Partners must distinguish between freely made offers and choices or deals that lack details. For example, WAC provides an offer to assemble and sell 5 cars to John’s company. However, without any agreement on the specific models, color, or price of the cars, John’s company decides not to proceed. In this situation, there is no legally binding contract between the two companies because there is no clear offer for the buyer to accept until the essential terms of the contract are determined (Study case, 2014). Once an offer is established in the contract, acceptance must follow which carries legal implications for both parties.
If the other party agrees to the offer, they will accept the terms and conditions stated in the contract. However, if negotiations are ongoing or a decision has not been made, a contract will not be established. Both parties must agree to any changes or additions made to the initial offer. For instance, Jane ordered a car from WAC. On January 4th, 2013, after Jane accepted WAC’s price, she signed a valid contract with Thomas – who is WAC’s supervisor in Vietnam.
O Co for the car as her custom. (Study case, 2014) 1. 1. 2.
Consideration is a vital element in forming contracts because it ensures that an agreement is legally binding. It involves the benefits obtained from entering into a contract, where each party agrees to fulfill specific obligations. Additionally, consideration brings advantages to all parties involved. If consideration is not included in an agreement, it cannot be enforced.
Consideration is the payment made for a promise by one party. It can be in the form of something valuable, which doesn’t have to be money, like a right, interest, or benefit given to one party. However, it must be possible and legal to carry out. In contract law, consideration creates an obligation for the promise through an exchange of promises between parties (E-lowercases, 2013). Executed consideration refers to all parties fulfilling all terms and conditions in the contract.
For instance, the European factory offers to supply the World Auto company with a container of motor parts. If WAC purchases the container one time, they can receive a greater price reduction of 30%. The vendor and their partner have established and signed the contract, which is both lawful and certified by a notary. WAC has paid for the order, and now it is the European factory’s responsibility to fulfill their obligations. The buyer has implemented their part adequately (Study case, 2014). 1. 3. Intention to create the relations A contract requires that the parties intend to enter into a legally binding agreement.
The parties involved in a contract must have the intention to create legal relations and acknowledge that the agreement can be enforced by law. This presumption eliminates the need for an explicit statement regarding their understanding and intention of legal consequences. In terms of a commercial agreement, its purpose is to engage with the legal system and carry significant binding power.
Capacity pertains to the necessity for all parties involved in an agreement to possess the legal ability to enter into a contract. If any party lacks this capacity, the contract becomes void. Capacity refers to an individual’s legal capability to participate in a contract.
The ability to enter into a contract is contingent upon several factors, including age and mental condition. Those who have mental illnesses, dementia, neurological instability, or are minors lack the capacity to create contracts that are legally binding. For example, individuals under 18 years old are prohibited from participating in the motor industry business. Furthermore, individuals who are bankrupt typically cannot establish contracts. To illustrate this point, ABA Ann. Ltd Co., which had substantial debts with Ocean Bank in March 2011, requested WAC to buy five cars on an installment plan in 2012.
The ABA Ann. Ltd Company is currently unable to trade due to unresolved debts (Study case, 2014). The concept of contract priority applies only to the parties directly involved in a contract, usually for the sale of goods or services. Third parties who benefit from the contract cannot legally take action against the contracting parties unless they have specific rights. For example, if a manufacturer sells a product to an agency and then that agency sells it 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 summarize, it emphasizes that for a contract to be valid, it must contain essential factors. These elements are necessary to ensure its validity. Absence of any of these elements may make it difficult to consider the agreement as a valid contract.
In the motor industry, it is crucial for parties to exercise caution and conduct quality inspections on products and partners before making decisions, ensuring legal guarantees. When it comes to different modes of purchasing, such as local, export, and distance buying, it is widely believed that contracts can take various forms. However, there are three fundamental types of contracts in the motor industry: written contracts, verbal contracts, and distance selling contracts. The written contract involves specific terms agreed upon between the buyer and seller and is based on documented evidence and data.
The parties involved in the contract must strictly adhere to its terms and are fully responsible for any issues outlined within it. It is crucial to preserve the contract carefully as evidence due to its binding nature. Hiring a lawyer is essential to ensure the validity of a written contract, even though a simple written contract can be submitted to court. Verifying the contents of the contract is advisable. For example, an employee and WAC may have a contract where the employee agrees to work 8 hours per day for a monthly salary of 5 million with an annual bonus of 10 million, and they will also sign an agreement with the company (Study case, 2014) 1.22.
