Part One:
The Role of the Contract
in the Coin Machine Industry Today
By Walter Bohrer
From the WISCONSIN MUSIC MER C HANTS ASSOC I ATION Newsletter, reprinted with permissi o n.
The very word "contract" has for many of us an almost
ominous sound. Why is that? Why does that particula r
word provoke a "fear" or at least a "caution" reaction in
people? Perhaps the phenomenon is a result of having
watched too many TV gangster d ramas and thus
developing a negative association between that very
frightening con no tatio n and a truly harmless phrase.
That rationale is, however, s implistic a nd does
accurately reflect the facts . As a matter of fact, the true
nature of the term's definition is pro tective, not harmful.
The contract has, and continues, to play a meaningful
role in all of our daily, personal and business lives.
The fear just mentioned is, I s uspect, caused primarily
by just simply no t knowing enough about, or being able
to understand and appreciate, just what a contract is and
does.
Moreover , and infinitely mo re important though, it is
my aim to s how you how crucial the contract will be fo r
successful o perating in the 80's.
History
Many believe that the contract was necessita ted by a
declining mo rali ty and sense of et hics that we feel is a
part of today's world. The conception goes furthe r to
include the notio n that in simpler, slower , and more
honorable times, the contract has no need to exis t- tha t
the handshake and a man's word served in its place.
Certainly in our early agrarian years, a great deal of
business was conducted in just that fas hion. Indeed yet
today, a tremendous amo unt of business is so struc-
tured ...
However, to retain this image denies the contract its
true historical role in civilized society.
The early 1900's saw the development of business
"form" contracts. Concurrently with the development of
form contracting, the Industrial Revolution was c hanging
the entire nature and institutio nal structure of our
econo my. New developing theories of "imperfect" a nd
"mono polistic" competition began to challenge the
prevailing laissez-faire, hands-off philosophy, as a basis
for public policy in a modern industrial-urban society.
The courts began to be persuaded tha t inequalities in
bargaining power had developed which jus tified their
intervention in various economic relations hips, including
contracting. Additionally, many important relatio nships
between contrac ting parties began to be s ubstantially or
fully controlled by legislation.
Today the courts may refuse to enforce, or even
rewrite terms in contracts, if this is deemed necessary, to
protect the real o r presum ed victims of one-sided o r
unfair contracts.
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Therefore tt will be beneficial at this poin t to discuss
the do's and don'ts of contracts.
Fundamental elements of a contract
1. N ecessity or desirability of a written contract.
A written contract is not ordinarily a legal necessity
except in case of real estate transactio ns and documents
evidencing indebtedness s uch as bills and notes. The
contract itself is the agreement betwee n the parties. The
written document is the evidence of that agreement. A
contract can be oral o r written o r it can be the result of
the actions of parties which fulfill the requirements of a
contract.
While it is not necessary to have a contrac t in writing,
it is a lmost always desirable that you do so because only
by writing can you evidence the terms and condi tions
under which the parties have agreed to be bound .
2.
Formal Language
Courts have held that there is no formal language
req uired in a normal business contract, but it should
specify the o bligatio ns of the parties in as much detail as
the parties feel is necessary to evidence their agreement.
In the case of a contract for placing a jukebox or an
amusement game, some of the items that s hould be in
such a contract that come to mind are as follows:
(A) Is there a definite period of time involved or is it
indefinte'? In either case, it s hould so s tate with a
termina tion clause in the case of an indefinite contract.
(B) What is to be paid, to whom is it to be paid, and
when is it to be pa id?
(C) What are the obligations of the parties with
res pect to maintenance?
(D) What are the obligations of the parties with
respect to licenses and permits?
(E) Who s hould be notified on either s ide in the case of
the need for service?
(F) If you are dealing with a corporation, do the
parties who actually sign the contract have authority to
s ign and bind their respective companies? If there is any
question as to the person's right to sign on behalf of a
corporation, you might wish to include a phrase
representing that th e signer has the authority to so sign.
(G) Damages for a breach must also be s pelled out.
3. S ign ing.
The contract s hould be signed by both parties. If they
are individuals, they can use their normal s ignature,
although signatures aren't even legally required. Any
mark or indication that a party normally uses to evidence
his intent to be bound is sufficient, but you can't have a
valid contract unless both parties evidence their intent to
PLA Y METER, November 1,1981