Contract Is the Basis of All Commercial Relationships

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Contract and the employment of workers

A contract is a legal agreement entered by parties to have an obligation to do something and maybe done in writing. However, there are oral contracts. In business relationships, employees and other commercial entities work under the enforceability of contracts. This way, therefore, the contract serves as an establishment of an agreement where the parties fix their rights and duties they must conform to (Atiyah 1999, p.121).

Employment of workers entails contracts between the employers and the employees or the workers. For a person to be termed as an employee, there must have been a contract with the employer either written or oral, and the employer has the mandate to control the employee on how the work is performed. Workers are employed by an employer to give labor and expertise to perform the jobs specific duties. The contractual relationship determines the kind of relationship the worker will have with the employer and the employers power over the employee. The contract between the employer and the employee gives rights and responsibilities to both the employer and the employee thereby forming an agreement upon which they are to work together in an organization. In this agreement between the employee and the employer, there is the formation of a relationship of dependence economically as well as social subordination (Freedland 2003, p. 347). In Lister V Romford Ice & Cold Storage Ltd (1957) where the defendants father was injured it was held that the defendant had breached his responsibilities and was required to indemnify the company(Poole, 2006).

The use of contracts in the employment of workers is to give a dividing line that attributes rights to the workers. Through such contracts, the workers know they have a right to a minimum wage, fair dismissal, leaves, and many other rights. Through the employment contract, there is the formation of a commercial relationship where each knows their rights and responsibilities written or said in the terms of the contract. Once someone accepts a job offer, a contract is made so that when one agrees to start the work, the employer knows that such an employee has agreed to the terms in the contract. Contracts, especially written contracts help the employee understand the employment rights, and cuts out any kind of disputes with the employer. Whenever there is a breach of a contract, the remedy may be damages or compensation in terms of money. The remedies imposed due to breach of contract award the party that undergoes the loss the damages expected (Shaw 2008, p.620). In this case, of Brace v Calder, 1895, Brace was wrongfully dismissed from his services, but later offered employment on his previous terms. He declined re-employment and sued for wrongful dismissal. It was held that the dismissal was irregular and was technically a breach of contract, thus Brace was entitled to nominal damages (Abbott, Pendlebury, and Wardman, 2007)

Contracts and the relationship between suppliers of precision equipment in India to its customer in the UK

The seller of goods and services is expected to conform to the contract made between him and the consumers. The sale of goods and services is viewed as the most basic form of a contract. In such contracts, the customer and the supplier have defined rights and obligations to conform to. The customer in the UK must have had a contract with the supplier in India to buy the precision equipment, and there was acceptance of the offer. The Indian supplier must have agreed to transfer and deliver the equipment to the UK buyer on or before a particular date. On the other hand, the customer must have agreed to accept the goods and make the payments for the equipment in conformity with the contractual terms (Bridge 1997, p. 72). In the case of Nicolene V Simmonds (1953), a contract between Nicolene (plaintiff) and Simmonds (defendants) provided that the usual conditions of acceptance apply. It was held that offer and acceptance should not be clear (Poole, 2006).

It is through a contract that the buyer and the seller form the kind of relationship that suits them both. In this kind of relationship, the two parties, the buyer, and the seller agree that the equipment is appropriate and fulfill the performance requirement, and the buyer agrees that they conform to the contract made. When this is done, then there is an identification of a contract. Without such contracts, buyers and sellers would not be in good relationships since any one of them could be free to harm the other. The buyer, for example, would refuse to receive the goods even when they are of the right performance and quality. On the other hand, the seller would be late in delivering the goods or deliver unfit goods, which do not qualify the expectations of the buyer. To maintain the relationship between these two entities, therefore, there is a contract that needs to be made for each of the parties to know its duties in the execution of the transactions (Nathan 2010, p. 810). In Rickards V Oppenheim (1950), a contract between Rickards (plaintiff) and Oppenheim (defendant) for the sale of a car was provided for delivery on 20 the match. The car was not delivered on that date but the buyer continued to press for delivery. On 29 June, he told the seller he must have the car by 25 July at the latest. It was held that the buyer could not

have refused delivery merely because the original date had not been

met, but he could do so by giving the seller a reasonable time to deliver. Here the notice did give a reasonable time, so the buyer was justified in refusing delivery after 25 July (Chandler and Brown, 2011).

When there is a contract, the buyer will agree to pay for the precision equipment at the time they are delivered and where he receives the goods. A contract makes it easier for the supplier and the consumer to have an effective relationship since everything they need to do is in the terms of the contract. The supplier can deliver the goods to the buyers address for the goods to be said to have been received by the buyer. The contract also prevents the buyer from losses that may occur during transportation (Gillies 2004, p. 336-9).

The frustration of a contract for personal services

There are some services that a person is only able to offer, and cannot be offered by a different person. These are usually considered as talents that people unusually possess, which are special, and another person cannot perform them exactly. Artists, actors, and writers among others are people with personal services. If such people contract to offer their services, they must conform to the terms of the agreement. If they fail to show up to offer their services, they become liable for damages since it is very difficult to replace them with other people for the same services. These people cannot be replaced because they are retained for their unique abilities (Jay 2010, p. 9-11). In the case, Plowman, G.W. & Son V Ash,1964, the defendant agreed that he would not canvass his employers customers for two years after the termination of his contract of employment. It was held that it was reasonable as far as it related to the goods of the employer (Poole, 2006).

