RWA3: Contract Law

The design and commitment to a contract is fundamental in business operations. Contracts provide a legal framework that hold involved parties into a legally binding commitment. The key elements of contracts can be analyzed based on fixed-price and cost-reimbursement contracts. The fixed-price contracts are primarily based on the agreement of a specific amount as the cost of the project (Kim, Roberts & Brown, 2016). This provide the element of fixed-cost which is agreed upon before commencing to work on the project. The cost-reimbursement is based on the element of compensation after completion of the project (Omar, 2009). The winner of the cost-reimbursement bid is reimbursed the funds used in carrying out a project successfully.

Among the two sample contracts, fixed-price contracts ascertain safety for the outsourcing entity as it limits the project costs to remain within the agreed price. Cost-reimbursement acts differently as it allows the contract costing to balloon massively. This exposes the outsourcing entity to additional costs incurred in the contract implementation.

In overall, the contracts must meet four integral elements including offer, acceptance, intention to create legal relationship, and consideration of the terms and conditions. Once all the elements have been met, the contract becomes legally binding. The difference between the two samples is based on the costing value and changes experienced in contract implementation.

The state of New York adopted the revised Uniform Commercial Code (UCC) in the late December of 2014. The revised changes presenting the modern versions of UCC were signed into a bill by Governor Andrew M. Cuomo. The adopted articles include Article 1 – general provisions, Article 2 – sales, Article 2A – leases, Article 4A – fund transfers, Article 5 –  letters of credit, Article 7 – warehouse receipts, bills of lading and other documents of title, Article 8 – investment securities, and Article 9 – secured transactions, sales of accounts and Chattel paper (US Legal, n.d.). The articles are fundamental to streamline and align contracts and commercial operations on a common platform.

References

Kim, Y. W., Roberts, A., & Brown, T. (2016). Impact of Product Characteristics and Market Conditions on Contract Type: Use of fixed-price versus cost-reimbursement contracts in the US Department of Defense. Public Performance & Management Review, 39(4), 783-813.

Omar, S. A. (2009). Identifying Risk in Cost Reimbursable Contracts.

US Legal. (n.d.). New York. Retrieved 20 November, 2020 from https://uniformcommercialcode.uslegal.com/states-adopting-the-ucc/new-york/