S O U T H E R NN E W H A M P S H I R E U N I V E R S I T Y

REPORT
The r isks in relation to
commerce contracts in Amercan laws

Course: Business Law

Student: Nguyễn Thủy Tiên
Class: SNHU 19 E 1
Instructor: Ph D. Nguyen Binh Minh

Hanoi, 10 / 9 / 2021
 1. Understandings about commerce contracts:

According to the definition written by the Legal Information Institute, a contract is “ an agreement between private
parties creating mutual obligations enforceable by law.  The basic elements required for the agreement to be a
legally enforceable contract are mutual assent, expressed by a valid offer and acceptance; adequate consideration;
capacity; and legality.  In some states, the element of consideration can be satisfied by a valid substitute.  Possible
remedies for breach of contract include general damages, consequential damages, reliance damages, and specific
performance”.  

A commercial contract is an agreement between traders in establishing, changing, or terminating rights and
obligations in commercial activities. Commercial activities are defined as "profit-making activities such as
purchasing and selling goods, providing services, investing, promoting trade, and other profit-making activities”. A
commercial contract is signed between traders, or between one trader and another. When compared to civil
contracts, this is a distinguishing element of commercial contracts. Traders (including legally constituted economic
organizations or people engaged in autonomous, regular, and recognized commercial operations), individuals, and
other groups with trade-related activities are among the objects of this commercial contract. Commercial
agreements can be verbal, written, or implicit in either a formal or informal setting. Wages, leases, financing,
recruiting, and employee safety are just a few of the topics they can address.

When signing a business contract, the following concerns should be kept in mind to secure the legal impact
of the contract and completely safeguard your legitimate rights and interests: assignment, confidentiality, dispute
resolution, entire agreement, exclusion of liability, force majeure, jurisdiction, liquidated damages, no partnership
or agency, termination triggers. 

The first section of the contract usually needs the most work since it identifies the parties, defines any vague
words, and discusses the contract's contents, such as the product or service being sold, dates and times, delivery
alternatives, and the agreed-upon price. Because contract law requires interested parties to comprehend the terms of
any agreement they sign, adopting clear language for regular business purposes will assist in meeting this
obligation.

In the United States, contract law governs the responsibilities formed by agreement, whether stated or
implicit, between private parties. Contract law varies from state to state; there is worldwide federal contract law in
many sectors, and commercial contract law is no exception.

Commercial contracts and agreements examples may include the following: licensing and franchise
agreements, loan and finance agreements, supply of goods and services, shareholders and joint venture agreements,
contracts for employment.

2. The risks in relation to commerce contract in American laws:

While some supply chain contracts include negotiated terms in the form of written agreements or long-term
contracts, the majority of supply chain contracts are based on conventional order terms and conditions. This might
result in significant value and high-risk contracts that receive little attention from internal or external attorneys.
Failure of a supplier to verify that essential clauses in their buy-side contract match those in their customer contract
may result in unjustified holding situations or price demands, which may eventually lead to higher risk. 

The following are some of the risks that might arise and readily generate misunderstanding in a commercial
transaction under American law.

Language requirements are one of the most common errors made while signing a contract in general and a
business contract in particular. In the United States, there is no requirement to create commercial contracts in
English; nonetheless, the great majority of both domestic and foreign contracts are drafted in English. That can be
perplexing since, in today's international market, commerce finance will contain industry-specific terminology as
well as language-specific terms, and writing it in a commerce contract for different-countries parties may cause
mistranslation or confusion to them. When engaging in a consumer contract, it is advisable to examine state-
specific legislation. Certain consumer contracts in some states, such as California, may be required to be translated
into another language that betters in any facet.