In the case of verbal contracts, they are formed through oral communication or actions without extensive written documentation; sometimes only brief texts are exchanged between buyers and supporters. The absence of clear terms and conditions allows parties to evade responsibility easily. Difficulties arise when one party breaches such contracts as proving their existence becomes challenging. For instance, John approaches Tam, a seller at WAC, seeking a new car and pays a $2000 deposit without obtaining any paperwork.
After a week, he returned and inquired about his car, but nobody at the shop has any knowledge of his case, as Tam is only a practical worker there. John lacks any evidence to support his claim that he was cheated by the company. (Study case, 2014) 1. 2. 3. In conclusion, a distance selling contract refers to a scenario where face-to-face interaction with clients is absent, with buyers placing orders via various means such as the internet, phone, email, fax, or letter. However, in the car industry, distance selling contracts do not cover all types of agreements, especially those involving substantial values. This type of contract may be more suitable for car parts with lower prices.
Distance selling contracts, such as those made over the internet or phone, do not involve in-person interaction and do not allow for inspection of goods prior to purchase. This comes with a risk in business, so it is important for both parties to provide detailed information about the total price, delivery, product condition, and necessary payment. Written contracts are often preferred by businessmen as they provide evidence of value to resolve disputes. In terms of contract modes, there are three types: local, export, and distance buying. Local contracts are signed in specific countries and only apply to domestic entities. They are simple and, in case of trouble, can be resolved quickly by local authorities, saving time and money for both the claimant and defendant.
The market for importing and exporting products, including the automobile industry, is experiencing significant growth. As a valuable field, it is crucial that the import-export process follows specific steps and is overseen by the appropriate authorities. Contracts are signed between parties involved in the cross-border transfer of products, which contain more complex content than local contracts. In the event of a dispute, determining the jurisdiction becomes challenging. Delays in the court process and increased costs are often experienced due to foreign factors.
It will involve more complicated laws and the court will reference laws from developed countries or the country’s third law to resolve issues. Both local and export methods utilize written contracts extensively. These methods apply to both verbal and distance buying contracts. Additionally, the distance buying mode in a contract also plays a role in business. Information regarding the sale of goods typically originates from other regions and is exchanged through modern communication networks like online mail, websites, telephone, fax, etc.
It is quicker and cheaper to purchase and move. In the motor industry, there are six hallmarked terms in contracts that protect the rights of those involved. These terms are crucial in ensuring that contracts are binding. The first term, called a condition, is considered the most important and is explicitly stated in the contract. Without condition terms, parties would not enter into a contract. If a party breaches a condition, they will be bound by it and can be enforced by the court.
Breaking a condition term will directly impact the purpose of the contract. If the condition term is violated, the complainant will receive compensation in the form of the correct contract and can choose to reject or terminate the contract immediately. For instance, in a case where WAC sells a car to Mrs. Train, the car must meet the appearance and conditions specified in the contract. Additionally, WAC provides a Warranty sheet for the car to the customer. (Study case, 2014) 1. 3. 2 Warranty Warranties are considered minor terms within a contract, and if there are issues with the product, the victimized party can only seek financial compensation for any resulting losses.
According to the Law Handbook (2013), if a warranty is breached, the innocent party has the right to claim damages but cannot terminate the contract. For instance, if a car stereo, with a six-month warranty, breaks after using it for only three weeks, the responsible party, known as the WAC, should be liable to repair or replace it without charging any fees. Another type of term that is not explicitly stated in the contract is known as a nominate term. Depending on the seriousness and nature of the breach, this term can be considered either a condition or a warranty. It refers to the uncertainties regarding the quality of the contract (E-lowercases, 2013).
The innocent party cannot ignore the fact that they will receive compensation from the guilty party, even though this is considered a conditional term. 1. 3. 4 Implied term Implied terms are unseen terms that are part of a contract and are not directly stated in written or verbal form in the contract. These terms can be implied based on custom, status, or by courts. (Business Law course book, page 114,115 2013) 1. 3. 5 Express term An express term is a clear agreement between the parties involved in a contract regarding all elements of the contract.
