1. The Contract
In business environment, a contract is recognized as a legally binding document between two parties which signifies three important constituents for both – agreement, contractual intention and consideration towards each other (Giliker, 2002). Generally speaking, the requirements for the establishment of a contract have to be lawful documented terms of agreement, purpose of formation of contract and the statement of consideration of benefits availed by each party through the establishment.
1.1 Relevance of Contract Law in Business
Like in the case of any legal scenario, the parties in a contract in case of business endeavours are legally bound to the stipulations of the contract established among them. In case of contradictory actions by either party as compared to the clauses of the contract, they are liable to legal actions taken against them (Jackson, 2007).
In the business environment, this is particularly relevant, as each and every day operations and functions are considered to be within the bounds of legal and statutory frameworks. At the same time, business organisations also need to abide by all the terms of a contract to ensure smooth operations and a legally hassle free environment for operations.
2. Meaning of the Contract Law
A contract is a written documentation of the terms and conditions of an agreement between two parties. In a business scenario, it needs to be implemented as disputes that might arise can be resolved according to the same. It needs to be legally recognized by a court of law. In case of UK, the same has to be in accordance with the provisions of the constitution of the country.
2.1 Terms and meanings
Offer – an expression of willingness to the terms stipulated in the contract. It can be made to a single person or entity, or a group of person or entities.
Acceptance – acceptance is the expression of assent to the terms of the offer expressed in a contract.
Consideration – statement of a return of ‘value’ that is stated to be provided in accordance to the terms of a contract.
Contractual Intention – it is a statement to abide by the intentions of the formation of the contract (McKendrick, 2000).
3. Relevance of the Contract Law to Choc Delux
Being a business entity, an organisation such as Choc Delux needs to focus on the different aspects that have to be incorporated under a legally binding contract. Even if the most basic requirements of business – revenue, reputation, and customer satisfaction are ensured, the terms of engagement has to be incorporated under a legally binding contract.
The importance of this is due to the fact that smooth and effective business operations have to be ensured which provides an organisation of legal assistance in case of disputes (Giliker, 2002).
3.1 Factors to be taken into consideration
There are a number of factors that needs to be taken into consideration by Choc Delux.
3.1.1 Legal Business Proceedings
In case a legally binding contract is enforced, the business proceedings will be achieved in accordance to English Law. In such a case, not only will Choc Delux be able to ensure commitments from both the parties to the situation, but the same will enable the company to abide by statutory compliances such as taxation and filing of returns. The formation of a contract will ensure that the exact terms of the agreement between the two parties will be recognised under the English Law and achieve clarity with respect to generation of revenues (Zartman, 2004).
The company and Kim will be able to procure a legal documentation of the agreement and each other’s liabilities in case of the event.
3.1.2 Claim and Security
At the same time, the establishment of a contract will be able to enlist the claims and liabilities of each of the parties to the contract. Since the discussion in this case is in reference to the supply of chocolate for the preparation of the wedding cake, each party would not be able to make claims other than the conditions that have been stipulated for the contract (Ross and LaCroix, 1999).
Choco Delux would be able to claim the agreed amount of money from the clients as revenues for supply of chocolate. At the same time, Kim and Kanye would be able to ensure that the correct quality and amount of chocolate agreed for the wedding cake is supplied by the company. In the event of disputes, both the parties would exactly know the legal validity of their claims, if any arise.
4. Breach by Kim
An important aspect that has been highlighted from the case so far is a threat to breach by Kim as of the current situation. There have not been any commitments from Kim’s end legally, that Choco Delux is entitled to supply the chocolate for preparation of the cake for the event.
In a business environment, uncertainty needs to be avoided at all costs and the current situation gives Kim the upper hand and even if she declines from the agreement, the company is highly unlikely to make any gains. The reason is that there has not been any legal documentation of either party’s agreement (Jackson, 2007). It could be said that the situation is likewise for Choco Delux also, but in case if it chooses to back out, there will be significant damages to the goodwill of the organisation.
4.1 Implications for the Company
Given the present scenario, there are two challenges faced by Choco Delux in the event of the proposed business development. One is to ensure that Kim agrees to enter into a legal contract with the company regarding supply of Chocolate. Given the difference in UK and US laws, convincing Kim needs to be done in a careful manner (Webb, 2001). The other significant challenge is to ensure that the reputation of the organisation is upheld in the establishment of the contract for the supply of chocolate to the family without being over assertive as at the end of the day, Choco Delux needs to ensure procurement of the order.
References
Giliker, P. (2002). Pre-contractual Liability in English and French Law. Kluwer: London.
Jackson, S. (2007), “Pre-contractual Negotiations: Recent Trends in the Interpretation of Contracts”, Construction Law Journal, vol. 3, num. 4, pp. 268-275.
McKendrick, C. (2000) Chapter 3: ‘Offer and acceptance’ – Section 3.1 ‘Offer and invitation to treat’ to Section 3.7 ‘Acceptance’
Ross, W. & LaCroix, J. (1999). Multiple Meaning of Trust in Negotiation Theory and Research: A Literature Review and Integrative Model. International Journal of Conflict Management, Vol.7, No. 4, pp. 314–51.
Webb, E. (2001), “The scope of the implied duty of good faith - lessons from commercial and retail leasing cases", 9 England Property Law Journal.
Zartman, W. (2004). International Multilateral Negotiation: Approaches to the Management of Complexity. San Francisco: Jossey-Bass
