Law of business association Essay Example

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Title :Law of business association


The law of business association or companies’ law is a field of law concerning any company of business organization like partnership or corporations which are profit making or specialize on the charitable or economic activities. These laws are meant to guide or rule the operations of the organization by forming the constitution of any company. It was derived from the common law of England addressing all types of corporations (Spindler, 2002). The essay below concerns the laws of Glamour Developments Pty Ltd which specializes in the construction of multi-level units in Melbourne. The concern law is that of how the company makes contracts and the techniques used.

Law of business association

Glamour Company is under the management of five directors and one of them acting as the Managing Director. Jane is anticipated to take over as the managing director after Mark steps down due to his ill-health, there is a problem when she makes a contract with Sarah who is an architect and well known for her avant-grade work using environmentally –friendly materials. In her position as the Managing director of the company; Jane had a negotiation with Sarah and settled at a fee of $ 70, 000 then signed a contract. However, due to the financial difficulties which the organization was facing at the moment as well as the dislikes of this work by the other directors, the transaction was turned down (Atkinson, 2005).

The company makes contracts based on the rules and regulations set in the constitution governing the entire organization. This stated that any contract whose charges exceeded $40, 000 requires the approval of all or majority of the directors hence Jane did not have the power to sign it without the knowledge of the others even in her position as the Managing Director. For the assurance of the achievement of the intended purpose asked Po one of the directors to negotiation the contract. Po was the style advisor for the entire organization therefore would help Sarah in enforcing the contract since it was already signed and had designed and worked on it. Every member of the management committee was supposed to be involved in the process of making contract and given a chance to express their opinions or views towards any contract to avoid disagreements (Gibbons,
2003 p. 78).

The managing director would have involved the other directors or Po as the style advisor in her deal with Sarah since it required a large sum of money exceeding the set amount of $40, 000. The laws of business association in Glamour Company apply the technique of acting within the authority thus the junior directors had power to stop the operation of the Managing Director when she assigned a contract with Sarah. They solved these contracts by acting within the authority or considering the rules or regulations set in the constitution of the entire company. Failures to appoint is another technique which are considered in the circumstance. The Managing Director did not appoint the responsibility of making the contract to the relevant individuals or involving the other directors in the process signing the contract (Cibinic, &
Nash, 2006).

Consulting the other directors or taking time to understanding the operations or performance of the organization so as to know its financial status before entering into any transaction prevents misunderstanding, 2006)CCH Incorporated (Garrett, &. The Managing Director would have understood the financial problems of the organization before entering into any expensive transaction or would have discussed the ways of raising money with the other members of management (Blau, 2003).

Written business contracts are legally easier to uphold than an oral contract because the agreement is signed and reference for agreement. The agreement between Sarah and Jane was written and very formal thus they could not withdraw it without proper arrangement or agreement between the parties involved (JSTOR (Organization), 2011). The contracts in an organization should be made depending on the laws of the organization as well as the set goals and objectives for the improvement of the performance. For the improvement or reduction of the financial crisis in Glamour Company, the management should concentrate on the contracts which are less expensive or participate in boosting the market of the products (Domberger, 2008).

According to Blankson, (2007), work contract is important in the operation of the organization and the work that the contractor does because both the worker and the owner are protected by the performance agreement that they sign. Before signing the agreement the owner of the organization should assess the nature of the job to be done, have the budget or the cost of the job and the nature of the payments to be made, list the necessary materials, the duration it would take and have all the involved members read and understand the contract before signing (Hansen, 2006).


Law of business is essential in the operation of the organization and the sensitive activities like making contracts. They bear the constitution of the business organization thus the members will be able to act to the expectation of the entire organization. The law of Glamour organization guides the members on the process of making contracts, this is used as a defend mechanism to turn down the transaction between Sarah and Jane.


Atkinson, P., 2005, Strategies for winning contracts, Aspen Publishers Online, New York.

Gibbons, J. The Public Debt of the United States: Its Organization; Its Liquidation; Administration of the Treasury; The Financial System: Burt Franklin research & source works serie, (525) Iss 525; 2003 p. 78.

Cibinic, J. &
Nash, R., 2006, Administration of Government Contracts, CCH Incorporated, Kansas.

Blau, J., 2003, Social contracts and economic markets, Springer, Salt Lake

Domberger, S., 2008, The contracting organization: a strategic guide to outsourcing Oxford University Press, Oxford.

Hansen, S., 2006, Performance contracting: expanding horizons, The Fairmont Press, Inc., New York.

Blankson, S., 2007, The Guide to It Contracting,, New York.

JSTOR (Organization), 2011, The Annals of the American Academy of Political and Social Science, Volumes 153-158, the University of Michigan, Michigan.

Spindler, G., 2002, E-commerce law in Europe and the USA, Springer, Salt Lake.

, 2006, CCH IncorporatedGarrett, G. &World Class Contracting, CCH Incorporated, New York.