Essay on "Contract Issues in "Proof of Life"

Essay 7 pages (2353 words) Sources: 1+

[EXCERPT] . . . .

Contract Issues in "Proof of Life"

According to Gilbert's Law Dictionary a contract is "an agreement between two or more parties which creates legally binding obligations. A valid contract must involve competent parties, proper subject matter, consideration and mutuality of agreement and obligation." The consideration in a contract is the thing of value that each party agrees to give up in exchange for what they receive. Without consideration a contract is not binding and enforceable.

Consideration is often treated as an equivalent to a bargain. A bargain is an exchange of promises, acts, or both, in which each party views what they give up as the price of what they are getting in exchange. This bargained for price may include not only promises of acts, but also promises to forbear and actual forbearance from performing acts one is legally entitled to perform. The concept that equates consideration and bargain is called the bargain theory of consideration (Eisenberg, 2002).

In order for a contract to form there must be offer and acceptance. An offer is an expression of present willingness to enter into a bargain, made in such a way that a reasonable person in the shoes of the person to whom the expression is addressed would believe that they could conclude a bargain merely by giving assent in the manner required by the expression. In order to be sufficient as an offer an expression must meet two criteria. There must be intent to enter into a bargain and there must be definiteness of terms (Eisenberg, 2002)

In the movie "Proof of Life," Peter Bowman and his wife, Alice spent several years living in third world countries. Peter, who was an engineer, was building a dam in the country of Tecala in South America. Peter was kidnapped off of a busy street by a group of guerillas in broad daylight. Panic stricken, Alice immediately turns to Peter's corporation (Quad-Carbon) to help. They send in Terry Thorne, an ex-soldier turned kidnap & ransom negotiator for a global firm (Luthan Risk Corporation). They collect a commission for rescuing hostages. Terry only just gets started working on the case when he is pulled. It turns out that Peter's company was trying to cut costs so they cut the hostage insurance. Quad-Com is also in the process of selling off some of their assets to Octanol. They are purchasing the pipeline but not the entire company of Quad-Com. With no way to pay Terry's high fee, Alice must figure out what to do on her own. Terry, who is burned out and disillusioned just wants a well-deserved break, but he cannot leave Alice to fight for her husband on her own, so he returns and takes the case for nothing. Terry's hopes for a quick resolution are now gone because he doesn't have the corporation's money to rely upon. In its place, he has to rely on whatever cash Alice and Peter's family can raise and deal with the kidnappers on his own. The kidnappers start with a demand of $5,000,000 to release Peter. Terry and a representative from the kidnapping party negotiate back and forth until they come to agreement for $650,000 to release Peter.

In this movie there was an offer made by the fact that the kidnappers offered $5,000,000 for Peter's release. This transaction meets the conditions of an offer because there is intent to enter into a bargain and there is definiteness of terms. This offer was not accepted though by Terry and Peter's family. Thus a valid contract was not formed. There was instead a counter offer made by Terry and Peter's family for a different amount of money. This offer and counter offer scenario played out until finally they agreed on an amount of $650,000. The offer was for $650,000 in exchange for the release of Peter. There was intent to enter into a bargain and there were a definite term which constitutes a valid offer. There was also valid acceptance when both parties agreed to the expression.

Technically one would think that there was a valid contract made when there was an offer of $650,000 and an acceptance when there was an agreement for the release of Peter. Under normal circumstances all of the necessary elements would have been present for a valid enforceable contract. But under these particular circumstances this contract would not be considered valid and enforceable. There are times when a contract is not a contract. A contract that is illegal at the time that it is made is not a valid contract and is not enforceable by law. A contract is considered illegal if either the consideration or the object of the contract is illegal. Some contracts are illegal because they are expressly prohibited by statute. Other contracts are illegal because they violate public policy. An example of this would be a contract that is made under duress or using undue influence (Eisenberg, 2002).

Duress is often defined as a threat of harm made to compel a person to do something against his or her will or judgment, or a wrongful threat made by one person to compel a manifestation of seeming assent by another person to a transaction without real volition. There can also be duress in regards to goods and sometimes, the concept of economic duress is used to negate contracts. A contract is voidable on the grounds of duress where consent was induced by wrongful threats (Eisenberg, 2002).

Undue influence is a reasonable doctrine that involves one person taking advantage of a position of power over another person. The law assumes that in certain classes of special relationships, such as between parent and child, or solicitor and client, there will be a special risk of one party unduly influencing their conduct and motives for contracting. When there is no special relationship the general rule is whether there was a relationship of such trust and confidence that it should give rise to such a presumption. If a party's assent is induced by the other party's undue influence, the contract is voidable by the victim (Eisenberg, 2002).

In the case of this movie, if Peter had been released or had somehow managed to escape, Terry and Peter's family would not have to pay the $650,000 that had been agreed upon because the contract had been made under duress and thus would be voidable by the victim.

A kidnapper's aim is ransom. The victim's aim is survival and release. The organization's and/or the family's aim is the victim's safe return. The process of communication between kidnapper and those seeking the victim's release is called negotiation. Negotiation is an extremely complex, emotional and strategic process requiring unique skills. Specialized crisis control experts who understand that the impact of all factors involved in this process will affect both victim safety and ransom paid are likely to use the negotiation process to wrest control from the kidnappers (McDermott-Lucey, 2006).

Extortionists often leverage vital information the same way kidnappers leverage human lives. Though every threat must be evaluated, the more accurate and specific the information, the more potentially significant the threat. If an extortionist provides detailed information about a CEO's residence, his daily schedule and that of his wife and children, any threat to their safety should be evaluated and handled immediately and expertly. When threatened with extortion, especially when it involves personal threats to loved ones or release of embarrassing or compromising information, there may be an understandable desire on the part of the victim to avoid involving authorities, which is precisely what the extortionist wants. An experienced kidnap advisor/crisis response consultant is able to provide an organization with the expert insight and guidance needed to thoroughly evaluate, and appropriately respond to, extortion threats. As with kidnappers, negotiating with extortionists is a highly specialized skill (McDermott-Lucey, 2006).

In today's business world, if a company does business outside of this country it has become almost necessary to have kidnapping and hostage insurance. Kidnapping for ransom money seems to be on the rise. Kidnapping and ransom insurance for businesses can be seen falling into three differently categories. The first is as part of comprehensive business insurance package, secondly, as a stand-alone policy for people and lastly some of the insurance companies provide it as a part of their home owners' insurance policy. Corporate policies often cover most kidnapping-related expenses like hostage negotiation fees, lost wages and the ransom amount. On the contrary a stand-alone policy for individual plays a pivotal part in paying for the cost of dealing with a kidnapping along with reimbursing for ransom payments (Gordon, 2009).

Kidnap and Ransom Extortion insurance gives a company numerous benefits and services. It provides coverage for kidnappings and other happenings through a blend of financial indemnification and expert crisis management, along with ransom payments and loss of income and medical care. Insurance companies can also give expert opinion on crisis management and can also impart employee training to prepare them if situation arises. This training can help them immensely in… READ MORE

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