Category: Contract

In this essay, I hope to give an unbiased view of some of the precedential cases and statutes that have shaped contract law up to now. I will go over (1) what a contract is and why they are used, (2) what it means to be fair in the eyes of contract law, (3) the parties involved within a contract – their individual and mutual rights a (4) Procedure when contracts are broken and situations where a breach of contract may not be obvious at first glance.

To understand contract law, allow me first to reduce it to the most basic level: A contract is an agreement between 2 or more people that is legally binding, between parties of which there is an offer and an acceptance of that offer; with an infinite variety of terms. However, these terms can be implied or expressed, which can lead to a grey area when complications or disagreements occur between parties and may require a ruling to sort and issues that may arise.

Such as with the case of Carlill v Carbolic Smokeball Company (1893), where CSB advertised a device to prevent Influenza, offering 100£ if the subject contracted the virus after specific use, opening a bank account with a balance of 1000£ for claims. Carlill bought the device, thereby accepting their offer and entering a contract. After a time, Carlill contracted the flu and made a claim for the 100£. However, when the time came to pay up, CSB decided there was no legal claim as an offer had not been directly made to Carlill, therefore she did not deserve any compensation. Displeased, Carlill went to the court of appeal and the Lord Justices ruled that the 1000£ showed intent from CSB to payout, should any claims occur. This case set a precedent that an offer can be made to the world, not just to an individual. This precedent was used again in the case of Bloom v American Swiss Watch Co (1915). Offers may be terminated by revocation, the lapse of time, death, or rejection, but if the offer is accepted, there is an unconditional agreement by the offeree; and the contract may not be changed unless there is a mutual agreement.

The main goal of a contract is to be an agreement of consideration. If a contract isn’t fair, problems will arise as time passes. Statutes that try to maintain a fair agreement are the Unfair Contracts Terms Act (1977) which prevents unenforceable clauses such as exclusions of liability from personal injury or death. All business to business contracts and exemptions must comply. Mental Capacity Act (2005) tries to ensure that any party that enters into a contract has the capacity to understand terms of a contract and aren’t at risk of exploitation such as the elderly or disabled. In the case of TH and TR (assigned solicitor acting as an agent to TH) v Sheffield Teaching Hospitals NHS Foundation Trust (2014), Justice Hayden ruled that TH, a 52-year-old man, in a delirious state could not reject treatment, so medical care was to be carried out by a healthcare professional, without consent. The care contract was signed by a solicitor representing TH.

With an intent to create legal relations, there is often a power dynamic, therefore a risk of asymmetric information, making some contracts voidable. Parties may sign a contract they don’t understand or are pressured into signing something that infringes their rights as an individual. The Consumer Rights Act (2015) aims to mitigate this effect. All goods bought by a consumer must be fit for purpose and be how advertised. Otherwise, misrepresentation like a false statement of fact which coerced the other party into an agreement makes a contract voidable – Misrepresentation Act (1967). Other voidable contract reasons include Duress and Undue influence as excessive persuasion or threat of violence will jade the view of a party. Such as with the case of Barton v Armstrong (1976). What went from a distaste for one another, turned into a threat from Armstrong, trying to strong-arm Barton into buying his company shares, by threatening him with “the city is not as safe as you may think between the office and home” and “you will be killed” over the telephone. Barton signed but later went to court claiming Duress and the court agreed. The judge ruled that the same breach of contract rules of misrepresentation applied here and so set the precedent making Duress a reason for a void contract.

Breach of contract is when a party or party’s performance is not fulfilled under contract and therefore needs to be amended. Remedies for breach are more often than not, Damages or Quantum Merit where work has only partly been carried out, damages may be awarded for only the work completed. A Judge may rule for an injunction or frustration, preventing a party from refusing to carry out their obligations under the contract or the inability to do so. Taylor v Caldwell (1863) is a landmark case where Taylor wanted to rent a concert hall, but an unexpected fire burned the building down so the concerts were unable to take place. Taylor tried to sue Caldwell for breach of contract but failed as Justice Blackburn ruled there was no breach, and frustration was the cause for the contract being impossible to carry out. Despite great expense and effort from Taylor to arrange everything in organising the concerts, he walked away with no compensation.

Due to the complexity of Contract law, it is and will remain an ever-evolving body of law that has foundations dating back to the medieval period, with the Lex Mercatoria, involving a few European merchants, to today where multi-million dollar business contracts are set out in many forms; where the individual rights of the parties involved are evermore present. This has created a level of complexity and detail that requires a lot of regulation and use of different bodies of law, to ensure equality of fairness for both parties whenever a contract is signed.

In this essay, I will argue that zero-hour contracts should not be allowed because they cause more for issues for the employees and they cause the organisations or companies that hire the workers receive most of the economic risk than the workers. The zero-hour contract may lead to organisations mistreating their workers by exploiting their workers, I will back my argument by using varies information from online resources.

