Governments enforce some promises but do not enforce most promises made between people. Do you think it is important for governments to enforce certain promises? What kinds of promises should be enforced?

 Governments enforce some promises but do not enforce most promises made between people. Do you think it is important for governments to enforce certain promises? What kinds of promises should be enforced?

As always, trust is hard to build but very easy to lose. If a government does not enforce all of its promises, it will lose its credit over time. What happens if citizens of a country do not trust their government? Currency policy is an excessively sensitive example of our daily life. Turkey's recent currency crash is a good example. We used to think that our government will do the best it can to make our lives better not worse. However, it seems did not happen in Turkey. 

In 2021, Turkey’s currency has been falling to an all-time low against the U.S. dollar. Nonetheless, President Recep Tayyip Erdogan presses ahead with a widely criticized effort to cut interest rates despite surging consumer prices. As a result, families are struggling to buy food and other goods. As we know that lower interest rate will increase the money supply since when all else being equal, a larger money supply lowers market interest rates, making it less expensive for consumers to borrow. Conversely, smaller money supplies tend to raise market interest rates, making it pricier for consumers to take out a loan. Now, the Turkish lira has lost around 40% of its value since the start of the year, becoming one of the world's worst-performing currencies. 

Basically, I think a currency or the monetary system is like a contract signed by the government to keep our economy going and growing. A government must promise to ensure the value of its currency is good enough to make its citizens live better. Although generally, a government has the authority to issue its currency, it is still created based on trust. I trust the money you give to me so I work hard to earn it. If it keeps losing its day by day, no one wants to work for it. Therefore, I think one of the very important promises that governments must keep and enforce is to keep the monetary system well administrated. Otherwise, every country can be like today's Turkey, the economic turmoil sends desperation and inflation soaring. Threatened by a currency crisis, many people lining up for subsidized bread, cutting back on meat, and fleeing for a better life in Europe.

Reference

SUZAN FRASER, A. P. (2021, December 3). Explainer: Turkey's currency is crashing. what's the impact?: Taiwan news: 2021-12-03 22:37:24. Taiwan News. Retrieved December 6, 2021, from https://www.taiwannews.com.tw/en/news/4364306. 

Brief Fact Summary of The American case of Sherwood v. Walker.

 Brief Fact Summary of The American case of Sherwood v. Walker. 

Have to ever regrated selling a good at a low price when you realize that you underestimate it? Did you accept it and learn from it, or did you ignore the contract, refuse to sell it, and try to make a new deal? This 19th-century case involving the sale of a cow is one of the most famous contracts cases in American law. Sherwood was the plaintiff who contracted to buy a cow that was believed to be barren at a low price from Walker (the Defendant). After they signed the contract, they both realized the cow was pregnant. A pregnant cow can produce milk rather than just beef. Therefore, Sherwood wanted to enforce the contract while Walker wanted rescission since the value of the cow increased due to the misestimation, a mutual mistake. Sherwood v. Walker has been cited as legal authority in more than fifty court decisions, from New York to California. It is celebrated, classic, and seminal. It remains one of the great contributions to contract jurisprudence. The case is a part of Michigan history known to practically every living American lawyer and law school student.

The key point here is that both sides had mutual consent while they signed the contract, but the mutual consent was based on misestimation. It was considered a legally enforceable promise once until Sherwood sued Walker when Walker refused to perform it. Of course, Sherwood is happy to purchase the cow at such a beautiful price, but Walker was not glad to earn less money. It was not an information asymmetry. It was a mutual mistake. However, in the trial, Sherwood has to prove it was a valid contract and mutual consent while Waller was trying to prove the mutual consent is a mistake of both parties. So, was there a mutual mistake in the perception of facts that permits either to rescind the contract? According to the verdict, yes. The mistake or misapprehension of the parties went to the whole substance of the agreement. Normally, we all think have to keep our promise, even though we signed a bad contract. However, in this case, one of them regretted AFTER signing the contract due to the mutual mistake. Notice that it is a MUTUAL mistake not just a bad contract for the party who regretted it.

What were the main legal issues involved? 

One of the main issues in the case was whether the remedy of rescission is available if both parties to a contract share a misunderstanding about an essential fact. This case reflects the question of whether two parties should be held to an agreement regarding one thing if the nature of the thing changes entirely. It is claimed that a mutual mistake of a material fact was made by the parties when the contract of sale was made. There was no guarantee in the case of the quality of the animal. Where there is no warranty, there can be no mistake of fact when no such fact exists, or, if in existence, neither party knew of it, or could know of it. In this case, neither party knew the actual quality and condition of this cow at the time of the sale. Accordingly, whether a contract was made based on a mutual aberration of the parties involving material facts can be void if the two parties learn of their mistake. The legal issues twist around the fact that both parties entered into a sale agreement under a bilateral misunderstanding.

