Discuss about the Commercial Law for Financial Intermediation.
Formation of Contract
Issues: Whether there is enforceable formation of contract in terms of commercial law transactions for the sale of textbooks on “Introduction to Business Law in Singapore” together with the class notes, details of which was posted on the social networking site on 1 Nov 2014. In the given situation, Alan made the offer of sale through a social site, which included the information on products sale with the description on contents of books and notes, consideration amount and details of payment.
Rules: According the regulations of commercial law of Singapore, chapter 8 on the Law of Contract, san agreement between the parties is legally effective if the same has been created by incorporating certain mandatory requirements. The regulations of contract as per per commercial law should include the following points:
- In order to form a contract legally binding on the parties, the contracting parties should be competent as per the capacity to the contract.
- The contract should include the clauses of offer and acceptance to enforce it legally. One party must be offering and the other party should accept the contract by agreeing the terms and conditions (Berger et al., 2016).
- One of the essential criteria of the contract is the disclosure of terms and conditions in the contract with respect to the length of the agreement, duration of the contract, consideration value, payment mode and description of products and services (Obloj & Zemsky, 2015).
Applications: The contract in the present case is said to be legally formed which was created by Alan through the social networking site by stating all the relevant information. The details of the contract included the description of books and notes offered along with the value of consideration on 1 November 2014 mentioning the payment date on 5 November 2014. As the offer accepted by the other parties on making the payment by the stated date as per the terms and conditions of the contract, it can be said the contract was legally formed (Bacache-Beauvallet, Bourreau & Moreau, 2015). Further, the offer was accepted by Bernard, Charleen and Damien as per the terms stated in the Alan’s contract it can be said that all the three individuals are parties to the contract.
Conclusion: Alan formed the contract in legal manner since it covers the relevant requirements with respect to details and consideration value. Additionally, the parties to the contract are Alan, Bernard, Charleen and Damien.
Bernard’s Legal Position
Issues: Whether Bernard can enforce any claim against the contract formed by Alan as per the contract law even if the terms and conditions of the contract have been performed completely. The given case covers the event of contract entered between Alan and Bernard on the date if 4 November 2014 for the exchange of book on Commercial Law and class notes against the consideration of $200.00. Bernard duly made the payment within the due date but later he got to know the information on the availability of the same book at the centre of education for free of charge.
Rules: According to the rules on legal contract law, there must be clear and unambiguous intention to form the contract. It is also important to mention the complete information about the content of agreement by the party that offers along with the complete details on consideration value and its mode of payment (Christensen, Nikolaev & Wittenberg?Moerman, 2016). Additionally, the rules on contract law states that the accepting party is required to conduct due diligence on the contracting subject and other relevant factors before its acceptance. However, it is also essential that the contract must contain the information free from errors and frauds that are meant to deceive the accepting party to the contract (Hoffman & Ottersen, 2015).
Application: The given case presents the contract offered by Alan for the sale of book and class notes against the consideration of around $200 through the medium of social site. In the agreement, Alan mentioned all the details on the content of the book of Commercial Law as well as provided the description of class notes along with the payment mode. It is further noted that the contract should be unambiguous and free from all the fraud and error description, which is essential for a valid agreement. However, disclosures of the details on the same subject with respect to the other factors are not mandatory to state in the agreement by the offering party. In the present case, contract by Alan was not mentioned the information on the free distribution of books by the education centre, which as per contract law rules, is not necessary. It is the responsibility of the accepting party to research thoroughly about the subject content (Lu, Zhang & Pan, 2015). Hence, Bernard cannot claim against the contract made by Alan on the grounds that the distribution of books for free from other source has not been made. However, in case it is proved by Bernard that the contract made by Alan was with the intention of fraud then Bernard can claim for the damages.
Conclusion: On general grounds, Bernard can sue Alan at the court on the grounds of deceiving through the offer if the same can be proved. However, there are very less chances of favorable judgment because the information in contract did not contain any loopholes.
Charleen’s Legal Position
Issues: Whether Charleen can enforce any legal claim against the contract created by Alan in compliance with the commercial law regulations. In the present situation, Charleen entered in the contract with Alan on 7 November 2014 in order to buy the book for which she paid the payment. It has been observed that Charleen, a student of GCE at “O” level considered to be a minor party to the contract.
Rules: As per the regulations of Contract Law and the provisions of common law under “Minors Contract Act”, contracts entered with minors are not enforceable if it has been made for the benefit of the contractual party. According to the regulations, contract entered with minors are governed separately in consideration with certain contracting elements. According to the section 2 of “Minors Contract Act”, contracts accepted by minors for certain transactions like acquisition of land or acquisition of shares are legally bound on the minors (Taylor et al., 2015). On the contrary, contract entered with respect to other matters are not legally enforceable on the minors except for the contract on partnership business.
