Recent Organisational Changes in the Virgin Group

Recent Organisational Changes in the Virgin Group These assignments discuss the organisational changes that the Virgin Group has been during the last few years, and how they are adapting to the changes in the operating environment. This will be in the context of the employees perception of the changes, and how the Virgin Group can lower their resistance to change. This is a natural feeling from employees, when faced with uncertainty, and this needs to be managed. The assignment focuses on the Virgin Group airline operation, Virgin Atlantic. Virgin Atlantic Airways was founded in 1984, and it is the UKs second largest carrier. The company is based at Gatwick, Heathrow and Manchester airport; Virgin Atlantic operates long haul services to over thirty destinations globally. The organisation has been recognised through awards from top business, consumer and trade (www.virgin.com). 2.0 THEORECTICAL FRAMEWORK 2.1 Meaning of Change management Change management is not a distant discipline with rigid and clearly defined boundaries. Rather, the theory and practice of change management draws on a number of social science disciplines and traditions. Three schools of thought form the central plank on which change management theory stands. This includes: The Individual perspective school: This school is split into Behaviourist and Gestalt-Field theory. The Gestalt-Field theorists believed that behaviour is not just a product of external stimuli; rather it arises from how the individual uses reasons to interpret the stimuli. The behaviourists, on the other hand seek to achieve organisational change solely by modifying the external stimuli acting upon the individual. The Group Dynamics school: This originated from the work of Kurt Lewin. According to Lewin (1974) people in organisations work in groups, and individual behaviour must be seen, modified or change in the light of groups prevailing practices and norms. HENCE the focus of change must be at the group level and should concentrate on influencing and changing the groups norms, roles and values (Cummings and Huse, 1989). The Open Systems school: The school is concerned with understanding organisations in their entirely. It attempts to take a holistic rather than a particularistic perspective. This is reflected in its approach to organisational change. Change management can be defined as a systematic approach to dealing with change, both from the perspective of an organization and on the individual level. A somewhat ambiguous term, change management has at least three different aspects, including: adapting to change, controlling change, and effecting change. A proactive approach to dealing with change is at the core of all three aspects. For an organization, change management means defining and implementing procedures and/or technologies to deal with changes in the business environment and to profit from changing opportunities. Daft (2000) states that change is a necessary evil and all organisation undergo change at one time or another if not continuously. Organisations usually change in response to political, economical, social, technological and legal forces. There are four different types of change that an organisation can undertake, they are technological change, new product based change, structural change, and cultural change. According to Bass (1985) successful adaptation to change is as crucial within an organisation as it is in the natural world. Just like plants and animals, organisations and the individuals in them inevitably encounter changing conditions that they are powerless to control. The more effectively you deal with change, the more likely you are to thrive. Adaptation might involve establishing a structured methodology for responding to changes in the business environment (such as a fluctuation in the economy, or a threat from a competitor) or establishing coping mechanisms for responding to changes in the workplace (such as new policies, or technologies). 2.2 RESISTANCE FOR CHANGE Many authors (Lawrence, 1954; Maurer, 1996; Strebel, 1994; Waddell and Sohal, 1998, among others) stress that the reasons for the failure of many change initiatives can be found in resistance to change. Resistance to change introduces costs and delays into the change process (Ansoffs, 1990) that are difficult to anticipate (Lorenzo, 2000) but must be taken into consideration. Resistance has also been considered as a source of information, being useful in learning how to develop a more successful change process (Beer and Eisenstat, 1996; Goldstein, 1988; Lawrence, 1954; Piderit, 2000; Waddell and Sohal, 1998). Undoubtedly, resistance to change is a key topic in change management and should be seriously considered to help the organisation to achieve the advantages of the transformation. To manage resistance change effectively, the following methods could be used: Communication and Education: This is by far one of the most effective implementation tactics that can be used by an organisation. Communication is used when solid information is required to ensure that employees buy into the process and education should always be used when the change pertains to the introduction of a new technology or product or service (Bunker and Alban, 1992). Participation: This will help with the smooth transition from the pre change phase to the post change phase and if employees were encouraged to participate in the change initiation phase then most of the problems that can occur when the change is implemented could be eliminated as the issues and problems may have been identified and solved in the initiation process (Buller, 1988). Negotiation: This can be used when there is severe resistance and management needs to sell the idea to the employees. Top Management: The visible support of top management to the change process can help reduce and eliminate resistance (Daft, 1982). 