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BLO1105 Business Law- Commercial Contracts

   

Added on  2019-10-31

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2IntroductionThe creation of commercial contracts starts with the identification a commercial opportunity, then followed by the identification of the parties. From there, the process of negotiation begins. Sometimes the law of contract may seem to suggest that the process of offer and acceptance happen consequently. However, commercial contract sometimes takes a long time in the negotiations. If parties do not get into an agreement, that leave the negotiation and focus on finding other opportunities. This paper will be an exploration of instances where failure in the negotiation results leaves the parties wondering whether there was a deal or there was no deal.Question 1: Lianne Vs MaryPart (a) Mary thinks that the quote she sent and her engagement in the negotiation process needed compensation. IssueThe main issue in this question is whether an inquiry during negotiations can bind the other party to a contract. RuleContract law calls some doctrines when identifying that the parties have objectively shown their consent to form a contract. In this regard, one of the doctrines is known as the concept of offer and acceptance. In general, a formal agreement must have an offer, and the offermust be followed by an acceptance.1 In addition to that, the promises would need a consideration among other requirements to become a legal binding agreement.2 Each of these elements has a 1 Tracey Hough and Kathrin Kühnel-Fitchen, Optimize Contract Law (Taylor & Francis, 2016).2

3guiding rule. For instance, a successful offer must be made by the offeror, and communicated to the offeree.3 The offeror must also be clear with a manifested intention to be bound. On the side of the offeree, he or she should accept the offer, and the acceptance should be unconditional. Also, the offeree must communicate the acceptance to the offeree, and demonstrate the intention to be bound. An agreement should also have a consideration, this one is the element of the bargain. It is the item of value that moves from one party to the other. Before parties enter to an agreement, they may choose to first negotiate. It is a fundamental rule in contract law that mere negotiations do not make binding obligation.4 Rather, parties must show their intention to be bound by the agreement. An inquire means to seek clarification and it is neither an offer nor an acceptance.5 Sometimes, however, during the negotiation, the intention of parties becomes clearer indicating an intention to be bound.6 For instance, where parties sign preliminary negotiations or one party makes comments like “we have a deal.” In such cases, the court weighs the competing interests. In this, where the negotiations were full of offers and counter offers, the court’s objective method will signify an absence of a contract. That is, the clearer the intention, and the completeness of the negotiations,the higher the chances of concluding that there was an agreement. Similarly stated in Australian Kenneth W Clarkson et al, Business Law. Text And Cases (Cengage Learning, 13th ed, 2015).3 Jeffrey F Beatty, Susan S Samuelson and Dean Bredeson, Business Law and The Legal Environment (South-Western Cengage Learning, 6th ed, 2013).4 Teachers Ins. and Annuity Ass'n v. Tribune Co., 670 F. Supp. 491 (S.D.N.Y. 1987).5 Richard A Mann, Barry S Roberts and Len Young Smith, Smith & Roberson's Business Law (South-Western Cengage Learning, 15th ed, 2012).6 Gregory J. Marsden and George J. Siedel, "The Duty To Negotiate In Good Faith: Are BATNA Strategies Legal?" (2017) 14(1) Berkeley Business Law Journal.

4Broadcasting Corporation v XIVth Commonwealth Games Ltd, [1988] that the more the gaps, the lower the chances that parties intended to be immediately bound by their negotiations.7ApplicationA high-profile case that this paper would look is the highlights of Masters v Cameron [1954].8 This case arose from a document containing the parties’ terms. It was a question whether the document was a binding contract or it was merely an agreement to negotiate terms which were to be part of the contractual terms. In deciding the issue, the High Court stated that since the wording of the clause suggested that that there remaining more step towards completingthe document to become enforceable, the document terms were not binding on the parties.ConclusionThe price quote could not amount to a binding contract. Even though there are inquiries from customers that can amount to a binding agreement, the inquiry from Lenna very much fittedto be an opening to a negotiation. Even though a demonstration of assent to agree is an offer instead of preliminary negotiations, the terms must be so definite that the other party just needs to respond with an "yes." It is more of the objective approach whether a reasonable man would see Linna's enquiry as an offer, not whether the offeror has a thought of making a contract. Compare this between this case and Stellard Pty Ltd v North Queensland Fuel Pty Ltd [2015] buyer who made a verbal purchase offer for $1.6m, and gave the conditions within the offer. Theofferee (seller's agent) replied with instructions for signing the contract. The emailed contract comprised of the price, the deposit amount, settlement date and other conditions. The buyer 7 18 NSWLR 5408 91 CLR 353

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