DRAFT A MEMO FULLY ANALYZING
AND DISCUSSING WHY THERE IS OR IS
NOT A VALID CONTRACT
In my opinion, there is no valid contract between
Doe and GIANT Pharmaceutical Company. In
business law, a contract is valid only when there
is a mutual or comprehensive agreement
between the involved parties and in most cases
arrived at by written agreements (Turner, 2006).
In this case, conversation over the telephone
could not qualify as a legal business contract as
there was no agreement done by writing between
the two parties. Hence, Doe was not bound to the
GIANT in any contractual form.
In the making of a contract, two dependent
parties meet and lay down their terms to each
other in an effort to induce entering into a
contract in the case of mutual contract
agreements that involve two parties only.
However, there are high chances of disputes
arising before the contract is arrived at, whereby
terms are adjusted to favor the opposition party
and others discarded when seem to manipulate
either of the party (Carvan, 2002). In the case of
Doe and GIANT, Doe gives an annual salary of
$500,000 as his term, but Stein quotes $ 300,000
as his considerable salary payment to him.
Consequently, Doe feels insulted and drops the
conversation due to aggression.
However, this could not mark the end of
negotiations, as disputes are part of the making
of a contract because disputes are part of the
peripheral statements made in the process of
arriving at the real contract (Barron, 2006). In
the Australian Business Law, statements that are
made in the making of a contract are in no way
recognized as a part of the term of a contract as
in the business where bargaining for the buying
price is considered as a process of determining
the buying price.
Vermeesch and Lindgren (2005) tell the
following legal case that happened in a
commonwealth nation and I find it relevant to
this case. Business law is universal in the
commonwealth nations and hence most cases
are handled equally among commonwealth
nations as far as business law is concerned. A
construction company tendered for a
government contract for the construction of a
modern university. The tenderers were supposed
to wait for a period of three months before the
winning bidder was determined.
Barely a month after the tendering, a private
manufacturing company invited construction
companies for tendering for the construction of
a modern production line. This construction
company bid for the tender and it was supposed
to take three weeks before the winning bidder
was determined. Fortunately, this company won
the tender, made a lucrative contract with this
company, and ventured into construction
immediately.
Immediately after three months were over, the
government, through the ministry of public
works, announced the winning bidder who
fortunately happened to be the construction
company that had earlier won the tender for a
private company. Unfortunately, the
construction company did not have the ability to
handle the two projects simultaneously because
of the low labor force, expertise, and machinery
and instead opted to drop the government’s
contract.
However, the company opted to risk taking the
two projects, but the time limit was shorter than
required for achieving high quality and quick
growth for a construction company with two
lucrative ongoing contracts. Hence, the
managers decided not to take the two projects as
training grounds, but instead drop the
government’s contract as no other company
would have agreed to work in conjunction with
it in the project as that would result in a violation
of the law of the contract.
Unfortunately, the government seemed reluctant
to drop the case and threatened to punish the
construction company for violation of a contract.
The managers were greatly astonished by the
government’s response as they had pre-assumed
the matter to be easy for them. Worst still, the
government moved to court and sued the
company for its attitude towards its contract.
The construction company sought legal advice
for its action and found that it was not in contract
with the government, but needed to have
informed the government through the writing of
its dropping of the tender before the three
months grace period, in which the winning
bidder was to be determined (Vermeesch &
Lindgren, 2005).
The court determined the case and the
construction company was found to have
violated the contractual law by making an
application for the tender that was far beyond its
capability. A huge fine was imposed, as the
government was to resume the process of
determining the best bidder among the tenderers.
The above case is equally similar to the Doe and
GIANT’s case, but Doe, who is the tenderer,
goes for the lucrative contract assuming that the
matter between GIANT and him is over
(Vermeesch& Lindgren, 2005).
Looking critically into the case, Doe is free to
make his own choice as he did not make any
written agreement with GIANT as is required by
the law of contracts (Ciro & Goldwasser, 2006).
However, GIANT believes it has a right to force
him to move its way because of the letter of
agreement that got to Doe’s desk late. The
contract is not valid as the agreement, which
GIANT believes to have written, was based on a
peripheral statement over the phone and no
written document could be used as evidence.
Therefore, GIANT has no grounds for forcing
Doe to move its way under the law of contracts.
Then assume that there is a valid contract,
and fully analyze and discuss the remedies
that might be available under that contract
With regard to the law of contracts, the
agreement between Doe and GIANT is a form of
collateral contract that is not done in writing, but
as a promise, which then forms the basis for a
legal contract that could be recognized by the
law. Assuming there was a valid contract
between Doe and GIANT, of which there was
not, there are serious consequences to either of
the parties as far as reputation, career, and
business, are concerned (Gibson & Fraser,
2007).
