Research Articles Base: Business Law Contracts

Maritime Insurance

Question 1 The non cargo claims   The non cargo claims include the payment for the use of the Savior and Pugwash. Since the two vessels helped the Flying Dustman in salvaging the vessel, the owners of the vessels demand some remuneration for the salvaging operations. A non cargo claim is the expenses of the government that has jurisdiction on the Bunkham bay. O has to pay the procedures that will be done to clean the bay and other expenses needed to repair the damages on the environment. Goods and passenger cargoes claim a legal and a financial niche in transnational trade. They represent a bundle of interests different in kind and character from those of the ship owners, probably because vast numbers of people had no rights of any kind and the trade in both were common. Protection from hazards of the sea was not always a ship owner’s responsibility, and losses were thought to be inevitable accidents (Miller 1996). In modern times these legal interests are characterized as first party: goods and passengers and the ship itself which account for freights and passage money, and third party: the legal liability when damage or loss occurs to these interests (Miller 1996).   Over time on the one hand, a general non land-based maritime law of specific application evolves to organize the affairs of ship owners, the rights of crew members, the rights and priorities of suppliers of necessaries to the ship both on the credit and personality of the ship and /or on the authority of the ship’s master, the claim of port authorities and warehousers and wharfingers and, more important, the management of damages in disasters at sea which were common. The duties of passengers as well as duties owed to them, the rights of cargo owners and financial backers arose out of the maturation and eventual safety of sea travel. Four types of contractual arrangement are commonly used. Under a voyage charter, the ship owner contracts to carry a specific cargo in a specific ship for a negotiated price per ton. A variant on the same theme is the contract of affreightment, in which the ship owner contracts to carry regular tonnages of cargo for an agreed price per ton. The time charter is an agreement between owner and charterer to hire the ship, complete with crew, for a fee per day, month or year. Finally the bare boat charter hires out the ship without crew or any operational responsibilities (Stopford 1997). A voyage charter provides transport for a specific cargo from port A to port B for a fixed price per ton. If the voyage is not completed within the terms of charter-party then there will be a claim. For example, if lay time is specified at seven days and the time counted in port is ten days, the owner submits a claim for three days demurrage to the charterer. Conversely, if the ship spends only five days in port, the charterer will submit a claim for two days dispatch to the owner. The rates for demurrage and dispatch are stated in dollars per day in the charter-party. The calculation of demurrage and dispatch does not normally present problems, but cases do arise where the charterer disputes the owner’s right to demurrage (Stopford 1997). It is important for owners of a vessel to pay for the claims whether it is for a good or a non good. Paying the claims relates to the owners willingness to have a good relationship with other people involved in vessels and/or shipping. Paying the claim reduces the tension in the environment.   If Horatio had sold the vessel to a separately registered company Shipping involves many complexities due to various things. If before sending the Black Pig to Liverpool, Horatio had sold the vessel to a separately registered company the result would be almost the same. The accident that happened with the Flying dustman was not deliberate and cannot be prevented even if another company owned the vessel. The probable change would only be on whom those involved would go to ask for compensation or remunerations on what happened.  Should Horatio sold the vessel to a separately registered company, the burden on paying for the damages would fall on the separately registered company rather than Horatio since the transfer occurs before the sale of the Black Pig.  The legal distinction between the risks of land carriage and the perils of early sea voyages, without adequate ocean charts, low-level ship technology, unpredictable weather, unwilling or underfed sailors, unstable political climates and, until the Romans abolished the practice, piracy, which had been lawful and widely engaged in maritime commercial activity, made shipping a risky and quasi-legal business, and was not quickly grasped or provided for in English common law (Banister 1995).   The different needs and culture from carriage rules by land are illustrated by the difference between highwaymen and roving pirates. Though both were outlawed, one could serve a public purpose. The concept of individual carriage liability or common carriage of either passengers or cargo is not well documented but is distinctly formulated. It was common practice for centuries for vessels to carry both goods and passengers, there being no scheduled passenger service before the invention of the steamship in the nineteenth century. The potential of loss of life at sea and the ultimate responsibility for it were still to be developed concepts for which even the common law had no provision. Human cargo carriage were probably not considered goods unless they were slaves and left open the question of who was the insurer of life and limb under these circumstances (Banister 1995). While continuation of these inadequate rides for the years intervening from imperial rule to medieval times cannot be proved or assumed, one finds early seventeenth century marine insurance policies did not give general or explicit coverage to passengers, captain or crew when issuing policies covering voyages, even if the policy recited all losses and damages which may happen to the scheduled and particularized effects. Though international shipping and trade have, by their nature, a measure of independent sovereignty, ships and their cargoes and passengers could owe an allegiance to one or more enemy states, and conflicts of control had to occur (Hilling 1996).Ships had to traverse often-disputed territorial waters before then proceeding to the high seas. Full rights of innocent passage upon the high seas had to await a recent international treaty. For some time in history, the seas were not an open highway outside of the jurisdiction of nation states. The policy of ship owner liability for goods carried by him found easier expression in unscheduled services. Merchants normally traveled with the cargo shipped. Ostensibly they exercised joint control over their goods until landing. It was only when this partial and joint control could not be exercised that a rule was needed (Hilling 1996).   The extent to which the stricken Flying Dustman should have been refused refuge at Bunkum Bay The stricken Flying Dustman should have been refused refuge at Bunkum Bay because of the damages it had caused to their waters. But due to assistance of other vessel, those who govern Bunkum Bay had no choice but to allow the stricken vessel to enter the waters. Those who govern the Bunkum Bay has the right to refuse the entry of the flying Dustman since it can be considered as a threat to their environment. The stricken vessel releases chemicals that ruin their territorial waters. Vessel safety investments consist of actions by the operators to improve the safety of vessel service. These investments include hiring more experienced personnel and utilizing newer and larger vessels. Vessel operating conditions describe the environment in which vessel service is provided. These conditions are represented by the phase of vessel service, type of waterway where the accident occurred, and weather/visibility characteristics. Weather characteristics include precipitation and wind speed. Two measures of vessel damage severity were considered: the occurrence of severe vessel damage and real vessel damage cost per gross ton of ship size. The non-seaworthiness variable was assigned a one if the seaworthiness of the vessel was not affected; set equal to two if the seaworthiness of the vessel was affected; and set equal to three if the vessel was a total loss in the accident. Although there is a trend toward worldwide parity in commercial vessel safety standards, significant differences exist among nations in their enforcement of safety standards. The United States has long been a nation with relatively high maritime safety standards (Loeb, Talley & Zlatoper 1994).   