Based on the html tags and their contents, the court will first examine the terms that are expressively agreed upon by the parties when reviewing a contract. Exclusion clauses, also known as exemption clauses, can help parties reduce the binding between them when entering into a contract. This means that either party can breach the contract without needing the court’s involvement. Exclusion clauses are terms in a contract that limit the rights of one party or provide exclusive liability. The UK business law has established the legal conditions for Exclusion terms.
The exclusion clause must be included in a contract for it to have legal effect and must be interpreted strictly. Additionally, in both business scenarios mentioned, the three main elements of a contract (Agreement, Consideration, and Intention) are easily applicable.
In the first case, regarding the warranty certificate, there is a clear agreement between Soda and the customer (World Auto Co) for the trading of car parts (oil pump). Soda offers the car parts to WAC and specifies that Wag’s customers will receive their warranty service.
The contract is deemed valid when WAC signs and accepts responsibility for payment and customer service, while Soda agrees and accepts all terms and conditions.
Consideration: Based on the information provided, this motor trading contract has consideration between two parties. Soda’s consideration involves providing warranty terms and conditions for customers who purchase the oil pump, while WAC’s consideration is to pay the company. Additionally, WAC will decide whether to repair or refund buyers if the product is damaged.
The legal intention behind this text is a selling contract within the business trade. Both Soda and WAC have agreed upon all terms and conditions, ensuring that they have legal rights to conduct their business. In Case 2, Soda sends an employment letter to an employee, offering them the position of Regional Business Manager. However, the offer is not complete as there are numerous blanks in the letter that have not been filled in, similar to a standard form. The employee accepts Wag’s offer and will only reply to the letter if they agree with all the terms.
The consideration in this contract will be the consideration of the executors. The consideration in this contract involves discussions with employees about various aspects such as working time, salary, promotion, priority, and other clauses. The consideration requires employees to work within clearly defined regulations and to achieve the company’s goals (scenario, case 2, 2014).
The legal intention is that both parties agree to transact according to instructions and must comply with the terms of the law.
2. 2 Analyze the law of terms in the two aforementioned contracts.
In this section, the terms will be divided into different types based on their meaning. Case 1: Warranty certificate: Referring to the mentioned scenario and case 1, the terms included are Condition terms, Warranty terms, Nominate term, and Exclusion term. In Case 1, the specific terms mentioned are term 4, term 3, term 5, term 7, and term 2. Another term mentioned in Case 1 is Term 1. The Condition terms state that “Term 4: This warranty is valid only if the Product’s serial number on the Product has not been altered, defaced or removed.” (scenario) Companies are typically interested in serial numbers as they use them to determine the product’s place and date of production as well as its model. It helps them ascertain if the product was made by their company or not.
The serial number is crucial as it affects the company’s ability to examine the product. If it is blurred, the product may be mistaken for a fake, old, or refurbished item. According to the scenario, term 6 states that the warranty is only valid for World Car Parts purchased in Vietnam from a preferred partner. In an unfair practice towards the company, Soda forces customers to buy accessories at WAC. If customers purchase low-quality products from other accessory stores and have WAC replace them, it undermines the company. Term 3 of the warranty terms emphasizes that World Car Parts’ decisions regarding Soda Warranty are final and conclusive, and the purchaser agrees to abide by these decisions. Additionally, term 5 states that this warranty card cannot be replaced or re-issued and must be presented upon request. According to term 7, World Car Parts reserves the right to replace AAA 105 D, 06A115105D with a comparable model or product. In term 8, customers are instructed to call World Car Parts Customer Service at 01526348504 for warranty services. This term confirms that customers should contact the company for any inquiries or requests. Term 3 demonstrates that all decisions regarding problem resolution must be accepted by the customer. Lastly, term 8 clarifies that the company will only replace a previous product with a similar one.
Assuming that if there is any damage, the company will replace the machine or spare parts. However, customers are not allowed to cancel the contract. If a customer decides to sue the company, the compensation will only be limited to certain fines. Term 2 states that this warranty does not cover damages caused by acts of God, accidents, misuse, unauthorized alterations, or repairs performed by unauthorized individuals without the knowledge or approval of World Car Parts. Acts of God refer to events beyond human control, but there is no mention of any specific organization or responsible party. This exclusion is considered reasonable in order to safeguard the company’s interests.