To begin with, Doe is a world’s living legend for
his breakthrough in the invention of a cure for
the common cold, through which he is a Nobel
Laureate. Hence, many pharmaceutical
companies would like to be associated with such
a figure for business among other reasons.
Regardless of his personality and reputation,
GIANT, through perceiving him as an ordinary
individual has a right to take legal measures
against him for violation of a contract (Crosling
& Murphy, 2000).
The contract goes for four years after which then
he would either fail or renew the contract as is
required by law. By failing to renew, Doe shall
be free to move to MARK or any other company
of choice. GIANT’s thorough conviction that
Doe has breached the contract could take him to
court and sue him for the same. On the other
hand, Doe would be required by law to drop his
contract with MARK as a default requirement
after which then other requirements are
imposed.
Depending on the hearing of the case, the court
determines other legal punishments on the
offender (Keyzer, 2002). Doe in this case, which
would include proceeding to work with GIANT
for the next four years or a huge fine and
cancellation of a contract with GIANT, in which
case he would be allowed to proceed to work for
MARK. In either way, both parties would lose in
either their reputation or business.
Remember! This is just a sample
You can get your custom paper by oneof our
expert writers
In case of the case being ruled against Doe and
required to drop off his contract with MARK,
GIANT initially would have won, but lost in the
long-term business. An employee is the most
crucial element of a business, and hence their
rights should not be violated under any
circumstances in a democratic and capitalist
nation. Doe would have felt humiliated by
GIANT and most probably would never offer his
best for the success of GIANT, but rather long
for the ending of the contract or termination of
the same, but whichever comes first of the two.
In such a case, GIANT would lose in both
business and reputation perspectives as
competitors would take advantage of Doe’s
situation to humiliate GIANT.
In addition, Doe would react negatively to the
decision of the court, claiming the violation of
his rights, and instead seek protection from
professional bodies, which in most cases would
impose sanctions on the GIANT. In such a case,
GIANT would lose tremendously as it would be
perceived as an agreed company managed by
dictators and more so does not adhere to the
international labor rights and requirements
(Garrett, 2001). Australian constitution allows
professional bodies to issue sanctions on the
institutions that do not adhere to their
professional requirements; hence, Doe has the
right to seek protection for the professional body
of pharmaceuticals. Some of the remedies of
such sanctions would include the
pharmaceutical license being revoked or
GIANT’s products banned from entering some
markets.
On the other hand, if the court rules against Doe,
demands that he pays a fine, and proceeds to
work for the MARK, GIANT too would have
lost in the case. Most probably, MARK, would
pay the fine and publicize the matter in an effort
to create a bad reputation for GIANT in the
market. This scenario would happen because a
business increases chances of survival and high-
profit makings only when it manages to
overcome stiff competitors (Griggs et al., 2003),
and in this case, GIANT and MARK are stiff
competitors in the pharmaceutical industries.
However, business managers ought to be
prudent and focused on the objectives of their
business. Doe’s case has serious negative
consequences for the company regardless of the
ruling or validity of the contract and hence it
needs to be dropped before the matter worsens.
By dropping the matter, the business would
retain its competitive advantage over MARKS
and so be in a better position to work hard to
overrun the performance of MARK, whom Doe,
a pharmaceutical guru, is working for. In
addition, Doe would consider GIANT upon the
expiry or termination of its contract with
MARKS, which would serve as a gain for
competitive advantage for the company. As a
legal advisor, I would advise GIANT to ignore
the action but instead embark on improving
skills for quality production and target larger
markets.
Reference List
Barron,L. (2006). Fundamentals of business
law. North Ryde, NSW: McGraw-Hill.
Carvan, J. (2002). Understanding the Australian
legal system. Sydney, NSW: Law Book
Company.
Ciro, T., & Goldwasser, V. (2006). Law and
business: text and tutorial. Melbourne, Victoria:
Oxford University Press.
Crosling, M., & Murphy, H. (2000). How to
study business law. Sydney, NSW:
Butterworths.
Garrett, M. (2001).Correcting your
drafts. Melbourne, Victoria: Oxford University
Press.
Gibson, A., & Fraser, D. (2007).Business
law. Melbourne, Victoria: Pearson.
Griggs, L., Clark, E., & Iredale, I.
(2003). Managers and the law. Sydney, NSW:
Thomson Publishers.
Keyzer, P. (2002). Legal problem solving: A
guide for law students. Sydney, NSW:
Butterworths.
Turner, C. (2006). Australian commercial
law. Sydney, NSW: Law Book Co.
Vermeesch, R., & Lindgren, K. (2005).Business
law of Australia. Chatswood, NSW:
Butterworths.
