Question

Consider the following contractual relationship. Person A, voluntarily contracts with Person B and agrees to exert a specified level of effort on behalf of Person B. Person B agrees to compensate Person A for their effort at a rate agreed to by both parties. Furthermore, Person A agrees that:

• If he/she does not exert the agreed upon level of effort, Person B has the right to take assets from Person A;

• Person B has the right to unilaterally decide whether the level of effort from Person A meets the terms of the contract;

• Person B has the right to unilaterally end the contract and take assets from Person A if he/she (Person B) decides the effort is not sufficient; and,

• He or she (Person A) will not have any right to appeal Person B’s actions to a mediator or the courts even if Person B ends the contract and takes assets from Person A.

Can you imagine a contractual relationship actually existing where one party voluntarily gives to another party the right to unilaterally punish them (i.e., take assets) for non-performance and give up the right to contest the punishment in court? Carefully explain why or why not? The courts and mediation are mechanisms to enforce contracts and prevent parties from acting opportunistically toward one another. Are there mechanisms that would substitute for the courts and mediation that would help prevent, as in the case above, Party B from being opportunistic toward Party A?

Answer 1

A contact is where both the parties agrees bilateral on the term of agreement and which is enforceable by the law.

The basic requirement is.

1. Parties should be compent to contract.

2. Mutual obligation

3. Acceptable

4. Enforceable by law.

Here, in the above case we can clearly see that the person B is have unilateral benefits. The contract must be both ways . both the parties should gain something, but the above case person B is taking the right to go to the court for the Beach or for having a biased view.

The contact here isn't valid contract. This contract impose person A to give up his right even if the contract is made voluntary , contract is gives unilateral benifts when the contract should go both ways.

Like point B. Where person B has the right to decide the efforts of person A unilaterally meets the demand of person B. It's possible thst the opinion of person A or the decision of person A is wrong or biased.

The last point where the contract takes away the right to appeal. That's not a fair contract. Taking the right from the person to challenge the decision is not fair contract.

Now about the next question yes, the Court and mediation is the mechanism to enforce the contact. Mediation can be the mechanism used as alternative to court. Court process are tiring and long. It takes a lot of people energy and also the complex court process. Whereas the mediation is where a third party ( neutral party/parties) helps the parites in dispute to reach a solution for a settlement. It only facilitates the process, the options are exploded by the parties themselves and they reaches for a mutual resolution.

Yes, mediation can definitely help in reaching a resolution. Mediators is third person ( party) who helps the parties in dispute explores every available option and give them the chance to reach for a solution beneficial to both. In case to Court there is always one party on the winning side and other on the losing side, but in case of mediation both parties agrees on the terms which are beneficial for both the parties in dispute.