Legal Implications of Overcharging by Suppliers - Coursework Example

Contract Students Name Code & Course Professor’s Name University City Date Legal implications of overcharging by suppliers The business world is dynamic and keeps on changing form one situation to other. In business, nothing is constant when it comes to delivery of services to the customers. The customers keep on varying their interests towards the products available and this means the seller have to adjust which in turn affects the suppliers who are the key source in the market (Chen, J, et al., 2013). It can therefore be stated that the markets consists of two extremes that is the producers who supply the required products and the consumers of the products. The two parties dictate the terms of the market in a free economy. Today’s market has external rules that favor both sides of the parties. The suppliers have challenges when it comes to pricing of the products in the market. The market being controlled partly by external forces that is the government and other authorized organizations affect the prices to be charged. The suppliers therefore have to ensure they produce and sell within the stated prices to cater for both consumers and for fair competition among the suppliers themselves (Whitfield, D 2014). The factors of production are also a key challenge to the suppliers as they keep on changing due to economic strains. The suppliers have to ensure they minimize on their costs and improve their profits which are difficult with restrictions in the selling price of the final products. The desire to improve on their profits with the prevailing high costs of production at times tempt the suppliers to charge their products or services at a price beyond the stipulated price which is against the laws of business. As outlined, the market has rules and regulations that govern it. This rules and regulations are outlined in the business law (Whitfield, D 2014). Business law is of branch of law that deals with the rights and conducts of people and organizations that engages in trade and sales of goods and services. It is like a set rules and regulations guiding the people who are engaging themselves in the act of business. It is a law that affects both the private sector and the public sector at large. Business law is considered to originate from civil law and not criminal law. Civil law by definition concerns itself in solving disputes between individual persons or the organizations. It is also referred to as private law as it does not involve the state. While criminal law deals with solving crime related issues, it is branch of law that deals with the individual and the state. If the individual is found guilty, he is convicted and imprisoned as the punishment by the state. Thus it is also known as public law as it concerns itself with the common good of the entire public and not individuals. Laws are made by people and they are derived from some sources. Sources of law literally means where the rules and regulations of law are found. The origin of both criminal law an civil law in a given country at a particular time include, the constitution which can be defined as the body of rules and principles by which a given society choose to govern itself or how to regulate its affairs (Ayling, J,M 2014). The constitution contains the agreed contents of the political system of the society. The other source of law is the case law. This is where the judges of the high courts or other appellate courts make laws through the decisions they make during trials which are then considered to be final and the lower courts have to abide by the decisions made. The other source of law is the administrative law which entirely governs the people in a given society through the rules made. Business law is therefore part of civil law which can also be a concern of the government. When a business or a person engaged in trade charges prices above the normal price, the governments can take the initiative of charging the person or the business in court of law as a fraudster stealing from the public (Ayling, J,M 2014). Overcharging of goods and services by the suppliers may be fraudulent in nature if the supplier is aware of the act of overcharging with an intention of making supernormal profits at the expense of the buyers. In the case of G4S and Serco security companies in the United Kingdom, the companies charged the UK tax payers millions of money for monitoring of ex-offenders which in real situation was not being done. According to the report by the national audit office, the two companies continued to charge the government even when the monitoring equipment had not been installed (Disantostephano, J, 2013). This has amounted to overcharging for the work not done which is considered to be a fraudulent case in the court of law and the companies have to pay back the extra money overcharged. Given that overcharging of products is a fraudulent act, it is important for both customers and business owners to be aware. In the case of G4S and Serco security companies, they both knew what they were doing. The charging of the government on the work that was not being done was against the laws of business (Disantostephano, J, 2013). It is important therefore for the relevant authorities to come up with a serious punishment against fraud in order to help customers who are at most cases disadvantaged because of such acts. The problem of product and service overcharging is especially witnessed in the small businesses though it is not detected and put to light. This compromises many people as they are the immediate customers of such business which sell products that are needed fast. Risks in outsourcing of work to suppliers In any business the goal is to improve on the profits with minimum costs. This at times becomes difficult especially among the small businesses due to insufficient manpower and lack of the required skills to improve on productivity, and this is where the term outsourcing comes in. (Chen, J, et al., 2013) outsourcing in business is therefore the ability of a given business or individual to pay another individual or organization from within the country or outside to manage business activities for them. This kind of activity is beneficial especially to small business if well done. It enables such kind of business to get the required business skills which they could be having due to inadequate manpower (Whitfield, D 