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时间:2014-10-24 09:33来源 作者:英国论文网 点击联系客服: 客服:Damien


For any business operation to be successful, engaging in contracts is inevitable. Contracts come into being when more than two parties with perceived right, mental intent and confinement of the law agree to exchange certain acts which are of interest to them. Contracts are a presentation of private business laws whereby parties are given the mandate to develop a set of laws during contracts procedures (Avila, 2007). It is vital for a contract to be devoid of vague and ambiguous language as instances of conflict and confrontation may result between the parties involved. Several risks are associated with poorly made contracts. For instance, existence of contractual dispute in a business enterprise has resulted into cases of litigation, business and financial losses as well as tarnished reputations. The commitments and obligations of the parties to the contract need be fully defined.

Clear communication methods need to be availed especially in order to settle instances of non-compliance to the contract terms. The objective of this memo is to highlight the legal risks as well as opportunities present in the process of contract creation. Some activities to undertake in order to avoid the occurrence of the risks will be addressed as well as how a business enterprise can obtain benefits resulting from opportunities availed in the simulation. The common legal traps which exist when making a contract include accepting in totality the contents of the contract without first of all understanding in totality what the contract entails. In case one fails to raise any queries regarding the contract through filling in non-compliance statements, the contents of the contract are deemed as fully binding. Managers need to be fully aware of what makes up a contract for instance letters, telephone calls or meetings so as to avoid the risk of getting into a contract while still in the process of negotiation. Negotiations are vital in the contract making process since there is no standard contact (Avila, 2007). Both the parties to a contract need to adequately negotiate so as to come up with amicable objectives and targets vital to both parties. All legal provisions permit negotiations before a contract is deemed effective.

The Boilerplate principle in the making of contracts refers to making a standardized contract. Here the parties to the contract have the provisions which generally govern the contracts as well as stipulating the legal and business importance for the intended contract arrangement. To minimize the perceived risk in bleaching the entire contract, it's fundamental that organization's managers be aware of the conditions or warranties which form the contract and follow them to the latter. By considering the various terms involved in the contracts, the risk of bleaching the conditions to a particular contract is reduced. Instances of having the contract repudiated will be minimized as well, and it will not be possible for the other party to the contract to discharge the terms involved (Avila, 2007).When the conditions and warranties of the contract are adhered to, then instances of unplanned damages will be averted as well.

Another imperative principle to various business contracts relates to the entire status to the contract terms. This principle implies that the aggrieved party can result into legal action owing to failure of fulfillment of a requirement to the prepared contract. Contractual obligations are thus derived from statements alone. The manager thus need be aware of the obligations which come about prior to deliberately becoming a signatory to any contract. Being aware of the various ways in which a contract can be set aside is vital. For example, a void contract means that it was never in existence whereas voidability implies that one party can make a contract ineffective. A contract which is unenforceable implies that both parties to the contract can choose to have recourse in court as a remedy (Blum, 2007). All these unbecoming risk may be averted by various considerations from managers prior to instituting the contract.

A binding contract ought to be voluntary not coercive. The manager should always engage in voluntary contract whereby moral considerations can be established on legal-grounds or even events which are always justified and not offensive to any party. Through legal considerations, it can be established whether the contract will be binding or not. Misrepresentation which involves giving false information regarding a product or service out-rightly makes any contract to be literally nullified. It is vital for the managers not to make false statements regarding any product that would call for legal actions from brand loyal clienteles. Instances of fraud in factum and inducement are risky and should be avoided at all cost. A valid contract is not liable to compensatory damages, exemplary damages or liquidated damages (Blum, 2007). The manager will avoid the risk of compensatory damages which are usually given to the detrimental party to the contract. Instances of duress as well as undue influence while entering into a contract need be done away with. While duress involves threatening to harm a party to the contract so as to compel a manifestation of a transaction, it renders the contract void once the other party proves that duress was indeed used during contract instituting procedures by any party. Undue influence which primarily involves a particular party to the contract taking advantage of a position held by other parties to the contract also vitiates contracts when the court establishes this. The manager need not coerce the parties to the contract to enter into any contract arrangement.

Exemplary damages are expensive and are surcharged by the courts to serve as a remedy to perceived reoccurrences of such contract evils. Time wasted on court proceedings and arbitration would be utilized by the manager to undertake important business tasks. Although oral contracts are valid, it is vital to have a written contract which will support the business intention to enter into a legal relationship (Blum, 2007). Incase of misunderstandings with other parties to the contract, proving the contract becomes easy. During instances of bleach of contract, it is thus vital for the managers to know the importance of privities whereby it's only the parties to the contract who can be sued. The contract need be within the party where the bind is clearly placed and various risks advanced under court ruling ought to be controlled or entirely regulated.


•Avila, H (2007) Theory of legal principles. New York: U.S.A: Springer.
•Blum, B (2007) Contracts: examples and explanations. IIinois, U.S.A: Aspen Publishers.

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