Personal service contracts occur between the individual employee and the employer to agree on the terms and conditions of the employment. Through this contract, the relationship between the employee and the employer is defined. The responsibilities of both parties are identified making the parties work in an effective relationship. These contracts are created by the employers and given to the employees to sign if they feel they agree with the terms and conditions of the service. However, the employees can disagree with the terms of the contract. When the employee fails to agree with the terms of the personal service agreement, a counter-proposal occurs. However, the employer may refuse to hire until the employee agrees to the contract terms. Whenever an employee fails to negotiate for the conditions and wages of the contract, they can seek the help of a professional like a lawyer to obtain the contract that serves their best interests.

The employers who draft the personal service contract do so in their interests. This makes the personal service contracts to be one-sided giving the employer more rights than the inflexible employee. This calls for the employee to negotiate with the employer before signing the contract. These contracts are very frustrating because in cases where the employee signs the personal service contracts without having read them, they may end up benefiting only the employer. In this case, therefore, the contract suits the interests of the employer. In the case of LEstrange V Graucob, (1934) where LEstrange (plaintiff) signed the document without reading it. It was held that he was bound by it even if he did not read it; the same case applies to the employment contract if one signs it without reading then he is bound by it(Abbott, Pendlebury, and Wardman, 2007).

A serious ankle injury was sustained by a visitor to the premises of a company, where faulty stairs tread has been reported by a cleaner three weeks before.

In this instance, the contract does not apply. The company was negligent by failing to repair the stairs even after the cleaner reported the fault. This resulted in harming the visitor unreasonably. The company, therefore, departed from the expected conduct since a prudent company could have repaired the stairs if in a similar situation (Miceli 1997, p. 115).

The company has a duty to all its clients to have a safe environment for them all. In this case, therefore, the company breached its duty of care and departed from the expected standard of conduct. The company failed to act resulting in a bad relationship between it and its visitor. The company must exercise care as a duty to anybody who visits the company. The company knowingly exposed the visitor to the risk of loss thereby breaching its duty of care (Simon, Johnston &Markesinis 2003, p. 200).

Once the fault was reported, a reasonable person in the department that deals with repair from a caring company could have made sure that it was repaired to safeguard the safety of others. This case, therefore, shows that the company had intent in injuring its visitors, and is liable for the loss. The company is liable for the injury is caused to the visitor because it is evident that its act of negligence was indeed the cause of the accident. If the stairs had been repaired as soon as the cleaner reported the fault, then the injury could not have occurred (Schuck 1991, p. 271). In the case of Donoghue, v Stevenson 1932 Donoghue bought an opaque bottle of ginger beer, which was found to have a decomposed snail. It was held you must take reasonable care to avoid acts or omissions which you can reasonably foresee would be likely to injure your neighbor (Chandler and Brown, 2011).

The significance of the Articles of Association in a limited company

The articles of association are important in a limited company because they state the rules and regulations upon which the affairs or operations of the company operate. The articles of association should be interpreted the same way commercial contracts are. This is because the work of the articles is to set out the basic management of the company, the structure of the company, and regulate the companys internal affairs. These articles create a contract between the members of the company and the company. The company, therefore, drafts its articles depending on the companys acts. Just as other commercial contracts, the articles of association identify and define the roles and terms of service within the company. This is very important because each member of the company knows their duties and the penalties imposed in cases where individuals do not comply (Nicholson 2010, 87; Randy, 2003).

The articles of association should be therefore interpreted based on their commercial purpose extensively. They help in solving internal conflicts in the company. Every member should read and understand the terms of the articles for each of them to work in an effective relationship in the company. This is because each will know the objectives of the company and act towards the common goal of the company. This is only achievable if each member knows his or her responsibility, and that which is required of them. The articles, therefore, serve this purpose just like any other commercial contract. This is because, the articles of association is a contract between the business and all its members that include the employer, the employees, the clients, and all its stakeholders (Poole 2010, p. 63-83). In Percival V Wright (1902) the directors purchased some shares from a member without revealing that negotiations were in progress for the sale of all shares in the company at a higher price. No sale ever took place. The plaintiff nevertheless sought to have his sale to the directors set aside for non-disclosure. It was held that the sale should not be set aside since the directors owed no fiduciary duties to individual members (Abbott, Pendulebury, and Ward, 2003).

References

Abbott, K., Pendulebury, N., & Ward K. 2003. Business Law. London: Thomson learning

Atiyah, P.1999. The Rise and fall of Freedom of Contract. Oxford: Clarendon Press.

Bridge, G. 1997.The Sale of Goods. Oxford: Oxford University Press.

Chandler, A. & Brown, I. 2011. Q & A law of contract 2011 and 2012. Oxford: OUP oxford.

Freedland, M. 2003. The Personal Employment Contract. Oxford: Oxford University Press.

Gillies, P. 2004. Business law. Sydney: Federation Press.

Jay, F. 2010. Law 101. New York: Oxford University Press.

Miceli, F. 1997. Economics of the law torts, contracts, property, litigation.New York: Oxford University Press.

Nathan, M. 2010. International law.New York: Cambridge University Pres.

Nicholson, R. 2010. Articles of Association.London: Sweet & Maxwell.

Poole, J. 2010. Textbook on Contract Law. 10th ed. Oxford: Oxford University Press.

Poole, J. 2006. Casebook on contract law. London: OUP Oxford.

Randy, E. 2003. Contracts.New York:: Aspen Publishers.

Schuck, P. 1991. Tort Law and the Public Interest Competition, Innovation, and Consumer Welfare.New York London: Norton & company.

Shaw, M. 2008. International Law. 6th ed. New York: Cambridge University Press.

Simon, D., Johnston, A. &Markesinis, B. 2003.Markesinis and Deakins Tort Law. Oxford: Oxford University Press.

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