Managing Contract Issues in Business at Home and Abroad“ Please respond to the following:
Imagine you are a senior manager in a U.S. manufacturing firm who procures component parts and services from various states. Analyze three (3) clauses in a potential contract that might put your company at risk if not sufficiently scrutinized prior to signing a contract. Determine whether or not you can assume that the Uniform Commercial Code will apply to the contract. Provide a rationale for your response.
A contract clause is a specific provision or section within written contracts. Each clauses will address a specific aspect related the overall subject of the contract. Some of the clauses that may be present in the contract would include the following:
Merger Clause: A merger clause simply states that the current written contract overrides any previous oral or written contract.
Arbitration Clause: States that any legal disputes are to be resolves through arbitration rather than litigation.
Severability Clause: Ensures that the remainder of the contract is enforceable even if part of the contract is determined to be invalid. Without this clause it is possible for the entire contract to be Null and void by the court.
These three clauses can cause risk to the company if not included in the contract. The Uniform Commercial Code is a set of laws that provides legal rules and regulations governing commercial or business dealings and transactions. The main purpose of this code is to standardize business law in the United States and seek uniformity amongst all states. Under this code people are allowed to make contracts according to their business needs. Although businesses can freely make a contract, the code requires the filling of missing provisions with UCC provisions where parties to the agreement are silent or fail to include in the agreement. Therefore, the uniform commercial law will apply in this case because of the involvement of transactions dealing with personal property.
From the e-Activity, discuss the major issues addressed in the case you found. Explain the contract law that the court applied to the case and why. Then, determine at least one (1) action in drafting the contract that either company to the dispute could have taken to avoid litigation.
The case I chose to research is Forestal Guarani S.A. v. Daros International, Inc. This case involves wooden finger-joints, where a contract dispute between two corporations, one based in the United States and the other in Argentina took place. In the US, the Convention contains a provision allowing a contract to be proved even if it is not in writing but also authorizes a signatory state to make a declaration opting out of that and related provisions. The United States has not made such a declaration, but Argentina does. The District Court summarily denied the motion, concluding that genuine questions of material fact existed. The District Court granted the US company summary judgment motion, concluding that the CISG governed the parties’ dispute and barred that the Argentinean company’s claim because the parties’ agreement was not in writing. The Court also found that the Argentinean Company had not provided any other evidence of its alleged agreement with the US Company. If there was an arbitration clause in effect then litigation could have been avoided. Also if the companies had reviewed the laws with in each other’s operating home region then the laws for each would be clear.