since they are supposed to be under the custody of their guardians in such instances. The acceptor must be in the same mind with regards to the subject matter of the contract with the offeror (Gibson 1988). There must be a meeting of minds where mutual agreement is reached. In other words, there must be mutual understanding in the terms and conditions of the agreement. Therefore, when the parties involved have not yet reached an agreement, there is no contract formed which can be legally enforceable. If and only an agreement based on mutual understanding has been reached, the two parties have a duty to fulfil which should not be taken for granted as this may lead to a lawsuit being filed for breach of a contract. The contracting parties must be aware and clear of the terms and conditions of the contract for it to be valid. It can be seen that the two parties who enter into a contract often freely do it where there is no undue pressure on the other side by the other party. The guiding principle in the formation of the contract is that both parties involved are intentionally aware of the agreement they would be making. Where there is no one forced into making a contract, then there is every reason for both parties involved to honour their contractual obligations. Agreements made between sane or sober people and those who are insane or excessively drunk cannot be treated as valid contracts. The general rule in the formation of contract states that every person can contract freely within the general limits of the law, but the mentally ill or excessively drunk have limited contractual capacity to enter into a binding agreement (Gibson 1988). The main reason is that their reasoning capacity will not be similar to either sane or sober people. This kind of scenario will form an unfavourable condition to the formation of the country given that the other party will be disadvantaged. The validity of a contract ought to be based on mutual understanding where there is consensus on the agreement made. Thus, any agreement between such parties is null and void and it can never be treated as a contract. This also applies to insolvent persons or those who have been convicted of crime. Entering into a contract with a person who is known to be insolvent or a convicted criminal is also null and void in terms of formation of a contract. In certain circumstances, agreements may not be valid contracts if they are impliedly prohibited by the law (Gibson 1988). Agreeing to sell or buy intoxicating substances such as liquor from people without a liquor licence is prohibited by the law hence any attempt to evade the statute by performing the act indirectly is void. It is very difficult to claim money owed through such illegal contracts of selling prohibited products without a proper licence. Contracts which involve illicit deals such as selling of drugs are also not valid under the provisions of the law. It can also be seen that conniving with someone to still in return for payment in terms of money does not form a valid contract. It can therefore be seen that certain agreements that do not meet the highlighted factors may not be regarded as constituting valid contracts. Part B Paul buys the wrong type of bricks for houses built near the sea and Kingsley Lt is now in a dilemma given that the houses have to be demolished. Against this background, this analysis seeks to advice Kingsley Ltd on the measures they can take should there be any using the Conventional sale of International Goods (CISG) and sale of goods (SOGA) provisions. As a point of departure, it can be noted that the CISG is a provision that was adopted by a diplomatic conference on 11 April 1980 and it establishes a comprehensive code of legal rules to countries that ratified it in governing the formation of contracts for the international sale of goods, the obligations of the buyer and seller, remedies for breach of contract and other aspects of the contract (http://www.uncitral.org/uncitral/en/uncitral_texts/sale_goods/1980CISG.htm). As far as this provision of the international law is concerned, it can be seen that there is little help for Kingsley Limited given that it primarily deals with issues that are related to two different states. It is clearly stated that CISG can only intervene when it comes to different organisations operating in different territorial states which is not the case here. It is advisable to Kingsley Ltd to seek other local remedies instead of referring the case to the CISG as it has no jurisdiction to preside over domestic issues affecting companies from the same territorial state. The local courts in the local courts are better positioned to deal with such kind of cases. Only cases involving inter governments are referred to the CISG. Kingsley Ltd and Brick-for-All are two local companies in one country hence their issue can only be dealt with by local courts which have the jurisdiction to preside over such issues. On the other hand, the Sale of Goods Act states that both buyer and seller agree to exchange goods for a certain value of money and both of them are obliged to meet certain terms of the agreement. The obligations of the buyer are: to pay the price, to pay the seller’s necessary expenses in maintaining the article sold until delivery and to accept delivery of the article sold when tendered to him (Gibson 1988). On the other hand, the seller is obliged to care for the subject matter of the sale pending delivery and to deliver the article to the buyer. A close analysis of the given case study shows that there has been no direct breach of the contract. The seller supplies the consignment of the bricks bought by Paul on behalf of Kingsley Limited. Paul the manager for Kingsley Ltd approached Bricks-for-All and made the choice of the particular type of bricks he wanted and he does not state the area where the houses will be built. What is important is that Paul makes his own choice without any pressure or force to buy the bricks. He has fulfilled his obligation and according to the case details, it seems that he is quite satisfied with the purchase he has made. Indeed, he ought to know the kind of product he is purchasing. Even in terms of the CISG, if the seller has not caused the damage to the delivered goods, then he is not answerable to any damage thereafter. Upon delivery of the goods bought, any defective material may be turned away if it does not meet the specific requirements of the buyer. Once the seller has delivered the goods to the buyer upon payment and the buyer accepts the delivery, then a contract is sealed. Thus, it is advisable to Kingsley Ltd that buying the right type of bricks is the only viable option in this case. One other weakness in Kingsley Limited’s case is that Paul does not seek advice when he makes a purchase of the bricks which could be done freely. Paul fails to do that simple and noble thing so it is his own problem. If one does not ask for information, it cannot be the seller’s fault as it will be assumed that the buyer is aware of what he will be doing. In legal terms, ignorance is no defence hence Paul cannot go to court and claim that he did not know what he was buying. He is to blame. It can also be noted that as far as the sellers obligations are concerned, Brick-for-All fulfilled its part. Assuming that they had agreed on the terms of payment, the company supplied the correct quantity of the bricks as required by the buyer. The buyer in turn accepts the delivery and he does not raise any issue upon delivery which shows that they are content with the material that has been supplied. The buyer is to blame here. References Aldous J., & Levy D. (1991). Making and breaking the law. Victoria. UCTA Publishing Company. CISG (N.D) http://www.cisg.law.pace.edu/cisg/text/treaty.html [Accessed on 14 December 2010]. Consumer law- What is a contract? (N.D.). From: http://www.paralegaladvice.org.za/docs/chap12/02.html [Accessed on 14 December 2010] Duplessis L. (1999). An introduction to law. 3rd Edition. Juta Gibson G.T.R. (1988). S A mercantile and company law. Cape Town. JUTA & Co LTD. Kleyn D. & Viljoen F. (2002). Beginner’s guide for law students. 3rd Edition. CT. JUTA Koffman L & McDonald E. (2007), The Law of Contract, 6th Edition, Oxford University Press. E-BOOK. Available at: http://books.google.co.za/books?id=8JtwkQrAC_kC [Accessed on 14 December 2010]. Ray Moses (2001), CCJA’s Guide to Federal and Texas Bill of Rights and other Individual Freedoms http://stclguns.homestead.com/BillofRights.html [Accessed 14 December 2010] Todd C. (2001). What you must know about contracts of employment. CT. SiberInk. UN Conventional Sale of International goods. (N.D) http://www.uncitral.org/uncitral/en/uncitral_texts/sale_goods/1980CISG.html [Accessed on 14 December 2010] Read More