Partners must discriminate offer from free will, options or deals without details. For example, WAC offers to assemble and sell to John’s company 5 cars. Before any agreement about products is reached on models, color, or price, John’s company decides not to continue. In this case, there is no binding contract between two companies because there is no definite offer for the buyer to accept until the essential terms of the contract had been decided. (Study case, 2014) After having an offer in the contract, there must be acceptance. Once accepted the contract has legal effects on both sides.
When the other party is clear with the offer, they would take place an acceptance with the rules and regulations being offer in the contract. There will be no contract if the parties are still negotiating, consulting or not having made a decision for the offer. Any inductions, changes affect the counter offer that must be accepted by the other party. For example, Jane ordered a car which was assembled by WAC. A valid contract had been created and signed by Jane and Thomas – supervisor of WAC in Vietnam on January 4th, 2013 after Jane agreed the price of W.
O Co for the car as her custom. (Study case, 2014) 1. 1. 2. Consideration In every single agreement, there must be consideration in order for the agreement to be legally binding; it is a critical part of contract formation. Consideration constitutes the benefit that you receive from making the contract. In other words, each person in a contract must promise to do something. In addition, consideration results in a benefit to each party. The failure to have consideration in an agreement can render the agreement unenforceable.
Consideration is the price paid for the promise of the other party. The price must be something of value, although it need not be money. Consideration may be some right, interest or benefit going to one party. Of course, the consideration must not be illegal or impossible to perform. Contract law consideration bases on the exchange promise between parties in contract and it also is a bound form in order to the promise, which has to have responsibility for that. (E-lowercases, 2013) Executed consideration is one of all parties must do implement all the terms and conditions in contract.
For example: The European factory offers supply the World Auto company a container of motor parts, WAC can have a greater price – 30% for that container if they purchase one time. The contract was established and signed by the vendor and their partner. The trading is lawful and certified by notary. WAC paid for the order and the European must do their responsibility. The buyer did their implement adequate. (Study case, 2014) . 1. 3. Intention to create the relations A contract requires that the parties intend to enter into a legally binding agreement.
That is, the parties entering into the contract must intend to create legal relations and must understand that the agreement can be enforced by law. The intention to create legal relations is presumed, so the contract doesn’t have to expressly state that you understand and intend legal consequences to follow. Commercial agreement intends to participate in law system and having high binding. 1. 1. 4. Capacity The parties to an agreement must be competent to contract. If either of the arties does not have the capacity to contract, the contract is not valid. Capacity means that a person is legally able to enter into a contract.
There are several things that make a person legally able to do so including age and state of mind. Not all people are completely free to enter into contract. People who are with mental illness, dementia, neurological stability or children are the inability to create a contract. In this scenario, young people under 18 years old has not legal to enter into the motor industry business. Moreover, bankrupt people are almost deprived of their general capacity to contract. For example, on March 2011, ABA Ann. Ltd Co. Was collapsed by the huge debts with Ocean Bank, this company requested WAC to buy 5 cars on installment plan in 2012.
In this case, ABA Ann. Ltd Company cannot participate in the trading until the debts would be solved. (Study case, 2014) 1. 1. 5. Priority of contract Priority of contract occurs only between the parties to the contract, most commonly contract of selling goods or services. If a third party gets a benefit under a contract, it does not have the right to go against the parties to the contract beyond its entitlement to a benefit. An example of this occurs when a manufacturer sells a product to an agency and the agency sells the product to a retailer.
The retailer then sells the product to a consumer. There is no priority of contract between the manufacturer and the consumer. Priority is the legal term for a close, mutual, or successive relationship to the same right of property or the power to enforce a promise or warranty. (The Law Handbook, 2013) To sum up, most important essentials factors of a valid contract are mentioned above. These elements should be met in a contract to make it a valid contract. If any one of them is missing we cannot or having difficulty in treating that agreement as a valid contract.
Especially, in the motor industry, the parties must be careful, make quality inspection about the products and the partners before making decision and be guaranteed by legislation. Comparison with local, export and distance buying modes There is a fact that is thought by many that contract is created by a lot of forms, however, the three basic forms for motor industry business are written, verbal and distance selling contract. 1. 2. 1. Written Contract The first one is written contract, contract can be between the buyer and the seller, including specific terms. It exists based on documents and data.
