Commercial Transaction in Respect of Aspects of Law Issues - Coursework Example

Contract Law Name: Student’ Number: Course: Tutor’s Name: Executive summary The paper involves analyzing commercial transaction in respect of all aspects of law and other applicable issues. The analysis will ease the application of the law in different situations that we face every day in business dealings. The paper involves giving direction to a company on actions it should take in case there are differences in the way it handles its legal issues. The analysis involves judgments and decisions made during certain scenarios. The report will not only help the Pried Services but also the companies that experience the same legal problems and issues. This is to help the business fraternity in realizing their position in their dealings, so as not to do things the wrong way. The paper tests and explains different aspects of law and how law in general is organized. Introduction The reports involves an analysis of a commercial transaction that has already the company has been involved in. The commercial transaction was between the organization where I work, the Pried Services and Promoter directs. The Pried services approached Promoters directs for the services of advertising their products for a period of six months the payments were agreed upon ant pried services effected the payment. The company was to print promotional coupons that will help increase their sales as well as help the customers to win a grand price of a car from the BMW Company. The Promoters Direct printed the coupons as required but made a mistake because it printed a winning ticket in every five tickets instead of printing a winning ticket in every 50 tickets. This made the number of winners to be ten in each and every day, while Pried services wanted a winning ticket to be one per day. The Pried Services was not ready to award each and every winner. The company moved to court to seek if Promoters direct could pay for its negligence in its coupon production. Legal Issues The case involves two scenarios where one involves Pried services and Promoters direct. The other scenario is that involving Pried service and the customers holding the winning tickets. There are other legal issues as they will be discussed in the report. There is also legal issue where the company is being sued by the customers who have already had the winning tickets. Another legal issue is that Pried Services needs to determine if there is an existing contract between the company and the customers. The topic of the report is the commercial transaction of the organization. The key issues of the transactions start from the process of the transaction from the first step to the last. There are also issues on how both parties played their roles in the transaction. The implications of the way the parties conducted themselves is that the process of the transaction is clearly laid down. The lessons learnt in this process are that managers should always follow the right processes while carrying out the transactions. Another lesson is that every transaction should follow the legal process for it to be on the right track. The elements of intention and consideration required for the formation of a contract exist. The parties in this case are Pried Services as the defendant and customers who have the winning coupons as the plaintiffs. The plaintiff is the person that takes the case to court and the defendant is the accused party. The legal Determinants There are three main requirements for the formation of a legally enforceable contract, intention, agreement and consideration. The element that requires discussion here is the agreement by the parties to enter into a legally binding agreement. There are two elements that make an agreement valid, offer as well as acceptance. An offer is an invitation from an individual to another to buy something or do something. Acceptance is the act of taking another party’s offer to do something or buy something. An agreement is valid if one party makes an offer and the second party makes an acceptance by taking the offer. A valid offer has to satisfy the following elements, promissory, sufficiently complete, it should not be expired, intention to result into a contract if accepted and have to be addressed to a specific person or a group. For acceptance to be valid the following rules has to be satisfied, must be in the same terms as the offer, made before the deadline, addressed to who made it and made in acceptable form. The court objective is to assess if there was a promise between the parties involved. This is to decide whether this promise would have led to an agreement resulting to a contract. The other rule of law is the court to decide assess if the offer sufficiently complete. If it states all the necessary requirements, such as the price of a commodity, the mode of accepting the offer and there is a deadline for the acceptance of the offer. This is a rule which should be followed and observed in making agreements. The rule of law also states that for an offer to be valid is should be directed to a specific group or a person. Therefore, court should assess if this requirement is fulfilled. The other rule of related to an offer is that an offer should be made within a given time frame. This is to ensure the deadline has not passed which would make the offer invalid. The law requires acceptance of the offer to be made to the same party who made an offer. This is to avoid conflicts in reaching an agreement. The other rule of law is that acceptance should be made using the stated mode in the offer. The modes include fax, email and post. In the case Carlill vs. Carbolic Smoke ball Co [1893]1 QB 256 during an Influenza epidemic Carbolic Smoke ball company produced smoke balls that would prevent one from getting influenza. It advertised in newspapers that anyone who purchased the smoke ball and used it in the right manner and contracted influenza will get a reward of $100. The company went ahead to deposit $1000 in a bank. Carlill so the advert and bought the smoke ball but contracted influenza. She claimed the $100 