Question 2 Marine Insurance Act Marine insurance is known as the oldest type of insurance. Out of Marine Insurance came the concept of non-marine insurance and reinsurance. Currently Marine insurance is being attributed to the concept of Aviation and Transit risks. Cost-efficiency follows the same pattern because of the reputed existence of markets for tangible property. Resource maximization is another matter. The insurance of remoter-than-tangible interests in insurance was made the subject of a companion act prohibiting gambling in marine insurance. But again this does not settle the matter, as remoter interests are statistically quantifiable and the financial market of freight and commodity options futures and other financial derivatives are ample demonstrations of the functioning and viability of those markets (Clarke 1997). Modern shipping ventures are far more complex than this act contemplates. Ship finance is but one example. Depending upon the country, one finds the selling of bonds which have been guaranteed by various governmental bodies in the United States more generally financing by a syndication of shares by limited small business corporations. None of these interests would be insurable. Bondholders have only a legal claim for payment and shareholders are members of a company which may or may not control the operation of the ship (Clarke 1997).    Goods as cargo may be subject to factor finance where the tangible interest is contained in the receivables invoices. It is submitted that separate insurance coverage is available for receivables and as such their resources have different type of protection, but in some cases it cannot be maintained that factoring and bond holding could not have an insurable stake in marine insurance.  There is considerable scope for resource maximization for the insurer under the sections 65-66 of the Marine Insurance Act. It involves two conditions which supplement each other: one is that the insured receives a general average contribution whether or not he has received an apportioned contribution from the other interests on the voyage. Normally his negligence would bar him from receiving a contribution. The other is that if he owns two interests say ship and some cargo both are to be treated as non owned interests. This means that his contribution will not be cancelled out by his cross liability to make a contribution. If the interests are treated as non owned, he receives a contribution for each of them (Virgo 1999). The marine insurance act regulates marine insurance and has 2 important sections.  The sections focus on what policies are considered to be void and how should risks be treated. The marine insurance act covers various things that include the loss or damage of ships, cargo, terminals, and any other transport or property used to transfer cargo. Together with Institute clauses, the marine insurance act makes sure that parties are free to engage in a valid and binding contract. The Marine Insurance Act includes a standard policy, which the different parties were given the freedom to use if they had the need for it. The policies are thorough and had been tested before it is used in the marine insurance contracts. Policies can be based on well tested policies in the past. A marine policy usually covers around only a certain part of the insured’s liabilities towards a third party.   A contract of marine insurance is of good faith, and it is preserved by disclosing all material facts As regulated by the marine insurance act, there should be good faith at the marine insurance. Having good faith means that, those involved n the marine insurance should show or explain all aspects of the agreement. Very early specimens of either French, Dutch or Italian contracts of marine insurance are not readily available for examination except by reference to tribunal and court decisions seeking to enforce one or more terms of conditions of the contract. Moreover, there was no uniformly accepted criterion of just what constituted an insurance policy as opposed to a marine contract. The modern definition of insurance involves a pooling of similar risks, which is not mutual protections, with a contract reflecting true risk analysis as a decision process, with a view toward underwriting exposures commonly found in maritime venture (Harris 2000). The acceptance of this exposure for a small sum in comparison with the values exposed called a premium, and owed whatever the outcome of the venture separates insurance from finance, in the first instance, because of the disparity in amount, and from wagers, in the second instance, because the insured does not profit from his own loss  (Harris 2000).   It transpires that early marine insurance was a process of both of these tendencies. Its subsequent development takes elements of both wagering and finance and carries forth early terms and conditions of contracts of finance and wagers into the modern contract. In this sense, the contract of bottom is the most illustrative of marine contracts as a developmental tool for construction of the modern policy and to amply demonstrate the real connection of shipping in international trade where it is a part of a cycle of finance and simultaneous transport.  There are basically two forms of first-party marine policies: the perils policy and the all-risk coverage. The perils policy is issued by Lloyds as Institute Voyage Clauses and Time Clauses with varying modification for Hulls and Cargo which include freight, location, transit risks and so on. The newest cargo clauses no longer contains the terms of insurance but are thought to be perils policies, major perils only and all risk of physical damage policies (Tolentino 2000). The breadth of coverage offered by the policies is traditional, and by custom, in older forms listed something called perils of the sea which were insured against. For these events and later others, the master of the ship had no responsibility to third parties where he carried their goods. These same casualties did affect his ship. While modern policies now cover the ship separately, this was not so in early marine insurance or in the bottom contract. The third-party interest was retained by self insurance in early policies. Modern policies define the subject matter covered in two ways: the person or things insured (Tolentino 2000).   In many ways, the risk exposure in insurance is both the thing and the person and the promissor in insurance has an obligation toward the things insured and toward the beneficiary (Sin 1997). The security in bottom bonds consists of the ship and its rigging; rigging apart from the ship; the merchandise and cargo; the ship and attached slaves; freight and passage money; furniture of the vessel; valuables carried but not for sale; and, as an extra measure, perhaps all the property of the debtor. Some of these items are stated in the British Marine Insurance Act of 1909 as being the insurable value of the marine risk; the modern steamer included many more as reflected in the Institute of Voyage Clauses No.8. Marine insurance is one of modern society’s most unregulated types of insurance. Insurers have the freedom to offer coverage with terms and conditions which suit them and the market they handle. It follows then that the rates and prices charged relate to their perceived costs and the probability of profit. Modern insurance sets a promise against an act. The action required is the payment of the premium in return for indemnity when a covered loss occurs. The indemnity offered by the insurer is typically set out in policy forms authored by the underwriter in the language of, as people have seen, great antiquity and in some cases of ambiguous and obscure meaning. The policy type and form ought to conform to the individual’s commercial need, but it is not generally tailor-made (Sin 1997). Each person involved in a marine insurance should know the contents of the agreement and what should one expect in the agreement. Each person involved in the marine insurance should be given information on what would break the agreement.  The policies in the marine insurance should make sure that it gives a clear indication of what claims will be answered by the insurance, what percent of claims will the insurance cover, and the time period of the insurance. The marine insurance should give a description of what good or non good claims will be covered. The marine insurance should determine the percentage of claims or damages will be covered and what will be the terms of payment that will be done.   References Banister, D (ed.) 1995, Transport and urban development, E & FN Spon, London.   Clarke, MA 1997, Policies and perceptions of insurance: An introduction to insurance law, Clarendon Press, Oxford.   Harris, R 2000, Industrializing English law: Entrepreneurship and business organization, 1720-1844, Cambridge University Press, Cambridge, England.   Hilling, D 1996, Transport and developing countries, Routledge, New York.   Loeb, PD, Talley, WK & Zlatoper, TJ 1994, Causes and deterrents of transportation accidents: An analysis by mode, Quorum Books, Westport, CT.   Miller, G 1996, The legal and economic basis of international trade, Quorum Books, Westport, CT.   Sin, K 1997, The legal nature of unit trust, Oxford University, Oxford, England.   Stopford, M 1997, Maritime economics, Routledge, London.   Tolentino, P 2000, Multinational corporations: Emergence and evolution, Routledge, London.   Virgo, G 1999, Principles of the law of restitution, Oxford University Press, Oxford. 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Maritime Insurance

