Free Essay

Contract Formation and Associated Legalities

In:

Submitted By sharmameera
Words 1116
Pages 5
Abstract The topic in discussion here is the suit filed by a company Non-Linear Pro against Quick Takes Video for non-payment of lease amount. The later claims that the product leased to them was of inferior quality and has been owned for less than a month, whereas Non-Linear Pro is trying to charge them for a three-month lease. A noteworthy point is that none of the owners of the company have signed the lease. It has been signed by a third party agent appointed by the company to place and receive orders on their behalf, while one of the owners states that the agent is not authorized to sign any documents on the company’s behalf.
This paper aims to discuss if the contract formation was achieved and if a third party agent was authorized to sign a contract on behalf of the company.
Second, the paper discusses the policies and procedures, which, if pre-defined by Quick Takes Video, would have avoided such a situation from arising.
Third, the paper discusses another option, besides arbitration, which the companies can use to work through this dispute in a timely, low-costing and effective manner.

Contract Creation and Management
In the abstract above Karen, one of the owners of Quick Takes Video, raises her concern that the third party agent Janet was not authorized to sign any document on company’s behalf. But according to Hal, Janet is responsible for most of buying for the company and has been signing the receipts in the past. So it seems that Janet does have some implied authority to sign a document on behalf of the company.
Also Janet was told to ‘work out the details’ with the Non-Linear Pro salesman. This statement translates to giving her the apparent authority to sign any deal on behalf of the company, more so in the absence of any specified rules that limit the authority of the third party agent. There were no instructions to guide her regarding the final approving authority.
According to the common law and UCC (Uniform Commercial Code), a contract is formed when the “offeree sends and acceptance to the offerer…” Also according to the UCC, a lease contract is in effect when “there is a writing, signed by … that party’s authorized agent, sufficient to indicate that a lease contract has been made between the parties …”. In the case on hand, first these conditions had been met and second by a third party agent who was apparently given the authority to do so on behalf of the company. Keeping in mind these two points, contact formation has been achieved.
On studying the case, certain discrepancies arise on behalf of Quick Takes Video, which if considered earlier in the transaction would have been instrumental in avoiding such a situation. The company should have formulated well-defined policies regarding the role of a third party agency in its business. These policies can include the following information:
➢ Work profile and the expectations from an agent working on behalf of the company.
➢ Specific instructions for the agent to work on in certain situations. For example, in the current case, Janet should have had specific steps to follow, ensuring that the authorized dignitary signs the contract.
➢ Specific situations in which the agent can assume ‘implicit’ or ‘apparent’ authority along with the limit of such an authority.
➢ Sample situations and solutions for the same, to ensure that there is no ambiguity in the agent’s understanding of the policies.
The company should have ensured that the third party agents go through these policies and completely understand their ‘express authority’ regarding any business decisions to be taken.
Second, the company could have set up certain procedures to support these policies. For example, in the event of working out the deal with the Non-Linear Pro salesman, Janet could have been explicitly told not to sign any document on behalf of the company but just work with the sales person to understand the nature of the deal. Later she was to forward all of the information to some one in the company who was in a position to sign the contract. This simple step could have prevented the company from landing in the current situation.
The above-mentioned two steps would have reduced greatly the probability of ‘implied’ or ‘apparent’ authority of the agent.
Now, the parties are embroiled in the litigation process of suing and counter-suing. Going by the nature of the dispute, it is safe to assume that neither of the companies would like to spend a lot of money or time and try to get the dispute resolved as quickly as possible. Already, arbitration has been recognized as one of the ways of working through this problem. Besides arbitration, Quick Takes Video also can consider other options like mediation, mini-trial, conciliation and fact-finding. The company can consider some of these options like conciliation, if the owners think that they want to have business with Non-Linear Pro in the future.
In my opinion, besides arbitration, the other option, which the company can consider, is a combination of fact-finding and mini-trial. Because Quick Takes Video has a strong point in their favor that of the product not working as expected, this can be highlighted as a fact with appropriate data to support it. The neutral third-party ‘fact-finder’ can base his or her report on this information along with information regarding the experience of the employees working on the product.
This information can then be presented in a mini-trial, where the judge will be made aware of the report findings and will give his or her opinion about the case. Going about in this manner, each company would get an idea of its strength and weaknesses with regard to the case and then they may want to negotiate with each other with this better understanding. I feel that this way they can better appreciate each other’s point of views, through the evidences presented in the mini-trial and reach a negotiation amicably.
In conclusion, it is evident from the discussion between Hal and Karen that both the companies have strong points in their favor and weak points against their case. Quick Takes Video has used the Non-Linear Pro product and has found it to be ‘a piece of junk’. Non-Linear Pro on the other hand have a signed lease contract document from a person who represents Quick Takes Video, and are eligible to demand the money as per the contract. It is up to the decision-making authority to declare which company is the defaulting one, and which has acted ‘in good faith’.

