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The Basics of Contract Writing
Business can be conducted successfully only upon the certainty that promises will be fulfilled. Unfortunately, promises based solely on personal honesty are not always sufficient. Such promises do not have the reliability which is essential to business. Contracting — and the law that stands behind contracts — assures the parties to an agreement that the promises they make will be enforceable.
The Battle of the Forms
Under the common law of contracting, the acceptance of a contract must be a "mirror image" of the offer to form a contract. If an offer is made and the acceptance in any way changes the offer, there is no contract. For example, if Smith makes an offer to sell his car to Jones for $10,000, and Jones accepts the price but tells Jones that he also wants the car painted and the radio upgraded, no contract has been formed. Smith has made an offer and Jones has returned with a counteroffer.
Writing The Contract
When writing a contract, a starting point is to ask: "What is the purpose of this contract?" One objective is to define the understanding between and responsibilities of the parties, and predetermine (allocate) the risks that each party is willing to accept. Another objective is to define organizational goals and policies and translate them into the provisions of your contract. For example, the philosophy of long-term and "partnering" liaisons with suppliers has assumed much significance in the '90s. If that concept has taken on importance in your organization, your contract should reflect this goal.
Understanding Terms and Conditions
Contract law and the Uniform Commercial Code (UCC) provide purchasers with many rights and remedies. With the expansion of warranties and the development of the UCC, the law has moved from caveat emptor (purchaser beware) to caveat venditor (seller beware). However, there are rights the purchaser often needs that are not automatically granted, and so they must be written into the contract.
Leslie S. Marell
Leslie S. Marell is an attorney in private practice. She has specialized in business and commercial law since her admission to the California Bar in 1976. Ms. Marell has extensive legal experience counseling organizations, particularly those in manufacturing and high technology, in the areas of business contracts, purchasing, computer and technology law, real estate, employment law, and day-to-day legal matters. Prior to establishing her firm in 1990, she was corporate counsel for Avnet, Inc. (Hamilton Hallmark) for six years and is formerly affiliated with United Technologies Lexar and Hughes Aircraft. Ms. Marell has developed seminars entitled, "The Legal Aspects of Purchasing," and "Reading, Writing and Negotiating Contracts," which she presents to purchasing professionals throughout the country. She is also the author of a software disk for purchasing professionals containing 68 contracts covering a wide range of subjects.
- NAPM InfoEdge, February 1997, "Understanding Electronic Commerce"
- Glossary of Key Purchasing Terms, Compiled by the National Association of Purchasing Management
FOR FURTHER READING
- King, Donald B. and Ritterskamp, James J. Jr., The Purchasing Manager’s Desk Book of Purchasing Law, Second Edition, Prentice Hall, 1993
- Contract Terms and Conditions, NAPM TECHnotes, NAPM 1993
- NAPM’s 81st International Conference Proceedings, April 1996, "The UCC as a Tool for Procurement Professionals"
- Purchasing Today™, August 1996, "Online Software Licensing"
- Purchasing Today™, April 1996, "Essential Elements of Software License Agreements"
- Ritterskamp, James J. Jr., Ritterskamp Views the Law, NAPM, 1995
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