Free «Business Law and Practices» Essay Sample
Business firms and corporation enter into contracts on daily basis. Making a formal and written contract is important for business corporations and firms, although oral contracts are accepted and well recognized by law.
According to Tillotson and Mulcuhly (2004), there are certain rules of making a valid contract. If business firms do not have the required knowledge of contract drafting rules and engage in making contracts in ignorance of these rules, their contacts serve no purpose in any court of law if referred to it to determine its validity or rather get remedy for breach of contract by one of the parties in the contract. In our case by firm A making an offer to B and later making a second offers, the only critical concept will involve analyzing terms of the first contract, if they remain binding in law the second offer does not council the first offers. This primarily introduces us to the rules of offer and acceptance. These are fundamental elements for making a binding contract. This will only apply if the first offer was accepted by firm B. if accepted the parties involved negotiate and reach an agreeable terms.
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To accept an offer, it must come to the knowledge of the offeree. This is involves clear communication concerning terms of the offer by the offeror to the offeree. If by any chance massage is not delivered to the offeree. Murray (2000), affirms the offer will not come to the knowledge offeror. Hence, not accepted by the offeree, therefore in achieving acceptance in any contact to be binding the offeror may make use of any media of communication to avail the offer to the offeree. Furthermore, use of an authorized person on behalf of the offeror may effectively communicate the offer, and similarly communicated to the acceptance has to be communicated to the offeror. In case it’s approved by the offeree, the contact will be binding. On the case given, the first offer has no clear terms on whether it was accepted or rejected. If accepted the second offer will never withdraw the earlier offer unless under agreeable terms and rules by both parties (Abdullah, 2008).
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The case of Farnham and Chemergen has a binding contract, first Farnham made an offer to have Chemergen supply of Plesterex A product. An offer that was well communicated and acceptance made clear by Chemergen partners. This granted both parties a binding contract that governs the transaction among the two players. Since acceptance was expressly communicated by Chemergen meant the contact was assent by both parties. Clearly basing on this law requirement Farnham can successfully file a law suit demanding for valid breach of contract and gain through compensation on damages caused, due to breach of the contact by Chemergen (Tillotson & Mulcuhly, 2004).
Furthermore, a contract exists between Sigma limited and Farnham, here the two parties involved in oral contract making. The terms were clear as Louis and Gloria, owners of Sigma ltd accepted an offer by Henry who represented Farnham. The terms of the contact were. Henry was to confirm acceptance through communicating to the Sigma ltd on Wednesday before midday, which he did by leaving a massage and further honered the contract by send driver to collect the product as agreed. This makes the rules of the contract binding and is valid between the two parties. Tillotson & Mulcuhl(2004), suggessts that Farnham too can successfully claim damages under the existing contract between the firms and successfully win.
However, Farnham is not left out as the firm has controversial contract with Ministry of defense. Farnham ltd secretly agreed to supply of pilot drones in the ministry. Murrey (2000), for a contract to be binding, a formal agreement either written or oral has to be in place to support the contract existence, if misunderstanding occurred. This can serve as the basis for filing a successful business law suit, over breach of contract by any party. In this case, there is no clear evidence that concerns existence of the contract. Consequently the termination of the contract by the ministry of defense is no violation or breach of the existing business arrangement by the parties.