Similar Documents

Premium Essay

Elements of a Contract

...Elements of a Contract ETH/321 July 27, 2015 Professor A Contract A contract is defined as an agreement that creates obligations that are enforceable by law. Elements of a contract include mutual assent, consideration, legality and capacity (Legal Information Institute, 2015). Jack has to decide whether to engage an attorney. What would you advise? In this particular case I would advise Jack not to involve an attorney. The elderly lady that he entered into an agreement with is showing signs of early Alzheimers. This in itself would cause concern in a judge’s eyes. A person can only enter into a contract if they have contractual capability which means that they must understand the terms associated with the contract (Business dictionary, 2015). If the elderly lady didn’t have the capacity to fully understand the contract due to her deteriorating condition then it is unlikely that a judge would rule in Jack’s favor. A judge is not able to create an agreement for both parties. This fact being stated, the parties involved have no true agreement surrounding the terms of the contract so it is likely that the contract would be voided. Was there a valid contract when Jack purchased the china for $150.00? Why or why not? Did Jack's superior knowledge prevent formation of a contract? How might the widow's age or possible medical condition affect contract formation? A valid contract did exist during the period of sale and exchange since both parties had come to an agreement on...

Words: 577 - Pages: 3

Premium Essay

Intro to Business Law Cases

...David’s Case In advising if a legally enforceable contract exists between Sam and David, I would first consider the requirements of forming a valid contract. Formation of a valid contract requires six pre-requisites all of which must exist in order for a valid contract to exist. Intention to Create Legal Relations From an objective perspective it can be seen that a reasonable person in Sam’s position would not have had the intention to create legal relations with David. Although this may have been undertaken as a business transaction during the initial contact, it was a social and private arrangement at the time the offer was made. It is also a legal presumption that agreements made in a social environment are not be legally binding[1]. The case of Dietrich v Dare (1980) 54 ALJR 388[2], further illustrates this presumption, where no intentions of a legally binding agreement could be determined. Agreement- Offer and Acceptance “An offer is an undertaking by the offeror made with the intention that it will bind the offeror as soon as it is accepted by the offeree”[3] It can be seen here that Sam had made the offer to David at the end of the phone conversation. The offer met the required rules as set out in Latimer[4] such as the offer being communicated directly to David as well as being made obvious that it was an offer and not an invitation to treat. David had then accepted the offer the following week when he rang Sam to organise the internet connection. The...

Words: 1851 - Pages: 8

Premium Essay

Human Resources

...Module Handbook Unit 5: Aspects of Contract and Negligence for Business Unit code: Y/601/0563 QCF level: 4 Credit value: 15 credits Module Tutor: Anila Mushtaq Contact Details: anila.mushtaq@yahoo.co.uk Preferred style of contact: In the first instance, if you have any queries regarding the teaching or assessment for this module, please ask question during the lecture. If you do not receive a satisfactory response then e-mail me with your query for an appointment. Introduction: The aim of this unit is to provide learners with an understanding of aspects of the law of contract and tort and the skill to apply them, particularly in business situations. Unit abstract: The unit introduces the law of contract, with a particular emphasis on the formation and operation of business contracts. Learners are encouraged to explore the content of these agreements and then develop skills relating to the practical application of business contracts, including offer, acceptance, intention, consideration and capacity. Relevant case law examples will be covered. Learners will consider when liability in contract arises, the nature of the obligations on both sides of the contract, and the availability of remedies when a contract is not fulfilled in accordance with its terms. Additionally, the unit will enable learners to understand how the law of tort differs from the law of contract and examine issues of liability in negligence...

Words: 2001 - Pages: 9

Premium Essay

Pros And Cons Of Venture Capital

...1.1 What is Venture Capital? Venture capital is a segment of private equity industry, which focuses on early-stage, high-potential, start-up companies. The venture capital fund earns money by owning equity in the companies it invests in, which usually have a new technology or business in high technology industries, such as biotechnology and IT, however with high risk. Funds are typically established as limited partnerships, which is a contract between institutional investors who become limited partners and the fund manager. The basic intermediation structure of venture capital and private equity funds is graphically summarized in Figure 1. Figure.1 Venture Capital Financial Intermediation Venture capital is a specific form of industrial finance(part...