They can not do anything not appeared in the contract and each party has to take responsibility for all issues in the contract. There is a high binding but it has to be kept carefully because evidence is very important. In order to make sure the validity of written contract, it has to be adapted by lawyer. The simple written contract will be post to court, but it is better to check again. For example, the contract between employee and WAC with the salary is 5 million per month and the bonus will be 10 million per year, work for 8 hours per day and employee will sign a contract with company. Study case, 2014) 1. 22. Verbal Contract In the second type – verbal contract, it is created by oral, actions, no document or there is only a short text between the buyers and supporter. Because of the missing of distinct terms and conditions, the parties can avoid and are not responsibility for that. Troubles can be come if a party breaks the contract. Evidence for the existence of the agreement cannot prove clearly. For example, John is finding a new car, he met Tam – the seller in WAC and paid $2000 as a deposit for a car without any sheet.
After a week, he came back and asked about he car, but anyone in the shop knows about his case, Tam is only a practical worker there. John does not have any evidence to prove that he cheated by the company. (Study case, 2014) 1. 2. 3. Distance Selling Contract Lastly, distance selling contract is when you don’t see your client directly, the buyers place orders through internet, phone, via email, fax or letter. In the car business, distance selling contract does not meet all contracts, especial the big value ones. It may be available for car parts with small prices.
Distance selling contracts are not entered into person and you do not have the opportunity to inspect the goods before purchasing. (The Law Handbook, 2013) An example of this would be agreeing to a contract made over the internet or the phone. It also lead to the risk in business easily, so the side parties must give detail information about total price, delivery and product condition, the payment is necessary, too. Businessman prefer to use written contract more than oral and distance selling ones in their choice because it always keeps value evidences to solve disputes when happening. . 24. Modes of Contract The contracts transaction is usually carried out bases on the transaction’s form. There are 3 kinds of form: Local, export and distance buying modes. Mention about local mode of contract, this form has legality as a contract form to be signed in a local of certain countries. It does not cover foreign entities and it is simple in containing of the contract, if a trouble happens, the local authorities will solve the problem with the short time, hence local contract is considered as the form can save time and money for both claimant and defendant.
In the current trend, the market for export and import products is expanding greatly. The automobile industry is not exception. This is a valuable field, therefore, the import-export process must be clearly and passed the specific steps and be under the control of appropriate authorities. The parties signed a contract with the shift from this country to another. It covers complex content than the local contract, when dispute happen, the situation will be very difficult in choosing the place for jurisdiction. Due to foreign factors, judge process is delayed and took more time as well as more cost.
It will relate with more complex laws and the court will use developed country laws or the country’s 3rd law to solve. Local and export mode make the full use of written form in the contract for sure. They will be applied for both transaction methods left, which cover verbal and distance buying contract. Moreover, distance buying mode in a contract also has a role in business. Information of the sale of goods usually from other area, which will be exchanged by the distance scale of modern communication networks such as online mail, websites, telephone or fax, etc.
It takes less time to purchase and cost savings in moving. Motor industry There are six hallmarked terms in contract to protect the right of people who make and create contract. They play an important role in binding contracts. 1. 3. 1 Condition Condition is viewed as the major term and mentioned directly in the contract. If a contract does not contain condition terms, the parties would not join into the contract. It will bind the parties if they breach a condition, and the conditions will make the party be enforced by the court.
Breaking condition term will affect the purpose of contract directly. If condition term is broken, complainant will be compensated with the right contract and rejecting as well as ending contract immediately. For example: WAC sells a car to Mrs.. Train. That car must have the appearance, car’s conditions as they decided in the contract before. They also give customer Warranty sheet of the car. (Study case, 2014) 1. 3. 2 Warranty Warranties are minor terms of a contract, when the product have problems, the wronged party will only be able to seek monetary damages for any loss suffered.
Therefore, If a warranty is breached the innocent party may claim damages but cannot end the contract. (The law handbook, 2013) . For example: As the description of the car stereo – six month warranty, it breaks after 3 week using. The WAC must have responsibility to change or fix it without any fees. 1. 3. 3 Nominate term The nominate terms are something that are not mentioned within the contract. Depending on the nature and seriousness of the breach, it could be a condition or a warranty. This term is understood as the nonsense risks in the quality of contract (E-lowercases, 2013).