3.0 IMPLEMENTING CHANGE IN VIRGIN GROUP One of the largest internal change moves by the Virgin Group, was when Sir Richard Branson, became disillusioned by the public listings, obligations and corporate bureaucracy of a publically listed organisation, he sought after to taking the organisation back to private ownership (Johnson, G Scholes J 2004). This was from the philosophy that forgoing short-term profits for long-term expansion is the way forward (www.virgin.com). This contingency approach of the Virgin Group is formed from the business requirements, and the structure (which will take the shape of what is needed to operate within the change environment) as this has a considerable direction on the overall organisational performance (Burnes, B. 2000). The structure of the Virgin Group and its accomplishments, are contingent the environmental influences. As a result by changing the structure, this is an internal driver of change in reaction to the external markets (Mullins, L 2005). With the change in the listing of the organisation, came the reduction in organisational bureaucracy. The need for bureaucracy and a hierarchical structure in the Virgin Group was reduced greatly (Johnson, G Scholes J 2004). As a result Sir Richard Branson assumed a hands-off stance, with the managers, encouraging them to use their initiative, skills and experiences (www.virgin.com). This change to the organisational structure has led to a separation of the employees, through now working in specific groups or parts of the business. The variety in locations that the Virgin Group operates, and the wide range of services and goods they offer has led to divisions in the work force. Therefore they are not a centralised team; some divisions could operate in an insular manner, which is easier said than done to change, without altering the structure (Burnes, B. 2000). Some of the internal drives of change the Virgin Group faced with, were the several layers of managers, which can slow down the management reporting systems and their reaction to situations they are faced with. With the contemporary environment, this is negative to change and will slow down the internal management process (Burnes, B. 2000). There have been internal issues since the structural change, with communication across the group and this was particularly noticeable in the middle and lower levels of employees. They were not receiving enough information on the proposed changes, leaving them unable to instruct employees on the organisational changes (Johnson, G Scholes J 2004). The organisational structure of the Virgin Group is a group de-centralised; this could encourage silo behaviour, from the different business teams and the different locations in which they operate. There is a natural competiveness between groups, and operating under this structure can encourage competitive behaviour between them (Johnson, G Scholes J 2004). To encourage the Virgin organisation working as a group, and to reduce silo behaviour caused by the structural change they started using a single web address, Virgin.com, for the whole of the organisation customers has entrance to all the Virgin services under a solo portal. These strategies assist in supporting the organisational parenting strategy and improve the synergies already imitative from the organisational branding of the Virgin Group (www.virgin.com). Virgin Atlantic service is very much customer focused with a prominence on value for money, quality, fun and innovation. The organisation is 51% owned by the Virgin Group and 49% owned by Singapore Airlines, and employees over 9000 people (www.virgin.com). This change has led to two internal parent organisations, but with Virgin retaining the majority share. Changes to organisations are almost at an epidemic status, reducing the organisations control of the external environment. All organisations are faced with incessant change; this is in their operational environment and the organisational context. In the modern-day organisational situation, there is enormous attention and spotlight on the human resource. The drivers from this change can be both internal and external to the organisation (Coram,  R Burnes B 2001). The human resource is not excluded from this change process, and is a significant part of the organisational context (Frank F et al 2004). Contemporary theorists advocate that if organisations want to be effectual, in both their current and future operating environment, they must focus on the composition and motivation of their human resource (Beardwell, I. et al. 2004). Virgin Atlantic values their employees and trains them to maintain the high service levels and to be able to remain effective (www.virgin.com). As a result of the change it is vital to manage the human resource fairly. When organisations use human resource management as a tool, it will assist them to encourage and motivated their employees to adapt to the proposed changes. The future prospects for all organisations are unpredictable and it is difficult to confirm what is required from the human resource, when an organisation is changing (Bratton, J Gold J 2003). An internal driver of change is the HR responses to market forces. The HR function should mix the current issues of their human resource with the wider financial and business requirements, that change will force upon them (Bratton, J Gold J 2003).The Virgin Group including Virgin Atlantic focus on their employees, as they see the value in managing the resource. Employees are recruited who fit within the culture and support the Virgin ethos. Internal change is driven by an organisations strategy (Bellin, B Pham C 2007). The strategy is a consciously created plan, which will include the methods and actions, to achieve the desired result. An organisation mission statement is normally a non monetary realisation. This mission is the future direction of the organisation (Johnson, G Scholes J 2004). The internal forces for change includes making the organisational structure more effective, reducing diversification through streamlining the portfolio and identifying new and emerging markets. This change has realigned the organisation on their mission, focusing employees to assist in the transformation (Groucutt, J. et al 2004).   