Jan 29, 2018 in Law

Introduction to Law and Contracts

The following paper examines the business contracts entered into by the General Motors. It also incorporates the essential elements of a contract. The paper takes a keen interest in the Human Resource department. The General Motors is an international company having diverse brands and is the world’s largest vehicle manufacturer. Business contracts are paramount in the sense that they state the terms and conditions of any business transaction. This enables the involved parties to avoid any misunderstanding which may come up in the absence of a written contract.

The main aim of the Human Resource department is to meet the organizational requirements of the company it represents and the needs of the workers hired by the company. The department plans and identifies the number of employees needed by the company in the future. The following are the essential elements of a contract evident from the agreement between General Motors and the Canadian Auto Workers union (CAW).

Minimum of two parties

The Human Resource department at General Motors Corporation has a treaty with the Workers Union of Canada (CAW). The contract is a four-year tentative agreement which occurred and they vowed to go on strike if a deal was not going to be reached. This contract involves two parties; that is General Motors and the Canadian Auto Workers (CAW). The CAW at the Detroit represents nearly 20,000 employees. This union has been assertive to reach agreements with the General Motors.


An offer is legally binding once accepted and it’s subject to acquiescence with the terms of the offer.  GM’s president agrees to offer a third of its flex shift as an addition in Oshawa, which attracts 900 employments and geared to create a hundred employment posts at St. Catherine’s facility. Earlier on, General Motors had plans to power cut Oshawa three shift lines in the month of June, the year 2013, nevertheless the power line was at present scheduled to run with only one shift for approximately one year. This would help the company to maintain a standard level of employment as the contract ends. The future of the combined power line remained an important issue in the talks, since it offers employment close to 2,000 employees. This number represents a quarter of CAW’s workforce at General Motors.

In exchange, the workers agreed to a wage freeze and other concessions in order to prevent closure of the plant closures and layoffs. This agreement reduces entry level wages for new employees to about $20 an hour from $24 and prolongs the period of time new employee to reach peak pay levels of $34 an hour to ten years from six. The agreement also foregoes the living cost increases until June 2016. The employee will instead receive a $3,000 lump sum payment during the first year and $2,000 in the following three years. The new recruits are also to be moved into an inexpensive hybrid pension plan.

Invitation to treat

This is a clear declaration of the will to dialogue. An invitation to treat is not considered as an offer; moreover, it offers no acceptance in forming the binding contract. This is a part of the beginning of negotiations. Both parties are involved in negotiations to arrive into an agreement. The GM president says that the main piercing issues were job security and the union’s struggle to put further limitations on GM’s short-term worker program. During the negotiations, the president argues that, the contract addresses both issues, including putting restrictions on the temporary workers so that they can only be used for their original purposes for instance, during the introduction of new vehicles.


The General motors’ have reached into tentative labor agreement with the Canadian Auto Workers union. The two parties closed a negotiating meeting that tackled everything including benefits, wages, plant closings and new model manufacturing. The agreement covers about 8,200 workers currently, and GM has also agreed to uphold or add 1,750 positions in the next four years. With this consideration and without any conditions, acceptance of the offer should be precisely as offered.


For a contract to be binding, it must be reinforced by valuable consideration. This is what the parties involved in the contract give out as the price agreed upon for the others promises. The president promises that the Oshawa three shift consolidated line which had been intended to shut down is scheduled to stay in operation with at least one shift till June 2014. The workers are also to be given lump sum bonuses instead of the adjustment of bonus of the living cost for the first three years. Workers will get C$2,000 lump sum payments in the contracts second, third and fourth years in lieu of adjustments of the living cost and a C$3,000 agreement bonus.

Legal obligations

The parties involved must aim to create a legal duty and they need to understand the agreement as enforceable by law. However, for the GM and CAW case, this is not taken into much consideration. The court does not defend the workers. The workers have started to question rules set by capitalism, going to occupy their work places when threatened by plant closures or when GM bosses refuse to pay severance. The only thing that kept the pressure on GM was the blockage of its headquarters and without it GM would be free to act with impunity.


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