Describe about Business and Corporate Law of Relevant Laws and Applications.
This report analyses two different situation using relevant laws and applications to evaluate whether the contract is enforceable or not.
1. In the business and corporate law, consideration is a significant element in the formation of a contract. In a consideration contract and agreement, both parties (promisor and promisee) should receive some value in term of benefit, loss, responsibility and right (Poole, 2016). An agreement without valid consideration is an invalid contract. To the formation of a contract enforceable, there is required to an offer is made by promisor and its acceptance by the promisee. In the other words, consideration of a contract law refers to simply exchange of things between two parties where the value is also included. In the consideration of an enforceable agreement, the significant thing is the legality of terms and conditions.
(A) In this case, Jane is going to abroad, so she offers to give her Lotus Super 7 sports car to jack and Jack accepts the offer of Jane. In the market, the value of this type of care is approximately $25,000. Thus, the issue is whether the consideration is presented in this case or not.
According to the concept of the consideration, this case is unenforceable agreement; due to there is the lack of fulfilment of the consideration legal principal (Harris, 2015). In the consideration, it is essential to both parties receive some value in the agreement. But in this case, Jack is getting the benefit as Lotus Super 7 sports car, which is offered by the Jane. Jane is not receiving anything type of profit or money against this. In additionally, Jack is also not doing any promise to give return against Jane’s offer. Thus, it can be concluded that this case is not involving the consideration in the agreement and it is an unenforceable agreement. In this case, consideration will present when the Jack promises to Jane to give a value against to car that should be meet the market value of the care (Morgan, 2012).
(B) In this case, Jane offers to Jack sell her Lotus Super 7 sports car for $25 000 and Jack accepts Jane’s offer. At the same time, in the market value of this care is approximately $25,000. In this case, the issue is that weather consideration is presented or not.
As per principle of the consideration, in this situation consideration is presented because both parties in the agreement are agreed to exchange some values. In the given case this, Jane is selling her car for $25000 and Jack accepts Jane’s offer without made any reduction in the offer price. It proves that this is a considerable case. Along with this, jack has not made any reduction in this price. The missing aspect in the last case is now major aspect. It is because both parties are getting benefit in this situation. Jack is getting the benefit of Lotus Super 7 sport; on the other hand, Jane is getting benefit in monetary term. It means that this agreement is completing the legal formalities of the sale and purchasing contract act (Bartsch, 2016). On the behalf of this, it can be identified that this case is legal in terms of consideration and the buyer has an enforceable agreement.
(C) According the case, Jane is offering a Lotus Super 7 sports car for $2500 to Jack and Jack buys her car without make any changes. At the same this, the actual value of the care is $25000 in the market. In this situation, the issue is created that whether the consideration is presented in the case or not.
In this case, the consideration is presented in the agreement but, it is not with proper justification. The principle of the consideration depicts that both parties should receive adequate benefit from their actions (McKendrick, 2014). In the existing case, Jane is offering her sports car only for $2500, but the market value of it is $25000. As concerning this consideration principle, Jane should receive the adequate value of its car that can be approximately $25000. But, at the same time, it is Jane self-offer and decision. There is not any kind of pressure upon the Jane to sell its car for $2500. It depicts that consideration is presented in this case and Jack has an enforceable agreement in the court (Hart, et al., 2012).
At the same time, it is also found that the contract between Jane and Jack is not affected by any public policy and civil law. It provides strength to the contract and proves that contract is enforceable. In this agreement, both parties have a legal obligation to fulfill their commitment regarding the law of consideration. Beside of this, in the contract law, an agreement may be unenforceable if, the promise is impossible to finish. In this situation, the agreement cannot be registered in the court (Hillman, 2012). In the context this agreement between Jane and Jack, the offer is given by Jane for selling her car only for $2500; this agreement is not fair due to the inadequate value of the sports car. It is because the actual market price of the care is $25000, which is by far from the offer price. In this manner, it is inadequate for Jane due to the price of the sports car is not according to the market price. At the same time, it is also found that to make a contract valid and enforceable; three elements are essential in an agreement, which is consideration of law, a legal or valid offer and its acceptance and mutual assent (Bozeman, 2015).
The agreement between Jane and Jack is unenforceable due to this agreement does not fulfil the requirement of an enforcement contract. In the study of this case, it is found that Jane has not offered valid agreement to the Jack. It is because the market value of the car is $25000 while Jane is offering it only $2500. Due to this, it is affected by the rules business and corporate law. But, at the same time, conformity and willingness of the Jane show that it is legal agreement in terms of consideration and it is also an enforceable agreement for Jack (DiMatteo and Hogg, 2016).
2. This case is seemed as case of duress in completing the objective of the case. According to the presented case, North Ocean Tankers have contract with shipbuilder for producing a tanker. This contract has done in the US currency and it will not contain any alternation in the future due to change in currency value. Unfortunately, in the mid of contraction of the tanker, the value of the US dollar has devalued approximately 10 percent. Due to this, the shipbuilder is observed that there is a loss in contraction of tanker and it is demanded to pay extra US$3 million otherwise, it can punctuate the work. In this case, the buyer has agreed to pay the excess money due to it had a charter regarding the tanker. So, it is essential for it to make the delivery on the time. After complete this agreement, the North Ocean has not tried for recovering its additional amount till nine months. Thus, the issue in this case is that whether the buyer has legal obligation to recover its excess amount.