What approach did the court take in addressing the legal issue? 

Initially, Sherwood brought a replevin action before a Justice of the Peace to obtain possession of Rose, and he won. Walker appealed to Wayne County Circuit Court, where Sherwood won again. However, Walker determined not to lose the case. So, he appealed again to the Michigan Supreme Court. The high court overruled the previous verdicts. The court found that the parties’ misapprehension regarding the barren nature of the cow went to the substance of the agreement. As such, the agreement was void due to its pregnancy. The cow ceased to be the animal that was originally deemed to be. Because the mutual mistake had affected the substance of the transaction had been made, Hiram Walker had a right to rescind the contract and keep the cow. That means, where a mistake of both parties at the time a contract was made as a basic assumption on which the contract was made has a material effect on the agreed exchange of performances, the contract is voidable. A party bears the risk of a mistake when the risk is allocated to him(or she), or he(or she) is aware at the time the contract is made and he(or she) has limited knowledge with respect to facts to which the mistake relates but treat his(or her) limited knowledge as sufficient.

How did the court apply its approach to the facts of the case? 

The court’s position is that a mutual, material mistake of fact makes the contract voidable by the party adversely affected by the mistake. The critical question is whether there was a mistake as to a material fact. The mistake was not of the mere quality of the animal but went to the very nature of the thing. A barren cow is substantially a different creature than a breeding one. There is as much different between them for all purposes of use as there is between an ox and a cow that is capable of breeding and giving milk. 

If the mutual mistake had simply related to the fact whether she was with calf or not for one season, then it might have been a good sale; but the mistake affected the character of the animal for all time, and for her present and ultimate use. The cow was not in fact the animal, or the kind of animal, the defendants intended to sell or the plaintiff to buy. She was not a barren cow, and, if this fact had been known there would have been no contract. This mistake affected the substance of the whole consideration, and it must be considered that there was no contract to sell or sale of the cow as she actually was.

Provide a detailed example of how the court's conclusion might be applied in a modern business setting. 

Signing contracts with business parties is an essential part of doing business. Suppose you run a coffee chain like Starbucks. You have to sign many contracts with many different suppliers to ensure the supply of coffee does not discontinue and is safe. One day, you approach a local coffee bean supplier, and due to the conditions such as the weather and the soil, the quality of the coffee beans is not good enough. Therefore, you decide to purchase the product at a lower price and use them on the cheaper drinks. The supplier agreed since he thinks it is a fair price. You both have mutual consent and signed a contract for the coming ten years to supply ten million pounds each year at $1 per pound. However, due to climate change and genetic variation, the quality of the coffee beans has become much higher than they were five years ago. So, five years later, the supplier refuses to supply and attempt to sell them at a higher price. Of course, you probably sue him to legally enforce the promise. This very likely happens when material facts are changed after signing a legally enforceable contract.

In this case, if the mutual mistake had simply related to the fact whether the coffee beans were of high quality or not for one season, then it might have been a good sale; but the mistake affected the character of the coffee beans for all time, and for its present and ultimate use. The coffee beans were not in fact the material, or the kind of material, the supplier intended to sell or you to buy. Moreover, if this fact had been known there would have been no contract like this one. This mistake affected the substance of the whole consideration.

Finally, a promise is always followed by trust. However, trust is hard to build but easy to lose. Humans feel more pain when they are losing something than they are getting something. Therefore, it is not wise to break a promise easily or frequently. Credibility is always a part of your assets when doing business. Although most of us do not want to lose anything, sometimes it is still worth keeping your words when earning trust and creating credibility. In addition, actively seeking diverse-owned businesses to purchase from is always a wise choice. And, I truly believe that such a supplier diversity is a clever business decision and business imperative in today’s business climate. It helps us identify and deliver high-quality products and services across all business channels while driving value and economic development in the communities we serve.

Reference

Lau, T. & Johnson, L. (2011). The Legal and Ethical Environment of Business (Vol. 1). Flat World Knowledge.

Sherwood v. Walker. U.S. Contract Law for LL.M. Students. (2017, August 18). Retrieved December 6, 2021, from http://blogs.kentlaw.iit.edu/harriscontracts/home/excuse/sherwood-v-walker/.