Procurement and Contract Negotiation Essay

Introduction

Contracts are essential contents of all forms of agreements today. Additionally, contracts are forms of legally recognized agreements that are employed and utilized by individuals to ensure that important arrangements between two or more people or entity are founded on legitimate grounds. In the business context, written contracts provide people and entities with legal paperwork stating the expectations of various parties under a contract and providing a guideline of how negative scenarios or occurrences can be resolved. Also, contracts reduce the risk of forfeiture to the legitimate parties under a contract and also clarifies the particulars of a contract to all parties involved. Lastly, creating contracts saves the parties involved time and money that would otherwise be incurred if some persons under the contract decide to forfeit the agreement. In light of such merits, it is plausible that procurement professionals should know the fundamental principles of the Contract Law so as to make sound contract negotiations as well as decisions.

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Contract Law

The law summarizes the legal provisions that are put in place under the constitution to protect all parties involved in an agreement. The law is mostly referred to in settling conflicts arising due to the infringement of trade agreements. The term "contract" refers to a promise, which is legally enforceable between two or more parties. In the event such a promise is violated, it permits the aggrieved party to attain legal remedies. Today, the formation of a law enforceable contract requires the promise to have the elements of an offer, consideration, acceptance as well as mutual intent so as to be considered as bound. Also, each party involved must have the capability to enter into a contract. In today's contemporary society, most oral contracts are considered to be binding. Nevertheless, some forms of the contract require certain formalities like being written, signed as well as dated for all parties involved to be bound by their terms.

Understanding the principles of a contract as dictated by the provisions of the Contract Law is imperative and all procurement professionals should ensure that they are well versed with such law's provisions when engaging in contracts. Subsequently, this enables such professionals to identify instances where they may be aggrieved by other parties under a contractual agreement and in turn seek legal intervention for remedies. There are six fundamental principles of a contract that all procurement professionals must know. Additionally, these include the agreement, consideration, intention, capacity, genuine consent as well as legality.

Principles of the Contract Law

Agreement

During contractual arrangements, there must exist an offer as well as an acceptance with a certain agreement between all the parties involved in the contract. In other words, it means that one party in a contract must create a clear offer while the other party or parties must accept the stated offer. In such cases, if a professional procurement personnel may find out that one of the party who had already agreed to the offer has forfeited the agreement, that he or she can file a lawsuit against the concerned party and claim damages.

Consideration

With the exemption of very few occasions, there does not exist a contract or a legally enforceable agreement without some form of a consideration. In this case, a consideration refers to the exchange of promises by all the persons or entities bound by the contract or agreement. Considerations can be in form of lump-sum payments of funds, delivery of equipment, promises to execute service or an activity, promise to take a legal action or promise to enforce a right under the provisions contract law. In this case, it is essential for all procurement professionals to understand how to place or claim considerations when making legally abiding contracts.

Intention

Every individual who has consented to enter into a lawful contract must aim and agree to be bound by the agreement. Moreover, such an individual must have a serious intention of creating legal obligations when bound by the contract or intend the contractual agreements to have legal consequences in the event they are breached. As such, the procurement professionals must know the intention element of a contract under the Contract Law when making legally binding contracts. Moreover, knowing the legal implications of such intentions by others parties under the contract will enable the procurement professionals to respect and conform to the requirements of the contract. Additionally, this is so as to avoid legal consequences such as facing a lawsuit that could force them to pay damages.

Capacity

It is the fourth element of a legally abiding contract and it is employed to define the assumption that all parties under a contract have the right mental capacity. That is for them to understand their actions when participating in a lawful contract. Under the Contract Law, all persons have the right to enter into a contract. Nevertheless, there is a certain grouping of people who are considered inappropriate to participate in any form of contractual arrangement. Such groupings are inclusive of young people - particularly those who are under the age of eighteen. Furthermore, individuals with mental impairment - including people with an intellectual disability, are also not expected to participate in a legally abiding contract.

Lastly, persons who are under the influence of drugs or alcohol are not considered as viable parties to a legal contract. As such, there is a need for procurement professionals to understand the capacity of all the other parties in an agreement to be considered as viable to form legally enforceable contracts. Additionally, this element is important because if one party was to avoid a contract on the basis of their incapacity, the procurement professionals involved may suffer losses through the breach of contract. In such a case, the party claiming out of a contract on the basis of an incapacity must prove that the other parties knew or ought to have known of their incapacity.

