A contract is an integral part of any serious case. Contracts may be both written or not. Of course, the written ones are considered more serious, while oral agreements do not have the same legitimate power. They are the legal agreements that aim to guarantee the equal rights of the parties involved. As Houg and Kühnel define it, “A contract is an exchange of promises that constitutes a legally binding agreement between two or more parties. The agreement is reached when an offer by one person (the offeror) to another (the offeree), that indicates the offeror’s willingness to enter into a contract on certain terms without further negotiations, is accepted by the offeree. The contracting parties can be individuals, groups, or organizations” (4). The content of the Contract differs depending on its purpose. Nevertheless, the structural components are usually standard. An agreement with the proper structure and content is a sign of professionalism. I am going to analyze a Contract between two medical institutions. For reasons of confidentiality, their titles will not be mentioned. The names “Hospital” and “Laboratory” will be used instead.
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Offer and Acceptance
The Contract under analysis is a bilateral one. Its integral components are the intendance to create legal relations, offer, acceptance, and consideration (Houg and Kühnel 6). Let us concentrate on offer and acceptance, as they give the idea of what the agreement is about. Generally speaking, an offer is a promise of some actions in exchange for the actions of another party. It introduces the objectives of the contract parties, for the necessity of informing the other party of one’s intentions is evident. McKendrick interprets an offer as “a statement by one party of a willingness to enter into a contract on stated terms, provided that these terms are, in turn, accepted by the party or parties to whom the offer is addressed” (26). There are no restrictions on the form of an offer. It may be written, oral, or indicated by ones’ behavior. The offer and acceptance parts of this Agreement are stated in the section called “Recitals.” In the offer, the Laboratory indicates that it operates some clinical laboratories and can provide the testing of high quality. Thus, it suggests the services that can be transferred to another party according to the Contract on certain conditions. In acceptance, the Hospital agrees that it uses a clinical laboratory for the welfare of its patients. The peculiarities of taking the services are also outlined here. The Contract states that the Laboratory is used in case of necessity for a qualified diagnostic reference that cannot be performed in the Hospital’s laboratory. It means that a Laboratory has resources necessary for a Hospital. A Laboratory will let them be used by a Hospital on the cost established in Exhibit A.
The subject of the Contract
The subject of a Contract defines what is being transferred acceding to the agreement. The subject of this Contract is the laboratory services provided by a clinical Laboratory for the advantage of the Hospital patients. To identify the subject, the Contract uses the following instruments. First of all, it is the Agreement itself. Secondly, it is Exhibit A. The Exhibit is necessary for this type of a contract. As long as it involves the delivery of services, these services should be listed. Besides, the cost of the tests provided by the Laboratory is fixed in the Exhibit A to address the financial issue. The Client will pay the Laboratory according to the fee schedule. The instruments and recitals mentioned above are the integral components of the Contract.
Warranties and Conditions
Warranty is crucial for any contract (Utkin 31). Some researchers oppose the concepts of warranty and condition (Taylor and Taylor 105). In fact, Taylor and Taylor define warranty as “a term of a contract that is not a condition and gives the right to damages but not termination upon breach of warranty” (105). A condition is a term of a contract that “gives the right to terminate and claim damages upon breach of the condition” (105). One of the warranties in the given Contract is as follows. The Hospital guarantees that the Laboratory will not be charged for non-performance of the obligations because of reasons out of control. These situations may include natural disasters like storm or flood, or social and political issues like war. It protects the Laboratory from income loss in case of unpredictable situations that could not be avoided. There is also a financial warranty. It deals with the fixed prices for the tests during the initial term of the Contract. It protects the Hospital from the possible growing costs and, consequently, may attract customers who prefer stability. The mutual warranties contribute to the confident relations between the parties. They may feel more protected and, as a result, provide the high-quality service.
As for the conditions, one of them is connected with the possibility of order cancellation. The Contract states that a Client has an opportunity to cancel an order. On condition the Client’s notification is received earlier than the test is completed, Client will not be penalized. It is an advantage for the patients of the Hospital, who are the consumers of the services provided by the Laboratory. It is important that they feel safe about the refund of their payment in case the tests they have purchases appear unnecessary. It is crucial to state the conditions of services delivery in a Contract to avoid misunderstanding between the parties.
