Contract Law Is an Important Economic Factor - Essay Example

Contract Law Name: Institution Affiliation: Executive summary Contract law is an important economic factor that is of great significance on the business sector. For a long time, contract law has faced several challenges that need to be addressed to achieve maximum production in the private and public sector. In trying to analyze the available gaps in contract agreements, there have been setbacks majorly brought about by the lack of knowledge and insufficiency of records. Additionally, contract law is very significant to a country since it ensures that the philosophical concept togetherness and national unity is achieved. Furthermore it also promotes entrepreneurial culture due to the surety that it creates to the traders. It is because this ensures that the business security in the market is equally distributed to all people irrespective of their financial status. Moreover, this process has to be done to have a specified record of the agreements between buyers and sellers. Introduction The Australian contract law is based on the inheritance that was drowning from the initial and the very first contract law in the; the English contract law. However, the whole thing was done differently with some of the decisions being obtained from verdicts in the Australian Courts1. The contract law in Australia was the basis on which the judicial authority was established in the business sector. It was done by the Australia legislatures earlier on the conception of the constitution. The authority that was funded by article gave a chance for the country’s jurisdiction to be established2. The establishment took place during the trial of the piracies and felonies that showed commitment to the high seas. However, the last appeal to the court decision was important in determining cases that arose from the businesses and the private organization. Legislative body becomes the first institution to be formed in the Australia. Moreover, in Australia the major factor that led to the formulation of contract law was the disputes that arose between the business entities across the country. Most importantly, the Australian contract law system was formed because of the Northwest Terrain. In 1788, when the United States Constitution becomes approved fully, the Assembly got the power to put in place a federal judicial system. Therefore, only the Supreme body was established by the constitution in Australia followed by the judicial act that was enacted in 1789. The Australian judicial system fits well into the society because it comes about as a result of an irresistible change. In business, it provides best due to the strong policy base that it possesses beginning by the constitution and other business bills. Within the Constitution, the legal powers of Australians are invested in the centralized court structure, the judiciary is specifically created by the Establishment and in return gives the Congress the mandate to create other lower federal courts. However, the same Constitution also allows the states to establish other state courts that are functional at the state level. Additionally, the legislature has used the constitution to establish courts, other district courts the court of international trade as well as the courts of a claim. The states, on the other hand, have smaller courts that handle more specific and legal matters. Moreover, the federal courts have the mandate to address matters of presidential elections and other issues of national concern compared to the state courts which, may not go beyond their borders. Finally, the Federation judges are appointed by the president and the approved by the Senate while the state court judges are selected in a variety of ways that range from election to appointment for life. Moreover, federal courts can solve an issue that cut across the states of the country while the state courts are mostly specific to the state boundaries3. It means that the state courts may not handle matters that pertain to presidential petitions or matters of international concern. However, the state courts are of importance as they help in resolving conflicts that directly affect the people on the ground. Problem statement Contract law and business judicial system in Australia is majorly influenced by the difference in financial levels alongside the economic levels of the various business partners. The standard of shareholder participation regulates the future of the financial evaluation and analysis mostly in the third world countries. An increase in the level of business risks also leads to an increase in the need to put in pace contract law. Additionally, involvement in the organizational decision making processes may be of great significance id there is effective contract law that is put in place4. However, the major challenge facing contract law is the underlying policies that have not been fully employed by the Australian Government. The project pepper, therefore, provides insights to the analysis of contracts as well as the sustainable planning for business resource. Theoretical framework Many of research on Australian contract law have been put in place in the record of the developing employment options in third world countries5. The said readings have revealed the presence of maximum options that business owners can put in place to enhance healthy relation and recording of contracts to secure their businesses. Furthermore, contract law is determined by the underlying theories that determine the movement of the strike prices of the commodities and services. In the stakeholder relation, there is the use of critical engagement there is a need to generate higher returns to offset those prices of same goods alongside services that created in diverse states, not within Australia, this is to ensure that the employees and the employers have to work together. The evidence obtained from the various researches curried out in the area show that there is a maximum relationship in stakeholders in the markets assuming the extensive time decay a similar case can be related to that of The Eagle (1977), where passenger or individual making a booking for a service enters a contract6. Studies carried out for understanding the connection between the stakeholders; trading has not however been able to get the affiliation, which tends to bring the two variables together. Therefore, in the act of testing the contract law theory and the business judicial system, some models have been put in place. The methods usually are used depending on the kind of contract in question. The process has to be first employed after the relationship existing between the underlying challenges in the country’s business sector has been identified. The technique is