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Doing Business with Third Parties

In your work and daily activities you will often, unconsciously or deliberately, make a contract or agreement with a third party. Your lunch purchase is a simple example. Your relationship with the University as employer or education provider will most commonly be a contract.

Much of our activity can be legally analysed in this way but it generally only becomes important to do so where a dispute arises. Then it is necessary to ascertain what the terms of the agreement are, what your and the other party's obligations are and how those obligations have been fulfilled.

If the agreement is in writing it may be in very close print on the back of a delivery docket or ticket, buried in letters which have passed to and from you, or recorded in a more formal document. It may be written in language you thought went out of style before Dickens parodied it, or there might only be a note of your memory of what was agreed. The aspects of the agreement now in dispute may not be specifically mentioned in the written material.

We generally expect important things to be put in writing, but most people are concerned with what actually happens rather than what the writing might say about things which are in their view unlikely to happen. Of course once put in writing, the written agreement becomes the touchstone.

When the computer software does not work or the other party does not do what they said they would do, it is of no comfort to find that the contract is "not worth the paper it is written on". The strength of the contract may not be related to the words in the document but more often is a function of the strength of the other party. This is not an issue of course until that other party does wrong or does not do at all. It is then too late to find that the other party is a "man of straw".

Some prudent do's and do nots in dealing with outside parties:

  • Don't just rely on the fact that another University or someone else you know uses them;
  • Don't just rely on the fact that a large name business trusts them as a distributor. Franchise businesses are more and more common and the only qualification is enough money on the nail to buy the right to use the big name Amcal Chemists, Angus & Robertson, Snap Instant Print, LJ Hooker, Hungry Jack's, most hotel chains, are some examples of franchised businesses;
  • Don't be misled by knowledge that the individual behind the business has assets. If your agreement is with a company which has no assets and only a paid up capital of $2 you may have no recourse to the assets of the "proprietor";
  • Put the other party on an equal footing - it is dealing with a large institution which more likely than not will pay its bills on time, what is there about the other party which gives us similar comfort?
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