Question 1 The non cargo claims The non cargo claims include the payment for the use of the Savior and Pugwash. Since the two vessel...

Business Law Contracts

Business Law Contracts Introduction The law of business contracts is based in the assessment of courts regarding the common misinterpretations, dilemmas, and other consequences that bounds two opposite parties with their associated responsibilities. Every businessman know how to deal in terms of entering contract and if one party, considered to be at fault in the delay or did not receive the appropriate requirement as discoursed in the contract, the innocent party is protected by the business law. The Obligation Obligation is a personal feeling that a person is bound legally or ethically in one certain matter. For such, obligations may arise in terms of bond or contracts. However, the failure to fulfill such obligation is punishable by law as if it is written in the contract. Part of the civil obligation is to be responsible in committing himself in meeting the demands and must pay for all the damages caused by e.g. negligence. The most common type of written agreement between the two parties, especially in corporate world, is the use of contract. A contract is a meeting of minds between two persons whereby one binds himself, with respect to the other, to give something or to render some service. The characteristics of a contract should have a binding force, has autonomy, has mutuality, has relativity, and has consensuality. The obligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith. This means that the will of the contracting parties are the driving force of the contract and can be the object of consideration in creating obligation, which will be the binding force or law on the parties themselves. As long as the contract which gives rise to the obligation is valid and not contrary to law, public morals, public policy, public order or good customs, the contracting parties are legally  bond to comply with their respective obligations in good faith. The Breach of Contract “The order of specific performance is granted to an innocent party” In the breach or violation of contract, the effects can be serious on one or both parties. The innocent party is entitled to receive the “thing” (e.g. goods or products) or “performance” (services) specified in the contract even if it terminated. On the other hand, the wronged party may allow the contract to stand and sue for damages. In contract law, the award of damages is intended to place of the innocent party based on their agreement in the contract. In some cases, the performance may include compensation related to the income which should been generated if the contract had been performed properly. The wronged party will cover the obligation to pay the other damages such as the further financial losses. The court will appear to have the supreme powers over the contract and can order for the performance or fulfillment of the obligation. In general, the “order of specific performance” is granted for the innocent party to provide relief, while the other party might suffer serious hardship not unless the required performance is delivered. The order of the court to grant the specific performance is based on the examination of the case, avoiding the circumstances that may include and is equitable to do so. The Damages The terms “damages” are the basic remedy provided for a breach of contract. Commonly, this is provided by the law and placed to be the right for the innocent party. In some rare cases, the damages are insufficient remedy nevertheless, the specific performance is received and injunction can be awarded. In the order of court regarding the specific performance, the requirement should be on the positive contractual obligations. In some circumstances, the specific performance are not allowed or limited to the following: 1.      Damages that are provided as an adequate remedy 2.      Where the order could cause undue hardship 3.      Where the contract is of such a nature that constant supervision by the court would be required 4.      Where an order of specific performance would be possible against one party to the contract, but not the other 5.      Where the party seeking the order has acted unfairly or unconscionably; for he is barred by the maxim ‘He who comes to Equity must come with clean hands’. 6.      Where the order is not sought promptly the claimant will be barred by the maxims ‘Delay defeats the Equities’ and ‘Equity assists the vigilant but not the indolent’ Conclusion The protection provided by law is a sign that the parties should be “faithful” before and while on contract in order for them not to suffer from inconveniences. Sources: Beauchamps Solicitors (2008) GMS Contracts Contract Law Issues [Online] Available at: http://www.beauchamps.ie/downloads/GMS%20Contracts.pdf [Accessed 02 September 2010] Law of Contract [Online] Available at: http://law.jrank.org/pages/12504/Contract-Law.html [Accessed 02 September 2010].   Credit:ivythesis.typepad.com

