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Chapter 1:Commercial Agreements
Samples 1 : Joint-Venture and
Shareholders' s Agreement
Samples 2 : Lease Agreement
Samples 3: Real Estate Sale And Purchase Agreement
Samples 4: Billboard/Signboard Construction Agreement
INTRODUCTION
Cambodia, like most, although not all, open economies,
operates on the basis of a market system. This means that
economic activity takes place through the exchange of
commodities. Contract law is the legal mechanism through which
such market activity is conducted and regulated.
Contract law is important for many reasons. Contracts are
essential to the activities of businesses, governments, and
individuals in free market societies. Respect for contracts
can aid investment and growth, which generally lead to a more
prosperous society. So the basic policy in free market nations
is to promote the performance and enforcement of contracts.
Unfortunately, as we all know, dispute is often present in
human relations. And parties sometimes disagree about the
formation, meaning, or performance of their contracts. Such
disputes can be complex and difficult to resolve. Resolving
them in a fair, efficient way is the task of contract law.
That is why it is so important that people in business and
government--and other individuals--understand contract law.
Contract disputes occur in a wide range of areas, because
contracts are used in so many different aspects of life. Of
course, the free market economy operates to a large extent
through contracts. Business organizations --from small family
businesses in local markets to the largest multinational
corporations--use contracts to buy and sell raw materials,
supplies, and services. Farmers make contracts to buy the
equipment and supplies they need to grow things, and to sell
what they produce. It is hard to imagine a business surviving
without using contracts. This is because the main goal of
business is to make money, and it is difficult to do that
without using contracts to trade things.
Contracts are also crucial in the activities of governments in
trying to protect and improve the well-being of their people.
Governments make contracts to buy what they need to operate
the different branches of government; to keep order and
protect the public from various dangers, to build key elements
of the nation's infrastructure, such as railroads and
airports; to control the nation's natural resources; and
sometimes to hire private parties to help them perform certain
government functions. Governments also make important
contracts with other governments (such as treaties) about a
wide variety of matters. These matters range from trade issues
to environmental standards, from human rights to peace accords
that resolve wars.
For
individuals, contracts make it possible to reliably get food,
shelter, health care, work, education, transportation, and
recreation; to marry, raise children, and care properly for
families; and even to affect events after their deaths! In
fact, for most people, it would be difficult to go through
even a short period of life without making contracts.
Of course, one reason the importance of contracts may not be
obvious is that making contracts is so common. It happens so
much, and in so many different situations, that people making
contracts often do not even realize they are doing so. For
example, if a persons buys a bowl of noodle soup for breakfast
at a market stall, he has actually made a contract. The buyer
of the soup has agreed to pay a certain amount of money for
the soup, and the seller has agreed to provide the soup. In
fact, this is probably a valid, oral, bilateral contract.
There is no need to understand these legal terms yet. The
point is only that even such a common act as buying soup for
breakfast actually involves making a contract.
Even contracts like the soup example above, which may seem
simple, are governed by the legal principles discussed in this
book. For instance, in the soup example, suppose the buyer
used a threat of violence to compel the seller to sell him the
soup. In that case, the contract would not be valid, because
of a formation problem: duress. If it was not clear which soup
the parties meant, there might be interpretation problems. If
the seller provided the wrong soup, defective soup, or no
soup, without a legal excuse, the seller would have breached
the contract. In that case, the buyer could ask a court for a
remedy. So even this small transaction could involve legal
problems. Contract law tries to resolve these problems. |
