BUSINESS LAW ASSIGNMENT

Business Law Assignment



Business Law Assignment

Question 1

A: Assuming that in law the agreement comprises a contractual joint venture; would the requirement of good faith likely be an implied term of that agreement?

Contracting parties often use contracting clauses that are the exact opposites of completeness catchalls: general clauses such as 'good faith' or 'best efforts' clauses signal contracting incompleteness, as opposed to completeness. It is important to remember that all of these strategies involve presumptions. It is all too easy for courts or proponents of a particular strategy to criticize the alternatives as failing to hew closely enough to the parties' intentions, when in fact the parties' intentions in incomplete contracts are at least uncertain, and the question is which strategy is more likely to be successful at approximating these intentions. For example, suppose a buyer rejects goods delivered late after the market price drops below the contract price. A court might be called upon to decide whether to imply a good faith limitation on the buyer's ability to reject (Dobbs, 2001, 78).

A textualist might argue no on the ground that such an implication would be contrary to the parties' intentions as expressed in the time of delivery term. But the parties' intentions - whether actual or hypothetical - may well be that a good faith obligation should be implied rather than that the time of delivery term should be interpreted as absolute. A proposition that textualism, contextualism, penalty defaults, or joint maximization best represents the parties' intentions needs to be defended. A joint venture is a mechanism for combining complementary assets owned by separate firms. These assets can be tangible, such as machinery and equipment, or intangible, such as technological know-how, production or marketing skills, brand names, and market-specific information. In an equity joint venture the partner firms transfer all or part of their assets to a legally independent entity and share the profits from the venture. Contractual arrangements that do not involve shared equity control are sometimes referred to as nonequity joint ventures; examples include licensing and management contracts, as well as supply and distribution agreements. Shared ownership and contractual arrangements are also frequently grouped together under the term alliances.

For example, the implied duty of good faith or the duty of loyalty in fiduciary contracts. Are these defaults or mandatory rules? That depends on how well one thinks the duty of good faith tracks contractual intent. If one believes that parties may write incomplete contracts for which they expect courts to fill in the gaps, the duty of good faith or the duty of loyalty might easily be viewed as a default. If the parties want a particular obligation that conflicts with what courts ordinarily view as good faith or loyalty, and they specify that obligation, courts will generally enforce it.

B: Under general contract law principles, do either or both of the QSG changes in the applicable law, allow either party to avoid, rescind or terminate the contract?

If we analyze the case, we will ...