A legally binding contract in the United States does not have to have any particular form. Commercial
contracts, with some exceptions, can be formed electronically and are governed by the Electronic Signatures in
Global and National Commerce Act at the federal level, as well as the Uniform Electronic Transactions Act, which
has been adopted by all states except Illinois, New York, and Washington. This can be convenient, but it might lead
to disputes between the two parties, such as the states listed above agreeing that contracts can be written
electronically and submitted online. Networking may have a significant role in the success or failure of a
company's contract or the contract schedule. This will have an impact on the progress of the work as well as the
overall image of the firm. Furthermore, these laws authorize electronic signatures in most commercial and business
transactions, subject to certain exceptions as long as the terms of the contract must be accessible for review. This
can have unanticipated consequences in the contemporary 4.0 era when the problem of online fraud is prevalent,
and signature counterfeiting is no exception. If you have access to a person's personal information and data, you
can use that information to commit crimes such as contract modification, illegal signature stealing…

The Uniform Commercial Code (UCC) generally governs commercial agreements (such as supply contracts
for the sale of goods and services) in the United States, where the authority consists of 50 states with their law
enforcement and has been codified by each state, with some states making modifications to certain UCC
requirements. As a result, because state legislation and common law regulating commercial transactions differ from
state to state, a careful examination of the state law controlling the contract is advised since state diversity laws can
be mutually detrimental to the advantages of parties such as in taxes, etc. if a contract is made between parties in
different jurisdictions. 

Multiparty issues happen in a variety of other settings. There is the issue of whether the immediate parties to
a contract can enter into an agreement that confers rights on someone who is not an initial party to the deal.
Because the dogmatic structure of contract law was largely formed on the model of the simpler two-party situation,
and because contracts for the benefit of third parties did not have great practical importance until relatively recent
developments such as the emergence of life insurance, many systems of contract law have encountered difficulty in
determining the relationship between the parties.

The insurance provider chosen must be of high quality. An insured party (as well as an additional covered
party) is not genuinely protected if an insurance company goes bankrupt or is otherwise unable to pay its
obligations when they become due. As a result, each party's counsel should force the other party to pick an
insurance firm that fulfills specific objective performance standards or ratings established by one or more well-
known organizations. A.M. Best Business, Standard & Poor's, and Moody's, for example, all give insurance
company ratings based on variables such as financial size, claims-paying ability, and underwriting capacity, among
others. These firms exclusively give ratings for companies headquartered in the United States. Furthermore, the
insured party's counsel should make every attempt to force the insuring party to acquire insurance with defense
responsibilities that are beyond (i.e., in addition to) the policy limits, as litigation expenses are typically expensive
and can rapidly surpass a settlement payout.

There are no statutes that compel contracting parties to incorporate financial limitations to restrict
obligations, but contractual parties are allowed to include financial caps in their contract. Furthermore, if there is no
tortious behavior, most jurisdictions in the United States follow the conventional common law rule that prohibits
punitive penalties for breach of contract. Financial limitations can be set aside in the consumer setting if they are
determined to be unconscionable. While commercial parties are typically allowed to contract as they see
appropriate, parties wanting to take advantage of such clauses should incorporate such financial limitations in clear,
prominent language, as well as representations, warranties concerning the provision and giving more proof of their
suitability for the circumstance at hand. However, the risks remain significant since the financial caps may simply
be a formalized portrayal of the firm's cash flow and may not reflect the actual money held by the organization. In
that scenario, without financial constraints or restrictions on obligations to create a barrier with other parties, the
contractual parties may face dangers such as unexpected bankruptcy, fraud, embezzlement, and so on.
 If a contract has an infinite term, it will be valid for a reasonable time under the UCC. Unless the parties
otherwise agree, each party may cancel the contract at any time (though many courts have held that reasonable
notification to the other party is required). Certain termination clauses may be specifically agreed to by the parties
to a long-term contract for the sale of goods. Some clauses may allow one or both parties to terminate for
convenience, which means that one party may terminate at any time without the other party is in breach. Other
applicable laws or notification requirements may apply to these 'at will' provisions. A contract may, of course,
include the ability to terminate for cause. Termination for reason generally happens when one party is either in
general breach of the agreement or one or more listed "events of default," such as non-payment, failure to deliver,
or breach of guarantee. Again, unless the parties agree differently, reasonable notice is usually necessary to
terminate. In this case, it is demonstrated that a party should be able to cancel a contract unilaterally based on the
term of convenience and cause, which may generate misunderstanding in a general situation. For example, if a
business cancels a contract while it is collaborating with another firm that is profiting from the collaboration, even
with reasonable notice, it will still have an impact on the firm's image later on.

