Contract Issues in Proof of Essay

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Kidnapping, extortion and detention are real dangers for businesses that operate both overseas and in domestic markets. Top management of these firms often overlooks these things by saying that it will never happen to us. They seem to not understand how much damage it can do to a business. "With more than 1,000 annual kidnappings of business professionals and executives all around the world and number of terrorist's attacks, such policies is an absolute necessity in the eye of life and health insurance professionals who travels internationally" (Gordon, 2009). Kidnap and Ransom insurance policies give a cushion to a business with regard to independent investigations, collaborations, arrangement and delivery of funds, and number of other services pivotal to a safe, speedy and satisfactory resolution. Any business of any size can be a target for extortion threats against them or their employees. People are inclined to think business extortion and kidnapping always happen with firms who are global in nature, but radical groups and criminals are present everywhere. Kidnapping and ransom insurance helps businesses manage the costs that are associated with extortion or kidnapping threat against their business (Gordon, 2009).

In Peter's case in this movie his company had carried kidnap and ransom insurance on their employees. When peter was given his present assignment he believed that the hostage insurance was in effect and he had not been told any different before he was kidnapped.

Peter's company would have been allowed to change the benefits that Peter received but only upon reasonably notifying him of this change. This can be seen in the case of Bankey v. Storer Broadcasting Co. 443 N.W. 2d 112 (Mich.1989), in which the court determined that an employer may, without an express reservation of the right to do so, unilaterally change its written policies from one thing to another, provided that they employer gives the affected employees reasonable notice of the policy change. In this case the company did not give Peter any notice. His family was notified but only after Peter had been kidnapped. Qaud-Carbon would be responsible for paying for the negotiator that was used to free Peter since this would have been a covered benefit under the insurance that they dropped.

Another twist that this movie raises is the question of whether the company Octonol would be liable to Peter just because they are buying a part of Qaud-Carbon's assets. In order for a debt to be held an obligation by a third party it would have to be assigned to them and they would have to agree to be responsible for it. In this case the liability for paying for the release of Peter would be solely Qaud-Carbon responsibility.

The movie raised a lot of good points about contracts and their validity in many different situations. In order for a valid contract to occur all the elements must be present. It must have consideration and there must be an offer and acceptance in order for it to be valid. The contract that was formed between Terry and Peter's family and the kidnappers was technically a valid contract because it contained all the necessary elements that are needed. But in the end it would not have been an enforceable contract because it was a contract that was made under duress.

Of course had Peter's company not dropped the kidnapping and ransom insurance that they had taken out the validity of the contract between Terry and the kidnapper would not have been a question. The costs that occurred from Peter's kidnapping should have been handled by the insurance company and never by Peter's family. Because of the fact that Peter's company dropped the insurance without reasonably informing Peter that they were doing so would make them liable for any costs that were incurred anyway.

The last element in regards to contracts that was found in this movie was that of whether the new company that was purchasing so of Peter's company's assets would also be liable for the costs that had been incurred surrounding Peter's kidnapping. Because this debt would not be an assignable debt and could not be assigned to a third party and accepted by that third party they would not be responsible just because they purchased some of the old companies assets. They would have had to be offered to take over this debt and agreed to such in order for them to be liable for it.

In the end Peter's company Quad-Carbon would have be solely responsible for any debt that would have been incurred in the kidnapping and release of Peter. They made several mistakes that in the end would have end up costing them a lot more than just keeping the kidnapping insurance in effect.


Eisenberg, Melvin a. (2002). Contracts. Chicago: Thompson.

Gilbert's Law Dictionary. (1997). Chicago: Harcourt Brace.

Gilroy, Tony and Hackford, Taylor. (2000). Proof of Life. United States: Castle Rock


Gordon, Alexander. (2009), Retrieved October 16, 2009, from Ezine Articles Web site:


McDermott-Lucey, Jean.…[continue]

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