Virgin Atlantic is reliant on their branding, this is recognisable when they enter new markets, and this has been an internal driver of change (Groucutt, J. et al 2004). The Virgin brand name is the most significant benefit and asset to the organisation. This brand of Virgin and Sir Richard Branson was capitalised on, when an adverts for Apple Computers, Sir Richard Branson was connected to Einstein and Ghandi, as a shaper of the 20th century (www.virgin.com). The management of Virgin Atlantic has been very strong, during the changes over the past five years. This strong leadership of the organisation will focus the employees during periods of change. An organisations efficiency and survival during periods of change, is dependent on the ability of their management and leadership team. (Bailey, J. 2009). Gupta (2004) concluded that the ideal world of vision, the leadership transfers this to the real world, making it happen (Gupta, S 2004). The virgin group is a good parent to Virgin Atlantic, with Richard Branson as an effectual leader (Bailey, J 2009). This will assist in the stabilisation of the organisation during times of change, and reduce employee resistance. The success of the organisation is, in addition, dependant on clear-cut communication and management of the behaviours that motivate employees performance to be an effective organisation (Gupta, S 2004). Through proving freedom of decision making to the managers with Virgin Atlantic, encourage a responsibility of their actions and ownership of the organisation. This provided an organisational culture that encouraged growth with the managers. When recruiting new management, potential employees are shortlisted for innovation, abilities and competitive nature (www.virgin.com). In addition, Virgin Atlantic is capable to cope with the possible downsides of this autonomy and decentralisation. To prevent the failing of communication links and the potential threat of single business units chasing their own strategies, the Virgin Charter sets out a management system and internet business strategy that takes gains from the of information technology, further extending the Virgin brand (www.virgin.com). External forces have led the separate business within the Virgin Group to move towards the tactically five pillar realm. The core strategy is the heart of Virgins core strategy to develop the five pillars of the business empire: travel, leisure, mobile phones, entertainment retailing and personal finance (www.virgin.com). This during periods of change keeps employees focused on the organisational goals, and unites the organisation (Groucutt, J. et al 2004). The accomplishments of the Virgin Group are reliant on their corporate parenting strategy, and the competitive advantage is dependent on the culture (Groucutt, J. et al 2004). The Virgin Groups strategy is executed through the decentralisation of the businesses and the unified branding. In the short run, the strategy looks very strongly constructed, and some commentators believe it is near enough unstoppable (Johnson, G Scholes J 2004). On the other hand, in the long term, they need to be a succession plan, to replace the natural wastage of management, with individuals that believe in Virgin Charter. They will need to continue the legacy of the Virgin Groups corporate ethos, through successful execution of the Virgin Charter (Groucutt, J. et al 2004). Virgin Atlantic must also carefully consider the new markets they plan to enter. One solitary slip-up can blemish or even destroy the Virgin Brand, and this could be disastrous for the group (Johnson, G Scholes J 2004). Diversifying too much could weaken the Virgin brand, especially when a service or product does not meet the expected Virgin standard. The news on a loss of reputation will travel faster than the success of a product or service. Therefore the association of a single Virgin brand can also have a negative effect on the group (Kotler, P et al 2005). As previously discussed, organisational change is an existing and inevitable aspect of organisational life. The environment surrounding the organisation in the operational and market context is in a continuous situation of change, this through the worldwide economy and the speed and change of technology. As a result, organisations should take action to reduce the impact of forced change, through predicting and assessing the possibilities (Groucutt, J. et al 2004). There are numerous external factors, which will have an effect on the Virgin Atlantic, and how they manage their operations. The external political environment includes the administrative and legal systems, which govern the organisation where they operate. The external operational environment for the Virgin Group will influence the internal procedures and ultimately the organisational effectiveness. These external political influences can be drivers of change, which manage over the organisation. For example an unfavourable political environment can prevent expansion into the location (Klein, L 2008).   The national financial trends will also be a driver of change, for example a down turn on the economy will impact on an organisations expansion plan. This driver of change can reduce the economic stability of the finances of the organisation; as a result, less investment will be attracted. The state-run legal systems are made up from the policy, laws, and regulations of the host country.   