Contract Law: Alpha Bookstore’s Delivery Issues

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Table of Contents

Introduction
Area of Law
Conclusion
Reference List

Introduction

Contract law refers to agreements between companies and typically includes clauses for recovering damages in case one party fails to uphold its obligations. Alpha Bookstore encountered issues with both its orders, one due to defamation accusations and the other because of unforeseen damage to a warehouse. Regardless of the causes, the bookstore’s plans suffered because it has no ‘Gryffindor Chronicles’ books for a Christmas promotion and no ‘Cabinet Inside Story’ or ‘The Return of 007’ copies to sell.

It is evident that both with the ‘Cabinet Story’ and ‘The Gryffindor Chronicles,’ the Alpha Bookstore does not have a legal remedy that would allow them to receive the books within the set deadline. Therefore, the focus of the remedies should be on receiving compensation for the losses that this bookstore will have due to not being able to sell these books. The area of law that this case relates to is contract law, and the bookstore has remedies for the problems with the contract and lost chance. This case study analysis aims to examine the issues Alpha Bookstore manager Carolina encountered and offer legal advice regarding what can be done to resolve the delivery delays.

Area of Law

Commercial law aims to protect the rights of parties involved in trading. Contract law is an area of commercial law that deals with agreements between parties and each side’s duties (McKendrick, 2018). A typical contract refers to an exchange of goods for money. In the case of Alpha Bookstore, the issue is the exchange of books published by the two companies for an agreed sum.

The principles of commercial law and contract law aim to protect the businesses from losses that resist after one of the contract parties fails to deliver the promised goods or services (McKendrick, 2018). The problems that Alpha Bookstore encountered fall under the experience of contract law.

Under contract law principles, contract frustration is an event that is unforeseeable and serious enough to threaten the ability of parties to adhere to the agreement (Goode, 2017). There is a difference between frustration and force majeure, the latter is usually an event out of control of one party, for instance, a natural disaster, after which this party is not liable for not delivering its obligations. Examples of frustration cases include Maritime National Fish Ltd. v. Ocean Trawlers Ltd, which shows that frustration automatically ends the contract (Ellis, 2020). The destruction of the subject matter is one factor that results in frustration and the court will have to review the case to determine further obligations of parties in the case of ‘Gryffindor Chronicles.’

One can assume that because Alpha Bookstore expects a specific number of books from both publishers at a set data and has to pay an agreed-upon price, the bookstore and the publishers have reached an agreement. According to Anson (2008, p. 31), a contract is ‘an actionable promise or promises.’ Additionally, there is an expression of common intent and dependence of the parties on others upholding their agreed-upon duties.

Having this agreement in written form, although not required by the English law, makes it easier to establish that both parties agreed upon the same conditions (Anson, 2008). Hence, although Carolina from the Alpha Bookstore has correspondence with representatives of both publishers, one must determine if these parties have signed a legal agreement. The case study suggests that Alpha Bookstore had contracts with both publishers with a set number of books, prices, and dates of delivery.

With these contracts, a ‘breach’ refers to actions that go against what was outlined in the agreement and allow a party that suffered to receive a remedy. The benefit of having a ‘breach’ clause in a contract is self-evident: both parties understand the responsibility they have in case they fail to deliver what was promised (McKenrick, 2018). In some cases, penalty clauses are included in contracts. These clauses specify the exact compensations and steps each the breacher has to take to mitigate the consequences of the breach, which are agreed on damages clauses.

The purpose of such a clause is to simplify the process of proving that one party suffered losses and ensure that damages that can be considered remote but result from a contract breach are accounted for in the contract. Hence, in the case of Alpha Bookstore, the first step is to examine the agreement they had with White Owl Publishing and Beta Publishing to determine if potential breaches and actions were predefined in these contracts. If no specific clauses were included in this contract, the bookstore’s remedy is in using the general principles applicable to contract law and contract breaches.

The offer and terms under which it has to be delivered bind both parties legally. From the moment that one party made an offer, and the second one accepted it, both become bound (CEFIMS, 2020 a). This means that each party has to do what they agreed on in the contract. However, there are legal situations where contract obligations may not be fulfilled, for example, when the result of the actions would cause one party to commit a crime (CEFIMS, 2020 a). In that case, the contract is deemed void, and the parties have no obligation to fulfill their duties. This factor may become a problem for Alpha Bookstore’s order of ‘Cabinet Story,’ which will be discussed in detail in the next section.