referred to like the call and the put ideal. The model is thus applied in establishing the connection that exists between the relationship and output of supplies ended in these marketplaces. Literature view Bonell, (2009) argues that contract law and business judicial system a major contributor to regional development. The issue comes out as the author includes the significance of contract law and the need to secure business entities in a legal framework. Clarity is made that the need for this association is purely based on the sound will of any country to accomplish its economic goals. He continues to clarify the peripheral inferences of business judicial systems, citing that it is very important in certifying that a business financial status is sustained, and an issue that can increase the level of recognition by other units. Mak, (2008) conditions that this kind of undertaking is one of the few interventions that is compulsory to be positive and to be promoted highly among the stakeholders in the business field. Additionally, Mark gives explicit rationalization measures that are meant to spearhead the quest for good business evaluation and proper planning before a contract is made between two entities. Furthermore, Twigg-Flesner, (2013) states in his article that in making any step towards the realization of defined contract policy, something that he makes clear in the second chapter of the same publication. Making reference to the tremendous development in the business sector, he explains and considers contract policies ion as the dominant influence that determines the direction of a country, region, continent or the whole globe in terms of business security. General principles of contract law Agreement Consideration Contractual capacity Genuineness if asset Legality Formation of an enforceable contract Depending on the details of the contract, there is need of peace of mind or lack thereof. Henrietta would be in a better opportunity to clearly understand her position and in addition to the claims against the solicitor in terms of damages and losses, mental distress and being upset. This can play a huge role in the court proceedings that are efforts which should ultimately lead to her compensation. One way of analysing the negotiation process in a contract is by considering the offers and competence. This will determine whether a contract has been made thus constituting the item. This is in accordance to MacRobertson Miller Airline Services v Commissioner of State Taxation (WA) (1975), a case concerning the transportation of commuters on mass public transport. Therefore, the same principle is applicable to Uber X that deals with the public transport7. Research questions My research seeks to provide an answer to the following question through an analysis of the existing literature and secondary data analysis which are of great significance for the development of the entire judicial system of a county. What is contract law How does contract law impact on the social-economic development of an organization What are the implications of poor business policy systems to a country’s economic development? What factors have contributed to the changing business policies and contract requiems? Motivation The key motivation for the proposed research topic has been derived from the economic growth that has been experienced regarding the unstable contract systems in Australia and other developing countries. Consequently, there has been an improvement in the legal frameworks and diplomatic frameworks that has contributed to the positive bilateral trade relationship between organizations and business entities8. Contract law has immensely contributed to the economic growth not only Australia but also globally, which has contributed to the improvement in the world’s economic value and individuals business security. Moreover, the trading relationship between organizations has been considered as an essential element in improving the legal scope. Business relations and legal frameworks enhance proper judgment processes. In conclusion, the findings from the study contribute positively to both the policy development and academic enhancements in the economy. Other than the policy development, the findings provide a basis for the research development on the topic. An overview of the Australian contract Law The Australian Law as it is currently constituted is composed of five major components. These include the Real Estate Financing Law, Financial Leasing Law, Supervision of Finance Companies Law, Real Estate Mortgage Law, and the Enforcement Laws (Saudi Arabian Monetary Agency9. These components are aimed at ensuring that the law is effective in ensuring that there is economic growth. The supervision of finance companies law, for instance, is developed to regulate the companies and ensure there is proper operation of the participants. The laws are developed to promote the development of the business sector in Australia10. Contract Law marks a great change in the country’s business industry in terms of the availability of the funds and regulations on the same. There has been a slow development of the market over the past years due to the unwillingness of the government to implement the law to promote the business industry11. The law provides opportunities for most financial institutions to offer loans to the borrowers; thus, promoting economic development. The introduction of the law into the market has contributed to steady growth in the total credit from the institutions. For instance, according to the information provided by Australian Monetary Agency, the total credit loans in 2013 was $18.7 billion while in 2014, the amount rose to $25.1 billion. In the prior year, 2012, the total credit advanced to the customers was lower at $11.45 billion. Australian law of contract considers various elements, including the element of offer, consideration and acceptance. The element of consideration is key to the contract formation since a promise is considered in the common law in a case whereby the promise is sealed or supported by consideration. For example, service providing companies such as the Uber X and Airbnb services that involve money and promise of payments to the services. Therefore, a promise is offered with a considerable promise to receive monetary compensation. For a contract to reach an agreement there must be a level of acceptance and certainty by both the parties. Therefore, the element of acceptance make the contract or the agreement complete. Once the parties reach the level of acceptance and consideration, the element of offer set in when the service provider agree to willingly provide the services. With these elements, the contract case laws are in a position to apply the principle of pacta