Contracts Business Law Essay

Contracts are often viewed as unnecessary in the eyes of the public. Most people think that they live their lives doing what they want, when they want with little regard for contractual law. In reality, contracts bind the decisions that most people make on a regular basis. By writing this article I will demonstrate the usefulness of contracts and how they relate to everyday life. I also intend to provide a reasonable idea of what would happen if we did not have contracts guiding decisions made. Because without contracts, the law would not know who to rule in favor of should the need arise, which happens on a daily basis all around the world. The basic definition of a contract is an agreement between two or more parties. This definition encompasses a great many things. If you take a look at the life of an average consumer, from the beginning of their day to the end of it, they make decisions based on factors that have been put in place by contracts. Our consumer wakes up in his home, which was bought from K. Hovnanian, a company that is well known for the designing homes and making people’s dream homes come to life. That house was built by contractors. By definition a contractor is a person or firm who contracts to build things. Electricians, carpenters, stonemasons, plumbers, home audio technicians, Sheet-rockers, painters, and floor specialists are all examples of contractors that were involved in making the consumers dream home come to life. However, K. Hovnanian does not have a contract with each of these types of contractors. Instead, they have a contract with a general contractor, who has agreed to hire each of the other types of contractors to complete the work necessary to make the house come to life. Our consumer works out a deal with K. Hovnanian for a certain price, which becomes the binding contract that K.  Hovnanian agrees to build the house for. The trademarks that K. Hovnanian uses to define who they are, is bound to them by a trademark agreement with the United States. According to the Legal Information Institute of Cornell University, A trademark is defined as â€Å"Any word, name, symbol, or design, or any combination thereof, used in commerce to identify and distinguish the goods of one manufacturer or seller from those of another and to indicate the source of the goods. † By registering this trademark our consumer is able to safely say that it is K. Hovnanian they are dealing and not someone who is pretending to be them. Once the home is completed then, the consumer would then bring in a third party, to the agreement: Bank of America. Bank of America has entered into an agreement with our consumer to pay K. Hovnanian for the home built. In turn, the consumer must pay back Bank of America over the next twenty years at a fixed interest rate the amount of money borrowed. This becomes a mortgage contract. According to the Legal information institute at Cornell University, â€Å"A mortgage contract, involves the transfer of an interest in land as security for a loan or other obligation. this is the most common method of financing real estate transactions. The mortgagor in this case K. Hovnanian is the party transferring the interest in land. The mortgagee, Bank of America, is the providing the loan given in exchange security. â€Å"Normally, a mortgage is paid in installments that include both interest and a payment on the principle amount that was borrowed. † Now that our consumer has bought his home and is moving in, a decision is made to buy items for the home that will be necessary for the consumer to live comfortably. Our consumer goes to Kmart and uses their Visa credit card to pay for a number of items such made by brand name companies such as Martha Stewart Living or Craftsman, the bill of sale, otherwise known as the receipt, is an agreement to pay the store for the amount of goods purchased. However, that is only the basics of the idea. The long process of agreements that we do not see and probably do not think about is there is a contract for every minor detail, allowing this transaction to happen. The consumer uses their Visa to purchase these goods up to a pre-determined dollar amount. Therefore, a request was made by the consumer to purchase the merchandise being sold by Kmart using Visa and, in turn an agreement was made with Visa to pay back in due time the amount for the goods purchased, plus interest of course. In turn, Kmart has agreed to honor Visa as per their contract with Visa. They worked out an agreement before hand to accept Visa, which would increase their sales and Visa would be allowed to keep a small percentage of the sale for the ability to use their services. However, to use the services provided by Visa, Kmart must have an agreement with a company that allows them to go beyond their store via electronic communications. The use of services through a company such as Verizon would be necessary. Verizon provides high speed internet as well as telephone services to companies like Kmart to allow them to access outside of the walls of the business. Therefore, Kmart enters into a binding contract with Verizon, for a pre-determined