Business Law Contracts

Business Law Contracts Introduction The law of business contracts is based in the assessment of courts regarding the common misin...

Commercial Law- Case Study

Commercial Law and Business Arrangements: The Intention to Contract Introduction             Commercial law provisions, particularly the establishment of binding business arrangements relies on the existence of a valid contract. A binding contract has core elements revolving around the intention of the parties to enter into a binding agreement. If the intention to engage in a contract exists, together with the other elements of a binding agreement, then the parties to the contract can enforce obligations or rights. Otherwise, there would be no basis for claims. Intention to contract constitutes a requisite to bind parties to comply with the terms of the agreement. Facts             In the given case, three sports enthusiasts—Chris, Jas and Pat— who were without access to satellite link agreed to form a club that would allow them to watch events together. Chris suggested that the creation of the club involves the purchase of equipment for installation in the garage of Pat to which Jas and Pat mutually agreed as a brilliant idea. However, after parting and telling their families of the club, Jas and Pat did not receive the expected support. Without knowing about this, Chris purchased the equipment using the credit card he jointly shared with his spouse. Chris later learns that the arrangement for the club is off. Issue             The issue is whether there is a valid contract among Chris, Jas and Pat for purposes of enforcing obligations on the part of Jas and Pat. Short Answer             There is no enforceable contract among Chris, Jas and Pat because there was no intention to engage in a binding contract. This means that Chris cannot legally bind Jas and Pat to comply with their obligations in the formation of the club, especially in relation to the purchase of the equipment. Discussion             Generally, based on the elements of valid contract, the intention to create an enforceable contract depends on the existence of three factors. According to Harvey v. Facey (1893), the first is a valid offer, which requires the intention of the party making the offer to be involved in an enforceable contract and the belief on the part of the recipient of the offer of the intention to create an enforceable contract. In the given case, there was no valid offer because even if Chris may have intended the agreement to form a club as binding, this was not the perspective of Jas and Pat. In Carlill v. Carbolic Smoke Ball Company (1893), the second factor is acceptance, which requires communication and without any conditions or counter-offers. Since Jas and Pat did not consider the agreement as an offer, the mutual agreement to the idea of forming a club does not constitute an acceptance and the intention to engage in a legally enforceable agreement. There should also be a consideration as mentioned in Australian Woollen Mills Pty Ltd v. Commonwealth (1954), which was not present in the given case and negates the existence of an enforceable contract.             In considering the intention of the parties in engaging in a contract, there emerge two assumptions. The first assumption is that social or domestic arrangements generally involve no intention to create a binding agreement. This means that agreements falling under this category do not comprise a valid basis for enforcing contractual claims. The second assumption is that commercial or business arrangements generally involve the intention to engage in a binding agreement so that parties to these agreements can legally enforce obligations and rights relative to the other parties. The intention has to be clear or clearly deducible from the facts of the case. However, as general assumptions there are also exemptions or qualifications to these assumptions.             The rationale for assuming domestic and social agreements as non-commercial and thus not involving binding contracts is the distinction between the private and public affairs for purposes of determining the extent of coverage of the law. According to Australian European Finance v. Sheehan (1993), courts keep out of the private affairs of people and leave them to settle emerging problems on their own in respect of liberty and privacy. There are only limited domestic aspects, such as domestic violence, with which the courts interfere.             In conjunction with the domestic sphere and property law, Balfour v. Balfour (1919) provided that domestic agreements for the allocation of property are not contractual in nature. The promise of the husband to pay the wife a fixed amount is not enforceable in court because there was no intention to engage in a binding agreement. In Cohen v. Cohen (1929), the promise of a husband to provide a dress allowance to his wife also does not constitute an enforceable contract. This has an implication to the present case. Even if the wife of Jas and family of Pat agreed to the formation of the club and the contributions from the parties that this entails, this is not a binding agreement and Chris cannot enjoin the families to accommodate the club. In addition, even if the spouse of Chris agreed to the purchase, this is not a binding agreement that would give Chris the right to enforce obligations on the Jas and Pat and their families to pay for their contribution to the purchase price of the equipment. Whatever agreements or disagreements arising within the families do not comprise enforceable contractual terms. The agreement of Pat to make his garage the venue for the club and Jas’ agreement to help do not comprise enforceable contractual terms.            Mere promise for accommodation does not comprise an enforceable contract. In Todd v. Nicol (1957), the court held that a promise made to another person living in another country to provide accommodations when visiting the country does not constitute a basis of contractual claims in court. This means that even if Pat agreed to make his garage the venue for the club, he does not have a legal obligation to comply with this promise especially with the disagreement of his family.             