Business law analysis question Essay Example

  • Category:
  • Document type:
  • Level:
  • Page:
  • Words:

Business law 3

Question a

The fundamental provision of the Uniform Commercial Code provides a comprehensive coverage of contracts concerning the sales of goods and other intangible properties. The UCC § 2-206; Restatement § 30(2) defines the modern approach to acceptance of a contract (Frey 2001). It provides that a contract can occur if either the offeror or the offeree has acted reasonably in written, by silence or by any other actions that shows acceptance of the terms of the contract in a reasonable manner. It therefore makes the silence by one partner to imply that the offer has been accepted and thus a contract that is binding has been created between the two parties (Koffman 2007). This basic provision of the UCC is important and applicable to this scenario.

Since Ben, the manager of Safe Food (SF) had agreed for the transfer of Excellent Foods (EF) business to SF if the sales increase by 20 % and that SF will be ready to pay $90, 000 for the deal, the contract had already been created if only the sales of EF would attain the 20 % increase in a period of two months. Later, the EF wrote a letter dated 14/2/2011 to inform SF about the changes in the terms of condition as a result of increased value of the business to $120, 000. SF failed to respond to the changes in the conditions, this in itself implied according to UCC § 2-206(2) that SF has agreed on the changes of the terms of initial agreement (Emanuel 2010). Within a period of two months, the sales of EF has increased by 25 %, the manager of EF Dave then proceeded with the transfer process to SF. SF responded by indicating that it was no longer interested with the deal (Brown 2000).

Based on the actions of SF, EF can commence actions against SF because SF breached the contract on the following grounds. It failed to honour the terms of EF transfer which it had created through an agreement, SF could have opted to disagree with the changes in the terms of sales when it was notified about the increase in the value of the business. SF silence implied that it had agreed with the terms but instead went on to dishonour an enforceable contract and hence liable for its actions in a commercial court of law if EF proceeds to filel a suit. Lastly, EF should commence its charges based on the actions of SF and the provisions of the UCC.

Question b

According to Kelleher (2009, p.91) Promissory Estoppel set forth in Restatement of Contracts of 1981 Section 90 provides that; a promise made by a promisor should be honoured in order to avoid injustice that may occur on the part of the promisee. The promisor is thus liable for the damages that resulted from his/her failure to honour a promise which ends up disadvantaging the promisee financially or in any other way that is reasonably considered a loss on the side of the promisee as a result of the failed promise. As also elaborated by Miller (2009, p.189) there are a number of conditions that must be fulfilled in order for the Promissory Estoppel to be enforceable. Firstly there ought to be a clearly defined promise, secondly, the promisee must reasonable rely on the promise, thirdly, the magnitude of the reliance must be of great and definite character and fourthly, justice will only be served through the enforcement of the promise (Miller 2010).

Assuming that the letter dated 14/2/2011 had not been submitted by EF, EF could not have relied on the provisions of the Promissory Estoppel because of the following reasons. There is lack of a defined promise because of the changes that was made by the promisee without informing the promisor in a reasonable time, the changes of the value from the initially promised $90,000 to $120, 000 ought to be communicated in order to make the promise clear and defined. The second issue is that the promisee unreasonably relied on the promise given the fact that there were some substantial changes in the promise which was not communicated. Thirdly the magnitude of the reliance on the side of EF the promisee is not great and of defined character. Fourthly justice cannot be served by enforcement of the promise since there were some considerable changes that should have been communicated effectively to the promisor in order for the process to be justifiable (Helewitz 2010). As shown by the failure to meet the required terms of Promisory Estoppel, EF cannot rely on the provisions of this doctrine to bring any charges against SF under any circumstances.