Words: 9941 - Pages: 40

Premium Essay

Intro to Law York University

...Intro to law Chapter 1 Business law is divided into: - Tort law – injury - Contract law - Business (sole, partner, corporation) - Real estate - Intellectual - Environmental 3 functions of the law 1. Settling disputes 2. Establishment of rules 3. Protection Sources of law - Case law – from recorded judgement – precedent - Statues – passed by government - Statue law – judicial understanding and application Stare decisis: to let a decision stand 1. From the judges own 2. From a court of equal rank 3. From a court of higher rank Equity - Rules originally based on decisions of the king Charter of rights - Notwithstanding clause o Permits the government to pass a legislation that conflicts or overrides charter - Right to due process o Informed of rights o Right to a lawyer Classification of laws - Substantive law o Law that sets out rights and duties o Individual right enforceable at law - Procedural o Procedures taken to enforce the law - Public o Relates to the relationship between governments and persons - Private law o Relates to relationships between individuals Chapter 2 Jurisdiction 1. Court of original jurisdiction 2. Court of appeal Criminal court procedure 1. Plaintiff – party bringing the action 2. Defendant – party defending an action 3. Discovery a. Examination and questions Class action - Group of individual represented by one attorney in a suit Chapter 3 Administrative law - Includes laws, rules, decisions...

Words: 1901 - Pages: 8

Premium Essay

Business Law

...BUS 393 – Final Review Chapter 2 – TORTS: * Tort: (private wrong = not criminal) an act that causes harm such as physical harm, harm to property or reputation, & gives the right to sue and to seek remedies (damages to compensate for loss) * Intent: it is not the intent to injure or harm but whether you deliberately intended the conduct or act that caused the injury (damages greater if can prove intent – includes punitive damages) * Vicarious Liability: you did not intend the harm but is responsible for someone else who did the harm – intentional or not (ex. Employers) * INTENTIONAL TORTS: * Battery: form of trespass to person – intentional physical interference – actual physical contact * Assault: threat to harm another (immediate & possible to carry out) * Defense: consent or self-defense * False imprisonment: complete restraint (physical or no physical = handcuffs) without authority – wrongdoer must have been caught committing a crime then private citizen can arrest. No false imprisonment where authority to arrest (ex. police) * Trespass: voluntary conduct without authority (ex. On land, someone throws something on land, building structure) * Nuisance: person using their property in a way to interfere with a neighbor’s use of property (ex. Fumes, noise, water) – must be reasonably foreseeable * Defamation: derogatory false statement – must clearly refer to the person suing – must be published (heard or read...

Words: 3635 - Pages: 15

Premium Essay

Partnership

...DEFINITION In a contract of partnership, two or more persons bind themselves to contribute money, property, or industry to a common fund, with the intention of dividing the profit among themselves. Two or more persons may form a partnership for the exercise of a profession civil Code of the Philippines, article 1767). An association of two or more persons to carry on, as co-owners, a business for profit (Uniform Partnership Act, section 6). Partnerships resemble sole proprietorships, except that there are two or more owners of the business. Each owner is called a partner. Partnerships are often formed to bring together various talents and knowledge or to bring needed capital into a business. Partnerships are generally associated with the practice of law, public accounting, medicine and other professions. Partnerships of this nature are called general professional partnerships. On the other hand, service industries, retail trade, wholesale and manufacturing enterprises may also be organized as partnerships. CHARACTERISTICS OF PARTNERSHIPS The characteristics of partnerships are different from the sole proprietorships already studied in basic accounting. Some of the more important characteristics are as follows: Mutual Contribution.There cannot be a partnership without contribution of money. Property or industry (i.e. work or services which may either be personal manual efforts or intellectual) to a common fund. Division of Profits and Losses...

Words: 1407 - Pages: 6

Premium Essay

Bus311 Keys to a Successful Business

...Running Header: Keys to Operating A Successful Business 1 KEYS TO OPERATING A SUCCESSFUL BUSINESS RAVINEEL CHAND BUS 311: BUSINESS LAW INSTRUCTOR: ANTHONY PEREZ 11 AUGUST 2014 Running Header: Keys to Operating A Successful Business 2 When it comes to successfully starting and running a fireworks business, one of the most often asked question is “What tools are required to run a successful business”. Fireworks themselves are serious business and to start and successfully run a fireworks business is not as inherently easy as it seems. This paper will attempt to explain potential personal liability for injuries sustained by consumers when using this product incorrectly. It will also analyze the formation of a contract between Acme fireworks and several large retailers inquiring about Acme Firework’s Company’s ability to fill large orders on a regular basis. Along with that, it will also analyze the different employment types and finally recommend a new business entity based on the facts provided. Being personally liable for injuries to consumers who use Acme’s products can be best summarized as in the event a consumer is injured while utilizing Acme’s products, should they win the case in court , the judgment or settlement can be satisfied out of the personal assets of the owner of Acme Firework’s Company. “Strict liability, called liability without fault, means that manufacturers, distributors, wholesalers, retailers and others in the chain...