Remedies for a Breach

There are multiple remedies for a breach of a contract guaranteed to Alpha Bookstore by the general law. However, the parties may have included ways of resolving issues that are not a part of the common law in their agreement (McKenrick, 2018). Firstly, the Alpha Bookstore’s remedy is to ensure that the contracts are terminated. One of the fundamental rights a buyer has is to terminate the contract in case the seller breaches the agreement (McKenrick, 2018).

It is unclear whether the bookstore already paid for the books or if the payment had to be made after the delivery of the items, but the bookstore should ensure that there is a recognition of a contract breach and Alpha Bookstore will not be required to pay the publishers for the books that were never delivered.

An important factor is that a company is not only to be able to terminate the contract and receive the money-back but also have compensation for damages. Since business involves long-term planning, the obligations of a contract are linked to some plans a company has for obtaining a profit. Hence, one party has a right to have compensation for damages that occur as a result of a contract breach (McKenrick, 2018). This compensation may be nominal or substantial, based on whether the party suffered a monetary or non-monetary loss.

This is relevant for the ‘Gryffindor Chronicles’ books because the bookstore planned to promote this publication before Christmas. One can assume that some pre-planning has been done, and Alpha Bookstore has contracts with other companies, for example, agreements to print out promotional materials. Since the bookstore will not receive the books until January. Hence, one potential remedy for this situation is claiming for the damages to account for the losses that are a direct result of not being able to sell the ‘Gryffindor Chronicles’ before Christmas and sell the copies of ‘Cabinet Story.’

Hadley v Baxendale is a case that demonstrates the use of the damages principle, where one received compensation for a breach of a contract (McKenrick, 2018). The example of this case explains the issue of remoteness with the lost chance claims since a party may argue that the damages they received are indirect but still relate to the breach. To qualify as being not too remote, such a claim has to either flow naturally from the breach or be in contemplation when the contract was made (McKenrick, 2018).

In Hadley v Baxendale the rule suggests that only reasonable contemplations about the indirect damages. Additionally, in the Sale of Goods Act 1979 in section 54, there is an outline of the unusual losses that can be paid by the breacher if this party was aware that these losses would happen as a result of the breach (Sale of Goods Act, no date). Hence, if this bookstore had any other agreements for the promotion of books, for example, they planned on organizing book launch events or inviting the authors to do book signing sessions and paid to prepare for such events, they may be able to recover the damages for these as well.

Lost chance refers to the business opportunities a company might have had but could not pursue due to the actions of third parties. In this scenario, Alpha Bookstore counted on a change to sell 200 copies of ‘Cabinet Story’ and 500 copies of ‘Gryffindor Chronicles’ and make profits that will help the store pay its bills. However, because these publishers cannot deliver the books, the store lost its chance. The case of Robinson v Harman demonstrates the two methods a court will use to calculate the damages the innocent party suffered.

These methods are different in value and cost of cure, with the most appropriate one used for each individual case (McKenrick, 2018). In terms of legal consequences, this means that Alpha Bookstore may be able to receive compensation for the lost profit that it did not receive because it was unable to sell ‘Gryffindor Chronicles.’

There is a duty to mitigate policy, where a party that suffered losses is obliged to take steps necessary to avoid the losses if they are able to do so (McKenrick, 2018). The publishers may use this duty to prevent covering the losses. However, since the agreed time of delivery was November 1st and the Alpha Bookstore representative contacted the publishers herself on November 3rd, one can argue that the publishers did not take steps to warn the bookstore about the issue and provide them with enough time to avoid the losses.

Regardless, based on the case, the plaintiff has a duty of providing that the innocent party aggravated the losses by not taking steps to mitigate the potential damage (McKenrick, 2018). With White Owl Publishing, the duty to mitigate policy is an issue because the company reached out to the bookstore themselves to notify them about the delay. However, because this was also done on November 3rd and not before the date of delivery, Alpha Bookstore may be able to prove that they did not have enough time to order another pre-Christmas book and arrange for additional events.

Legal Case: Defamation

The issue with the “Cabinet Inside Story”‘ is the defamation case filed against the author by the former Home Secretary. Notably, not all cases of misrepresentation will lead to legal action, but Beta Publishing was warned by the layers that in case they sell any copies of this book, liability will follow. The general legal principle applicable here is that contracts that force a party to commit a crime cannot be considered valid because in Tinsley v Milligan the ruling highlights that one cannot enforce contracts that will result in a crime (CEFIMS, 2020 a).