reward but the company refused to pay her saying there was no enforceable contract. The issue was the promise to pay $100 reward intended to result into a contract. The court decided there was sufficient reason to lead into a contract. Another issue was that is any offer made to the public lead to a contract. The court held that an offer made to the public can be accepted by anyone. The advertisement was an offer that called for acceptance. Another issue in the case is that had Carlill accepted the offer because she had not communicated to the company. The court held that by buying and using the product as directed was acceptance of the offer. In the case Esso Petroleum Ltd v Commissioner of custom [1976] 1 ALL ER 117 Esso Petroleum produced coins as gifts to its customers for every four gallons of Esso petroleum so as to promote its sales. The commissioner of customs argued that the free coins were produced in plenty for general sales and should be subjected to a tax. The issue was that was the Esso company offer intended to lead into a contract. The court held that the terms of the promotion were intended to legally binding. Facts to consider An agreement is only legally valid when it satisfies all elements of an agreement that is, offer and acceptance. There is need to objectively assess if the present circumstances could amount to an agreement between Pried Services and the customers holding winning coupons. The question is whether, the circumstances present could lead to a valid agreement that would result into a contract between the parties. The fact that the company made advertisement in the media to the general public meant that the company was making an offer by promising to give a car as a reward for coupons. This led to acceptance by the customers. Acceptance purchasing of the Pried service products and accumulating the tickets as required in the adverts. The elements of an agreement have been fulfilled in this scenario thus leading to a valid contract between the parties. The reason behind this is that elements of an offer have been fulfilled and those of acceptance has also been fulfilled. The Judgement In this case the agreement was made between the customers through the promotion because this is considered as an offer to the general public. The customers accepted the offer through purchasing the Pried services products. They also searched to the winning coupons. Therefore, the company should honour the promise of giving out a car as agreed. The company should work to withdraw the offer so as not to continue messing or withdraw all the coupons from the market. Second Scenario In this scenario Pried services is seeking to know whether Promoter Direct can rely on mere clause that it promoter direct included in their agreement. The clause worked to exclude promoter direct from any penalties that will arise from any mistakes arising from mistakes in printing of the coupons. Legal issue The principle issue to determine express agreed terms and reliance on exclusion clause. The parties in this case are Pried Services as the plaintiff and Promoter Direct as the defendant. Promoters Direct The plaintiffs feel they have been offended by the defendant. Legal approach Express terms in a contract are the elements that have been included in the agreement by declaration or being stated either in writing or by word of mouth. There is need to identify all the terms of the contract to ensure the involved parties know their obligations (Lambris, 2011). Exclusion clause help a party to avoid liability or limit it this should clear and precise and should be brought to the attention of the other party before coming into an agreement (Lambris, 2011). Conditions are terms that are of fundamental importance in the agreement. Warranties are terms which are of lesser importance than conditions. In the case Causer v Brownie [1952] VLR 1Causer took his wife’s dress for dry cleaning to Brownie who gave Causer a docket written that Brownie was not responsible for damage or loss whatsoever. The dress was stained during dry cleaning and Causer asked for damages. Brownie refused and relied on the clause on the docket. The issue was whether Brownie could rely on the statement on the docket to avoid liability. The court held that the statement had not become a term of the contract. The reason behind this was that the document did not appear to be a contractual document and it was not brought to Causer’s attention. It is important for the involved parties to understand the terms of the contract both express and implied. This will help in case there are problems with the parties. It is also important for exclusion clause to be brought to the attention of the other parties. Promoters Direct will not succeed in their quest to be excluded in the liability because quality was an express term and a condition in the contract because Pried Services made it clear that it will only enter into a contract if the materials were to be free of errors. Promoters Direct confirmed that their materials are proof-read before delivery. The exclusion clause was not brought to the attention of the Pried Services during the contract negotiations. If the clause had been brought into the negotiation table the results of the contract would have been different. Judgement In conclusion, it is possible that the Pried Services will need succeed in its quest because Promoters direct did not deliver according to the agreed terms. The delivery of faulty materials was a breach of the conditions and terms of the contract. Implications The implications of these legal issues are much far reaching to Pried services because it has to honour its promise to its customers. The customers hold winning coupons should be compensated for their acceptance to the offer the company made. The implications will mean that the company will incur high losses because this was not in their plans. This will portray Pried services as a faithful company if they give the holders of the coupons their presents. The company will also lose its customers and faithfulness in the market if it does not give the winning coupon holders their