Words: 2773 - Pages: 12

Premium Essay

Private Equity

...Venture Capital and Private Equity Contracting This page intentionally left blank Venture Capital and Private Equity Contracting An International Perspective Douglas J. Cumming Associate Professor and Ontario Research Chair, York University – Schulich School of Business, Toronto, Ontario, Canada Sofia A. Johan Senior Research Fellow, Tilburg Law and Economic Centre (TILEC), Tilburg, The Netherlands AMSTERDAM • BOSTON • HEIDELBERG • LONDON • NEW YORK • OXFORD PARIS • SAN DIEGO • SAN FRANCISCO • SINGAPORE • SYDNEY • TOKYO Academic Press is an imprint of Elsevier Academic Press is an imprint of Elsevier. 30 Corporate Drive, Suite 400, Burlington, MA 01803, USA 525 B Street, Suite 1900, San Diego, California 92101-4495, USA 84 Theobald’s Road, London WC1X 8RR, UK Copyright © 2009, Elsevier Inc. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording, or any information storage and retrieval system, without permission in writing from the publisher. Permissions may be sought directly from Elsevier's Science & Technology Rights Department in Oxford, UK: phone: ( 44) 1865 843830, fax: ( 44) 1865 853333, E-mail: permissions@elsevier.com. You may also complete your request online via the Elsevier homepage (http://elsevier.com), by selecting “Support & Contact” then “Copyright and Permission” and then “Obtaining Permissions.” Library of Congress Cataloging-in-Publication...

Words: 236635 - Pages: 947

Free Essay

Law 421 Chapter Notes

...Source of information: THE LEGAL ENVIRONMENT OF BUSINESS: A MANAGERIAL APPROACH: THEORY TO PRACTICE. Published by McGraw-Hill/Irwin, a business unit of The McGraw-Hill Companies, Inc., 1221 Avenue of the Americas, New York, NY, 10020. Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved. ————— Chapter 1: LEGAL FOUNDATIONS My interpretation of law is that these are legally-backed rules of action and conduct that have been created to promote and protect the moral and ethical expectations of society.   The primary sources of law are constitutional, statutory, administrative, and common---are found at federal, state, and local levels.   Constitutional law is the foundation for all other law in the United States and is the supreme law of the land. Statutory law is created by a legislative body and approved or disapproved by the executive branch of government. Administrative law is the source of law that authorizes the exercise of authority by executive branch agencies and independent government agencies. Common law is essentially law made by the courts and that has not been specifically passed by legislature, and is based on the fundamentals of previous cases that had similar facts.    There are also secondary sources of law which are intended to increase the level of uniformity and fairness across courts in all 50 states. Secondary sources of law have no independent authority of legally binding effect.   The categories of law are as follows:   ...

Words: 5578 - Pages: 23

Premium Essay

Acme Fireworks

...Course Instructor Institution Date of Submission Acme Fireworks Business Contracts The business contract is considered as the common legal transactions most business people get involved to ensure the activities run smoothly. When a person understands the contract law, he/she is good to create a sound business agreement. However, the agreement would be legally enforceable in case something bad happens. As the manager of Acme Fireworks, I was requested by the owner to determine which law between common law and the Uniform Commercial Code (UCC) will govern the business. According to Sheleff, (2013), the common law controls the majority of contracts that include intangible assets, employment, real estate, services, and insurance. On the other hand, the Uniform Commercial Code (UCC) governs contracts for the securities and sale of goods (Meiklejohn, 2008). Therefore, the contract between Acme Fireworks and the retailers would be governed by Uniform Commercial Code (UCC). There are various articles in the UCC and specifically, Article 2 deals with the transaction of goods. The statute in the article stipulates precisely the regulation of sales to consumers and other classes of buyers. Acme firework is a retail outlet that deals with the sale of fireworks and also displaying them. It will enter into a contract with other large businesses to produce large quantity on a regular basis, and it would be governed by UCC. It is because...

