Preliminary Agreements on Business Law | Assignment
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Added on 2020-04-01
Preliminary Agreements on Business Law | Assignment
Added on 2020-04-01
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Business Law 1PRELIMINARY AGREEMENTS IN BUSINESS LAWAuthor NameClassProfessorName of SchoolCity and StateDate
Business Law 2Preliminary AgreementsAll commercial transactions have almost similar behaviors. In particular, many of them involve "preliminary agreements." These are agreements which parties form as they agree to some of some matters in contemplation of the ultimate contract. Despite their nature preliminary agreements, they hold two significant legal outcomes. It is either they become enforceable, or they become unenforceable in law. What happens is that parties enter into a negotiation of a potential transaction. During their negotiations, both parties contribute their time, effort, or money to facilitate their talks. They agree on some matters at a point, but the uncertainty of otherissues keeps the main agreement open for further discussion. However, disputes in negotiations arise, and one party abandons the deal as the other one protest the other party’s exit. This paper would aim to discuss the position of the parties’ relationship at that point. Also, the paper will discuss the issue of performance after the formation of a contract. And ultimately, the paper will look at the advertisement regulations. Scenario 1: Mary and Lianne’s Dispute to the Preliminary Agreements.In brief, the problem arose when Lianne exited the negotiation after Mary had prepared a quote as requested by Lianne. Mary is protesting the exit claiming that the quote was a binding preliminary agreement. IssueThe parties are disputing central dispute over what can be called like a preliminary agreement. Lianne has abandoned the negotiations, while Mary is protesting the exit. Mary says there was an agreement, Lianne thinks there was no binding agreement yet. Rule
Business Law 3Such an issue is always a battle between lawyers and legal scholars. This is probably because courts use the same legal doctrines addressing the conflicting issues of precontractual liabilities are sort for cases of preliminary agreement (Banakas, 2009). As a result, Mouzas and Furmston (2008) find that the issue creates an obscured criterion for governing the preliminary agreement. In the determination of this matter, the courts choose to apply one main approach. This method seeks to place the agreement into any of the three established categories. The idea isto test the agreement against the legal rules of pre-contractual liabilities.There are basically three categories. The first type is the "preliminary negotiations." This one happens when parties conclude their discussions, but both parties have not come to a consensus even on a single term(Klass, 2010). In such circumstances, no party can recover anything after the other exits(Klass, 2010). The second category goes to preliminary agreements. This scenario occurs where parties discuss all the terms, agree on some of the key terms, but leave the others open for future thoughts(Miller and Jentz, 2010). In such a scenario, the law presumes that parties only agreed to preliminary negotiations commitment. In such a case, the only thing that the law can help with is to oversee that parties negotiate in good faith on the part of the remaining terms(Barasnevicius Quagliato, 2008). If one party pulls out, the other party can only recover the expenditures suffered in the reliance on the negotiations. The court cannot force the parties to make a contract or agree on the contemplated contract.The third category is a situation where both parties have discussed all the matters. After the discussion, they agree to all the material terms that would form part of the main agreement(Grundmann, Möslein and Riesenhuber, 2015). However, before the scheduled date of the final agreement, one party exits. When this matter comes before the court, the law asserts its legal force and makes the preliminary agreement binding.
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