The innocent party cannot blind the fact and they will be paid the compensation from the guilty party although this term is considered as condition terms. 1. 3. 4 Implied term Implied terms in a contract are terms that form part of the contract, they are the invisible terms that is not directly stated in written or spoken words in contract. The implied term is divided into three kinds by the custom, status and by courts. (Business Law course book, page 114,115 2013) 1. 3. 5 Express term Express term is in a contract which all elements in contract are clearly, and it was agreed between the parties to the contract.
Based on them, when examining a contract, the court will look first at the terms expressively agreed by the parties. 1. 3. 6 Exclusion clauses Exclusion clauses sometimes referred to as exemption clauses. This terms can help parties participating in making contract can decrease the binding between both. Therefore, each party can breach the contract without any intervention of the court. It is an agreement in a contract which shows that the limit right of one party or exclusives liability. The UK business law has created the legal condition for Exclusion term.
Exclusion clause must be united in a contract before they have legal effect and interpreted strictly. 2. 1 Apply the elements of contract in both cases business scenarios In two cases mentioned above, it is easy to apply to both the three main basic elements such as Agreement, Consideration and Intention to create the legal relations. Case 1: Warranty certificate Agreement: Soda and customer (World Auto Co) have the trading for car parts (oil pump). This contract has offer and acceptance clearly. Soda offers car parts to WAC and gives a point that Wag’s customers will have been under their warranty service.
The contract is valid whenever WAC signs, accepts that they have responsibility for paying and customer service as well as Soda agrees and accepts all terms and conditions. Consideration: Through clearly information from scenario, this motor trading contract has consideration between two parties. Consideration of Soda is warranty terms and conditions for customer archiving the oil pump and consideration of customer (WAC) is to pay for company and WAC will made decision for fix or refund to buyers if product is damaged.
Legal intention: It is a selling contract, so it belongs to business trade. Agreement all terms and conditions of both Soda and WAC made they have legal rights for doing business. Case 2: Employment letter Agreement: Soda sends to employee an offer for Regional Business Manager position. There has offer but it is not complete because of a lot of blanks in letter, which are not filled, it is the same with standard form. Employee accepts the Wag’s offer and reply the letter only if agreeing all terms.
Consideration: This consideration will be executors consideration. Consideration in this contract will be the discussion in company with employees about working time, salary, promotion, priority and others clauses. Consideration requires employees working with clearly regulations and has to achieve the company’s goals (scenario, case 2, 2014). Legal intention: Conceding parties agree transaction as instruction, two parties have to deal and obey with term of law. 2. 2 Analyze the law of terms in the above two different contract.
In this part, will divide terms into different types as their meaning Case 1: Warranty certificate: Scenario and case 1 which is mentioned above Condition terms Warranty terms Nominate term Exclusion term Case 1 Term 4, term 3, 5, 7, term 2 Term 1 Condition terms “Term 4: This warranty is valid only if the Product’s serial number on the Product has not been altered, defaced or removed. “(scenario) Almost company always interest in serial number because they will base on it to determine where it is produced, when it is produced and model of product, especially, whether product is made by their company or not.
Serial number is very important because if it is blurred, company will find hard to examine, product will be examined such as fake product, old and refurbished. “Term 6: This warranty is valid only in respect of World Car Parts purchased in Vietnam from a preferred partner. ” (scenario) Soda force customer to buy accessory at WAC, if customer buys low-quality products in other accessory store and let WAC change, which is unfair toward company. Warranty terms “Term 3: The decision of World Car Parts on all questions, relating to Soda Warranty shall be final and conclusive and the Purchaser hereby agrees to abide y side decision. (scenario) “Term 5: This warranty cannot be replaced or re- issued and this warranty card must be presented upon request. ” (scenario) “Term 7: World Car Parts reserved the right to replace AAA 105 D, 06A115105D with comparable mode/product. ” (scenario) rearm 8: For warranty service, please call World Car Parts Customer Service at 01526348504. ” (scenario) In term 8, company is very clear that if customer has any require, they only call for company. Term 3 shows that all decisions to solve problem, customer have to accept. Toward term 8, company only change similar product with product which sold before.
Assuming that if there is some damage, company will change new machine or spare and customer cannot cancel contract, because if customer sues company, company will only compensate for a certain fines. В«Term 2: This warranty does not cover damages arising form or due to acts of God, accident, misuse, unauthorized alteration or repair by unauthorized person without the knowledge or approval of World Car Parts. ‘ (Scenario) Acts of God are the legal terms for events beyond human control, but there is no mention of any organization or who is responsible for. This case is considered as a fair exclusion ERM to protect benefits of company.