Tài liệu tiếng Anh thương mại quản lý Chapter 17 Contract formation and legal issues
17-1 Chapter 17 Contract Formation and Legal Issues 17-2 Key Concepts • Litigation Prevention • Dispute Resolution » Negotiation » Mediation » Litigation » Arbitration » Courts • Development of Commercial Law • Basic Legal Considerations • The Purchase Contract • Letters of Intent 17-3 Key Concepts • Special Legal Considerations » Inspection Rights » Rights of Rejection » Title and Risk of Loss » Warranties » Evergreen Contracts » Order Cancellation and Breach of Contract » Liquidated Damages Provision 17-4 Key Concepts • Special Considerations (cont’d) » JIT Contracts » Honest Mistakes » Patent Infringement » Restraint of Trade Laws • International Considerations » Contracts for the International Sale of Goods » Foreign Corrupt Practices Act 17-5 Litigation Prevention • The best way to deal with legal disputes is to avoid them in the first place! • Daily activities of supply managers are subject to two major areas of the law: » Law of Agency – Supply professionals act as agents for their firms » Law of Contracts 17-6 Why Most Business Firms Utilize Litigation Only as a Last Resort • Contractual disputes are usually resolved more effectively using negotiation • A lawsuit almost always alienates a good supplier • The outcome of any court case is usually uncertain • Litigation is expensive 17-7 Dispute Resolution • When attempting to resolve a dispute, it pays to keep in mind six considerations: 1. Time 2. Money 3. Complexity/Formality of Method of Dispute Resolution 4. Stress 5. Visibility 6. Damage to the Relationship 17-8 Dispute Resolution • Five Options exist to resolve a dispute: » Negotiation » Mediation » Litigation » Arbitration » Courts • Most disputes are best resolved through negotiation and compromise 17-9 Mediation • If negotiation fails, the disputants can consider mediation • Mediation involves introducing a third- party into the discussion • The mediator’s role is to listen, sympathize, empathize, coax, cajole and persuade • One thing the mediator may not do is decide anything • If the disputants confer decision-making authority on a third-party, we are now talking about arbitration 17-10 Litigation • Some maintain that if a commercial dispute reaches litigation, the disputants regardless of the outcome have already lost • In litigation, costs tend to be maximized » Recall: time, money, formality of method, stress, visibility, and relationship damage [...]... delivery, and so on must be specific enough to bind both the buyer’s firm and the supplier to definable levels of performance 17- 18 Competent Parties • A valid contract must be made by persons having full contractual capacity • A contract made by a minor, an insane or intoxicated person is usually entirely void or voidable 17- 19 Legality of Purpose • A contract whose purpose is illegal is automatically illegal... whose purpose is illegal is automatically illegal and void • A contract whose primary purpose is legal, but whose ancillary terms is illegal, may be either void or valid 17- 20 The Written and the Spoken Word • A contract is not a physical thing • It is a relationship which exists between the parties • A written document is evidence of the contract • Oral contracts are more difficult to prove facts • Law... included as part of the contract should appear above the agent’s signature 17- 21 Letters of Intent • Letters of Intent and Memorandums of Understanding – precontracts to cover informal agreements • LOI’s can be used as a planning document to order materials with long lead times, special tooling, or unique design work • A preliminary agreement with open issues to be resolved 17- 22 Special Legal Considerations... Implied Warranty of Fitness for a Particular Purpose 17- 29 Evergreen Contracts • Orders or contracts with open-ended termination • Can be difficult to monitor or amend 17- 30 Order Cancellation and Breach of Contract • A breach of contract has occurred if a supplier: » Fails to deliver by agreed delivery date » Fails to perform in accordance with the contract • The buying firm has the right to cancel... provisions are common 17- 31 JIT Contracts • Require higher quality • On-time deliveries • The following must be spelled out in such contracts in unequivocal terms: » Quality levels and controls » Delivery schedules » Inventory levels » etc 17- 32 Honest Mistakes • Honest mistakes can happen in drawing up a contract • The conditions surrounding each case weigh heavily in determining whether the contract is valid... Acceptance are automatically incorporated into the contract, unless one of three conditions exists: 1 They materially alter the intent of the offer 2 The offerer objects in writing 3 The offer explicitly states that no different terms will be accepted 17- 17 Consideration • A valid contract must also contain the element of obligation • Most purchase contracts are bilateral • Important point is the “mutuality... purpose » “The Written and the Spoken Word” 17- 15 Offer and Acceptance • Purchase order constitutes a legal offer • Supplier’s quotation usually constitutes an offer » Agreement does not exist until the supplier accepts – Called a “meeting of the minds” • Uniform Sales Act law requires acceptance of an offer in terms that were identical with the terms of the offer » Mirror image concept 17- 16 Battle of the... of a competing supplier 17- 35 International Considerations • United Nations’ Convention on Contracts for the International Sale of Goods (CISG) » Stipulate in the purchase order or contract which body of law is acceptable to both buyer and the seller » Stipulate a mutually acceptable “choice of forum” at which any lawsuit will be heard • May want an arbitration clause also 17- 36 ... Industry practice usually sets the standard for “reasonable” time 17- 24 Rights of Rejection • A buying firm has the right to reject material that: » Does not conform with the terms of the contract » Is an overshipment • Rejection requirements: » Notification must be sent to the supplier » The nature of the defect or default must be specified » The buying firm is not legally bound to return the material... The nature of the defect or default must be specified » The buying firm is not legally bound to return the material » The buying firm is obligated to protect and care for the material in a reasonable manner 17- 25 Title and Risk of Loss • From a legal point of view, the question of which party has title to purchased materials is normally answered by defining the F.O.B point of purchase » F.O.B origin . 17- 1 Chapter 17 Contract Formation and Legal Issues 17- 2 Key Concepts • Litigation Prevention • Dispute Resolution » Negotiation » Mediation » Litigation » Arbitration » Courts • Development. full contractual capacity • A contract made by a minor, an insane or intoxicated person is usually entirely void or voidable 17- 20 Legality of Purpose • A contract whose purpose is illegal. Loss » Warranties » Evergreen Contracts » Order Cancellation and Breach of Contract » Liquidated Damages Provision 17- 4 Key Concepts • Special Considerations (cont’d) » JIT Contracts » Honest Mistakes » Patent