According the principles and rules of the contract law, duress is an illegal term in the contract and agreement (Habermas, 2015). Many times, it is seen that one party of the contract is used threat and violence against to another party of the contract. It is because; first party tries to compel for achieving contract objective. In this case, there is involuntary of the buyer to pay the exceed amount, which is occurred due to devalue in US currency. It is also analyzed that threat in the contract is also a reason in making contract illegal (Schwenzer, et al., 2012). In this, the shipbuilder treats the North Ocean Tankers to pay extra amount otherwise, it will stop the work of contraction of the tanker. It proves that threat of the shipbuilder to complete the contract is illegal.
Duress in the contract law is defined as a threat of a party against to another party's willingness or assessment (Harris, 2015). All kinds of the illegal threats come in duress of the law that makes the agreement illegal. There are two types of duress in the contract law, which are physical duress and economic duress. In this, physical duress includes the person duress and goods duress. Murder and kidnapping such as activities are come in duress of person. Duress of goods refers to refuse to deliver goods. On the order hand, economic duress includes the no reasonable alternative, wrongful and improper threat and financial distress (Hillman, 2012).
From the study of the given case, it is identified that the shipbuilder has created pressure on the buyer to retain involved in the contract with paying US$ 3million extra money. The reason behind this is that the shipbuilder is in loss due to the US government devalued its currency by 10 percent (Mattila, 2016). So, on the basis of given detail, it is analyzed that North Ocean Tankers has paid excess payment amount of US$ 3 million to the shipbuilder under the duress. It leads to economic duress in the agreement as well as duress of goods. It ensures to North Ocean Tankers to recover its extra money from the shipbuilder. Additionally, in this case, it is also found that shipbuilder has not given the alternative option to the North Ocean Tankers for accomplishing the objective in determined agreement (Cartwright, 2016).
In this situation, the law is said that undue commercial pressure in the agreement is a kind of treat that is illegal in terms of the law. The court is required to take effective action for solving this type of issue with the carefully analysis of the case. In this case, the court will find that the shipbuilder has made pressure on the North Ocean Tankers for retaining in agreement and paid excess payment. In the other words, it will be said that the contract has completed in the under the duress of agreement (Butler, et al., 2013). On the basis of this discussion, it can be concluded that the buyer is able to recover its excess amount and for this, it can be applied in the court.
For the example, an earlier duress case is studied of North Ocean Shipping Co. Ltd v Hyundai Corporation Co Ltd. In this case, Hyundai was shipbuilder and the payment of the deal had done in five instalments. But, Hyundai was demanded to give 10% extra of the deal due to some default in the payment and shipbuilder was stopped the delivery of the ship. North Ocean was said that they will pay excess money to maintain the relationship. In this case, the high court was taken action as to refund the extra amount to North Ocean. The court was said that amicable relation was not the good consideration but, instead of this, increasing the letter of credit was a good consideration (Bix and Bix, 2012). This agreement was void due to the involvement of physical duress in the contract.
Along with this, the study of the law depicts that duress in the contract leads to make contract voidable, which provides strength to a party that is treated by another party (Mattila, 2016). The law also provides right to infected parties to get the compensation in against loss in the agreement. From the case study of North Ocean Tankers and shipbuilder, it is said that buyer has right to go to court for recovering US$3 million from the shipbuilder.
Bartsch, R.I. (2016) International aviation law: a practical guide. UK: Routledge.
Bix, B. and Bix, B.H. (2012) Contract law: rules, theory, and context. UK: Cambridge University Press.
Bozeman, A.B. (2015) The future of law in a multicultural world. USA: Princeton University Press.
Butler, D.A., Christensen, S., Dixon, B. and Willmott, L. (2013) Contract Law Case Book. USA: Oxford University Press.
Cartwright, J. (2016) Contract law: An introduction to the English law of contract for the civil lawyer. UK: Bloomsbury Publishing.
DiMatteo, L.A. and Hogg, M. eds. (2016) Comparative Contract Law: British and American Perspectives. USA: Oxford University Press.
Habermas, J. (2015) Between facts and norms: Contributions to a discourse theory of law and democracy. USA: John Wiley & Sons.
Harris, P. (2015) An introduction to law. UK: Cambridge University Press.
Hart, H.L.A., Raz, J., Green, L. and Bulloch, P.A., (2012) The concept of law. USA: Oxford University Press.
Hillman, R.A. (2012) The richness of contract law: An analysis and critique of contemporary theories of contract law. Germany: Springer Science & Business Media.
Mattila, H.E. (2016) Comparative legal linguistics: language of Law, Latin and modern lingua francas. UK: Routledge.
McKendrick, E. (2014) Contract law: text, cases, and materials. UK: Oxford University Press.
Morgan, J. (2012) Great Debates in Contract Law. UK: Palgrave Macmillan.
Poole, J. (2016) Textbook on contract law. UK: Oxford University Press.
Schwenzer, I., Hachem, P. and Kee, C. (2012) Global sales and contract law. USA: Oxford University Press.