Business Management Affairs - Essay Example

Business Management Affairs Introduction In the modern world, there is no aspect of life that is entirely free of contractual relationships. Human beings acquire rights and obligations, for instance, when one borrows funds, when they buy or lease a house, when they obtain insurance, and in this particular case (involving Simon and Davina), when they are forming a business with another person. Contract law in general aims at providing stability and predictability for both parties to a contract (Dunham, 2008). During the pre-negotiation of a contract, effective planning is very important in order to achieve success in the contract. Data gathering, data assessment, and the forming plan, including strategies, tactics, and desired results, are essential to professional contract negotiations. One will need to create a highly collaborative atmosphere to increase the possibility of achieving a perceived win/win outcome. When engaging in a contract, it is important not to narrow down to one issue, instead understanding that the other side has different interests and needs. In other words, it is important to understand the other party’s real needs. Contract and Contract Law Leading authorities on contract law have defined a contractual agreement as a legally enforceable and voluntary promise exchanged by two or more parties (Simon and Davina) to provide the terms of the promise in exchange for something of value known as consideration. The parties to a contract must make a promise to one another; these parties are obliged to complete the obligations of a promise. If there is a party that feels injured by not receiving that to which he or she is entitled, then the promise will have to be addressed in the court against the party who broke the promise. For example, a person who borrows money from a bank promises to repay the money. If that person fails to repay the money, the bank can go to court and attempt to collect the money that is owed. Contract law further assures the parties to a contract private agreement that the promises one had engaged in will be enforceable. In real sense, many promises are kept because the parties involved feel a moral obligation to do so or because keeping a promise is their mutual interest. The person making the promise (Davina) and the person to who the promise is made (Simon) may decide to honor their agreement for other reasons. Generally, the rules of the contract law are often followed in business agreements to avoid potential problems. Contract law also provides an essential condition for their existence of a market economy. Without a legal framework of reasonably assured expectations within which to plan and venture, business persons would be able to rely only on good faith of others; at least one should be confident that the legal framework will make their counterpart(s) honor the promise. Duty and good faith are usually sufficient, but when dramatic price changes or adverse economic conditions make it costly to comply with the earlier made promise, the elements of the contract law may not be enough. By fully embracing the contract law, it will ensure that there is compliance with a promise or to entitle the innocent party to some form of relief. A contract is an agreement that can be enforced in court by two or more parties. The agreement in the contract mainly deals with an agreement to perform or to refrain from performing some act now or in the future. In most case, contract disputes arise when there is a promise of future performance. Note that if the contractual promise is not fulfilled, the party who made it is subject to the sanctions of a court. That party may be required to pay monetary damages for failing to perform the contractual promise. The party (Davina) may be required by law to perform the promised act. Don’t worry of renege (Dunham, 2008). In this case, Simon is the offerer, and the offer is that; he wants Davina (a high profile mentor) to support the finalists to the new television show both on and off the screen. For it to be determined whether a contract has been formed, the element of intent is of great importance. In a contract law, intent is determined by what is referred to as the objective theory of contracts, not by the personal or subjunctive intent, or belief, of a party. The logic behind the theory is that a party’s intention to enter into a contract is judged by outward, objective facts interpreted by a reasonable person, rather than by the party’s own secret, subjective intentions (Beale, 2010). Some of the objective facts that one needs to consider when one engages in a contract include: what the party said when entering into the contract, how the party acted or appeared, and the circumstances surrounding the transition. It must be realized that intent to form a contract may be manifested by conduct, as well as by words, oral or written. Note that it is a general rule for any person to enter into contractual arrangements. This general rule is known as freedom of contract, a freedom protected by the US constitution in article 1, section 10. Since freedom of contract is a fundamental public policy of the United States, courts rarely interfere with contracts that have been voluntarily made. Of course, as in other areas of the law, there are many exceptions to the general rule that contracts voluntarily negotiated will be enforced. For instance, illegal bargains, agreements that unreasonably restrain trade and certain unfair contracts made between parties with a great a mount of bargaining power and another with little power are not generally enforced. Certain contracts and clauses may not be enforceable if they are contrary to public policy, fairness and Justice. These exceptions provide freedom from contract for persons who may have been pressured into making contracts unfavorable to themselves (Leroy and Jentz, 2009). Elements of a Contract Requirements of a valid contract include an agreement, consideration, contractual capacity, and legality. One party must offer to enter into a legal agreement, and another party must accept the terms of the offer. On consideration, any promises made by parties must be supported by legally sufficient and bargained for consideration. Contractual capacity states that: both parties entering into the contract must have the contractual capacity to do so; the law must recognize them as possessing characteristics that qualify them as competent parties. Finally, on legality, the contract’s purpose must be to accomplish some goal that is legal and not against public policy (Beale, 2010). Every valid contract has certain characteristics. If any of them are absent, the enforceability of the agreement comes into question. Essentially, every contract must have parties who provide some act or benefit that the other party does not otherwise have the legal right to receive. Specifically, all contracts must involve at least two parties, parties who have legal capacity, a manifestation of assent by all parties to the contract and consideration that supports a legal and enforceable promise. Take note that in all contracts, each party to the agreement must signify acceptance of the terms in some way. This