CHE 458 – Unit 6 Entrepreneurship and Business Development PDF

02/08/2024 CHE 458 – Entrepreneurship and Business Development (Unit 6) LECTURER: Kenneth Asamoah Boateng, PhD 1 Course Content CHE 458 Entrepreneurship...

02/08/2024 CHE 458 – Entrepreneurship and Business Development (Unit 6) LECTURER: Kenneth Asamoah Boateng, PhD 1 Course Content CHE 458 Entrepreneurship and Business Development (3, 0, 3) Entrepreneurship and free enterprise. Types of business and registration. Law of contract. Business planning and reporting. Product and service concept for new ventures. Market and market development. Organization and financing new projects. Current trend, e-commerce. Case studies. 2 1  02/08/2024 UNIT 6.0 LAW OF CONTRACT 3 6.1 What is Business Contract ? 6.1.1 Definitions A contract refers to an agreement between two or more parties to create a legally-enforceable obligation to perform, or refrain from performing, a certain task. A contract can relate to almost any kind of transaction: Sale Service Transfer of property ownership Combination of different kinds of transactions. 4 2  02/08/2024 6.1 What is Business Contract ? 6.1.2 More Definitions The term "contract" is often used to refer to an agreement, consisting of the exchange of promises, which is recognized by law as giving rise to enforceable rights and obligations. It is a promise or set of promises which the law will enforce. This definition emphasizes the fact that a contract consists essentially either of an exchange of promises between two or more parties or a promise given in exchange for the performance of an act. 5 6.1 What is Business Contract ? 6.1.2 More Definitions A contract is essentially the outward manifestation of agreement between the parties with regard to a common objective. This manifestation of agreement may be made wholly or partly in writing, orally, by conduct or by a combination of all three. 6 3  02/08/2024 6.1 What is Business Contract ? 6.1.2 More Definitions In exceptional circumstances, a statute may demand that a particular kind of contract must be in writing to be enforceable. It means that no contract shall be unenforceable merely because it is orally made or not in writing. 7 6.1 What is Business Contract ? 6.1.3 Oral vs. Written Contracts Section 11 of the Contracts Act, 1960 (Act 25) which states: Subject to the provisions of any enactment, and to the provisions of this Act, no contract whether made before or after the commencement of this Act, shall be void or unenforceable by reason only that it is not in writing or that there is no memorandum or note thereof in writing. 8 4  02/08/2024 6.1 What is Business Contract ? 6.1.3 Oral vs. Written Contracts On the other hand, there are special contracts that the law requires that they be made in writing to be enforceable. For example, a contract for the transfer of an interest in land, mortgage contract, hire purchase, moneylending contract etc. must be in writing as required by the various legislations applicable to the specific areas of contract to be enforceable. 9 6.1 What is Business Contract ? 6.1.3 Oral vs. Written Contracts Another factor of considerable importance is whether the oral statement in question was later reduced into writing by the parties. Where the parties later reduce their oral agreement into writing, the omission or exclusion of an oral statement from the written document may lead to the inference that the parties did not intend it to be a term of the contract. This is known as the parole evidence rule. 10 5  02/08/2024 6.1 What is Business Contract ? 6.1.3 Oral vs. Written Contracts However, oral evidence may be used to explain an absurd provision in the written contract. Therefore, under the law, the law recognises both oral and written contracts but there are certain contracts that the law requires them to be in writing to be enforceable. 11 6.1 What is Business Contract ? 6.1.4 Parties in a Contract The parties in a contract are the two sides coming to an agreement and can include the following: Individuals Business entities Organizations Government agencies Usually, the parties creating the contract are the only parties that the rights and requirements of the contract pertain to. 12 6  02/08/2024 6.2 How to Write a Contract Anyone can draft and enforce a valid contract. When writing a contract, there are two things to keep in mind: 1. Ensuring the contract addresses all of the possible scenarios that may arise. 2. Ensuring the contract terms are not ambiguous. 13 6.2 How to Write a Contract Ambiguous terms have the potential to lead to differences of opinion between the parties to a contract. Unambiguous terms lead to a reduced risk of litigation. It is advisable to include as much information as possible in the contract so that disputes and misunderstandings are less likely. 14 7  02/08/2024 6.2 How to Write a Contract A Contract must specify the terms of the exchange and each party’s duties and responsibilities. For instance, if the contract is an exchange of goods, it must state and describe the goods, how many are involved, how much it will cost, and terms of delivery. If it is about delivery of service then the service must clearly be defined. 15 6.2 How to Write a Contract In addition, the contract must always include the basic information about the parties involved and the specific agreement, such as: The start and end date of the contract The names of all parties to be bound Payment amounts, in what form, and due date Potential damages for breach 16 8  02/08/2024 6.3 How to Execute a Contract In a contract one party makes an offer and the other party accepts. The offer is made by one party who drafts the contract and sends it to all parties involved. Upon review the offer may be accepted or rejected by those parties. A counteroffer may be made for the first party to accept in order for a contract to be created. 17 6.3 How to Execute a Contract An offer can be revoked so long as it has not yet been accepted. Once an offer has been accepted, a contract is legally formed and a revocation would result in breach of contract. Contract negotiations typically occur between the parties involved to ensure that they are both satisfied with the arrangement. Once both parties agree to the terms, they must both sign and date the contract. Both parties should keep a copy of the contract for their records. 18 9  02/08/2024 6.4 Common Tips for Writing Contract It is best to get the agreement in writing. Oral agreements can be binding in certain situations, but to avoid confusion and minimize the chances of disputes, the agreement should be written down in the form of a contract. Written agreements are easier to enforce. The provisions of a contract should be detailed. 19 6.4 Common Tips for Writing Contract Terms should be defined in clear language that leaves no room for ambiguity. Specific dates or prices, if applicable, should be listed. The contract details can always be modified later by writing an amendment to the contract that all parties sign and date. 20 10