As a result the organisation must survive within this legal framework, and audit their systems to ensure compliance to local regulations (Baldry, C et al, 2007). This economic stability is vital for organisational survival. This is achievable through re-evaluating their present market position, and tactically plan where they want to be. This is the organisations strategic fit, aligning their strategy with the environment, through matching their core competencies and skills, to the required strategy. This is a simple process that some organisations overlook (Kotler, P et al 2005). This continuous organisational change has an effect on the employees; this can impact the workplace, these changes can leave the workforce unsettled and can leave individuals uncertain of their role, and how this fits in with the organisations strategy. Change is unsettling for employees, and in times of economic downturn, they can become fearful of their job security (Hunter, D 2006). The very structure of an organisation can add to employees uncertainty in periods of change. The organisation hierarchical structure can put off the workforce from acquiring the details of the planned change. This is a basic change process, which is regularly overlooked, to the determent of the strategy (Hesketh, A Fleetwood S 2006). Consequently, the workforce is not aware of the full extent of the organisational change strategy, or their role within it. The structure of the organisation is capable of covering up what is really is occurring, frequently with just the summit of the management team being conscious of the full strategic intent of the organisation (Groucutt, J. et al 2004). The constant change in the Virgin Atlantic can lead to uncertainly with some employees. This uncertainly can lead to resistance to the change. This resistance is not malicious, and is not intended to disrupt, but some employees feel more secure through holding on to the way things are, and not changing working patterns and behaviours. When the employee relationship is not as strong as it should be, then any change to the working environment will be met with resistance (Beardwell, I. 2002). The most important tool that the management has during periods of organisational change is communication. Through setting up formal and informal communication channels, the employees can be given the information on the changes, leading to them understanding the rationale and the benefits to the organisation. The employee voice is a fundamental human right, for free speech, which should be encouraged in the workplace (Hunter, D 2006). These employee forums can be used as a platform for the Virgin Atlantic to discuss organisational changes that will affect the employees working lives. This will give the employees a voice, to openly discuss their concerns. Prosser (2001) concluded that the collective voice of the employees achieves what the lone voice could never do: it humanises and civilises the workplace (Prosser, M 2001). Therefore, it is vital to give employees a collective voice. The Virgin Group can also measure the employees feelings, fears and attitude to the proposed change, through employee surveys. This is good human resource management practice. This method of gauge the employee attitudes is only of assistance to the organisation when they are surveyed on a regular basis, to be used as benchmarks of the progress of the organisation in the employee relationship (Marchington, M et al, 2001). There are arbitrating factors when employees attitudes are surveyed, and this is further enhanced to benefit the organisation, when they are used with other forms of listening to the employee, for example discussion and communication (Hesketh, A Fleetwood, S 2006). When concerns are discussed it is imperative to pay attention to the motivational factors, which will maintain the employee interaction with the employer (Parker, S (2000) cited in Dorenbosch, L et al 2005). Not all theorists agree that employee attitude surveys are the way forward in industrial relations. When they have the results from the surveys employers do not have to respond to the conclusion from them, sometimes it is just lip service (Blyton, P Turnbull, P 2004). Union representation in organisations is frequently viewed as ideal in employees voice, and there is support that there is considerably more to the employees voice, than any survey can reveal (Dundon, T 2003). Virgin Atlantic has successfully managed organisational change through changing the structure of the organisation. This is in reaction to the different markets they operate in and the changes individually to their environment. This has led to an insular culture; this can be addressed through communication across the group. One of the major issues the organisation has faced is the employees rà ©sistance to the changes, sparked by uncertainty of their current and future working environments. Employees as individuals enjoy security, and when this becomes uncertain, there is a natural reaction to resist the change. 4.0 CONCLUSION The objectives of the assignment is the implementation of change in an organisation through understanding of the theoretical aspects of change management and the best way change management can be effectively implemented. It is absolutely clear that the support of senior management staff need to be sorted, development of effective strategies, tackling staff resistance to change, and implementing plans for accomplishing each goal stated need to be taken serious during implementation process to gaining comparative advantage over competitors. Virgin Group, are successful and encourage innovation. They must now ensure that all employees are committed to organisational strategy, and will through the knowledge accept the change.

