Business Contracts and Legal Risks
MGT 352
December 18, 2012
Final Paper 2
Introduction
Many companies today often don’t think about legal issues related to their business until they are hit with a lawsuit or decide they need to take legal action against someone else. The ramifications of a lawsuit as a plaintiff or a defendant can impact a company and even destroy a company and its reputation. This can happen if the company is not fully prepared on handling legal pitfalls that might come their way. Creating a system that defines and controls the company’s workflow is important in running a smooth and profitable business, as well as avoiding potential troubles with the law in the future. There are many risks that companies can be prepared for including structuring effective business contracts, avoiding lawsuits on business torts, minimizing product liability risks, avoiding employee lawsuits and avoiding risk in domestic and international sales transactions.
Business Contracts Contracts contain a common element which is a promise. A contract is a legal relationship that consists of the rights and duties of the agreeing parties growing out of promises. (Meiners, 2011). Contracts are important especially when an arrangement is more complex between two parties than just an exchange of money for goods. Contracts come in many forms and may not always be enforceable. Contracts can be in formal writing, oral discussions or inferred by the actions of the parties involved. A contract contains basic elements that gives the parties involved the confidence that exchanges will be enforced. These basic elements are an agreement, consideration, and legal capacity to contract, lawful subject matter, and genuine consent to the contract. Courts will not recognize contracts that violate the law. Business contracts play a vital role and can be damaging to a business if it is not properly written. Risks and opportunities for legal pitfalls become evident when new
December 18, 2012
Final Paper 2
Introduction
Many companies today often don’t think about legal issues related to their business until they are hit with a lawsuit or decide they need to take legal action against someone else. The ramifications of a lawsuit as a plaintiff or a defendant can impact a company and even destroy a company and its reputation. This can happen if the company is not fully prepared on handling legal pitfalls that might come their way. Creating a system that defines and controls the company’s workflow is important in running a smooth and profitable business, as well as avoiding potential troubles with the law in the future. There are many risks that companies can be prepared for including structuring effective business contracts, avoiding lawsuits on business torts, minimizing product liability risks, avoiding employee lawsuits and avoiding risk in domestic and international sales transactions.
Business Contracts Contracts contain a common element which is a promise. A contract is a legal relationship that consists of the rights and duties of the agreeing parties growing out of promises. (Meiners, 2011). Contracts are important especially when an arrangement is more complex between two parties than just an exchange of money for goods. Contracts come in many forms and may not always be enforceable. Contracts can be in formal writing, oral discussions or inferred by the actions of the parties involved. A contract contains basic elements that gives the parties involved the confidence that exchanges will be enforced. These basic elements are an agreement, consideration, and legal capacity to contract, lawful subject matter, and genuine consent to the contract. Courts will not recognize contracts that violate the law. Business contracts play a vital role and can be damaging to a business if it is not properly written. Risks and opportunities for legal pitfalls become evident when new