Contract Creation and Management - Nature of Agency
Contract Creation and Management - Nature of Agency
LAW 531
June 18, 2012
Contract Creation and Management - Nature of Agency
Successful contract creation is essential for two or more different parties to conduct business. A contract needs to be full of specifics and lacking in ambiguity, otherwise interpretations, based on needs and experience, can and will be made by both sides. One such area of potential ambiguity in a contract is that of agency. Agency is a relationship where a principal (business owner, company officer, etc.) appoints an agent and “the agent is the representative of the principal and acts for, in the place of, and instead of, the principal.” (USLEGAL.com, 2010, Agency). In the video The Nature of Agency (University of Phoenix, 2010), a contract dispute arises between two companies and one of the main factors in that dispute is whether or not agency is established. This paper will discuss what is required to establish agency and how it effected the formation of a contract between the two disputing parties. In addition, it will look at ways the contract could have been administered differently to mitigate ambiguities and the risks associated with them. Finally, it will consider contract dispute resolution methods and what may be the best way ahead for the disputing parties.
Contract Formation and Agency
To form a legally enforceable contract four elements have to be met (Cheeseman, 2010, p. 154). There has to be a mutual agreement between the person making the offer (offeror) and acceptance of the offer by the offeree. The second element is consideration. This is the legally sufficient items bargained or exchanged in the contract, such as money, property or provided services. Contractual capacity is the third element and refers to: “the ability of an individual to enter into a legally binding contract. A party 's contractual capacity may be affected by age, mental capacity, mental illness, intoxication and other factors
LAW 531
June 18, 2012
Contract Creation and Management - Nature of Agency
Successful contract creation is essential for two or more different parties to conduct business. A contract needs to be full of specifics and lacking in ambiguity, otherwise interpretations, based on needs and experience, can and will be made by both sides. One such area of potential ambiguity in a contract is that of agency. Agency is a relationship where a principal (business owner, company officer, etc.) appoints an agent and “the agent is the representative of the principal and acts for, in the place of, and instead of, the principal.” (USLEGAL.com, 2010, Agency). In the video The Nature of Agency (University of Phoenix, 2010), a contract dispute arises between two companies and one of the main factors in that dispute is whether or not agency is established. This paper will discuss what is required to establish agency and how it effected the formation of a contract between the two disputing parties. In addition, it will look at ways the contract could have been administered differently to mitigate ambiguities and the risks associated with them. Finally, it will consider contract dispute resolution methods and what may be the best way ahead for the disputing parties.
Contract Formation and Agency
To form a legally enforceable contract four elements have to be met (Cheeseman, 2010, p. 154). There has to be a mutual agreement between the person making the offer (offeror) and acceptance of the offer by the offeree. The second element is consideration. This is the legally sufficient items bargained or exchanged in the contract, such as money, property or provided services. Contractual capacity is the third element and refers to: “the ability of an individual to enter into a legally binding contract. A party 's contractual capacity may be affected by age, mental capacity, mental illness, intoxication and other factors
References: Cheeseman, H. R. (2010). «Business Law: Legal Environment, Online Commerce, Business Ethics, and International Issues» (7th ed.). Upper Saddle River, NJ: Pearson Prentice Hall. ClearPointLaw.com. (2011). contractual capacity. Retrieved from http://law-dictionary.clearpointlaw.com/c/contractual-capacity_Sta.aspx The Free Dictionary.com. (2012). apparent authority. Retrieved from http://legal-dictionary.thefreedictionary.com/apparent+authority USLEGAL.com. (2010). Agency. Retrieved from http://agency.uslegal.com/ USLEGAL.com. (2010). Definitions. Retrieved from http://definitions.uslegal.com/i/implied-agency/ USLEGAL.com. (2010). Express Agency. Retrieved from http://agency.uslegal.com/creation-of-agency/express-agency/ University of Phoenix (2010). The Nature of Agency [Video podcast]. Pearson Custom Publishing. Retrieved from http://media.pearsoncmg.com/pcp/pls_1256120324/nature_of_agency/index.html University of Phoenix. (2012). Contract Creation and Management Simulation. Retrieved from https://ecampus.phoenix.edu/secure/aapd/vendors/tata/sims/legal/legal_simulation2.html www.acquisition.gov. (1994, October). A Guide to Best Practices for Contract Administration. Retrieved from https://www.acquisition.gov/bestpractices/bestpcont.html