Basics of Contract Law

January 17, 2015

Basics of Contract Law

Q- What is a contract?

A contract is an agreement between two/many parties that a court will enforce because the agreement creates legally binding obligations between or among the parties. In contracts, each person obtains certain rights and assumes certain obligations.

 

Q- What are the four essential elements of a contract?

There are four essential elements that must be present for any agreement to have the status of a contract;

Q- What are the contract classifications?

Contracts can be classified in the following ways;

Q- Define the following; 

Bilateral Contract:

In this contract, both the offeror and offeree make promises. (A promise against a promise)

 

Unilateral Contract:

Is the one in which a promise (offer) is made by one party in return for the performance of a specific act by the other party (A promise for an act). The contract is not effective, till the second part finalize his commitments.

 

Valid Contract:

It is the contract that contains all the essential elements of a contract (Agreement, consideration, competent parties and legal purpose). This contract is legally binding on all parties to the agreement.

 

Void Contract:

Technically is not a contract, it has no legal effect and neither party can enforce the contract against the other in a court of law. It can be defined as an agreement that lacks any of the essential four elements of a contract.

Ex. to make a contract that you will buy something that you know it is stolen

 

Voidable Contract:

Is a contract that is completely enforceable against all parties unless and until a party, who is legally entitled to avoid the contract decides to do so.

 

Unenforceable contracts:

It is a legal contract in all respects, but fails to meet some requirements of the law, and as a result, the court will not enforce the contract against the parties.

 

Formal Contract

It is a written contract, prepared with certain formalities (bank Checks)

 

Informal Contracts:

These contracts does not require any particular formalities, the parties are free to use any style of language they wish. It may be oral or implied.

Whatever the language used, the contract should include the following;

Express Contracts:

An express contract is the one in which the agreement is specifically stated, i.e. insurance policies, in which all the terms of the contract are written as a part of the policy.

Express contracts may be either

Implied Contracts:

A contract implied in fact. The parties form a contract from their actions. i.e. bus fare.

 

Quasi Contract

It is a fictional contract which is implied in law. Actually, no real promises have been made by the parties, and none of the other elements of a true contract are present. This type of contracts is created by courts to promote justice.

 

Executory Contracts:  

It is the one that has not been fully performed by one or all of the parties.

 

Executed Contracts:

It is the contract in which all parties have completely carried out their parts of the contract.

 

 

II- The Top Ten Ways Culture Affecting Negotiation Style

Q- What are the three levels of culture, and how they affect the negotiation?

  1. Local Culture
  2. Organizational Culture.
  3. Cyber or global culture.

Q- There are 10 cross cultural communication benchmarks when dealing with contracts, discuss three of them with examples.

1 – Negotiation goal (Contract/Relationship)

An example for this: Americans goal is to sign the contract, but the Japanese & Chinese and the culture group in Asia seek building the relationship between two parties (the essence of the deal is the relationship)

2- Sensitivity to time (High/Low)

The sensitivity of time to the negotiator differ from culture to culture, it is said that German always Punctual but Latin sometimes late, Japanese negotiate slowly but American quick to finalize the deal

3- Emotionalism

It is said that the Latin Americans show their emotions at the negotiation table while Japanese & many Asians hide their feelings.

4- Team organization (One leader / group)

Many of Americans tend to take the leader approach which is known by (John Wayne Style), on the other hand other cultures stress team negotiation & consensus decision making

5- Form of agreement (General / Specific)

 

 

 

III- Language Crimes

Q- What is meant by the term language crimes and mention three of its levels with examples?

First thing that comes to mind when presented with “LANGAUGE CRIMES” is the ENGLISH MISTAKES, However Language Crimes stands for other types of language use including:

 

Q- Specify three misconceptions about the language?

 

 

IV- Mediation

Q- Define Mediation?

It is an impartial system that brings the proper parties who have a dispute to confidentially discuss the disputed issues with a neutral third party with the goal of resolving the disputes in a binding written agreement.

Q- State 4 qualities that should be available in mediation and comment on them?

Q- State 3 roles for the mediator and comment on them?

 

Cross Cultural Communication

 

Choose any three of these items:

Ex: As a result of the large power distance between the pilots working for South Korean Airlines more than once the co-pilot would not correct mistakes

Ex: Change like teaching people computer skills in some Egyptian hierarchies is not an easy mission

The degree to which the individuals are supposed to look after themselves or remain integrated in grooups

Individualism: stands for a society in which the ties between individuals are loose

Collectivism: a society in which people are integrated into strong, cohesive in groups.

Masculinity: stands for a society in which gender roles are clearly distinct, Men are supposed to be assertive, tough and focused on material success pursuing their ego goals while women are supposed to be tender, modest, concerned with quality of life and relationships

Femininity: stands for a society in which gender roles overlap, both men and women are supposed to be modest and tender, cooperating at work and good relation with the boss

Long term orientation: refers to the extent to which a culture programs its members to accept delayed gratification of their material, social and emotional needs, focusing on building strong relationships in markets for example

Short term orientation: refers to the extent that the members believe that the bottom line is the major concern (profits of last month, quarter, or year)

 

Barriers are:

Language barriers, time differences, socio economic, political and religious diversity.

These barriers create cultural diversity which causes Participants to be always learning continuously and diversified

This fact influences training, the amount of practice needed and level of interaction required with the instructor to get support

 

 

HOW TO CLOSE A DEAL

1- Creating an agreement template which is a standard document that includes all the critical elements of the effective agreements to be negotiated

2- Claim value or retain value (Closing stage and dealing with the last minute concessions)

3- Moving past stalemates which can block you

Cognitive stalemates: to think you are the fair one and you give too much in the agreement

Emotional stalemates: strong emotions come under stress when your hot buttons are pushed in the agreement

Process stalemates: insufficient privileges that may affect the agreement zone

4- Dealing with the bargaining traps as conflict spirals and psychological entrapment

5- Building relation ships between parties

 

 

1-Bragining traps

Especially when the parties are in complex and lengthy negotiations, examples are:

A- Conflict spirals

– Created by incompatible negotiation style

– Once it is begun, it has its own momentum and very difficult to be reversed

– It occurs when one party initiates a contentious communication, the other party replies through a contentious communication, then the first replies in the same consistent manner and so on.

B- Psychological entrapment

-A decision making process, where a party escalates his commitment to a previously chosen, through failing course of actions to justify his prior investments

-It occurs when the parties get so caught up in the negotiation game and in the time and efforts they have put in the negotiation that they become determined to reach an agreement even though its better for them not to reach one.

 

Ways of solving these problems:

2-Last minute concessions

Additional concessions would be created at the closing stage

They could be faced through these approaches:

A- Silence                      B- Walk away                  C- Promise technique

 

NILE WATER CASE:

Evaluate 1959 agreement in the light of contract principles

1959agreement was complementary to 1929agreement which done between Egypt and Britain as Britain signed for Sudan, Kenya , Tanzania, Uganda. Agreement of 1959 singled out by Egypt and Sudan only after their independence for distributing all the Nile’s water ignoring all Nile basin countries.

Egypt now wants the Nile basin countries to stick to the agreement’s conditions while they didn’t accept and sign for the agreement originally.

the agreement to be legal it should apply the four principles of the contract

This didn’t happen in 1959 agreement as they don’t attend the deal!

 

 

 

Top Ten Tips for a Smooth Contract Renegotiation

 

 

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