A zero-hour contract is a type of contract in which an organisation allows workers to work in any minimum working hours and workers are not indebted to take any work the organisation may offer. According to (Cabrelli, 2018, p. 850), a zero-hour contract is a workers contract under which (a) the undertaking to do or perform work or services is an undertaking to do so conditionally on the employer making work or services available to the worker, and there is no certainty that any such work or services will be made available to the worker.

In a zero-hour contract there is flexibility in work and could provide a means of permanent work for employees, it is also flexible for organisations as well because they need workers for short term projects. For an example as Illustrated by (Advisory, 2017), A company may need a worker in a such as “unexpected or last-minute events (e.g. a restaurant needs extra staff to cater for a wedding party that just had their original venue cancel on them)”,or the company is experiencing temporary staff shortages (e.g. an office loses an essential specialist worker for a few weeks due to bereavement) and also for on-call/bank work (e.g. one of the clients of a care-worker company requires extra care for a short period of time).

There are some of the major disadvantages of Zero-hour contract like it is that there is no steadiness in employment due to no assurance to be employed in the future, this may lead to a situation where workers may not have future income. As pointed out by (James, 2018), “Damaging social life; If you don’t want miss out on work from your employer, you may find yourself waiting at home and turning down your social activities”, The author talks about how the worker may have to work at inconvenient times.

Another disadvantage of zero-hour contract is there is no certain future flow of income, so if the employer wants to organise his savings, he may find it difficult due to lack of continuity of income. According to (Lucas, 2018) , ”Lack of control over the worker; an employer can’t stop a zero hours worker for another employer, even a competitor, and the law is on their side if the employer treats them unfairly for doing so. In this situation they have a right to claim unfair dismissal from day one of their contract”.

In zero-hour contract there is flexibility in working hours which beneficial for workers because they will decide when they want to work and also when they what want to receive income, According to (Davies, 2013), “Extra income, As there are no set hours, one of the upsides of zero hours contracts is the ability to pack In extra hours as they become available, so if you need extra money one month and earn extra money”, but this is a disadvantage to the company because the company may need workers during a particular period they may not be able to get due to the zero-hour contract workers may refuse to work if not agreed upon in their contract. Another disadvantage is the company may suffer from loss in protection of reputation, For example as stated by (Ventures, 2016) , Public criticism is a serious concern for companies offering employment on zero hours contracts . It may be difficult to reconcile such contracts with your values and brand image. It may also put off potential employees who choose not to apply for a job where their working hours are uncertain, or who don’t want to work for a brand that has received negative coverage for bad employment practices.

Introduction

The concern that requires being determined in the given case study of John is an issue of consumers’ satisfaction and consumers’ well-being at the lounge of business organizations through the legal and legitimate rules and regulations at any place of this globe. As the Span and Spic offers upgraded and high-class garment cleaning services, John trusted their service blindly without any hesitation. That’s why John did not turn over his receipt to go through all the related legal issues. On other hand, it is expected from a business graduate that he will be well aware of each and every adjacent matter while he is going to have a service from any commercial organization . Span and Spic is a well known and established service provider. Its front office assistant assured John to provide best quality service in the ground of materials. At that time s/he was also supposed to tell John that they were not to acknowledge any accountability for any spoil caused to any item of clothing. Apparently this incident would be supposed as a case of ethical matters, but in this study a big deal of legal contracts and lawful issues are to be evaluated related to this case.

Formation of Contract made by John with Span and Spic:

When a person, like John, is going to have any product or service at the arena of any business organization in the bazaar, s/he becomes legally bound with that trading organization automatically. The same happens with an organization. It is also bound by lawful rules and regulations with its consumers when the very organization is dealing in any product or service in the marketplaces. There are a few components that must be time-honored to make obvious the configuration of a lawfully requisite contract. Those components or elements of any legal contract are a] Offer, b] Acceptance, c] Consideration d] Mutuality of Obligation, e] Capacity and Competency, in addition to, in definite situations, f] Written Instruments .

An ‘offer’ is a pledge to proceed or abstain from acting, which is prepared in swap over for a return assurance to do the identical thing. A few Offers foresee not another guarantee being come back in exchange other than the presentation of an act or tolerance from intriguing deed.Laws differentiate introductory conciliations from official lawful offers in that consumers to introductory negotiations are short of a present purpose to shape a contract . For that reason, no legal agreement is shaped whilst parties to introductory negotiations react to each other’s incitements, demands, as well as insinuations. Promotional tools plus cataloguesare considered as outward appearances of the introductory negotiations. Or else, the related vendors of the Products or Services would be legally responsible for innumerable contracts with customers who observe the promotional advertisements or interpret the catalogue.