Genuine Consent

The principle stipulates that all parties under contract have entered the agreement based on their own free will. Additionally, this is because the parties' genuine consent is an imperative element of a lawfully binding contract. Nevertheless, procurement professionals should know that genuine consent in Contract Law can be affected by five primary issues. First, the procurement professionals should know that the genuine consent of all parties under contract cannot be termed viable if it occurred through undue influence of some of its members. In this case, the undue influence occurs when there is a disproportion of power between all the contracting parties. As a result, the weaker party enters into the contract with the principal party at a disadvantage. Moreover, in such a scenario, the inferior party cannot be stated as having entered into the contract out of their own free will because of the influence of the dominating party.

Ultimately, such influence is normally regarded as 'undue' and based on Contract Law, the court can dismiss the contract if a legal case was to develop. Second, by understanding Contract Law, procurement professionals can be in a position to understand that the genuine consent principle can also be affected if there was a mistake in the contract. Additionally, a mistake occurs when all parties are viewed as having agreed to different phenomena, or where there is a unanimity among all participants of a contract stating that the legal agreement signed was never understood. Furthermore, the procurement professionals must understand that a mistake is a complex and broad area of Contract Law. In this case, judges making decisions on such related cases are unsympathetic of contract parties claiming that they made a genuine mistake when entering into a contract.

Also, as a general rule under the Contract Law, making a mistake when engaging in a contract cannot protect the procurement professionals from all forms of contractual obligations. As such, having sufficient knowledge of the Contract Law can ensure that the procurement professionals do not suffer massive losses due to making a mistake when entering into a legally enforceable contract. Third, the general consent can be affected if there was a misrepresentation of some critical information by one party when making the contract. In such a case, the procurement professionals must understand that offering erroneous information to other contract parties can cost them to pay damages in payment of the aggrieved parties in case a lawsuit is opened. Forth, the general consent of parties in a contract can also be affected if there was duress inflicted towards some parties in the contract.

Duress is the actual as well as threatened violence subjected towards other people with the aim of obtaining a contractual promise. When making contractual agreements, procurement professionals should understand that under the Contract Law, a contract cannot be considered to be lawful if it was made by pressuring some of the parties under contract to accept the particulars of the agreement. Also, in such cases, if the afflicted or the weaker party in the contract files a motion through the contracts under the provisions of the Contract Law, the parties that involved in the enforcing the duress would be charged for damages. Also, such a contract would be considered null and void and the afflicted party may choose to walk away from the agreement with no legal implications imposed. Lastly, the principal of genuine consent can also be compromised by unconscionable conduct, which is a statement/s that defies all forms of good conscience available in a contract.

Legality

It is the last principle of a lawful contract and it describes the legal needs required for a contract to be recognized by the court under the Contract Law as enforceable. In this case, the procurement professionals should understand that all forms of the contract could be considered illegal if their subject matter is proscribed by a recognized statute or if the contract provisions invade the rule/s of the public policy. For instance, contracts that contain illegal undertakings, promises as well as objects could violate this condition. In this case, if the procurement professionals consented to supply small or large quantities of cocaine to party B in a contract, such an agreement would be deemed illegal since the subject matter (cocaine) is illegal. Ultimately, it is thus plausible to state that having sufficient information about the Contract Law can help the procurement professionals to recognize legal and illegal contracts when making business agreements to avoid court cases, fines or incarceration.

Procurement Professionals Should Also Know About Contact Law to Avoid Three Common Mistakes Made When Making Contracts

Failing to Make Written Agreement

Lack of an officially written and signed contract is among the major source of conflict that is encountered by numerous people in relation to contract law. The phrase "my word is my bond" is a common phenomenon used by numerous persons today when engaging in different forms of contractual agreements. However, unfortunately, the phrase is not enough to support legal abiding business contracts. The importance of verbal agreements should not be dismissed and they should be the first step to be taken when procurement professionals are making new client engagement. Nevertheless, verbal agreements are risky because they are subjective to change in the event one party to a contract forfeits the agreement. As such, all legal contracts made by the procurement professionals should be signed by all parties involved. As such,...