Relative to social agreements or voluntary associations, even with strong consensus among the parties, these do not necessarily comprise contractual terms. Cameron v. Hogan (1934) explained that for voluntary associations to comprise a valid contract there should be a clear intention on the part of the parties involved to create contractual rights enforceable in legal venues. In this case, the court considered the claim of the plaintiff for exclusion from the Labour Party as an internal matter and innate in the rules of a political organisation so that the rules do not comprise contractual terms enforceable in the courts absent any clear indication to the contrary. In the present case, there was no clear intention on the part of Chris, Jas and Pat to make the consensual agreement contractually binding. In fact, the agreement was merely informal and there was even no designation of responsibilities except for Pat’s garage as the site for the club. Even if Chris recommended that they club together to purchase equipment, there was no designation of the party to purchase the equipment or their respective contributions.             In the latter case of McKinnon v. Grogan (1934), the courts could interfere in matters involving members and officers of voluntary associations, particularly those associations incorporated under the law. This case distinguishes social associations between friends that are more informal and political or sporting associations that are more formal. There is a greater likelihood of creating enforceable rights in formal associations incorporated under the appropriate laws. In Baldwin v. Everingham (1993), formally created political parties can enforce their rules on officers and members pursuant to Commonwealth Electoral Act 1918. Relative to the given case there was no indication that the club that Chris, Jas and Pat would start constitutes a formal association with rules and bylaws or for incorporation or registration. As such, as an informal organisation, the club likely comprise a social agreement among sports enthusiasts without the intention of enforcing legal obligations on each other.             Business or commercial agreements carry the assumption of intention to create enforceable agreements and comprise the exemption to domestic or social agreements. As such, even if the parties are members of the same family or form part of social groups, the consensual agreement could constitute enforceable contracts if the object is business or commercial interest. In Wakeling v. Ripley (1951), the court held that while the parties involved comprise members of the same family, the agreement is commercial in nature because of the extent of implications for the parties. In this case, the agreement between the family members is for the sale of their home to move in with an elderly couple. The extent of implications for the family members selling their home and the elderly couple who would take in the homeless members suggest a binding contract. In application to the given case, the agreement between Chris, Jas and Pat could become commercial in nature depending on the extent of the implications for the parties. Chris could assert that the cost of the purchase of the equipment was a sizable sum so that this aspect of the agreement should become legally enforceable to claim the share of Jas and Pat in paying for the equipment. Chris can also claim that the agreement of Pat for his garage to comprise the headquarters for the club has long-term implications indicating the intention to engage in an enforceable contract. However, this is subject to rebuttal by Jas and Pat.             Distinguishing social and commercial arrangements is important because of the greater complexity of these two agreements when compared to the clarification of domestic agreements. In Roufos v. Brewster (1971), the son-in-law claimed that the agreement pertaining to the delivery truck he borrowed from the relatives of his spouse. The court held that there was a contractual agreement between the parties because of the commercial interests of the parties. Both the son-in-law and the relatives of his wife carry different business involving the delivery truck. Even if the agreement to lend the truck was informal, the owners held the interest to get back the delivery truck in the pristine condition for use in transporting products to their new restaurant and the borrower with the obligation for any damage to the delivery truck. Relative to the given case, there are no commercial interests involved because the intention of Chris, Jas and Pat was to establish a club to provide them satellite viewing for their favourite shows as a leisure activity for the group. There was not mention of making it into a business. Although, the club involves the allocation of resources, there was no strong support in claiming commercial interest. The implication is that the parties cannot be liable for claims of breach for cancelling the arrangement after Chris has already ordered and paid for the equipment using a jointly owned credit card.             Even a commercial arrangement has its exemptions when shown that that there is no intention to create an enforceable contract. In Rose & Frank Company v. JR Crompton & Bros Ltd (1923), the agreement covered commercial interests in producing and selling carbon paper. The terms of the agreement expressly mentioned the honourable pledge of the parties. When one party made a claim for breach, the court held that the agreement although covering commercial interest is not legally binding because of the negating effect of the honourable pledge clause of the parties. In application to the given case, there was neither a clause providing for the intention or lack of intention to create a legally binding agreement. As aforementioned, the agreement was very informal and loose that apart from the designation of Pat’s garage as the headquarters and the agreement to purchase equipment, there was no specific delegation of obligations or establishment of rules. Conclusion             Intention to engage in an enforceable agreement is necessary to support contractual claims. There is no enforceable contract in the given case because of the lack of intention on the part on the parties, to whom obligations are likely to the enforced based on the claim of Chris, to become part of a binding agreement.   References     Australian European Finance Corporation Ltd v. Sheahan (1993) 60 SASR187   Australian Woollen Mills Pty Ltd v. Commonwealth (1954) 92 CLR 424   Baldwin v. Everingham (1993) 1 Qd R 10   Balfour v. Balfour (1919) 2 KB 571 Cameron v. Hogan (1934) 51 CLR (HH 215) Carlill v. Carbolic Smoke Ball Company (1893) 1 QB 256   Cohen v. Cohen (1929) HCA 15 Harvey v. Facey (1893) AC 552   McKinnon v. Grogan (1974) 1 NSWLR 295 (HH 216)   Rose & Frank Company v. JR Crompton & Bros Ltd (1923) AC 445   Roufos v. Brewster (1971) 2 SASR 218f   Todd v. Nicol (1957) Sup Ct SA Wakeling v. Ripley (1951) 51 SR (NSW) 183 Credit:ivythesis.typepad.com

Commercial Law- Case Study

Commercial Law and Business Arrangements: The Intention to Contract Introduction Commercial law provisions, particularly th...