Defaming someone, as part of the tort law, is among such crimes, as demonstrated by the Clay v Yates case (CEFIMS, 2020 a). However, this is a civil liability issue and not a criminal one. The Alpha Bookstore should be warned that Beta Publishing may use this as a way to omit their obligations under the contract since sending the books to the bookstore would mean defaming the former Home Secretary. Hence, it is possible that there will be no liability for this breach.

From a legal viewpoint, ‘puffs’ or statements of opinion are not regarded as misrepresentation (CEFIMS, 2020 b). However, to determine this, one would have to review the copy of the book to see if the author uses expressions indicating that it is his opinion, such as “I think,” “In my opinion,” and others. Another chance is if the author uses vague statements that the Home Secretary perceived as facts. However, with these statements, both parties have to be aware that the person making claims does not have expertise in the given field (CEFIMS, 2020 b).

One example of a similar legal case is Bisset v Wilkinson about land sold as appropriate for sheep farming despite the fact that the seller never tested this claim (CEFIMS, 2020 b). With ‘Cabinet Inside Story,’ it appears that the writer presents themselves as a former employee sharing secrets about the Cabinet’s work. In this case, the expertise is evident, and the defamation claim may be valid.

Notably, with Beta Publishing, a contract implied a consignment of two books⸺ ‘Cabinet Story’ and ‘The Return of 007’ and both consignments did not arrive despite the fact that only ‘Cabinet Story’ had legal issues. Hence, the defamation claims have no connection to ‘The Return of 007,’ and with this book, the remedy for the bookstore is to claim damages as a result of contract breach.

Due to the issues with defamation associated with the ‘Cabinet Story,’ Alpha Bookstore may be unable to receive compensation for the losses. Hence it is best to focus on recovering the damages from the non-delivery of ‘The Return of 007’. Similar to the White Owl Publishing problem, the bookstore may address the lost chance issue with ‘The Return of 007’ due to its inability to make profits from the sales.

With Beta Publishing, another issue is the fact that this company is also accused of paying wages below the minimum to its warehouse employees. This issue falls under the competency of the director’s duties, a set of legal principles referring to the actions of a company’s owners before the society, shareholders, and other involved parties (McKendrick, 2018).

Director’s duties are outlined in the Company’s Act of 2006 (Comapnies Act 2006, 2006). One of the principles of a director’s responsibilities is the need to maintain the company’s desirability and reputation, which can be done through proper work with suppliers and sellers and by adhering to the laws, such as minimum wage requirements (Lecture 7).

Hence, a potential remedy for Alpha Bookstore is to claim that Beta Publishing’s CEO failed to fulfill its obligations outlined in the Companies Act, which caused damage to the bookstore’s business. The proofs of such adverse actions would include failure to notify the buyer about the potential problems with the ‘Cabinet Story’ book, failure to inform about the supply’s status, and inappropriate wages paid to the employees of this publisher.

Conclusion

In summary, this paper reviews English contract law and its basic principles to provide advice for Alpha Bookstore regarding the damages and contract breach it encountered. Contract law is a part of commercial law, where two parties agree to complete an exchange. Contract frustration ends the contract automatically, which is the case with Gryffindor Chronicles.’ This case study shows the many nuances of the contract law and potential ways of recovering from the financial damages that Alpha Bookstore can use, as well as potential issues with these lawsuits, such as defamation accusations.

With the case of Alpha Bookstore, one can assume that the company had a legal agreement in a written form, and potentially there should be a breach clause that outlines the responsibility of the publishers in case they do not deliver these books. However, because a contract with Beta Publishing is linked with a defamation lawsuit, it may become void. In that case, one remedy is to use the Company’s Act and a familiar of the CEO to fulfill his obligations before the society and the bookstore. With White Owl Publishing, the remedy is to file a lawsuit to recover the lost chance damages because the bookstore is unable to sell items that would be popular in the pre-Christmas period.

Reference List

Anson, W. (2008) Principles of the English contract law. Oxford: Clarendon Press.

Companies Act 2006 (2006). Web.

CEFIMS (2020 a) Lecture 4 [Lecture to Business Law], Business Law. CEFIMS.

CEFIMS (2020 b) Lecture 5 [Lecture to Business Law], Business Law. CEFIMS.

Ellis, L. (2020) Frustration of contracts in law: getting out of contract obligations (termination of contracts). Web.

Goode, R. (2017) Goode on commercial law. Edited by Evan McKendrick. UK: Penguin.

McKenrick, W. (2018) Contract law: text, cases, and materials. 8th edn. Oxford: Oxford University Press.

Sale of Goods Act 1979 (no date). Web.

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