amount of time and a pre-determined amount of money allowing Kmart to use the services Verizon provides. Now that Kmart has the means to reach the outside world, they must purchase equipment, such as MagTek equipment, that would allow Kmart to use the Visa card allowing consumers to make a purchase on credit for goods that Kmart Provides. According to MagTek’s Website, â€Å"MagTek is a manufacturer of electronic devices and systems for the reliable issuance, reading, transmission and security of cards, checks, PINs and other identification documents. † Among the electronic devices, is a magnetic strip reader allowing consumers to use Visa credit cards to make purchases. Kmart also has an agreement with Omnimedia, the owning entity of the Martha Stewart living products, and Craftsman, a company that makes tools for everyday use. This type of agreement is known an exclusive dealing arrangement. According to the Legal Information Institute at Cornell University, â€Å"Exclusive dealing arrangements are, essentially, requirement contracts in which a seller agrees to sell all or a substantial portion of its products or services to a particular buyer, or when a buyer similarly agrees to purchase all or a portion of its requirements of a product or service from a particular seller. This means that Kmart buys all of its tools from craftsman or all of its household items from Omnimedia. The reverse to this, is that Craftsman or Omnimedia may have an exclusive dealing arrangement in which they agree not to sell their products to competing companies or franchises. As you can see, there is much more going on in behind the curtains of a typical day, so that the consumer is able to live their life. These are only a handful of examples of what parts of our lives contracts have an impact on. There are many more out there. The opposite of having a life filled with contracts, is having one without them, which would likely be a life filled with chaos. Imagine the same scenario in the last few pages, but without contracts binding the many parties involved. Our consumer would set out to buy a home which they decide to do business with K. Hovnanian. On a handshake and a smile K. Hovnanian agrees to build the home, but changes things that the consumer specifically said he wanted to alter the price of the home. After a couple of weeks K.  Hovnanian contacts our consumer to let them know that they were able to secure the land, but the price will be higher. Reluctantly, the consumer agrees, after all this is a dream home that is being built. Another two weeks goes by, and K Hovnanian calls and says construction is right on schedule and that the house will be completed within the next couple of weeks. K Hovnanian and our consumer come to an agreement of money and the consumer has his bank give the money to K. Hovnanian as agreed. After a couple of Months of communication silence, the consumer gets agitated and goes to the lot where his house was being built. There is no house and no construction crew. He goes to the location where K. Hovnanian was only to find out they have closed their doors and left. After contacting some sources to find out the whereabouts of K. Hovnanian, the consumer finds out that the company he has been dealing with was not K. Hovnanian at all, just someone taking advantage of people using the K. Hovnanian name to get money for free. The one contract in all of this that our consumer did setup was with Bank of America for his Mortgage, which is now legally binding. The consumer cannot pay the mortgage and therefore his credit gets destroyed because of a failure to pay and a foreclosure on a home he never saw, which makes it so he never had a Visa card to pay for the purchases from Kmart. Because there was no contract, there was no crime. The company doing business as K. Hovnanian was not wrong because there is no copyright or trademark contract protecting the K. Hovnanian name. The consumer gave them money even though nothing had been in writing and no formal contract was made. In the end, this consumer was taken advantage of because contracts for the situation did not exist. The United States has placed many laws to protect the rights of companies and the trademark they possess. â€Å"Section 1127 Construction and definitions; intent of chapter,† is the chapter in US Code that defines the parameters in which a company may define or lose definition of their trademark. In turn, â€Å"The Lanham Act† protects the owner of a federally registered trademark from anyone not authorized, to use it (http://www. gpoaccess. gov/uscode/). Also under United States Code under section 1454, is the protection of consumer’s rights when making purchases of land by obtaining a mortgage. These rights are put in place to protect the Bank issuing the mortgage, as well as, the consumer. All in all, Contracts are a part of our everyday lives whether we want it to be or not. They may not always be seen nor the effects of it so obvious, but they are there, and their purpose is to protect all parties involved from entering an agreement without understanding and respecting the rights of the other parties of the contract.