Legal Issues in Supply Chain Management Term Paper

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Legal and Acquisition and Supply Chain Management (SCM) Issues

Supply chain management is a field that continues to advance as technological advancements and globalization continue affecting the business environment. Changes in supply chain management are also attributable to the emergence of new global alliances that enable businesses to connect on various aspects of the supply chain (Association for Supply Chain Management, 2018). As supply chain management evolves, business owners, leaders, and managers face a variety of legal and other issues. Legal and acquisition and supply chain management issues characterized the modern supply chain framework. This paper examines a case study involving some legal, acquisition, and other issues relating to supply chain management. Some of the issues included in the analysis include contract formation, risk of loss, and tort liability.

Case Scenario

Smith’s Imports, a corporation registered in Florida and headquartered in Miami, ordered a shipment of wine worth $10,000 on January 2, 2015, from the Cortez Winery in Santiago, Chile. While the order was placed electronically through Cortez’s website, the owner of Smith’s Imports did not read the terms and conditions despite agreeing. These terms stated that the buyer would be liable for any loss after delivery to the destination. When processing payment, which was due upon arrival of the wine in Miami port, Smith’s Imports administrative assistant entered the wrong information on the transaction documents. Consequently, the money was scheduled to be sent to an olive company operating in Tuscany, Italy. The wine was eventually shipped, but delivered to the wrong warehouse while Smith’s owner waited a week before taking further action since he was on vacation.

Payments for the shipment was eventually sent to the wrong company while the misplaced wine turned to vinegar after staying at the wrong warehouse for several weeks. As a result, U.S. Customs took charge of the remains of the shipment and hired independent contractors to move it to storage. One of the independent contractors was injured and required 30 stitches and a Tetanus shot after one crate split open when moving them due to a defect in design. After notification by U.S. Customs, Cortez filed a lawsuit against Smooth Shipping and Smith’s Imports seeking payment and damages for lost goods. On the other hand, Smith’s Imports sued Cortez and Smooth Shipping for damages brought by the loss of sales to retailers including lost profits. Additionally, the injured independent contractor is planning to file a lawsuit for damages brought by the injuries.

Contract Formation

The above scenario is an example of some of the legal, acquisition, and supply chain management issues that emerge during the sales of goods. These issues can be resolved using relevant laws, particularly the Uniform Commercial Code (UCC). UCC is a legal code that provides a framework for international contracts, sales contracts, common law contracts, commercial sales transactions, and guidelines for the sale of services. According to Fullerton & Knowles (n.d.), this code is not applicable to the sale of real estate, contracts incorporating significant labor, service agreements/employment contracts, marriage settlements, and security interests or liens in real estate.

The first toward addressing the legal, acquisition, and supply chain management issues in this scenario is examining contract formation based on applicable laws and elements of a contract. Since this case entails the sale of goods, determine the existence of a legally binding contract between the parties is the first step toward addressing the emerging issues. Generally, a contract of sales of goods is an agreement in which the seller transfers or agrees to transfer goods to the buyer for an agreed-upon price. Based on the UCC code, contract formation occurs once an offer has been made and accepted between parties. In this case, the contract was formed electronically as Smith’s Imports ordered a shipment of wine from Cortez electronically. As stated in case facts, Smith’s Imports placed the order through Cortez’s website using a typical electronic order form.

E-contracts have become common in the modern business environment as businesses carry out their transactions online. Jain (2016) defines an electronic contract (e-contract) as an agreement that is created and signed in electronic form. Such contracts are sometimes established in the form of “click to agree” or “I agree” button on a page containing the terms of agreement. By clicking on this button, an e-contract is formed even without signing anything as the buyer agrees to pay a certain amount of money to the seller in exchange of provision or delivery of a product or service. Therefore, Smith’s Imports and Cortez Winery entered into an e-contract despite not signing anything. This contract was established after Smith’s placed the order electronically and clicked on the “I agree” button. The electronic contract between these two parties was established as the agreement met all elements of a legally binding or valid contract.

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When a dispute arises between parties to an agreement, the complaining party must prove the existence of these elements to demonstrate the existence of a legally binding/valid contract with the other party or parties. The electronic contract between Smith’s Imports and Cortez Winery incorporates all the elements of a contract as follows:

Offer

The first element of a legally binding contract is an offer, which is primarily an expression of willingness to enter into an agreement on certain terms. In this regard, one of the parties to the contract makes a promise to do or refrain from doing certain things. An offer should be made with the aim of becoming legally binding upon acceptance (MacMillan & Stone, 2012). With respect to the sale of goods, an offer is made when one party promises to provide or deliver goods to the other in exchange for money or something valuable. Rai (2019) states that for e-contracts to be formed, the consumer/user/buyer searches for available products or services displayed on the seller’s website. He/she then selects what to buy. However, the website showing these products/services does not make the offer, but provides an actual invitation…

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…Shipping, a common carrier. Since the contract was a destination contract involving a FOB in the buyer’s city, the risk of loss is on the seller as specified in Uniform Commercial Code § 2-509 (Barnes, 2009). Therefore, Cortez Winery bears the risk of loss of the wine based on this rule.

Tort Liability

After the remains of the wine stayed at the harbor for several weeks, U.S. customs hired independent contractors to move crates to storage. During this process, one of the contractors was injured and is planning to file a lawsuit seeking damages for these injuries. However, the contractor needs to identify the right party to sue and the legal theory that would act as the basis for the suit. In essence, the independent contractor needs to identify tort liability in order to determine the party to sue. Generally, a tort is an act or omission other than a violation of contract that results in injury or harm to another. Independent contractors usually enter into agreements with employers while retaining their initial ways of operations. As a result, these contractors are not obligated to any requirements except what is specified within the contract.

Existing laws direct employees to seek compensation or benefits for any workplace injuries through the workers’ compensation system. Independent contractors cannot obtain benefits under the workers’ compensation system since the basis for their agreement with an employer is timely payment for their work. However, independent contractors are not prevented from bringing negligence lawsuits against the entity they are working for in case of a workplace injury. In such instances, the independent contractor must prove the employer’s negligence in order to hold him/her liable for the injuries (Hart, 2020). Therefore, the independent contractor should sue U.S. Customs for his injuries. In the lawsuit, the contractor could argue that U.S. Customs’ negligence contributed to the injuries. While the U.S. Customs took charge of the remains of the wine, they did not carry out due process to ensure the crates were safe before hiring an independent contractor to move them to storage. This would imply that U.S. Customs failed to provide a safe work environment that could have prevented the injury. Therefore, the legal theory that would act as the basis for the lawsuit is negligence on the part of the employer. Independent contractors can sue entities they are working for in case of workplace injuries under the theory of negligence (Justia, 2018).

In conclusion, this scenario is an example of legal, acquisition, and supply chain management issues that emerge in the modern business environment. While Smith’s Imports and Cortez Winery had no actual face-to-face conversations and did not sign anything, they created a legally binding contract. The contract was established electronically and incorporated all the elements of a valid contract including offer, legal consideration, acceptance, and mutuality. However, the contract between these parties ended up in loss of the wine and lawsuits seeking damages for the losses. Based on Uniform Commercial Code § 2-509, Cortez….....

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