Big Dogs Weblog

GM- Contract Law is Now a Handi- Wipe

by Blake on May 31, 2009 at 10:46 Political

Yea, I know, another interminable piece on the Auto Industry, but this has wider implications than just your ride to work, or even what you drive. The bedrock of our legal system, at least when it comes to doing business in this country, as well as many other countries, is Contract Law.

A contract is an exchange of promises between two or more parties to do, or refrain from doing, an act, which resulting contract is enforceable in a court of law. It is a binding legal agreement. ^[1] That is to say, a contract is an exchange of promises for the breach of which the law will provide a remedy.

Agreement is said to be reached when an offer capable of immediate acceptance is met with a “mirror image” acceptance (ie, an unqualified acceptance). The parties must have the necessary capacity to contract and the contract must not be either trifling, indeterminate, impossible or illegal. Contract law is based on the principle expressed in the Latin phrasepacta sunt servanda (usually translated “pacts must be kept”, but more literally “agreements are to be kept”).^[2] Breach of contract is recognized by the law and remedies can be provided.

Technically, any oral agreement between two parties can constitute a binding legal contract. The practical limitation to this, however, is that only parties to a written agreement have material evidence (the written contract itself) to prove the actual terms uttered at the time the agreement was struck. In daily life, most contracts can be and are made orally, such as purchasing a book or a sandwich. Sometimes written contracts are required by either the parties, or by statutory law within various jurisdiction for certain types of agreement. For example when buying a house^[3] or land.

en.wikipedia.org

In plain language, the written contract trumps all else- unless kyou are the United States government intent on rewarding friends of those in power. In that case, contract law becomes null and void- or what ever the king says it is. 

In this case, the King and his diminutive jester, little Timmy Geithner, have declared that the unions, who supported the Chicago gangster in his bid to steal our country, have to be repaid, and now they have received not one, but two shiny car companies to play with, while the people who invested in GM and Chrysler have to stand in the back of the line, hat in hand.

I know that Barama and his party love class warfare- without it they wouldn’t have been elected- however, the facts are that these “big, greedy, Bond- holders” that the liberals love to demonize are holders of the same bonds that school teachers, pipefitters, and other, more mainstream workers have in their portfolios for their retirements, and now they are darn near worthless, all because Barama put the unions at  the head of the line.

And it’s not just that, although the breaking of contracts is as serious as a heart attack, legally- all of this could have been done six months ago, without all of our money going into a pit of no return- the sheer idiocy is shocking.

GM’s bondholders had a 5 p.m. Saturday deadline to accept an offer to swap their $27 billion in debt for at least a 10 percent stake in a new GM. If the Treasury doesn’t get the support it wants, bondholders could wind up with far less in bankruptcy court.

The Treasury Department had no immediate comment on the deadline passing, and GM spokesman Tom Wilkinson said the automaker did not plan to make any statements Saturday.

GM took a huge restructuring step Friday when the United Auto Workers union agreed to a cost-cutting deal, and early Saturday, Germany’s finance minister said a plan was approved for Canadian auto parts maker Magna International Inc. to move ahead with a rescue of GM’s Opel unit.

But there was still much to do to beat the government’s Monday deadline to qualify for more aid. The company already has received about $20 billion in government loans and could get $30 billion more to make it through what is expected to be a 60- to 90-day reorganization in bankruptcy court.

But there was still much to do to beat the government’s Monday deadline to qualify for more aid. The company already has received about $20 billion in government loans and could get $30 billion more to make it through what is expected to be a 60- to 90-day reorganization in bankruptcy court.

Houston Chronicle, Sunday  May 31, 2009

Over 50 billion dollars, and that is just GM that they are talking about. If we had had the bankruptcy in November, we could have saved this money, and the unions would have gotten what they deserved under the law- far less in the immediate future, but a possible future, at least. This way, they have a shiny toy they have no idea how to operate efficiently, nor will they have the time to learn on the go, because I am certainly reluctant to buy something that would be designed by the government, and bossed by the unions.

Unions are good at putting nuts on bolts (and even then they have robots to show them how and help. What unions are not good at is management- they are vastly unsuited to the task, as unions and management have been natural adversaries for as long as there have been unions. Oh what will they do when someone has that inevitable grievance- who will they demonize? The we did it to ourself scenario doesn’t play well with liberals who like to always deflect responsibility and blame- but with the unions in charge the buck’s gotta stop somewhere. Perhaps they’ll play a version of spin the bottle to see who to blame.

Meanwhile, the poor bondholders have to do as the government tells them to do- they have no options, unless they want to run into a buzz saw of governmental red tape that would make their life hell for the next five years or so. Wow, what a deal- this is certainly a day to remember, when your own government screws you out of the money  you are legally obligated to by law, but are denied because of crass, lowly, political favoritism dished out by a group of mafia wannabes in governmental guise. 

They’ll make you an offer you can’t refuse.

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Tags: contract law, fraud, geithner, gm, thievery, unions