The parts about Contract term and termination are also significant. The parties should be aware of its duration together with the conditions and consequences of Contract termination. The Agreement under analysis lasts for three years starting from the day it was signed by the two parties. This Contract may be terminated due to certain reasons. First of all, it can be done by agreement of the parties. In case both parties are not satisfied with the contract implementation, they may agree to stop it. In this situation, the financial component is not included. Secondly, the reason for agreement termination is a material breach of the Agreement. In this case, the non-breaching party has to give the breaching one a written notification at least sixty days before the termination date. This period includes forty-five days during which the breaching party has a chance to solve the problems which caused the desire to terminate. If the parties find the solution within this period, the provision of the services on the Contract will continue. If the parties do not come to the compromise, the Contract is terminated by the end of the 60-days period after the notification. Finally, the contract can be terminated without indicating a reason. This situation demands to inform the other party minimum ninety days before the supposed termination date. This termination condition protects the parties from the loss of a customer of a provider accordingly. The 90-days period before the termination can be used to find other partners.
The Applicable Law and Its Interpretation
The laws that apply this Contract best of all are the Information privacy laws. As long as the Contract regulates the activity in the sphere of medicine, a lot of personal data are implied. They relate to both social and health issues. They are interpreted in a paragraph of the Contract devoted to confidential information and its protection. It states that both parties are aware that they may have access to some confidential information. It may include policies, trade secrets, operating manuals, software, some techniques, price lists, patient data, and other business information. The Contract declares that the confidential information belongs to every party and must not be transferred to any other parties. Consequently, the parties nay use the information belonging to each other, but it cannot be transferred or used in situations not related to the subject of the Agreement. The paragraph also has the instructions on the treatment of information in case of Contract termination. After the Contract is terminated, the Parties should stop using the confidential information of the other party. The application of this law protects the parties against the information disclosure.
Another aspect of the Contract that implies the Information privacy laws is the computer service. A Laboratory provides Clients with access to a particular system where they can order tests or get the results. Consequently, the system should be well-protected as it also contains personal information. The Laboratory provides the customers with the safe access to a web-based application where they manage their tests.
One more law connected with the Agreement is that of copyright. The Contract states that the Parties are not allowed to use the symbols or trademarks of the other Party without having a written approval. It guarantees the protection of both parties’ reputation.
In the long-lasting contracts, disputes are inevitable. Consequently, this possibility should be considered in the Contract. According to Turner and Turner, negotiation is one of the most popular ways of disputes’ resolution (427). It reduces the cost of the resolution and saves time. Arbitration usually suggests a satisfactory outcome for the parties. On the contrary, litigation is considered to be not effective in disputes’ resolution. As for the Agreement under analysis, it dedicates a separate paragraph to the issue of disputes. It states that a dispute between a laboratory and a Hospital should be resolved within ten days. In case the Parties are not able to resolve the dispute within this period or a longer one on their agreement, they may go to the court of competent jurisdiction. Still, while the Contract is under the court’s consideration, the Parties continue fulfilling their responsibilities on the Contract. It should also be mentioned that one of the parties is located in an Arab country. Consequently, the Contract states that all the disputed should be governed in accordance with the laws of that country.
Contract Effectiveness and Perspectives
To my mind, the Contract is properly structured. It has enough information to protect the interests of the companies. It singles out the rights and duties of every Party. It includes the conditions of services delivery and their cost. The Contract regards the issue of confidential information which is crucial for medical services. It might be effective in the conditions it describes. Still, some alternations can be done to improve the existing Agreement and make it more universal. I suppose that there could be other ways of resolving disputes than addressing the court. For example, arbitration as means of dispute resolution may be applied. Andrews states that “the assumption made in this work is that the parties have elected to pursue arbitration rather than to use the courts for the conduct of the main proceedings (17). In case the financial issues are not affected, arbitration may be a more effective, economical, and faster way to resolve a dispute. As long as the Contract mentions all the important issues concerning the mentioned services, there should not be a problem in dispute’s solution through arbitration.
On the whole, a properly constructed Contract is vitally important for any business relations. It is a guidance to contract termination the parties involved. The Contract gives the opportunity to structure the business relations and make the parties fulfill their duties. It states the expectations, enumerates the actions and predicts the possible outcomes. The Contracts are particularly important for negotiations which imply a financial component. Of course, the Contracts will differ depending on its goal and sphere. Still, the major components like offer and acceptance, a subject, warranties and conditions, disputes’ solving mechanisms, etc.
Andrews, Neil. Arbitration and Contract Law. Springer, 2016.
Hough, Tracey, and Kathrin Kühnel-Fitchen. Optimize Contract Law. Routledge, 2017.
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McKendric, Ewan. Contract Law. Palgrave Law Masters, 2015.
Taylor, Richard, and Damian Taylor. Contract Law Directions. Oxford University Press, 2015.
Turner Dennis F., Alan Turner. Building Contract Claims and Disputes. Routledge, 2014.
Utkin, Lev et al. “Imprecise Inference for Warranty Contract Analysis.” Reliability Engineering and System Safety, vol. 138, 2015, pp. 31-39.