Acts of God, war, acts of terrorism, or similar occurrences, fires, strikes, embargoes, or other government
actions, natural disasters, riots, power or transportation shortages, or other circumstances beyond either party's
control are examples of force majeure events in commercial contracts. The parties may include a force majeure
clause in the contract to excuse non-performance due to a force majeure event, or they may allocate the risk if
certain events were foreseeable (for example, a severe hurricane in the United States' south-eastern region) by
negotiating the contract's monetary terms. If a contract is silent on a force majeure occurrence, the court will
consider its foreseeability to decide if non-performance under the contract is excused. As a result, if a force
majeure incident was reasonably foreseeable, the court will typically conclude that the non-performing party
incurred the risk of the event and so is not excused from performance. The non-performing party is typically
forgiven if the force majeure situation was not foreseen. However, if an American party signs a deal with a
dangerous party in one of the nations at war, the issue may become even more difficult since the other party may
recognize that the firm is at risk but is unaware of what is going to happen in the near future. In that case, the risk
and the benefits both parties have will be equal but the risks can be too much to be accounted for and there can be
no solution. In such a situation, the risks and rewards for both parties will be equal, but the dangers may be too
great to account for, and there may be no solution. And if that American party is hypnotically playing a significant
role in the business, it may have far-reaching implications for the economy. 

3. Conclusion:

As a developed country with a system of distinct laws from each state mixed with the country's own laws, the
United States is continuously growing commerce and adding appropriate commercial law components, such as the
above-mentioned electronic contract or language requirements. However, because regulations differ from state to
state, the country's commerce contracts may also face limits and risks that could affect the business individually
and the economy generally. This can be related to the US political economy, such as the fact that America is a free
country and considered the land of endless opportunites, where many different types of parties are formed and
developed independently without being constrained by any mandatory subject, therefore, commercial laws are
greatly affected by this, for example, there are no financial limitations or restrictions mentioned in section 2.
Nonetheless, with different legal systems, aside from the risks that a party or the economy may face, there are
many opportunities for any party to benefit from, including considering which state could get the most benefit in
the commercial contract and which state has better familiarity, as there are now many districts in the United States
that concentrate a large population of specific-country foreigners. Overall, the US laws governing commerce
contracts may have unbridgeable gaps, but they may also benefit in other ways depending on the contract terms and
profession, the parties that join the contract, and even the scenario and location in which the contract happens.

*Lưu ý: Bản cover page chuyển từ pdf sang word bị lỗi

Preference: 

Legal Information Institute

https://gvlawyers.com.vn/hop-dong-thuong-mai-la-gi-va-nhung-dieu-can-luu-y-doi-voi-hop-dong-thuong-mai/?
lang=vi

https://parleypro.com/blog/10-key-clauses-in-commercial-contracts-you-should-know-about/

https://www.upcounsel.com/commercial-agreement

https://www.foley.com/en/insights/publications/2017/01/commercial-contract-risk-in-2017

https://www.lexology.com/library/detail.aspx?g=2ff4eb3a-f37b-490b-a497-03a1070cb816

https://www.britannica.com/topic/contract-law/Other-problems-of-contract-law

https://www.lexisnexis.com/supp/largelaw/no-index/coronavirus/commercial-transactions/commercial-
transactions-risk-allocation-in-commercial-contracts.pdf?
fbclid=IwAR1zw2WAon2WEd4_4mGqWodul5gPd_NfYNY_cANryivikWNtAncTuEiFVhA