Cartesian Dualism

In Cartesian Dualism, Descartes tries to prove that the mind or soul is distinct and separate from the body, having no thoughts like the thinking and knowing mind/soul. The first argument in Cartesian Dualism is the argument of doubt. This argument has to do with doubting that he is a thinking thing there must be something there that is true to that therefore there is no physical body because that thought is possible. He claims the mind and body is two separate things claiming this logic: I am certain that I am a thinking thing. I am not certain that I am a physical thing. Therefore, I am not a physical thing.I would not agree with him on this part of the argument, given the premise it is a good way to show that the body does not think for itself, but that does not lead it to a complete separation of the mind and the body. A lot of the physical sense and consumption that attributes to the thoughts of the mind or soul comes from the body. It cannot be written off as a separate and unr elated to the mind/soul just by imagining it does not exist because it cannot match the logic by thinking for itself. Another argument is from clear and distinct perception by proposing that all people are thinking things and not physical things.Overall this argument claims that if two things can exist apart from one another, then they must be two distinct and separate things, now saying that the mind is not only separate from the body, but can also live without it. If the mind is therefore distinct from the body, then it is possible to exist as a mind without the body. I logically don’t agree just because we can distinctly perceive the mind and body as two different things, how does that mean that they actually are, and how will the body continue to exist without the body as a carrying agent.The soul would not be a soul without the body, because it will not perceive the world the same without the body. The third argument is for simplicity with the idea that everything extend ed is divisible into parts. The body is extended and also divisible into parts such as the arms, legs, and so on. Here, Descartes did not believe that the mind was divisible into parts, even though we know different parts of the mind are responsible for different cognitive processes. Descartes believed believed that these differently labeled parts all have the same driving force behind them.So the logic goes if the mind cannot be divisible into parts, and all extended things can be divisible into parts, then the mind cannot be an extended thing. Which then makes the mind is of different material from the body which must be also separate and distinct from the body. Given the premise I can agree with this argument for Cartesian Dualism because it is more broken down and relatable than others having details and not many vague accounts having to be accepted to get to a solid conclusion.When I put each argument in context of flesh vs soul giving the body no real significance taking away any neuronal or psychological dependence that shape the mind/soul then the first two arguments are more easily taken but still misunderstandable from different point of views. Given most premises of these arguments I cannot whole fully agree with Descartes because logically it does not make sense to me given the different understanding and initial perception towards the human body and its natural role.

Paper on Depression

Thresa BigMan University of phoenix PSY270 Week 4 Depression paper Depression is a mental illness that a lot of individuals have in today’s society. According to the University of Phoenix fundamentals of abnormal psychology, describes many different mood disorders that effect many people today, â€Å"Depression is a low, sad state in which life seems dark and its challenges overwhelming.Depression can be an illness that can be manageable to an individual that has mild symptoms there are cases of depression that can be so severe that it can take over someone’s life in the aspect that it is manageable with daily living assistance and treatment plans that include assisted living environment and anti-depressants. Patients can even be misdiagnosed to have other disorders if not have a proper evaluation.Mania, the opposite of depression, is a state of breathless euphoria, or at least frenzied energy, in which people may have an exaggerated belief that the world is theirs for the taking. Most people with a mood disorder suffer only from depression, a pattern called unipolar depression. † When an individual has no history of mania and after the episode return to their normal mood others may experience periods of mania that o back and forth with periods of depression in a somewhat of a pattern is called bipolar disorder. (University of phoenix, 2011).Many individuals of all walks of life suffer from mood disorders according to the University of Phoenix Fundamentals of abnormal psychology (2011), â€Å"Mood disorders also have plagued such writers as Ernest Hemingway, Eugene O’Neill, Virginia Woolf, and Sylvia Plath. † Mood disorders have different stages of symptoms, according to the university of phoenix fundamentals