2014). This process is very important as it allows the given business to reduce on cost of production and at the same time improve on productivity efficiency. This saving of money for the business is the main key towards the process of outsourcing as many organizations strive to increase their profits with minimum costs possible (Whitfield, D 2014). Outsourcing in addition will ensure the business enjoys the ability to concentrate on other business related issues with ease knowing that the other parts are being handled by the outsourced business. Any business activity with benefits has risks which considered before choosing it. Outsourcing of work in a business is not an exceptional as it has also its risks. One of the risks is unplanned costs (Whitfield, D 2014). At the beginning of this process, the saving of money and productivity efficiency may look appealing to the business owners. The reality is that there is always a problem of hidden charges when the business is left in the hands of a third party who does not have a share of the business. Unforeseen issues like taxation may lead to increase in costs instead of reducing them as as earlier expected in the process. The process of outsourcing has to be done in a careful manner to ensure that all the possible risks are taken care of. The outsourcing process is like contract that is signed by a company with a vision of improving productivity. This leads to the second risk of the product or service quality which may deteriorate in the process (Chen, J, et al., 2013). This in response will affect the customer’s satisfaction thereby decreasing the number of customers that the business initially had. It is thus important for the prospect company or business to choose with care the type of outsource partners to award the contracts with consideration of the previous similar contracts completed by the same company. Doing this ensures that the quality and quantity of the company’s product are not comprised in order to maintain the customer reliability. The process can therefore be ensured through a good and planned transition between the owner company and the one being outsourced. There should also be cooperation in production and also cross company training to increase efficiency in the production to maintain quality and quantity (Chen, J, et al., 2013). Though many businesses have adopted the process of outsourcing, these important aspects are still being ignored as businesses focus at reducing the costs in the production process and increase profits. The process faces hurdles of time in delivering the products. This type of risk may not be able to be controlled by the outsourced company. It can be caused by factors such as bad weather conditions, political unrest in either company either of the outsourced company or of the business in charge of the contract (Chen, J, et al., 2013). Terrorism across the borders may also be a big problem towards this process. Such a risk in effect reduces the customer satisfaction and also may increase the costs as the company will have to incur much costs of storage as it requires a large stock of the products. Another key risk in outsourcing activity is failure or delay I the process of transition. Outsourcing is a process that requires serious planning to be undertaken before taking any step in awarding the contract (Chen, X, et al 2014). The company outsourcing has a responsibility of ensuring that proper plans are put into action to realize the benefits of outsourcing as a business practice. The process involves devolving of some of the key functions of the company and entrusting them to another company to undertake them (Sparrow, E, 2012). Lack of proper planning and a good budget towards the project will lead to failure in transiting the intended functions to the outsourced company. It is important therefore for the mother company to ensure there is good financing strategy in the budget towards the process and maintain serious discipline and consideration I planning for the transition to take place smoothly. This will help the outsourced company to build on the plan in order to help the business in charge of the contract realize its objectives of customer’s satisfaction and efficiency in production and saving of money (Sparrow, E, 2012). An example is the growth and success of Etihad airways which is linked to partnership with other airlines across the world, this shows good planning and structuring before engaging in contracts with other airlines. In the production process there is some information that not maintained as confidential. Companies have their ways of producing and supplying various goods and services to customers across the world, such are the secrete information that help such companies to cope with the competition in the market (Chen, X, et al 2014). When a company enters into a contract with an outsourced company to handle their affairs, it means such secrete ways of doing things that keep them favorable in market competition will be exposed. The more information the outsourced company gets from the mother company and the more they manage it, the greater the risk of confidential information will be exposed to the competitors. This is a serious problem in the world of business as it may compromise the productivity of a certain company at the hands of the outsourced company (Chen, X, et al 2014). In order to manage and reduce such kind of risks, it is important to consider the company to contract with and in addition to maintain a mutual relationship with such company to avoid spilling the information outside to their competitors in case of a contract termination. The above risks if not well handled may make the business to fail instead of success as expected. The purpose of the business to outsource is to improve on productivity and expand its operations to satisfy its customers with the help of the outsourced company. In the process therefore there should exist a mutual working relationship between the mother company and the outsourced partner in handling the risks and executing the daily business activities (Sparrow, E, 2012). This activities should handled with both partners and not left into the hands of the outsourced partner alone, it should be taken to be the responsibility of all the parties involved in the contract for the combined success of the business (Chen, X, et al 2014). For the business to realize success at the end of the day, the workers must