The strengths and weakness of the PPC 2000 contracts against the more traditional JCT 98

Introduction Design advice and the critical evaluation of building proposals often address the means adopted to meet objectives. The advice explains ‘how to’ design and build appropriately: what procedures to follow and checks to make, what materials to use, where a building should be oriented, how to construct features that are held to have desirable characteristics. An evaluation of a design checks that these means have indeed been adopted in the design (Sebestyén 1998). The preparation and presentation of almost all such design advice or prescriptive evaluation checklists are based on a premise of universality. It is assumed that it is possible to present information about how environmental issues should be addressed in building design in terms of solutions that are not specific to a time, place or client. This creates a theoretical image that such information can be applied directly, or adapted, to a variety of design situations. The concept of meeting needs is an integral component of most definitions of sustainable development, with a clear implication that needs can be determined independently of their context (Sebestyén 1998). The idea of meeting needs has a resonance with thinking on building design, because the idea that buildings must satisfy users’ needs has been part of this discourse over many years. An architect’s images about a good design often relate to the satisfaction of the users needs (Sebestyén 1998). In construction and the construction industry, advices and assistance from other parties help greatly in the success of projects. Assistance can be acquired through partnerships with other organizations. This paper intends to determine why some people prefer to use the PPC 2000. This paper intends to discuss the strengths and weakness of the PPC 2000 contracts against the more traditional JCT 98 and ICE conditions of contract.  The paper would decide whether it will recommend entering into one of the new type of contracts.   Discussion Construction and Partnering The Partnerships are an integral part of the urban village process and should continue on through to the construction process as individual phases of development are released for private sector development. There are several contractual ways to deliver both the residential and mixed-use components of each scheme; these include traditional contractor agreements, staged tendering, design and build contracts and project partnering (Blyth & Worthington 2001). The essence of the process is to minimize financial uncertainty and construction inefficiency whilst maintaining the design objectives of the master plan and the quality in the detailed components. Partnering does not just happen; it has to be actively sought, and considerable effort is required to extract its benefits. ‘The process has to be built on trust, which in turn can only be established through mutual respect between the individual partners-and that comes with experience and a successful track record’ (Blyth & Worthington 2001). In construction projects, partnering is a popular technique used to gain goals.  To make sure that the goals of partnering is achieved policies have been made. Specific policies such as the PPC 2000 and JCT 98 seem to have responded to the demands of the industry and government reports but there are some who does not prefer to use such contracts.   PPC 2000 Partnering contracts, symbiotic arrangements, or mutual trust relationships label the recurrent trend towards corporate disintegration and the substitution of rules for ownership in shaping the actions of formally independent parties. In determining which contracts the law will enforce or otherwise recognize as creating legal rights, regulatory authorities require evidentiary standards to appraise the reasonableness and welfare consequences of these undertakings. ‘The principal concern here relates to what may constitute a legitimate means and span of control that any unit in the industrial value-adding chain may wield over the decisions taken by related stages’ (Boscheck 2002). The importance of trust between contracting parties is highlighted by the modern phenomenon of partnering contracts or the contracts in which the parties commit to an open and cooperative management style known as the non-contractibility of quality, it has been at the centre of the current debate on the contracting of certain public sector services such as prison management. Whether services should be brought back in house on account of this problem depends on the significance of the Non contractibility issue (Domberger 1998).    Partnering is invoked to reduce the adversarial element in contracts and to achieve greater cooperation. It involves creating an atmosphere of trust between the contracting parties, through open communications, sharing of information, and working together towards a common objective. The partnering relationship is achieved through a charter or an agreement to work cooperatively and in the spirit of trust. Interestingly partnering does not replace the traditional contract which legally binds the parties in the transaction (Domberger 1998). Rather, it is additional to it and operates as a social conditioning process: if people behave cooperatively there will be no need to invoke the formal contract.  