Small Business Contracts Essay

1152 words - 5 pages

Sharon and Don decided to do business together via a verbal agreement. Don is already a small business owner of a local health food business. Sharon found out that Don was an owner of a business in the area after meeting him. Don became interested in Sharon’s family’s products once she showed him their products. Don and Sharon agree to sell samples of her family’s products in his store. When the products started selling well in Don’s store, he contacted Sharon to order more of the family’s products. For some time Don placed orders with Sharon’s family, and received awesome customer service. Sharon’s company would deliver the products that Don requested at the same rate and in a timely fashion. Upon receiving the order or orders, Don would receive an invoice that requested payment in 30 days, however, Don did start being late on his payments, but he still received any products that he placed an order for. During a delivery to Don, Sharon’s 17 year old son was convinced by Don to sign a contract that would make the company agreeable to continuing business with him. Sharon’s family business was doing very well and because of this a company in Connecticut was interested in them and proposed an offer. Later on Sharon finds out about the contract that her son signed with Don.

Contracts
Covenants of good faith and fair dealing
Don has gotten Sharon’s 17 year old son to sign a contract which Don believes holds them liable to continue business with him regardless of any other offers that they may receive. According to Anderson, (2012) regardless of what a written contract says, your business can be liable for doing or not doing something that was never discussed before a contact was signed. Because of the “implied covenant of good faith and fair dealing” (Anderson, 2012, p. 1), this is an obligation that can be inserted into a contract in the Utah courts. The definition of implied covenant is, “parties cannot intentionally or purposely do anything which will destroy or injure the other party’s right to receive the fruits of the contract” (Anderson, 2012, p. 1). If the contract that Sharon’s 17 year old son signed with Don requires that they do continue to do business with him it is a possibility that the contract may be legal, based on the laws of their state.
Minor’s capacity to contract
Legally binding arrangements when it comes to contacts there are people that have the lack of legal liability. Minors are placed in a special category and if they sign a contract the agreement is considered voidable by them. Voidable means that the person that signed the contract, that lacks the capacity to enter into a contract, can void the contract or go ahead with the contract. Since Sharon’s 17 year old son is considered a minor in most states he would be considered to have the lack capacity to make a contract. Since there is not much information about the contract and or state, it seems as though the contract that the 17 year old signed can be...

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