of psychology (2011), â€Å"The symptoms, which often feed upon one another, span five areas of functioning: emotional, motivational, behavioral, cognitive, and physical. Emotional symptoms can have the individual feelin g miserable, humiliated, and sad. In severe cases many individuals can suffer from anhedonia which can cause the patient to have the inability to feel pleasure. They begin to have no self-worth. Motivational symptoms can include according to the University of Phoenix Fundamentals of psychology (2011), â€Å"Depressed people typically lose the desire to pursue their usual activities. Almost all report a lack of drive, initiative, and spontaneity. They may have to force themselves to go to work, talk with friends, eat meals, or have sex. The patient will not have any motivation to get up and get out of bed at times. Motivational symptoms could be that a patient doesn’t want to do anything and has to force one self to do the littlest of things in their daily life. Behavioral symptoms include behaviors where the individual becomes less active productive. Cognitive symptoms people see themselves in a very negative light and do not have a high self-worth when they accomplish somet hing that is very substantial they do not see it in the right regards to see what they did was successful.Physical symptoms can include headaches, nausea, vomiting and sleeping issues. Physical symptoms can vary from person to person when it comes to mood disorders. Many times physical symptoms can often cloud proper diagnoses to mood disorders, according to the University of Phoenix Fundamentals of abnormal psychology (2011), â€Å"In fact, many depressions are misdiagnosed as medical problems at first. Disturbances in appetite and sleep are particularly common (Neckelmann et al. , 2007; Genchi et al. 2004). Most depressed people eat less, sleep less, and feel more fatigued than they did prior to the disorder. Proper diagnoses are often over looked because of all the physical symptoms that a person with a mood disorder can develop. Often the symptoms are treated before depression is diagnosed. When diagnosing unipolar depression, according to the University of Phoenix Fundamentals of abnormal psychology (2011), â€Å"People who experience a major depressive episode without having any history of mania receive a diagnosis of major depressive disorder. Individuals who display a longer-lasting but less disabling pattern of unipolar depression may receive a diagnosis of dysthymic disorder.Bipolar I disorder have full manic and major depressive episodes. Most of them experience an alternation of the episodes; for example, weeks of mania followed by a period of wellness, followed, in turn, by an episode of depression. Some people, however, have mixed episodes, in which they swing from manic to depressive symptoms and back again on the same day. In bipolar II disorder, hypomanic—that is, mildly manic—episodes alternate with major depressive episodes over the course of time.When dysthymic disorder leads to maojr depressive disorder, the sequence is called double depression (Taube-Schiff & Lau, 2008). † Unipolar depression is often triggered when the individual is experiencing extreme stress. Forms of treatment for these types of mood disorders may include antidepressants, individual therapy, and in extreme cases an individual may have to be under constant care as the disorder has caused them to not be able to maintain their normal quality of life and may be harmful to themselves or others.Group and family therapy can be an effective form of treatment for patients. According to the University of Phoenix Fundamentals of abnormal psychology (2011), â€Å"Family-Social Treatments Therapists who use family and social approaches to treat depression help clients change how they deal with the close relationships in their lives. The most effective family-social approaches are interpersonal psychotherapy and couple therapy. † Anti-depressants are commonly given as a part of the treatment plan for a patient.According to the University of Phoenix Fundamentals of abnormal psychology (2011), â€Å"Two kinds of drugs discovered in the 1950s reduce the symptoms of depression: monoamine oxidase (MAO) inhibitors and tricyclic’s. † Proper diagnoses are the most important part about treating any mental disorder. Many times physical symptoms cloud the illness. When treating this disorder it is important to diagnose to be accurate because often these types of disorders are often prescribed antidepressants as a way to treat the illness.After proper accurate diagnoses developing a treatment plan to determine what types of treatments would the patient benefit from. Assisting the patient in a proper evaluation to diagnose correctly is also a way for the patient to learn what is a normal mood or reaction to events or stress that happens in their life time can help determine what the patient is experiencing and often even why. Treatment and proper diagnoses goes hand in hand they are as important to the patient. References University of phoenix. (2011). Fundamentals of psychology. Retrieved from University o f phoenix, PSY270 website.

