The Proposal

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What is a Proposal
An act of putting forward something for consideration. (Webster) An offer to purchase, sell, lease or otherwise enter into a business relationship pertaining to a specific good or goods where sufficient information is provided to establish a basis for performance of an anticipated agreement.
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Elements of a Business Proposal
1. 2. 3. 4. Parties proper legal names, addresses, contacts, positions Clear and accurate description of the subject goods or services Delivery dates and conditions of availability The basic price, any possible adjustments thereto for additional things such as special features, escalation due to inflation, changes required to meet certain added requirements, etc. How the price is expected to be paid Conditions for financing or government approvals Expectation for completion of a contract by a given date Ability to cancel the proposal 3 Acceptance or termination of the offer

5. 6. 7. 8. 9.

1. Parties proper legal names, addresses, contacts, positions

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2. Clear and accurate description of the subject goods or services

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3. Delivery dates and conditions of availability

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4. The basic price, any possible adjustments thereto for additional things such as special features, escalation due to inflation, changes required to meet certain added requirements, etc.

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5. How the price is expected to be paid

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6. Conditions for financing or government approvals

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7. Expectation for completion of a contract by a given date

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8. Ability to cancel the proposal

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9. Acceptance or termination of the offer

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Law
Rather than worry about what legal system will look at your proposal and when, or if, you will be bound, if you include all of the above elements in your proposal, you are very unlikely to run into significant trouble. If any significant elements are left out different jurisdictions and choices of law can have profound effects
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Acceptance
• Acceptance is demonstrated by signing as indicated or otherwise signifying agreement in writing. • The deposit is “earnest” money, showing a desire and willingness to enter into an agreement for the sale or purchase contemplated. • Acceptance of the proposal and payment of the consideration creates, at the very least, an option period where the two parties have a commitment to attempt to enter into a purchase agreement based on the terms of the proposal, although all elements are open for discussion.

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Valid Acceptance
CISG:- either unqualified or even if acceptance contains minor changes to terms, changes added to contract, if not rejected by offeror - but, invalid if major changes (price, payment, quality, delivery, dispute settlement etc.) Common Law: - acceptance must be unconditional and unqualified UCC: - same as CISG except changes not added to contract
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So…
• Do not leave proposals open for long • Condition delivery positions so as to not tie up your entire production while your customer tries to make up their mind to accept, or not, your proposal (STPS, STAP) • Err on the side of providing more information than less
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The proposal is an important tool of business.
• • • • • Get it right Be prepared Give yourself flexibility Here is where some legal advise will help Getting it wrong can have serious consequences
– Financial – Legal – Business
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Exercise
You are the business manager of the Canadian Widget Manufacturing Company. Your sales people have indicated that European Widget Sales Pty. (Mr. John Smith, President) wishes to purchase 100,000 customized widgets for delivery immediately at $2 per widget. Your factory can turn out widgets at a rate of 100,000 per month with one month of lead time required for set up. Take appropriate action!
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