Introduction Marshall and his wife have been introduced into a Sunday school class I am teaching. He is discovering his faith in Christ and has shared in conversation that he owns a small business that could benefit from one of my products. After striking an implied business deal with Marshall, our companies begin to flourish with the recent interest in the benefits of Muscadines.
As business continues to flourish, Marshall takes it upon himself to secretly coerce my 17-year-old son into signing a contract unbeknownst to me. Now that a better business opportunity has presented itself to my company, Marshall is using this contact to hinder me from expansion. Implied Contracts Upon discovery and examination of this contract, it is apparent all business with Marshall would need to be terminated. This dissolution would cause significant strife between Marshall and I, but with just reason.
Marshall had an implied contract with my company stating he would heavily invest in my company’s Muscadine products, and these products would be supplied each month for a consistent predetermined price. An implied contract must consist of mutuality of intent to contract, consideration, an unambiguous offer and acceptance, and actual authority of the government’s representative to bind the government (White, 2008). An implied contract is also said to exist by the acts and conducts of both parties (Cornell, 2012).
Considering Marshall has maintained an investment in my company’s Muscadine merchandise, one can conclude an implied contract exists. Marshall, seeing the potential profits to be gained by this new product, wanted to ensure a more positive control of his investment by creating a written contract.
He made a huge error in judgment when he opted to have my son, a 17-year-old 1 BUSINESS part-time delivery boy, secretly sign this written contract essentially detailing the already established implied contract. Good Faith and Fair Dealing A new, promising business opportunity comes from a company out of Texas wanting to purchase all the products I currently produce at twice the rate Marshall pays. This is already an enticing offer, because Marshall tends to be frequently late in his payments. Considering this company is requiring I sign an output contract, which states this company will purchase all of the products my company is able to produce, I am unable to continue to supply Marshall with products (Output, n.d. ).
This new contract would ensure payments were made on time each month and my family would be more financially stable. Stopping business with Marshall to start a new venture with another distributor should have no legal ramifications. Had Marshall wanted to sincerely continue business, he would have approached me with this contract directly and practiced the good faith and fair dealing principles. Even though the contract was said to be a reiteration of the implied contract, Marshall’s shifty behavior implies he was preparing to avoid obligations or deny what the company already understood to be true (Implied, n.
d. ). Also, the fact Marshall assumed a 17-year-old minor to be a representative and ambassador of the company continues to identify his suspicious behavior and lack of regard to good faith and fair dealing. Lack of Reasonable Capacity In no way can anyone under the age of 18 sign a binding contract, because it is said that these minors lack the reasonable capacity to enter a contract (Bradley, n. d. ). Lack of reasonable capacity can be defined as one party of the agreement is too young or 2 BUSINESS lacks the metal ability to understand the agreement and it’s implications (Fitzpatrick, n. d. ).
The exceptions to this capacity are if the contract is pertaining to the minor directly in regards to food, clothing, and accommodation (Minors, 2008). Being that the contract is between Marshall and a 17-year-old minor, it has potential to be disputed and voided. Considering the 17-year-old unintentionally misrepresented himself and lacked legal capacity, the court can rescind the contract and attempt to restore both Marshall and my company to our positions prior to the establishment of this fraudulent contract (Bradley, n. d. ).
Doctrine of Promissory Estoppel The only security Marshall may have in this situation is a practice known as the doctrine of promissory estoppel. This defense defines a situation in which a promisee (Marshall) can recover any losses incurred due to a promisor (the company) defaulting on any type of gratuitous promise (Bradley, n. d. ). However, this will not be a substantial enough claim for Marshall being that the contract was with a minor and not my company. Future and Forgiveness The personal relationship with Marshall should not be affected, but it is already apparent Marshall will have animosity towards my company, family, and myself. As a concerned friend, I presented other options to Marshall in order for him to continue his business profitably.
A meeting to discuss the incident and options for the future is probably the best solution to any type of resolution. It should be made clear that his intentions were deceitful in nature and forgiveness has been bestowed to him. Should further animosity ensue because of the situation, reference a scripture from Ephesians 4:31 which states, “Let all bitterness and wrath and anger and clamor and slander be put 3 BUSINESS away from you, along with all malice” (Bible, n. d. ). It would be ideal to also ensure Marshall understands business is business, and this incident should not hold him back from his personal exploration to finding Christ.
Conclusion Because of the suspicious actions exuded by Marshall, my company has every right to pursue any legal actions necessary to have this secret contract rescinded. There are numerous reasons where Marshall appears more at fault in this situation. Even though Marshall can claim my company is in fault based on the doctrine of promissory estoppel, my company has a better argument in saying an implied contract existed and Marshall used shifty means to obtain a more binging written contract. The ideal situation is the fraudulent contract being rescinded and Marshall and I are able to learn a lesson from this incident.
Even more, Marshall will hopefully use some of my suggested distributors and begin to expand his company without my products. 4 BUSINESS References Bradley, Jeremy C (n. d. ). The Legal Capacity of a Contract. Chron. Retrieved from http://smallbusiness. chron. com/legal-capacity-contract-62816. html. Cornell University Law School (2012, January 04). Contract Implied in Fact. Legal Information Institute. Retrieved from http://www. law. cornell. edu/wex/contract_implied_in_fact. Fitzpatrick, Diana (n. d. ). Unenforceable Contracts: What to Watch Out For. NOLO Law for All. Retrieved from http://www. nolo. com/legal-encyclopedia/unenforceable-contracts-tips-33079. html. Implied Contract (n. d. ). Legal Terms and Definitions.
Law. com. Retrieved from http://dictionary. law. com/Default. aspx? selected=906. Minors and contracts. (2008, Mar 21). The Centralian Advocate Retrieved from http://search. proquest. com/docview/375992942? accountid=12085 Output Contract (n. d. ). The Free Dictionary. Farlex. Retrieved November 4, 2014, from http://legal-dictionary. thefreedictionary. com/Output+Contract. The Holy Bible (n. d. ). Witte, R. D. (2008, 01). Contracts implied in fact. Contract Management, 48, 70-71. Retrieved from http://search. proquest. com/docview/196311721? accountid=12085.