Words: 2322 - Pages: 10

Premium Essay

Business Law Midterm

...Business Law Midterm Fall 1999 Fall 1999 Professor Isler True/False Indicate whether the sentence or statement is true or false. ____ 1. The stability and predictability created by the law is essential to business activities. ____ 2. The federal government retains all powers not specifically delegated to the states. ____ 3. There is a specific guarantee of a right to privacy in the Constitution. ____ 4. Unintentionally causing a party to break a contract may constitute wrongful interference with a contractual relationship. ____ 5. Disparagement of property is another term for appropriation. ____ 6. The degree of care to be exercised in a situation can vary with a person's profession or occupation. ____ 7. The doctrine of strict liability applies only to abnormally dangerous activities. ____ 8. Trade dress has the same legal protection as trademarks. ____ 9. Counterfeiting constitutes forgery. ____ 10. Under the mailbox rule, an acceptance can be valid as soon as it is sent. Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. ____ 11. Alan is a judge. The function of Alan and other judges is to |a. |decide cases on the basis of their opinions about the issues. | |b. |decide cases on the basis of their personal philosophical views. | |c. |interpret and apply the...

Words: 4014 - Pages: 17

Premium Essay

Alibaba

...Lessons from Alibaba.com: government’s role in electronic contracting Qin Hu Xun Wu and Clement K. Wang The authors Qin Hu is a Lawyer, Legal Counsel of China Merchants Sekou Industrial Zone Company Limited, Shenzhen, China. Xun Wu is based at the Wharton School, University of Pennsylvania, Philadelphia, Pennsylvania, USA. Clement K. Wang is Associate Director (Research), NUS Enterprise Centre, National University of Singapore, Singapore. Introduction Story of Alibaba.com The development of e-commerce has been nothing short of explosive in recent years. Many believe that its growth and impact will only become more prevailing in the future. The sale of goods by US firms over the Internet, for example, is predicted to reach $1.3 trillion by 2003. By 2004, European enterprises are expected to have online sales of $1.6 trillion[1]. Companies in China, with the largest population in the world, are also probing this new source of revenue. The China Internet Network Information Center (CNNIC) issued an Annual Report in Internet Development in January 2000 that estimates that there were 22.5 million Internet users in China at the end of 2000[2]. A recent nationwide survey showed that China had more than 1,100 consumer related e-commerce Web sites by the end of the first quarter in 2000 (People’s Daily, 2000). Four Web companies, Sina.com, Sohu.com, China.com, and Netease.com have already been listed on the NASDAQ. However, the country’s e-commerce market is still in its infancy....

Words: 7693 - Pages: 31

Free Essay

Fdgfg

...grant companies full capacity. The doctrine of ultra vires has been fervently debated for many years since its conception in the 19th century, and has caused widespread confusion within the sphere of company law. It will be necessary, in order to construct a thourough and fluidous argument, to outline the history and development of the ultra vires doctrine and why, some would argue, it has become the bane of company law. It will also be necessary to dicuss the relevance of ultra vires to modern company law and the efforts to curtail its widespread influence. The DTI’s White Paper Modernising Company Law, presented to Parliament in 2002 seeks to afford companies the ability to act with unlimited capacity and therefore remove the problems associated with the ultra vires doctrine which will be discussed shortly. This essay will adopt the normative approach that companies, in order to fulfil their potential should have the ability to expand by any means possible to achieve the most economically efficient response. The doctrine of ultra vires is widely regarded as a way in which the company law can be responsive to different bodies and constituencies. The doctrine of ultra vires has been subjected to many reforms and has been highly criticised since it was first introduced, this is largely due to the fact that it has been regarded as a hindrance upon the economic efficiency of companies and an inhibitor of a companies ability to expand and respond to the economic climate. Stephen Griffin...

Words: 4008 - Pages: 17

Premium Essay

Mba 611

...CHAPTER 1 “LEGAL FOUNDATIONS” Administrative law is the body of law that governs the activities of administrative agencies of government. Clean hands doctrine a rule of law that a person coming to court with a lawsuit or petition for a court order must be free from unfair conduct (have "clean hands" or not have done anything wrong) in regard to the subject matter of his/her claim. Common law is based on precedent (legal principles developed in earlier case law) instead of statutory laws. It is the traditional law of an area or region created by judges when deciding individual disputes or cases. Constitutional law – a body of law dealing with the distribution and exercise of government power. Criminal Law versus Civil Law – Civil * between you and another citizen (no government involved); * disagreements between citizens were no crime has been committed (only e.g. injury); * designed to compensate parties (including businesses) for losses as a result of another conduct ; * e.g. speeding and parking violations; * don’t result in loss of freedom, though they can result in loss of privileges or fines. Criminal * between you and the government/law; * are a protection of society; * Congress and House of Representatives are involved; * When the individuals break the laws/are against the government; * actions that have been declared illegal; * they are prosecuted by the state (city, state or country); * normally punished with...

Words: 6978 - Pages: 28