Applications: The present case covers the contract of Alan with Charleen who is a minor for the purpose of sale of books on Commercial Law against the payment of $200. The case does not cover the transaction of acquisition shares or acquisition of land or even a partnership business. Accordingly, it can be said that the contract on sale of books between Alan and Charleen does not fall in the category of transactions as per section 2. Moreover, if the contract entered with minors is covered under a guarantee with respect to the terms and conditions of the contract, the same will not be enforceable on the minors. However, it may bind the guarantors on the legal matters if the same is “just and equitable” to do so. In the present case, contract between Alan and Charleen does not involve any guarantor for the sale of book. Therefore, the contract between Alan and Charleen does not hold any legal position in compliance with the regulation of Minors Contract Act.
Conclusions: Since the contract is entered with Minor for the sale of book on Commercial Law in exchange of $200, it can be said that the contract is not legally enforceable. Moreover, the contract also did not involve any guarantor, therefore it is still not bounded on Charleen.
Damien’s Legal Position
Issues: To analyze whether Damien is eligible to sue Alan for the damages he suffered from the contract on exchange of book of Commercial Law. Damien entered the contract offered by Alan to buy Commercial Law book and class notes on 4 November to be paid in cash. Damein was a student of Kaplan Higher Education, discovered the availability of book in the centre for free of charge on 23 November 2014.
Rules: According to the regulations under Contract Act of Business and Commercial Law, responsibility of the offering party is to disclose all the necessary facts for the subject to the contract. If the contract is created with the purpose of fraud, error or misleading the parties to the acceptance then such agreement would be considered as a “breach of contract” and the creator of the contract is liable to pay off the loss of damage (Deutsch, 2015). However, in order to claim the sum of damages, it is essential to prove the intentional misstatements in the contract subject on part of the offering party.
Applications: In the present case, Damien and Alan entered into a contract for the sale of book on Commercial Law and class notes in exchange of $200. However, Damien found the availability of book at the centre for free of cost after he bought the book from Alan. It can be argued that the intention of Alan was to deceive the parties by selling the book at high price even when the same was available at other source for free. On the contrary, it is Damien’s responsibility to consider thorough research on the availability of books by other means before accepting Alan’s offer. Accordingly, it can be said that the contention of Damien would not be tenable against Alan, unless the misleading intention of Alan is being proved before the court.
Conclusions: It can be concluded that Damien has very less chance to get a favorable decision from the court against Alan. Since, the contract did not contain any misleading or fraud statements therefore claim of damages might not be tenable.
Various Alternative Dispute Resolutions
“Alternative Dispute Resolution” is a procedure to resolve the disputes or friction among the contracting parties in compliance with the contract law regulations. There are various types of dispute resolutions available that assists in resolving the issues between offering party and accepting party to the contract. Such resolutions are arbitration, mediation and neutral evaluation (Menkel-Meadow, 2015). Arbitration is a dispute resolution procedure, which requires both the disputing parties appoint their respective lawyers to solve the case in front of third party. The third party neutral to both the conflicting parties is required to consider the nature and level of conflicts in consideration with the rules of contract law. This third party known as arbitrator analyzes the dispute and applies the regulations to present the decision fair to both the parties. Mediation is a resolution process where a third party is appointed neutral to the conflicting parties. The mediator considers the case to negotiate and resolve the friction by favorable means for the creator of the contract and acceptor of the contract. Mediation resolution is conducted to focus on measuring the solution that influences the decision of either party. On the other hand, neutral evaluation is a procedure that is undertaken by third parties authorized to settle the dispute case. In this resolution process, disputed parties are required to the attend the trial session which is evaluated by considering the evidences and regulations (Hoffman & Ottersen, 2015).
There are several advantages and disadvantages attached to the dispute resolutions among the contracting parties. In case of mediation resolution, the key advantage is maintenance of privacy and safeguards the contracting party relationships. Another benefit with this resolution is that the resolution is faster and the communication is clear between the parties (Christensen, Nikolaev & Wittenberg?Moerman, 2016). However, the disadvantage in the mediation resolution is the diversion of opinion after the decision provided by the mediator. The advantage in the process of arbitration is the accuracy and compliance of legal regulations while placing the decision on the case. On the contrary, disadvantage is that the party may not accept the decision since it is binding by following the arguments of respective lawyers (Lampe & Ellis, 2015).
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