Defusing the Exploding Offer (Reading 1.7 Business Negotiations pp72-79); A reference from Obligations and Contracts Part 3 International Business Law

Exploding offers and business contracts refers to any business negotiation cases that involves two parties having business consultations to come up with a consensus agreement in satisfying both parties involved.  From the reading of Robert J. Robinson (Negotiation Journal, July 1995, Vol 2, Issue 3, pp. 277-285)concerning the importance of applying “Exploding Offer” in International business, one party may be satisfied of the offer but in a later duration of the contract the offered party may reject or cancel the business deal subject to the later negative circumstance considerations of the business deal.  

However, the party who will cancel the business contract will pay a certain amount for damages, still the existing contract is revoked.  Some irrevocable business contracts of today can seldom be found in business institutions knowing that business suppliers are enormous in number compared to the buyers using the product for B2B or B2C nature of businesses.

The only way to keep you ALIVE! in reading  International Business Cases 

READING 1.7 GIVEN CASES:

1 The case of Mary portrays the apartment renting business were by Mary is the customer in renting the apartment in the “new city”.  The rent is $900 per month but the land lord will give a discount of $850 if Mary will give a security deposit.  In this event, Mary is being offered an “Exploding Offer” to rent the apartment.

2 John is planning to buy a new car, but when he reach to a certain car dealer the car agent will not reconcile to his desired amount offered.  But in a latter offer of the agent, John was offered a lower price deal knowing that the dealer is also accumulating customer quota for a certain period of time.

3 Pat is an MBA student, with the University program of accommodating business organizations to directly hire students from the University in conjunction to their HR needs.  In the given case, Pat was offered a high paying job only if Pat will accept or reject the job offer at the very moment without further consideration.

From the 3 cases of Mary, John, and Pat; the circumstance of “exploding offer” will occur to the buyer side.  In this manner, engulfing the logical business inferences of Mary, John, and Pat will cause negative customer satisfaction in the latter duration of the business.  Referring to the fundamental process of getting a contract, negotiation is only the preliminary event of the business deal were by the buyer and the seller will find common grounds of gaining advantages towards the business deal.   

Therefore, “Exploding Offer or Contracts” will depend its success to the Power of Asymmetry, Test of Faith, Restricting Choice, Lack of Consideration and Respect, & Lack of Good Faith.

PROCESS OF GETTING A BUSINESS CONTRACT: (Reference Mallor et al. 14^th edition 2010)

1 Negotiation

2 Agreement

3 Voluntary

4 Consideration

5 Capacity

6 Legality

7 Contract