John Saute Case

The U.S. legal system can be very complex and confusing to someone not in the legal profession and requires many years of study and practice to be proficient at applying its principles. Even though it is difficult to grasp all the aspects involved in the different facets of the law as it pertains to business, understanding at least the basics of contract law is vitally important for managers and business owners because they will most likely be dealing with contracts on a regular basis in order to successfully meet their business obligations. A contract is a way to describe and define the expectations of each party in a business relationship or transaction, it provides a measure of certainty, spells out what the consequences are if either …show more content…
What are the implications of the contract the John signed and how will it affect his decision whether to accept the new job or not? First, we need to understand the five elements of a contract that must exist for the agreement to be enforceable. Seaquist (2012) says …show more content…
Contracts are governed by either the common law or the Uniform Commercial Code. If the contract involves the sale of goods, it is governed by the Uniform Commercial Code and if it deals with anything other than sales of goods, then it is governed by the common law (Seaquist, 2012, p. 137). Sometimes however, a contract can have elements of both. For example, if the contract John Sauté signed said that he had to provide the kitchen, utilities, utensils and all ingredients, then it would have to be evaluated with something Seaquist (2012) calls the predominant test, which considers the greater of the costs. If the material value was greater, then the contract would be governed by the Uniform Commercial Code, but if the services were of greater value then by common law. Seaquist (2012) highlights the fact that contracts under common law have the following characteristics: It identifies the parties, describes the subject matter, sets forth terms and conditions, sets forth consideration and contains the signature of the parties (p. 151). The Uniform Commercial Code on the other hand directs courts deciding disputes between merchants to look to usages of trade and other commercial standards and practices to interpret contracts and fill contractual gaps in deciding contract disputes (Bernstein, 2015). Another major part of the contract in our example between John Sauté and the