Posted by Chester Morton / Tuesday, 20 March 2018 / No comments
The Legal Framework in which Businesses Operate - void contracts
The Legal Framework in
which Businesses Operate
Introduction
The legal framework refers to the set of guidelines, rules of
conduct and regulations within which any entity operates. Similarly, the
business legal framework describes the set of laws which guides the conduct of
business activities in a country. Any business within this legal space must
carry out its activities bearing in mind that the laws which guide how business
is done in a country must be obeyed since these laws are enforceable in the
courts.
For businesses to continue to exist in a country or a region,
they must demonstrate that they are committed to obeying the laws which govern
doing business in that country. A business organization which is not committed
to operating within the legal framework of its host country is bound to have
problems going forward.
Contracts
A contract is a voluntary, deliberate, and legally binding
agreement between two or more competent parties. In the business environment, a
contract will usually be between two business organizations or between two
parties. Although contracts are often
written documents, they can also be verbal or implied in a business transaction
between two parties.
That there is a contract does not necessarily mean that a
contract can be enforced. For example, a void contract cannot be enforced by a
law court.
A contract is said to be void if it has any or a number of
these elements.
If it is illegal
A contract is void
if it is illegal from the very moment it is made. As indicated earlier pouring
a toxic waste in public is illegal according to the law then if a company
enters into agreement to collect another companies toxic waste and dump this in
a public place such a company cannot seek redress in court if it was not paid
in court because the activity it sought to perform is an illegal act.
If declared null and void by a court
A contract is also void if it is legal but have been
declared by a court as null and void perhaps because the court is of the view
that the contract as it stood violates certain basic principles such as human
right, or that it is not fair to either party or because the contract goes
against a policy made by the government of the country in which the business is
located.
If the laws of the land change
A contract can also be termed as a void contract if there
has been changes in the law of the land or policies made by the government
which have made it untenable in law.
None compliance with the provisions of the contract
A contract can also be declared void if the provisions in
the contract has not been fully complied with by both parties.
Absence of capacity to contract
Lack of capacity to contract (such as arises from being an
infant or minor, intoxicated, or insane) automatically makes a contract void. A
contract that is void only in one or few parts may be saved by the process of
severance. Not to be confused with voidable contract.