There is a link between the way contractual arrangements are implemented and the benefits that are subsequently derived. But the link is not always clearly visible, and implementation costs are easily underestimated. Contractual relationships can be thought of as lying along a spectrum which runs from spot transactions at one end, to vertical integration at the other. When circumstances change, a move along the spectrum of contractual relationships may be an appropriate response (Domberger 1998). One type of partnering contract is the PPC2000. This type of partnering contract was created to serve the needs of people who want to adopt a complex approach to project procurement. Part of the PPC 2000 is a condition that states that parties involved will talk amongst themselves and discuss the outline of the project. As the parties discuss the project they need to determine how they can achieve their goals. The strength of PPC 2000 is its desire to boost the communication between members of the construction team and other parities.  The PPC 2000 is and will not be the solution for problems particularly on multi party agreement. PPC 2000 only chooses a good contractor that will implement the project; assistance, ideas and knowledge will come from other parties. PPC 2000’s main weakness is its inability to be used in multi party agreement; this prevents PPC 2000 to show its worth to agreements that are too risky.    JCT 98 Construction of a development may be undertaken by a single contractor, or a group of contractors managed by a project manager appointed from the team of the main contractor. It is also commonplace for contractors to appoint sub-contractors for some of the activities to be undertaken. All contractors are required to undertake their work in accordance with a written contract. Standard forms of building contracts are regularly used which have been developed, published, monitored and amended by the Joint Contracts Tribunal (JCT).’The number of versions and forms published by the JCT has grown considerably’ (Balchin & Rhoden 1998). The JCT of the United Kingdom have attempted to bring arbitrations more in line with modern contract management systems, especially in settling smaller disputes which will also give the parties an opportunity for mediation before plunging into a full-scale arbitration. Arbitration has long been regarded as a relatively quick and inexpensive method of resolving disputes. Unfortunately, in recent years there has been a tendency to follow High Court procedure and as a result arbitrations have resembled a nightmare. Long inexplicable delays accompanied by astronomic costs seem almost to be the norm (McGill 1995).   The lack of power available to an arbitrator to discuss a claimant’s case for want of prosecution and to deal adequately with a respondent who deliberately delays the proceedings is one of the most frequently cited and most valid criticisms of the arbitration process when compared with litigation. The inclusion of such powers in the JCT rules is one of the most cogent justifications for their production. Given the contemporary complexity of commercial and construction contracts, it is not unreasonable to predict that the settlement of disputes arising from them will also be complex, and by definition, time-consuming and commensurately expensive (McGill 1995). It is incumbent, therefore, on the experienced arbitrator to explore all avenues of achieving speedy settlement and resolution of the disputes put to him for adjudication. Recognizing that arbitration may not be the complete answer to speedy and economic resolution to commercial disputes, nor need the arbitral process slavishly follow (McGill 1995). The JCT creates various forms of contract, guidance notes and other standard documentation, this are used in the construction industry.  JCT 1998 features separate areas for private with quantities, private without quantities, private with approximate quantities, local authorities with quantities, local authorities without quantities and local authorities with approximate quantities.  The separate areas help the people concerned to choose their appropriate classification.  Under the different areas are amendments that focus on Construction Industry Scheme, Sundry Amendments, Terrorism cover and Joint Fire Code, Extension of time / Loss and expense / Advance payment and Construction Skills Certification Scheme. The major weaknesses with the JCT 1998 are the inability to arrange clause positioning and lack of project specific information. This can help the parties involved to relate the amendments in the contract to their specific situation. An organization should choose the JCT contracts because it has constant amendments that relate to newer problems in the project.   Conclusion In construction projects, partnering is a popular technique used to gain goals.  To make sure that the goals of partnering is achieved policies have been made. Specific policies such as the PPC 2000 and JCT 98 seem to have responded to the demands of the industry and government reports.  There are some who does not prefer to use the PPC 2000 because of its inability to be used in multi party agreement. The JCT 98 is a better contract policy because it features separate areas that help the people concerned to choose their appropriate classification.  A construction business should choose the JCT contracts because it provides constant amendments that can relate to newer problems in the project. The constant amendments to the JCT contracts helps a construction firm to be fully prepared for any situation while doing the project.   References Balchin, P & Rhoden, M (eds.) 1998, Housing: The essential foundations, Routledge, London.   Blyth, A & Worthington, J 2001, Managing the brief for better design, Spon Press, London.    Boscheck, R 2002, Market drive and governance: Re-examining the rules for economic and commercial contest, Routledge, London.   Domberger, S 1998, The contracting organization: A strategic guide to outsourcing, Oxford University Press, Oxford, England.   McGill, G 1995, Building on the past: A guide to the archaeology and development process, E & FN Spon, London   Sebestyén, G 1998, Construction: craft to industry, E and FN Spon, London.     Credit:ivythesis.typepad.com

