The reason why many business agreements contain language which refer any dispute

Question

The reason why many business agreements contain language which refer any disputes to binding arbitration is because of three major risks, namely, Legal Risks, Financial Risks and Reputational Risk. Whenever there's a dispute that's escalated to the courts there are legal risks which could cost the defendant and the plaintiff a large sum of money. Apart from cost of legal escalation, there's also the issue of the damages awarded, if any which could be substantially higher than the sum owed or the difference that needs to be paid out in the event of a litigation, since the court often awards damages disproportionately in order to set an example and discourage un ethical business practices. Whether or not to file, settle, defend would purely depend on the probability of the outcome and factors like Procedural history for similar cases and Facts and Evidence gathered by both parties.

Contract liability: UCC stands for uniform commercial code lays down an outline for commerce laws comprising of rules of sales etc. in the United States. Mirror Image Rule is a type of contract law that requires the person / individual or the organization making an offer to accept and deliver on the terms and conditions stated in the offer without deviating from it. Battle of the forms is a legal scenario where the person / individual or the organization making an offer through a contract receives an acceptance to that invitation through a separate contract. In such cases the contract can be voided in the event of ambiguity or discrepancies.

Contract Impossibility under UCC 2-615(a), under which a contract can be voided if one or more of the parties could not deliver fulfil their obligations due to unforeseen, external circumstances and despite of their best efforts to find close substitutes or alternatives, they were unable to deliver. (in this case a draught). Substantial Performance, under which, one or more of the parties involved in the contract can be offset, if they've delivered a reasonable proportion of their obligations, to their best ability to do so.

It is important to take into account the analysis of lawsuit before realizing what kind of lawsuit to use while evaluate if someone needs to file, settle or defend the case. As a consultant it is advisable to understand the reputation of the case and the cost involved. The settlement side of the story also needs to be analyzed. If the individuals are willing to settle the case and both the sides of the case are analyzed effectively.

There are expenses involved along with the extensive depositions. This also needs to be taken into account. Stress around the settlement and the anticipation for the result also needs to be a lasted for the purpose of taking a reflection regarding the lawsuit. Profitability around the case and understanding the effective terms decide if the case should be settled or fought against. The decisions regarding the outcome of the lawsuit depend on that. For example, if a dependent in a case has lost significantly in the past trial then there is liability to prove. If the defendant had reputation of negligence in the past by losing cases, then it would be advisable to settle the case for important benefit.

Source: Federal Judicial Caseload Statistics 2015 US Courts.GOV

Please answer questions about these several statements as follow from the above discussion it was retrieve from: 1) "...the court often awards damages disproportionately in order to set an example and discourage un ethical {sic} business practices"; and, 2) "Battle of the forms is a legal scenario where the person / individual or the organization making an offer through a contract receives an acceptance to that invitation through a separate contract. In such cases the contract can be voided in the event of ambiguity or discrepancies." Are these statements true? In contract law, if there is an ambiguity or discrepancy, is the entire contract "voided" or just the clause(s) that are affected?

Thank you

Explanation / Answer

1. Punitive damages to discourage unethical business practices

Punitive damages were awarded only to deter mean-spirited, negligent, and malicious conduct. Damages are meant to discourage unpleasant conduct. Damages were earlier assessed only on the basis of quasi-criminal intent. Even in civil lawsuits, plaintiffs ask for compensatory damages, for instance, in case of punitive damages.

Functions of punitive damages:

Haslip factors for reasonable deterrence; not always to set an example

These factors include:

(a) there is a reasonable relationship between harm likely to result and the punitive damages award

(b) correlation between the past conduct, duration, concealment, degree of reprehensibility, and, the defendant's awareness

(c) The court's desirability to remove profit that is due to wrongful conduct

(d) cost of litigation and losses to the plaintiff

For instance, by the end of the twentieth century, more than 200000 would have died from asbestos-related diseases. Punitive damages award against asbestos manufacturers would thus have helped.

Punitive damages are meant to stop recurrent type of reprehensible conduct.

2. Battle of forms

As per the Unidroit Article 2.1.22, Battle of the forms is the paradigm battle when X offers to buy goods from Y on its standard terms and Y purports to accept on its own terms. The party that puts forward conditions that the other party does not reject is the winner of the battle. A contract can also be concluded on the basis of agreed terms. The knock-out or last shot doctrine is for party Y to accept party X’s standard terms.

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