sacrifice their time and added more effort towards the business activities. The success of the business regardless of having outsourced a partner is a combined responsibility. The mother company must therefore make the right business decisions and at most cases outline clearly their goals to be achieved for the outsourced company to work efficiently towards achieving the desired goals (Sparrow, E, 2012). To minimize some of the risks, the company in charge needs to check and review the agreed terms and objects signed between them to ensure they are in line with the prevailing goals of the business. Clauses to be included in contracts to achieve value for money outcome. Any business in the market does not stand on their own, but share ideas about the market. There exist mutual relationships among the companies in any market to come up with products that satisfy their customers fully. This eventually leads to what is known as contracts between which might be written and unwritten (Zhao & Guo 2013). A contract therefore can be defined as the an agreement between two people engaged in business or companies to produce or sell to each other a certain product over a given period of time, and it is legally binding. This means that whatever agreement is entered into is recognized to be legally in the court law with respect to the business rules and regulations (Zhao & Guo 2013). Contracts consist of the offer by the person willing to sell or enter into an agreement with another, the intention or the purpose of entering in the contract, the formalities required, the legality of the contract, the capacity of the offeror and the offeree to enter into contracts, considerations by both parties before contracting and finally acceptance by the second party being offered the contract. For an agreement to become to be signed into a contract, it has be legally binding. In contracts, mutual love and affection cannot be a sufficient consideration in making the agreement to become binding ( Bunni, N 2013). Emotional feelings are not part and parcel of any business agreement as they are mostly done out of a good reasoning and people may change their minds any time they come to reality about the agreement. The contracts have common guidelines which are terms that ensure that the agreement has been fulfilled by the parties involved in the signing of the contract ones it has become law. These terms and conditions are put in a language that can be understood by both parties to avoid the excuses of misunderstanding in case of a breach of the contract by any party. The terms include the parties getting involved in the signing of the contract, their capacity to contract, and any other consideration whatsoever towards the persons getting involved in the contract as it should legally binding. It is then followed by the purpose of the contract. Here the intended objectives to be achieved are stated to be followed in by the parities for them to realize the purpose of the contract at the end of it ( Bunni, N 2013). If the objectives are not achieved, then the contract can be extended or nullified and compensation is paid for breach of contract for lack of completion within the stipulated time line. There is also time agreed by both the offeror of the contract the offeree. If the offer is not accepted within the stipulated time and not revoked earlier by the person being given the offer, it expires in such duration and thus no it is terminated (Bunni, N 2013). Time also applies in a way when the contract is agreed to complete within a given period say one year and the time passes without completion, the contract can also be terminated in such circumstances. Most contracts are done with an agreement of reimbursing the funds to the contractors. This is a situation where the contractor starts the work as agreed in the contract with his own money which is later repaid after a given period of time as agreed in the terms and conditions of the contract (Pena Lopez, 2013). The contractor also looks at the risks involved in the contract and how to prevent such risks; they look at how those risks can be compensated in case they do occur during the contracting times. Contracts involve the two parties which must be in agreement for it to occur. Even though it is legally binding, a contract can be terminated under a certain given conditions. Such conditions may include among others if there is a counter offer, where the other party being given an offer to contract come up with another offer to the contract, then the agreement may not be achieved leading to termination of the contract (Pena Lopez, 2013). It can also be terminated through revocation process where the offeror withdraws the offer presented to the offeree. Death or insanity of any one party before or after the seal of the agreement also leads to termination of the contract. To realize the profitability of a certain contract, key clauses need to be taken into consideration. These include the safety of the contract in the long term (Bunni, N 2013). The parties should view the project being undertaken in the future consideration as whether it can be sustainable or not. In terms of supply of products the conditions and period of the contract should be considered in order for the supplier to maintain good relationship with the customers and at the same time maintain their required profit margin. In the contract, there should also be allowance on the completion or change of certain terms in the contract along the way (David, H, et al 2013). This should be stated clearly with convincing understanding about the future outcomes which at times may not be prevented by either party. These kind considerations are important in contracts as they prepare the owner of the project to plan well and in turn the contract is well completed without excess or misuse of resources. References Peña Lopez, F. (2013). 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Parallel and Distributed Systems, IEEE Transactions on, 25(9), 2386-2396. David, H., Dorn, D., & Hanson, G. H. (2013). The China syndrome: Local labor market effects of import competition in the United States. The American Economic Review, 103(6), 2121-2168. Chen, J., Hong, H., Jiang, W., & Kubik, J. D. (2013). Outsourcing mutual fund management: firm boundaries, incentives, and performance. The Journal of Finance, 68(2), 523-558. Bunni, N. G. (2013). The FIDIC forms of contract. John Wiley & Sons. Read More