The strengths and weakness of the PPC 2000 contracts against the more traditional JCT 98

Introduction Design advice and the critical evaluation of building proposals often address the means adopted to meet objectives. The adv...

Discuss in details the function of the Bill of lading and explain the reason for the bill of lading being made out “to order” instead of to a named consignee

Introduction The world has witnessed the economic expansion of courier, logistics and transportation businesses around the globe (Welch & Nayak, 1992). Fueled by economic reform and large infusion of investments, courier, logistics and transportation businesses has transformed into great progress. Although, there are some restrictions to influence the development the logistic management, but the high demand of value-added logistics encourages every organization to improve their supply chain and to gain competitive advantage. Basically in logistics procedure, the bill of lading which is also known as the BOL or B/L refers to a document gave by a carrier to a shipper.  This document acknowledges the non-specified goods received on board as cargo for transportation to a named place for delivery to the consignee who is usually identified. Usually, the bill of lading considers the use of at least two different modes of transport from road, rail, air, and sea. Actually, the bill was derived from the term or verb “to lade” referring to the load a cargo in certain ship or other transportation form. Moreover, the bill of lading can be considered as a traded object. In accordance to the development of bill of lading and as indicated in the paper of Wyatt (1992), the standard short form bill of lading act as evidence of the contract of carriage of goods and it serves a number of purposes.  One of the significant purpose of bill of lading is it serves as evidence that a valid carriage contract, or a chartering contract, exists, and it may incorporate the full terms of the contract between the consignor and the carrier by reference (i.e. the short form simply refers to the main contract as an existing document, whereas the long form of a bill of lading (connaissement integral) issued by the carrier sets out all the terms of the contract of carriage. The bill of serves as a receipt signed by the carrier validating that these goods match the contract description have been received in good condition (a bill will be described as clean if the goods have been received on board in apparent good condition and stowed ready for transport). Furthermore, the bill of laden is also a document of transfer, being freely transportable but not a negotiable tool in the legal sense.  Meaning, it also governs all the legal aspects of physical carriage, and, like a cheque or other negotiable instrument, it may be endorsed affecting ownership of the goods actually being carried.   Discussion As previously stated, a bill of lading is document issued by a carrier to a shipper, signed by the captain, agent, or owner of a vessel, and stating the conditions in which the goods were delivered to (and received by) the ship; and an engagement to deliver goods at the prescribed port of destination to the lawful holder of the bill of lading (Welch & Nayak, 1992). A bill of lading is, therefore, both a receipt for merchandise and a contract to deliver it as freight (Sum, Teo, & Ng, 2001). It is a document of title to the goods, enabling the shipper or owner of the goods to endorse title to other parties, sell goods in transit, and Present to banks with other documents in seeking payment under documentary credits. Abbreviated generally as B/L, it is the most important document for sea transport. There are a number of different types of bills of lading. With regards to the issue of making the bill of lading as made out “to order” instead of to a named consignee, the bill becomes negotiable. For instance, it states that delivery is to be made to the additional order of the consignee using words such as “delivery to A Ltd. or to order or assigns”. Consequently, it can be by A Ltd. or the right to take delivery can be transferred by physical delivery of the bill accompanied by sufficient confirmation of A Ltd.’s intention to transfer. Bills of lading made out to a consignee whose name is left blank or to “bearer” or to “order” or to “assigns” are transferable (as opposed to truly negotiable) instruments the delivery or endorsement and delivery of which can transfer property in or rights and liabilities concerning the cargo covered.  Mere delivery of a blank or bearer bill of lading, or of a bill of lading “indorsed in blank”, can transfer property in or rights and liabilities concerning the cargo covered by that bill of lading whereas both endorsement and delivery are required to transfer property in or rights and liabilities concerning the cargo covered by a bill of lading made out to a named consignee or “indorsed in full” (Welch & Nayak, 1992).  A bill of lading is “indorsed in blank” simply by insertion of the name of the shipper or consignee on the reverse of the bill.  A bill of lading is “indorsed in full” by the shipper or consignee signing on the reverse of the bill an order to “deliver to X or order”.  Transfer of a blank or bearer bill of lading can be restricted simply by filling in the blank or adding a full endorsement.  Conversely, transfer of a bill made out to a named consignee or to order or assigns can be facilitated by adding an endorsement in blank. Delivery or endorsement and delivery of a bill of lading has the following effects, provided that the bill of lading is not “spent” (i.e. that it relates to some cargo that has not yet been finally delivered by the carrier, having regard to the quality of any delivery effected by the carrier rather than to the absolute quantity of cargo so delivered; see Mills, 2005): Ø  by mercantile custom, it transfers such property in the cargo as the parties to the transaction intended it to transfer, e.g. legal title only, for purposes of a mortgage, or absolute transfer, or absolute transfer subject to a right of stoppage in transit (Sewell v Burdick (1884) 10 App. Cas. 74); Ø  by the Carriage of Goods By Sea Act 1971 and Hague-Visby Rules, Article I(b) and Article III, rule 4, where the delivery or endorsement and delivery of the bill of lading is from a charterer shipper, it can operate to create a contract of carriage between the carrier and the transferee that is subject to the Rules and thus, potentially, on terms differing from those of the charter, even though the bill of lading incorporates the terms of the charter; Ø  by the Carriage of Goods by Sea Act 1992, it transfers to a lawful (i.e. good faith) holder of the bill of lading all rights under, and also subjects the lawful holder to liabilities under, the contract evidenced in (or, construing the Act consistent with Leduc v Ward, created by transfer of) the bill of lading.  (The Carriage of Goods by Sea Act 1992 thus connects transfer of title to sue with transfer of possession of the bill of lading rather than, as was formerly the case under the Bills of Lading Act 1855, section 3, with the passing of property or risk in the cargo covered by the bill of lading.)   Conclusion In this paper, an attempt has been made to explain the importance and function of bill of laden and its implications on organizational performance and competitiveness in the global market of the twenty-first century. Considering the importance of flexibility and responsiveness in logistics services, the importance of bill of laden is discussed within the context of improving the performance of logistics services. In order to demonstrate the complexity of logistics operations and this case study illustrates its functions in business operation, with reference to the strategies and technologies adopted (such as strategic alliances, partnership formation based on core competencies and internet technologies). Some of the critical success factors in logistics operations in accordance to bill of laden include: Ø  Strategic alliances with large clients across the world Ø  Web-based information systems Ø  Networking and relationship management Ø  Professional logistics team Ø  Customer relationship management   With the continuously tighter global market competition, companies are increasingly focusing on their operations to gain market leadership and thus increase profitability. In many organizations—and at many business schools—the boundaries between operations and other functional areas is rigid and nearly impenetrable. Yet as competition heats up and cost-cutting pressures mount, corporations are demanding that all functional areas in the organization work together to bring products and services to market quickly and cost-effectively. As business sharpens its focus on productivity and cost control, the future belongs to those companies that considers bill of laden, operations management theory and practice throughout their enterprise. References: Mills, Stephen (2005). Bills of Lading: A Guide to Good Practice (2nd ed.), North of England P&I Association, Newcastle-upon-Tyne, UK, ISBN 0-9546537-1-8. Welch, J.A. & Nayak, P.R. (1992). ‘Strategic sourcing a progressive approach to the make-or-buy decision’, Academy of Management Executive, Vol. 19, No. 8, pp.18–23. Sum C-C. Teo C-B. & Ng K-K., (August 2001). Strategic logistics management in Singapore, International Journal of Operations & Production Management, Volume 21, Number 9, , pp. 1239-1260(22) Wyatt, L. (1992). ‘Effective supplier alliances and partnerships’, International Journal of Physical Distribution and Logistics Management, Vol. 20, No. 9, pp.28–30.     Credit:ivythesis.typepad.com

Discuss in details the function of the Bill of lading and explain the reason for the bill of lading being made out “to order” instead of to a named consignee

Introduction The world has witnessed the economic expansion of courier, logistics and transportation businesses around th...