Commercial Contract or Other Agreement - Free Essay Example

Sample details Pages: 5 Words: 1542 Downloads: 7 Date added: 2017/06/26 Category Law Essay Type Research paper Tags: Contract Law Essay Did you like this example? QUESTION What distinguishes a commercial contract from other agreements, be they family arrangements or gentlemenà ¢Ã¢â€š ¬Ã¢â€ž ¢s agreements? Illustrate your answer with cases. Answer: Agreements: Agreements are not legally enforceable. This consists of an offer and acceptance to that offer without intention to make the agreement legally binding. Don’t waste time! Our writers will create an original "Commercial Contract or Other Agreement" essay for you Create order Agreement = Offer + Acceptance Contract: A contract on the other hand is similar to agreement with the sole intention to make the agreement legally binding. A contract is an agreement that the courts will protect and enforce. It is a legally enforceable agreement, which if not upheld by any of the parties involved can allow court of law to intervene and decide the matter as intermediary. Contract = Agreement + Intention + Consideration Explanation and Difference between Contracts and Agreements: Contracts can be executed through formal deeds. Contracts can be made written, verbal or partially written and partially verbal. Some contracts are bound to be written; otherwise they hold less legal grounds and are hard to prove in court of law due to lack of evidence. These include Real Estate or Property Contracts Hire ,Sale ,Purchase contacts Stock and Share Contracts Consumer Credit Contracts There is an exception to the above principle in case a contract has not been recorded in a written form. In such a situation equitable doctrine of part performance comes into play as happened in Buckenara v Hawthorn Football Club Ltd [1988] VR 39 A contract cannot be formed unless both the parties have the intention to be legally bound. The intention of the parties involved is decided on the presumption, in which the probable outcome is presumed and implied. These presumptions can be over turned or rebutted, but in case of rebuttal à ¢Ã¢â€š ¬Ã…“Onusà ¢Ã¢â€š ¬Ã‚  is the responsibility of the party who is rebutting the presumption. Testing the Intention using Presumption: Two types of presumptions are employed by courts when checking the intention of the parties, if they wanted to be legally bound or not. These presumptions are based on Domestic, Personal or Social Transaction Business or Commercial Transaction Method to check presumption The method to check the presumptions is objective test. This test considers an imaginary reasonable person to decide if an intention existed to be legally bound by the parties, when provided with all the evidence. Objective test is conducted by deciding The transaction being involved i.e. if ità ¢Ã¢â€š ¬Ã¢â€ž ¢s a domestic, personal or social transaction without the intention to be legally bound or if it is a business or commercial transaction with the intention to be legally bound. Looking into the evidence present to identify if a reasonable rebuttal can be given of the presumption, with onus of proof on the party rebutting the presumption. Some past cases of à ¢Ã¢â€š ¬Ã…“Domestic, Personal or Social Transactionsà ¢Ã¢â€š ¬Ã‚  and à ¢Ã¢â€š ¬Ã…“Business or Commercial Transactionsà ¢Ã¢â€š ¬Ã‚  along with their rebuttals are as follow. Domestic Agreements: Domestic agreements donà ¢Ã¢â€š ¬Ã¢â€ž ¢t show intention to make a legal binding to the arrangement being sought. They are mere agreements between close relatives or spouse. Thus they cannot be termed as a legal contract if an intention for legal binding cannot be proved in the court. Examples of this kind of agreement are Balfour v Balfour [1919] 2 KB 571 In this case Belfour committed to pay his wife maintenance money if she would stay back in England. He later changed his mind and stopped paying the maintenance money. The upset wife took a divorce and sued Belfour for breach of contract. The court decided in favour of Belfour considering that at the time of agreement, both the parties were spouse and it was more of a domestic agreement with no intention to legal binding. Cohen v Cohen (1929) 42 CLR 91 In this case, the husband promised a dress allowance to his wife. After sometime he stopped the allowance due to unhappy marriage .The wife sued the husband for breach of contract. But court held it as a domestic agreement considering no intention for legal binding was present. The presumption prevailed since no rebuttal was put forward by the wife. Rebuttal of Domestic Agreements: A presumption can be rebutted by presenting strong contrary evidence. The onus of proof is on the party trying to rebut the presumption. A few cases in which the presumption of domestic agreement was rebutted are as follow McGregor v McGregor (1888) 21 QBD 42 In this case the presumption of domestic agreement was rebutted. A husband and wife