Goodman Ms Business 1100 honors hybrid Essay Question 1 Contracts are one of the most important documents in business. It can mean the difference between profit or loss, depending on how well written it is, or how favorable the wording is for you. A contract, improperly written, can void a contract that your business desperately needed, leading to your bankruptcy. There are many elements and criteria you must follow in order to prove the validity of the contract. All of these requirements have been debated and it is assumed that the system we have now in determining if an agreement is a contract or if it's voidable is the most effective and just way. Something a contract needs is offer and acceptance. This is the debating process to start to get a contract. The offeror or someone makes an offer to you, the offeree, and you either accept, reject, or present a counteroffer. For example John wants you to build a patio for him, he says he will pay you 1000 for this 2 day job. As the builder you can either accept it, reject it, or say I'd like 1500 for the 2 day job (counteroffer). This is the part of the contract where the demand is laid out and someone is interested in helping you fulfill this demand. After the offers have been places there is the acceptance is when they finally come to terms say at 1250 for 2 day job. This acceptance is a promise by the offeree to be bound by the exact terms proposed by the offeror. This process is also called meeting of the minds. Consideration is the most important part of the contract to many people that love money or compensation. During the negotiation of a contract you must decide how will you pay for the service. Consideration is something of legal value offered by one party and accepted by another as an inducement to perform an act. In my example the 1250 for the builder building John's patio would be the consideration. In reality anything can be consideration as long as its agreed upon, even a promise of a great bargain or deal is sufficient to fulfill the contractual requirement of consideration. Firstly, a contract must be entered into as the free and voluntary act of all parties involved. Which brings me to the element of having legally competent parties. Anyone entering into a contract must have legal capacity, meaning they are of legal age and have enough mental capacity to understand the consequences of their actions. For example, someone who is was drunk when the contract was signed has a right to void the contract if it is something he wouldn't agree upon if he was in the right state of mind. Also minors do not have the capacity to enter contracts; if they do the contract is voidable by the minor if he doesn't agree to its terms or until he turns 18. Also a contract making you do something illegal is unenforceable. Any mistake, misrepresentation, fraud, undue influence, or duress can create problems with the contract, making it voidable by the party that was
under the above influences. That party can also sue if fraud took place, or they were put under duress by the other party. If a breach of contract takes place, the party that breached is responsible for compensating and/or reaching an agreement with the other party. This is meant to protect people from entering into contracts they otherwise wouldn't. It is also important to have the capacity to enter into a contract otherwise youre not legally obligated to fulfill the requirements putting the other party at a disadvantage, that's why many contracts can be voidable under those reasons. There is also the problem of oral and written contracts. Nearly all written contracts are enforceable if they contain the above requirements even if theyre written on a napkin. The only ones that are not enforceable are wills that sometimes have other requirements like witnesses. Most oral contracts are valid, unless its something concerning real estate/ property and if the value of the trade in the contract is over a certain $ amount dependant on the state (usually around 1000). A contract is not executed until all of its clauses and requirements have been met and the parties have fulfilled their promises to the full range of what the contract said. Fillmore W. Galaty "Contracts" http://law.freeadvice.com/general_practice/contract_law/
Tomek Michalik Ms Goodman Business 1100 honors hybrid Unit 1 essay Question 5 Franchising is a well known business and commerce procedure that brings together the owner of a recognized company, franchisor, with someone who is interested in opening a small business using that owner's recognized merchandise, franchisee. Franchising has become very popular in today's society where it has become increasingly to difficult find the financing and time to create a business plan and begin your own business. With a franchise the procedure is already set and you just pay a one time fee plus a fee equal to 4% of your gross sales to the franchisor and the rest is profit after deducting your other costs: rent, equipment, taxes, insurance, maintenance, and supply costs. Although it seems like a lot, with a small business you would have to spend much more money and have to undergo
the duress of putting your family through potential financial disaster for a few years until your business starts going, or worst case scenario you bankrupt. There are many advantages to a franchise which most believe outweigh the disadvantages since more than 90% of franchise owners report a positive income and are relatively if not very successful. The obvious advantage is the established name the franchise has provided to it. Like a McDonalds is guaranteed to already have a standard and have a flow of customers coming in. See if a small business was associated with a big business like a Microsoft, then probably the small business would propel forward due to the firm's backing and support of the already established and respected business. Running a small business under the franchisor's name and organization is very beneficial for the people that would like their own businesses but can not afford to finance and invest 3 years of their life into their own business. Also tied in is the marketing fee you pay to the franchisor that guarantees that you will have customers knocking on your doors instead of having you knock on theirs. This relieves you of the hassle of advertising your own business and you can get down to selling and generating a profit immediately. The training and management facilities and help provided to you by the franchisor are priceless. Yes there are SBA classes for small businesses, but I have never known anyone to go to one and the SBA's services are not easy to come across. With a franchise everything comes to you. The franchisor is like a guardian making sure all of the money being invested is making the franchise run properly. With a small business the only person watching out for the well being of your business is yourself, which can make it difficult, both physically and emotionally to run your own small business. Franchises do have disadvantages as well, for example control is an issue. With a small business all the decisions you make are final as the owner. With a franchise all your decisions have to be consulted and approved by the franchisors. This greatly limits the authoritative control small businesses have. Although some people do not have a problem with asking the franchisor, "would it be okay if i..." but others find it a great hassle and that it takes away from their freedom in their business. Another disadvantage is reaching a general agreement, or the contract, that you have with the franchisor. There are several occasions when the terms and conditions imposed by franchisor are in direct contradiction to what the investor wants. In effect the company puts safe-guards to protect the interest of the franchisor, not the franchisee. For example if you run the franchise into the ground there could be penalties, if you want to sell the franchise to a third party then they could refuse or ask you to pay a penalty. They are constantly policing you and making sure you abide all of your duties. They decide how many hours and how many employees you need hired at any one time. You can not change any of those things. For example Burger King has all of its fries across the country made exactly the same way, so they taste exactly the same wherever in the country you
eat BK. That is their rule and if you do not follow it you could be penalized. This is the exact opposite of a small business which gives you the choices. You can sell your business or declare bankruptcy, but then again you will be the only one directly affected by what you do with your business. With a franchise, if you do wrong you are damaging the franchisor and the proud company's name and you will be penalized if you do anything derogatory. Overall there are plenty of perks going along with owning a franchise, but the main disadvantage is its not really your own business. Its kind of like owning a car, but not really owning it, because its your parents and they will exactly designate how its to be used. Some would say a franchise takes all the fun and excitement out of business, others say franchises are the same profit, less risk. I believe it's a worthy investment if you can find the right franchise and an understanding franchisor, then it's a really good investment.