sunt servanda that is used in a case of parties that are bound by the contract. An offer in the contract law is considered to create a legal relationship between the parties involved. The legal framework do not give a clear detailed definition of offer but it is recognized since it can be converted to acceptance when it comes to contract. Therefore, making an offer for service provision by Uber X or airbnb put the companies to a legal liability and the courts can apply an objective test. The impact of contract Law on the Economy Generally, the Australian contract law is expected to have positive impact on both the Australian economy and neighboring countries. The law encourages the growth of business market by providing funds that are required for business developments. Through the provision of funds, both local and foreign investors are able to access credit for property development; thus, promoting economic development12. Business development in an economy is very important to the economic growth since it increases the amount earned from the investments. Therefore, with the improvements in the sector, the government is expected to raise more revenue through taxation. Additionally, the law through its components encourages most foreign investors into the country, which improves the capital inflow into the country. The effect is an improvement in the overall GDP for the economy; thus, economic growth. Furthermore, the new law on contracts allows the government to develop regulatory framework within which the institutions operate. The regulations assist in developing the market thereby resulting into an improved economy. Economic development through the contract law is also achieved through proper expenditures that reduce the wastages in the market; thus, ensuring economic development. The legislations create more opportunities in the business market which enhance economic growth. Finally, the law ensures there is proper allocation of resources in the real estate market with the aim of maximizing the returns on investments. A higher return on investments for the investors implies a better the economic growth, hence economic stability. The banking system in Australia is the major stakeholders in the business industry since they are providers of the funds. The contract law has a direct influence on the banking system which affects their performance and growth over time. With the introduction of the contract law in Australia, the banking system is expected to develop further due to the increase in the number of customers it serves13. In the public transport sector such as the Uber X and airbnb, which deal with service provision must engage in contracts that bound them to the various services on offer. The law of contract that bind the parties can be related to the case of MacRobertson Miller Airline Services v Commissioner of State Taxation (WA) (1975) 133 CLR 125 and Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) [1953] 1 QB 401. In the MacRobertson Miller Airline services, concerning the airline tickets, the court decision considered the fact that situations can arise upon analysis of the contract can lead to termination of an agreement14. Though the banking in Australia operates on the quiet principles that do not charge interest on loans, the introduction of the law implies that interest will be charged on the law; thus, influencing the overall performance of the banks in the systems due to cancelation of agreements. Contract law has an effect on the operations and regulation of the banking. The law offers policies and regulations that the banks need to adhere to; thus, improving the overall performance of the banking system. It causes the development of the banking institutions through the regulation hence a better financial performance for the banks. An implementation of the law implies that there is the opening of new business market which is an indication of an improvement in the banking sector in the economy. A contract or an agreement can be formed between a customer and the person providing the service. The agreement between the parties is and can be analyzed through the rule of offer and acceptance. Taking a case example of Uber X, a passage making a booking or hiring the services enters an agreement with the “offeror” with the willingness to pay for the services after engaging in a communication on terms of the service provision. Therefore, in terms of banking service provision, the contract law also has an effect of improving the level of liquidity in the banking system. When the borrowers repay their mortgage and refinancing the credit advanced to them, there is an improved liquidity in the market; thus, improving the overall performance of the market. Additionally, with the implementation of the law, the banking sector in Australia will be more organized due to the regulation that improves its efficiency in offering credit facilities to both the local and foreign investors in the economy. Recommendation Therefore, to promote the development of the business sector, the Australian government should adopt the contract law system and develop it fully to enhance business security. Additionally, it should embrace money market structure that will provide a platform where the borrowers and fund providers can meet and trade15. The market needs to be liquid and secondary in nature to facilitate the development of the market. Through the market, the government will have the ability to improve its overall economic performance. Conclusion In summation, it is important to note that law and regulation has a lot of effects to the business people and the job market. In Australia, for example, contract law and regulations have a lot of positive implications on the business sector16. The regulatory measures posed on the contract formulations not only reduce the risks but also inculcate confidence on business people. Additionally, the job market is affected by the many regulations and policies that pertain to the age of an individual. Finally, through the contract law, it is expected that there will be a restriction on the number of market participants which strengthens the economy banking system. The banking system acts as an intermediary between the borrowers of the funds. Therefore, with the law in place, there will be a restriction on the number of market entrants which will influence the market performance. References Ayres, I. (2012). Studies in Contract Law. Foundation Press. Beale, H., Tallon, D., Vogenauer, S., Rutgers, J. W., & Fauvarque-Cosson, B. (2010). Cases, materials and text on Contract law. Hart. Bonell, M. J. (2005). 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(2013). The Europeanisation of contract law: current controversies in law. Routledge. Read More