separated on terms that the husband would pay for the maintenance of the children and wife, if the wife would not incur any debts for which the husband would be liable. The husband stopped pa ying the maintenance money after sometime, on which he was sued by the wife .The wife was able to rebut the presumption of non intention on the grounds that the couple were separated at the time of agreement, which means that this was not a domestic agreement and both parties had intention to make the agreement legally binding. Furthermore the wife had to compromise her legal rights for this agreement, which makes it a contract. Social Arrangements: Social arrangements means that the two parties are not related to each other through blood. It may be that the plaintiff and defendant are friends, colleagues or someone known. Such agreements like domestic agreements are presumed to be not legally binding, and merely promises made on social relations. However such presumption can also be rebutted with the onus of proof borne by the party seeking to rebut the presumption. Examples of social agreements are Coward v Motor Insurers Bureau [1962] 1 All ER 531 In a motorbike accid ent the driver and passenger both died. The bike was being driven by the passengerà ¢Ã¢â€š ¬Ã¢â€ž ¢s friend. Since the driver had no insurance the wife of the deceased passenger could not claim for insurance money. But due to a relevant statute at that time, she could claim for damages after proving that there was a contract between her husband and the driver. She claimed that her husband used to share the motorbike expenses with his friend (bike owner).But the court held that, despite sharing of the expenses there was no contract between the two dead men with the intention to be legally bound. This arrangement was merely a social agreement. Rebuttal of Social Agreements: Certain cases have been decided in which the presumption of no intention in a social agreement was rebutted. Example of such a case is Parker v Clarke [1960] 1 All ER 93 In this case an elderly couple Clarkes asked their young neighbour couple Parkers to look after them and in return they would leave t he Parkers their property. An agreement was reached and Parkers moved in with Clarkes. After sometime the old couple changed their mind and did not honour the agreement. The Parkers took the matter to court in breach of contract. The presumption of no intention of legal binding was rebutted by the Parkers, with a letter between the two parties explaining in detail the agreement. Plus Parkers had sold their house on reliance with the agreement which shows their intention to make a legal binding to the agreement. Commercial or Business Agreements: When two parties do not know each other domestically, socially or personally and agreements are made at an arms distance, the presumption of intention in such cases is taken to be legally binding. Such agreements are presumed to be contracts even when the subject matter is personal. The presumption in such cases can be rebutted but previous cases have shown that rebuttal is difficult in that case. Nyulasy v Rowan (1891) 17 VLR 663 In this example a party made an offer to sell shares at a specific price. This offer was later taken back by the offerer claiming that the offer was just a joke. The buyer took the offerer to court claiming a breach of contract. The court decided on the basis of presumption that since both parties are at an arms distance and the transaction was commercial, the offerer has breached the contract by taking back the offer. Since there was no reason for the offerer to joke with the buyer since they were at an arms distance from each other. Honour Clause (Gentlemanà ¢Ã¢â€š ¬Ã¢â€ž ¢s Agreement): Sometimes in an agreement parties can wilfully include an honour clause. This means that the agreement will not give legal rights to any of the parties and would not create any legal consequences. Inclusion of honour clause only constitutes a gentlemanà ¢Ã¢â€š ¬Ã¢â€ž ¢s agreement and not a contract. Rose Frank Co v Crompton Bros Ltd. [1925] AC 445 In this case two parties were invo lved having business transaction history. One was paper product manufacturer in England, other being the Distributor in USA. The agreement taken to court by one of the parties involved an honor clause, which made it clear that none of the parties enjoyed any legal rights under the court of law, and the agreement would not have any legal consequences. The dispute revolved around one party giving six months notice of its intention to terminate the agreement. The court held that thought it was a commercial transaction by the nature of the contract. But since honor clause was included into it, this made it gentlemanà ¢Ã¢â€š ¬Ã¢â€ž ¢s agreement. Hence, eliminating any legal rights and legal consequences. References David Parker, G. B., 2013. Business Law for Business Students. 3 ed. Sydney: Thomson Reuters Australia Limited.