Author: Elliott J. Ehrenreich
Originally published in October 2016
Copyright © 2016 Knox McLaughlin Gornall & Sennett, P.C.
Acceptance of a Contract
Acceptance can be accomplished by either an agreement or an act. The document may or may not reflect additional terms which form a part of the agreement.
Prior and Subsequent Writings to a Contract
All documents/terms which were part of the contract negotiations need to be referenced or incorporated in the agreement itself. To the extent they are not, a party may not be bound to performance.
Subsequent writings, while evidence of intent, may not be legally enforceable without additional consideration. Parties also need to ensure that the modification or amendment language in the agreement is followed when changing or altering an agreement
Parties need to identify what is being purchased, in sufficient detail so as to be enforceable. Is there any requirement regarding the quality of goods? Do all parts have to be new? The quantity of the item or service needs to be sufficiently identified. If there is a deadline for performance it must be sufficiently identified, and to the extent necessary, called out so the other party cannot claim ignorance. Care should be taken to identify, if needed, what remedies there are for failing to perform on a timely basis.
Questions to consider:
In general, a party is obligated to pay the taxes assessed to them by law. Did the price in the quote/agreement include or exclude sales tax?
Most agreements will specify a specific state law which applies to any dispute between the parties. Most agreements will specify a specific jurisdiction to resolve any dispute between the parties. Parties should be cognizant that choice of state law and jurisdictions for a dispute are enforceable to the extent these have a rational connection to the transaction (corporate headquarters, place of performance, etc.).
Mediation is a requirement which requires parties to submit to discussions, before going to litigation, in a hope to resolve the disagreement amicably.
Arbitration constitutes private court, which may or may not include the ability to appeal to an actual court.
Assignment governs the right to transfer the agreement in whole, or perhaps in part, to a third party. This can and many times does include delegation to subcontractors. If the agreement is silent, assignment can be made without any consent.
Agreements many times call for a specific protocol to be undertaken before consent to an assignment may be given. In the most extreme cases, rights of first refusal are included in assignment provisions.
Agreements can also restrict the ability of a company to change its ownership, or, alternatively, terminate an agreement if a change in ownership occurs with a party to an agreement.
Must identify who is paying for shipping costs, insurance and risk of loss in transit. Certain commercial shipping terms, or Incoterms, are included to govern risk of loss and payment for shipment. If there are any specific shipping requirements, they must be included.
Questions to consider:
Questions to consider:
Questions to consider:
Questions to consider:
Questions to consider:
Conflicting Terms
The exchanging of purchase orders, with conflicting terms, followed by performance, creates a legally binding agreement.
Even though the terms may conflict, if the parties performed as if there was an agreement, and even though a purchase order specifically provides it cannot be changed, such terms will be negated or changed.
No Signed Agreement
Even if an agreement is not signed, there still can be an agreement. The ultimate performance, or even commencing work, will create a legally binding agreement. The terms as exchanged between the parties will constitute the agreement.
Uniform Commercial Code (“UCC”) Direction
When comparing the two (2) agreements, to the extent there are topics addressed by one (1) document when the other is silent, those terms will stand. To the extent the terms of the two documents contain conflicting language, these terms will be cancelled, and the UCC will fill in the terms, which are generally more favorable to the buyer of the goods. Other terms are filled in with what would otherwise be deemed “commercially reasonable.”
Author: Elliott J. Ehrenreich
Originally published in October 2016
Copyright © 2016 Knox McLaughlin Gornall & Sennett, P.C.