requirement to manifest or demonstrate a willingness to be bound by the contract is essential. Otherwise, it would be possible for persons to claim a contract existed where one party did not even have notice of a contract or the intention to enter one. Consider the following since they explore several issues relevant to the manifestation of assent. In the first place, the objective standard must be met to prove there was assent, the circumstances that may affect the termination of whether there was assent and methods of creating a situation for assent to a contract by the parties. Before entering into any contract, Simon and Davina must have come to some meeting of the minds about the terms of the contract. In most cases, an offer to enter a contract does not occur until after various types of negotiation have taken place. When one party has actually made an offer, the other party can accept or reject the offer as long as it is in effect. The acceptance is the last step in the formation of a valid contract, assuming the subject of the contract constitutes appropriate consideration. An important part of any offer and acceptance to contract is consideration. Consideration is the value each party gives in exchange for the benefit he or she expects to receive. Consequently, completion of what is promised by each party will complete the contract (Wishart, 2007). Even if all the elements of a valid contract are present, a contract may be not be valid if the following requirements are not met. To begin with, there must be genuineness of assent or voluntary consent. The consent of both parties must be genuine. For example, if a contract was formed as a result of fraud, mistake, or duress, the contract may not be enforceable. Secondly, the contract must be in whatever form the law require; for instance, some contracts must be in writing to be enforceable. The failure to fulfill either requirement may be raised as a defense to the enforceability of an otherwise valid contract (Leroy and Jentz, 2009). A valid contract may still not be enforced if the parties have not genuinely assented to its terms. It is worth noting that lack of genuine assent is a defense to the enforcement of a contract. If the law were to enforce contracts not genuinely assented to by the contracting parties, injustice would result. A contract that is otherwise valid may also be unenforceable if it is not in the proper form. For instance, if a contract is required by law to be in writing and there is no written evidence of the contract, it not is enforced (Leroy and Jentz, 2009). Genuineness of a contract is very important if considered it wisely. Genuineness of assent may be lacking because of mistake, fraudulent misrepresentation, undue influence, or duress. Generally, a party who demonstrates that he or she did not genuinely assent to the terms of a contract can choose either to carry out the contract or to cancel it and thus avoid the entire transaction (Richards, 2007). There are cases when mistakes are bound to be made. Note that everyone makes mistakes; therefore it is not surprising that mistakes are made when contracts are created. In certain circumstances, contract law allows a contract to be avoided on the basis of mistake. Distinguish between mistakes of fact and mistakes of value or quality. Note that only a mistake of fact makes a contract voidable. Contract Breach and Remedies On matters concerning contract breach and remedies, a contract will not be broken so long as it is to the advantage of both parties to fulfill their contractual obligations. Normally, a person enters into a contract with another person to secure an advantage. When it is no longer advantageous for a party to fulfill her/his contractual obligations, the party may breach the contract. A breach of contract occurs when a party fails to perform part or all of the required duties under a contract (Richards, 2007). Once Davina has failed to perform or performs inadequately, you can choose one or more of the several remedies. The most common remedies available to a non breaching party under contract law include damages, rescission and restitution, specific performance, and reformation. Remember that courts distinguish between remedies at law and remedies in equity. In the recent years, the remedy at law is usually monetary damages, a court will not a ward an equitable remedy unless the remedy at law is inadequate (Beale, 2010). A breach of contract entitles Simon to sue Davina for monetary damages. Consider that damages are designed to compensate a party for harm suffered as a result of another’s wrongful act. In the context of contract law, damages are designed to compensate the non breaching party for the loss of the bargain. In most instances, courts say that innocent parties are to be placed in the position they would have occupied had the contract been fully performed (Wishart, 2007). Other considerations that have to be taken of keen interest are the compensatory damages. These are damages compelling the non-breaching party for the loss of the bargain; they are aimed at compensating the injured party only for damages actually sustained and proved to have arisen directly from the loss of the bargain caused by the breach of contract. Foreseeable damages that result from a party’s breach of contract are referred to as consequential damages or special damages. These damages differ with compensatory damages in that they are caused by special circumstances beyond the contract itself. They also flow from the consequences, or results, of a breach. For example, when a seller fails to deliver goods, knowing that the buyer is planning to use or resell those goods immediately, consequential damages are awarded for the loss of profits from the planned resale (Richards, 2007). Further, punitive damages are designed to punish a wrongdoer and to set an example to deter similar conduct in the future. Punitive damages, or exemplary damages, generally are not awarded in action for breach of contract. It should be remembered that a contract is simply a civil relationship formed to unite two or more different parties. The law may compensate one party for the loss of the bargain (Wishart, 2007). Conclusion Caution should be taken when committing to a contract. Make sure that it is written and reviewed by the law enforcement agencies. Ignorance, for instance, not committing the other parties to abiding agreement may lead to breach. Remember that an indefinite promise is not an offer and cannot lead to a valid and enforceable contract. A promise is indefinite if the benefit offered by the promise (the consideration) is vague or incapable of having its value reasonably determined. Finally, be cautious on illusionary promises. An illusionary promise is one in which Davina retains the ability to negate the promise. References Dunham. W (2008). Introduction to law. London, Cengage Learning. Pp 420-424. Beale. H (2010). Contract law. New York, Hart. Pp 342-345. Wishart. C (2007). Contract Law. London, Oxford University Press. Pp 432-435. Richards. P (2007). Law of contract. London, Pearson Longman. Pp 50-56. Leroy. R and Jentz. G (2009). Fundamentals of Business Law: Excepted Cases. London, Cengage learning. Read More