Essay Sample on Business Transactions: Legality & Lawsuits

Introduction

Understanding the legal aspects of a business can save help solve numerous problems within the framework of all business transactions and also help avoid damaging lawsuits. When two businesses decide to do any form of transactions, it should be clear to both parties the terms and conditions of agreements (Andriyanto and Nevita 660). It should be ascertained whether or not the terms laid are legally binding, and the consequences that follow should there be any breach thereafter (Robinson and Purao 74; Ehrenzweig 973). The terms will depend on the types of documents used, and whether the documents are legally binding. Only after this shall any party ponder on the legal actions to take when there is a breach of contract or the terms of any other well-defined document(Parks and Schmedemann 404). Using Issue, Rule, Analysis, and Conclusion (IRAC), this paper analyzes the case of Woods Co. and Fabricator, to ascertain possible legal paths that the former should take when there is a breach of an agreement.

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The Issue

Fabricator Company is a golf maker, and Woods Co. is a golf equipment retailer. Fabricator's new line of titanium drivers has set a new a $200 wholesale price for TI Driverz. Because of the high-end technology of the drivers, Woods Co. placed a purchase order (PO) of 1000 TI Driverz at $200 each. According to the PO, Fabricators were to give Woods Co. a two percent discount if the order was paid within ten days, and the total in thirty days. After receiving the PO, Fabricators shipped 500 TI Driverz to Woods Co., after which the latter sent a $196,000 to the former, as a note payable on demand. Instead of $200,000 for 1000 pieces of TI Driverz, a two percent discount was deducted. Once Fabricators received the money, they paid their suppliers. The market conditions changed a few days later before the remaining 500 pieces were delivered, and the prices for each driver doubled to $400. Because of these conditions, Fabricators declined to fulfill the remaining orders until the prices were doubled.

The Rule

Breach of contracts can result in lawsuits or alternative dispute resolutions as the legal path (MacIntyre 56; Waddams 400). In this case, Woods Co. has options in terms of legal paths to follow. Because the amount of money involved in the transaction surpasses the range of $3,000 and $7,500, the case cannot be solved in a small claims court (Lorenzen 655). The first option is that Woods Co. can file a formal lawsuit against Fabricator for breach of contract, and see to recover financial damage equivalent to $98,000 for the remaining 500 pieces of TI Drivers. The other option is that Woods Co. and Fabricator can see the services of a mediator and settle the issue out of court. This alternative dispute resolution can allow the mediator to review the terms of the contractual dispute.

Analysis

Purchase orders and contracts are similar in certain ways. Not every Purchase order can be classified as a contract; however, once a purchase order has been accepted, it becomes a contract that is legally binding the two parties (Frank 92). In addition to the product descriptions, a purchase order has terms and conditions that outline the requirements to be met by the shipment (Epstein 350). Once Fabricator Company accepted the purchase order from Woods Co., the PO became a contract whose conditions must carry consequences similar to normal contracts (Grundmann 125). Woods Co. has a legal right to stick to the prices of the order because the new market conditions came after the contract was accepted, and the first shipment was made. The lawsuits can hold if they are supported by terms and conditions laid in the purchase order from Woods Co.

Conclusion

Determining the legal paths to be taken for the case between Woods Co. and Fabricator Company requires a full understanding of business law. This case is purely contractual, and the document used is not a complicated one. Once the courts get involved, Fabricator has a chance to defend its case, which the judge(s) must find convincing to make a judgment. The remedies for a contractual breach include payment of damages, cancelation or restitution or contracts, or specific performance in cases of unique subjects of the matter. In this case, damages of $98,000 can be paid to Woods Co. as it is equivalent to the amount of goods with which they were supposed to be supplied.

Works Cited

Andriyanto, Teguh, and Ary Permatadeny Nevita. "Auto Purchase Order System Between Retailer And Distributor". TELKOMNIKA (Telecommunication Computing Electronics And Control), vol 17, no. 2, 2018, p. 660. Universitas Ahmad Dahlan, doi:10.12928/telkomnika.v17i2.9948.

Ehrenzweig, Albert A. "Contracts In The Conflict Of Laws. Part One: Validity". Columbia Law Review, vol 59, no. 7, 1959, p. 973. JSTOR, doi:10.2307/1120001.

Epstein, Richard A. "Intellectual Property And The Law Of Contract: The Case Against 'Efficient Breach'". European Review Of Contract Law, vol 9, no. 4, 2013, pp. 345-362. Walter De Gruyter Gmbh, doi:10.1515/ercl-2013-0023.

Frank, Louis L. "Contracts?Breach Of Contract?Cancellation Of Classes Because Of Riots, Etc. Constitutes Breach Of Contract?University Compelled To Make Partial Refund To Student." American Business Law Journal, vol. 9, no. 1, 1971, pp. 90-91., doi:10.1111/j.1744-1714.1971.tb00769.x.

Grundmann, Stefan. "Regulating Breach Of Contract - The Right To Reject Performance By The Party In Breach". European Review Of Contract Law, vol 3, no. 2, 2007, pp. 121-149. Walter De Gruyter Gmbh, doi:10.1515/ercl.2007.009.

Lorenzen, Ernest G. "Validity And Effects Of Contracts In The Conflict Of Laws. II Law Governing The Intrinsic Validity Of Contracts". The Yale Law Journal, vol 30, no. 7, 1921, p. 655. JSTOR, doi:10.2307/788284.

MacIntyre, Ewan. Business Law. Pearson Education Limited, 2018, pp. 1-808.

Parks, Judi McLean, and Deborah A. Schmedemann. "When Promises Become Contracts: Implied Contracts And Handbook Provisions On Job Security." Human Resource Management, vol 33, no. 3, 1994, pp. 403-423. Wiley, doi:10.1002/hrm.3930330309.

Robinson, William N., and Sandeep Purao. "Specifying And Monitoring Interactions And Commitments In Open Business Processes." IEEE Software, vol 26, no. 2, 2009, pp. 72-79. Institute Of Electrical And Electronics Engineers (IEEE), doi:10.1109/ms.2009.48.

Waddams, Stephen M. The law of contracts. Aurora: Canada Law Book, 2010, pp. 375-545.