cars as a way of honouring their acceptance of purchase. The implications will be that Pried Services will be in a legal battle with Promoters Direct because of its mistakes in printing of the coupons. The companies’ relationship will be affected in the way they do their operations. Desired outcomes The desired outcomes in this scenario are that the company does not lose a lot of funds in future in compensating their customers in a way they have not planned. The desired outcome is that the company should have a clear policy of how to carry out their promotion. This clear policy will mean that the company will have a way to protect itself from any law suits in future. The company should also be able to get compensation from Promoter Direct because of the problems they have caused the company by ruining its competition because the customers will question the company faithfulness in its dealings. The company should be able to maintain its public figure through the law by having Promoter direct compensate them for the breach of their terms because Promoters direct had promised Pried services that it offers quality service. This was the reason Pried services sought their services. This will mean that Promoter direct will have to be responsible for the actions it has decide to take in its undertakings. The company will have to remove the exemption clause in its legal agreements or have to bring it to the attention of their customers so as to decide if they will get into contract with the company. The company should ensure that it involves the legal team in engaging in contracts to ensure that there are no hidden clauses that will affect the reputation of the company. The company should also seek for compensation from the Promoters Direct because this the mistakes in printing the winning coupons can ruin the company business operations. This will help any other party that would engage in any business with Promoters direct. The solving of the legal issues in the best way possible will ensure that the company maintain its position in the market. Recommendations The company should have a laid down legal framework on how its promotion strategies to ensure even the customers are aware of the methods the company uses to promote its products. The company should also be aware of the awarding process of the company. Therefore, the company should lay down how many cars or any other items its intending to give to their customers. The company should also let the promotional companies know their requirements before they enter into any agreement with them. This will help use the terms they have made to select the best company to promote its products. The company should also do this to all its contracts its undertaking to avoid any problems that might arise in selecting its partners. The company should also ensure that all those involved in its legal contracts are well trained and informed about the company strategies and interests. The company should also engage in a promotion program as laid down in their strategies to avoid losses in future (Abbott, Pendlebury and Wardman 2007). Conclusion Law is very important to managers so as to ensure that they make the best decisions regarding matters of their companies. It is a very vital process in business management and a lot of emphasis should be put in to ensure that manager is taking the right direction while solving the company problems. The business manager is the team leader but has an important role in creating cohesion and setting a climate in which team members are able to freely contribute and make important decisions. The success of any given project is unique to its risks and cannot be fully predicted at the start. Therefore the team has a role of continually monitoring the legal factors closely. The manager should lead the company in making the best ways possible to ensure that the company engage in the legal business that will be beneficial to the company. Reference List References Abbott, K, Pendlebury, N and Wardman, K. 2007. Business Law. Sydney: Cengage Learning. Adamson, J.E. 2010. 21ST Century Business: Business Law. London: Cengage Learning. Allan, D.E, and Hiscork, M. E. 1997. Law of Contract in Australia. Sydney: CCH Australia. Carter, W.J, Harland, D and Lindgren. 1996. Contract law in Australia. London: Butterworth. Clarke, P. 2006. Law of Contract. Sydney: Turnaround Publishers. Emerson J.D. (2009). Business Law. London: Barron Publishers. Gibson, A. and Fraser, D. (2013). Business Law. Sydney: Pearson. Gillies, P. (2004). Business Law. Sydney: Federation Press. Goldman, A.J. and Sigismod, W. (2010). Business Law: Principles and Practice. Sydney: Cengage. Lambiris, M. (2012). First Principles of Business Law.Sydney CCH. Latimer, P. (2012). Australian Business Law 31st edition. Sydney: CCH. Miller, C. and Cross, J. (2004). Business Law: Text and Cases 11th edition. Sydney: Cengage. Legal authorities Causer v Brownie [1952] VLR 1 Carlill vs. Carbolic Smoke ball Co [1893]1 QB 256 Esso Petroleum Ltd v Commissioner of custom [1976] 1 ALL ER 117 Appendices The commercial transaction Pried Services saw an internet advertisement by Promoter Direct stating that they are the best printers in the country and before delivery they ensures that they would exercise reasonable care in proof- reading all materials. Pried phoned Speciality Printers for an appointment to negotiate a contract to print all the promotional materials for the next three years. Pried Services made it clear that it is a term of the contract ‘that all reasonable care must be taken to ensure that all materials delivered are without errors’. Promoters Direct gave the assurance ‘that all materials would be proof-read before delivery’ in front of the lawyers involved in the contract. Promoter Direct had included a clause in the contract “Promoter Direct accepts no responsibility for any loss or damage whatsoever caused by errors in printing, resulting from defective typesetting work by the printer or any of its employees.” It was discovered that instead of only 5 being winning tickets every day, there were 50 winning tickets every day. Read More