Span and Spic was expected to be watchful to avoid keeping inadequate information about their on-going as well as after sell services onitsnotice boards in comprehensible and explicit terms that generate the authority of approval in the consumers like John. The notice board only depicted the price list excluding all adjacent rules and regulations. Those rules are written on the back side of customer-receipts. Span and Spic should keep all terms and rules on its front-counter notice board along with the price so that any customer can be well aware of “Have’s” and “Have Not’s” in the business lounge of the cited organization. When John discovered that his suit had been damaged, he rejected to pay furthermore insisted reimbursement for the smash up; but Span and Spic rejected to do so. At the time of introductory intimation, the organization promised to provide best quality service using superior materials for dry cleaning. This promise made an assurance in the mind of John that his suit would be unhurt after the cleaning. The rejection of the ‘after selling service’ by Span and Spic concludes the offeree’s authority of taking as well as finishes the offeror’s accountability for the guarantee.

“Acceptance” of aservice is the appearance of acquiesce to its regulations and terms. It must normally be prepared in the mode specified by the service oriented ‘offer’. John accepted the premium dry cleaning services of Span and Spic. It means generally that he was well aware of all lawful rules set by the concerned organization. He should go through the established legal contracts. On other hand, the owner of the Span and Spic should make a customer like John well aware of the adjacent legal issues of their cleaning services whether it be in written format or orally.

Each and every entity to a legal contract must afford something of Value that encourages the other one to cross the threshold of the contract. The decreeidentifies this swap of values “Consideration.” This exchange of morality and valuedo not call for consist of coinage. In its place, it oftencomprises of a guarantee to execute aproceeding that one is not lawfullynecessary to do or a guarantee to abstain from aperformance that one is officiallyunrestricted to do.

Law and decree of any system considers that a contract is sustained by adequate consideration usually aims more at the assurance or presentation of anofferee than the guarantee or presentation of anoffer. Through the given case it is apprehended that John is not a regular customer of Span and Spic, but he is well aware of the service and reputation of the said organization . That’s why, whilst John thought about the dry cleaning of his costly suit, he thought of Span and Spic. From this point of view, John could become a potential fresh consumer of the organization . Therefore, the same organization is always expected to take his matter into consideration – at least for the first time – as it is the question of goodwill in the market.

Mutuality of Obligation is intimately associated to the notion of consideration. Under this set of guidelines, both entitiesare expected to be bound to carry out their commitments or the existing law or decree will consider the contract as if neither entity is accountable to execute. According to this doctrine, John in addition to Span and Spic has mutuality of commitments; because according to present customs of law John promised to pay for dry cleaning service and Span and Spic is accountable to provide service in according with John’s requirement and payment. No one of them is supposed to have the ultimate authority to cancel this agreement set by law.

When a person does not recognize the characteristics and outcomes of any contract that s/he has gone into, the lawful decree considersher or him as missing mental aptitude to shape a binding agreement. In the question of “Competency and Capacity” John is not such a party who does not afford proper mental aptitude to apprehend any service oriented lawful contract .

In the arena of business, not every legal agreement among different parties necessitate be in writing to be legitimate and obligatory on various parties. Almost all state legislatures have ratified anentity of law that recognizes definite sorts of agreements that must be in scripts to be enforced. Span and Spic provided its rules and regulation in written format, but somehow it was not so explicit to grab the attention of John. From the aspect of the organization, it did nothing wrong to legal issues in the case of John.

A Discussion if‘Span and Spic’ is lawfully unrestricted to trust on the clause written on the back portion of John’s receipt to shun responsibility concerning the spoil caused to John’s suit:

Issue

According to the law, a ‘Consumer’ is measured to be a normal human being or lawful body to which a service or goods presented in the bazaar is offered. The people or the lawful unit believed to be a customer or a Consumer in this logic should craft utilization of the service or goods, provided that it comprises the end user of such Service or the Products. In this sense, John is obviously deemed as a Consumer because he has had the offered service at Span and Spic. When John is declared in accordance with law as a potential consumer, automatically he comes under the Customer Protection Law. He can avail the conveniences of such protection law standing on the opposite side of the Span and Spic.

Rule

A country or national law system developed ‘Consumer Protection Law’ to shield customers against inappropriately depicted, spoiled, defective, as well ashazardousproducts and/or services in addition to from inequitablebusiness and organizationalperformances.Each and every country has a particular legal or constitutional body to deal with the consumer protection issues. The related institution investigates on the complaints of the consumers. In this case John as a consumer may have the conveniences of the Consumer Protection Laws against Span and Spic.

Application

There is a bureau of Federal Trade Commission (FTC) to fight against faulty products and services. It resists unfair business practices in the marketplace. At first, John should lodge a complaint against the Span and Spic. Then the concerned bureau of the FTC will scrutiny the complaint and they will investigate the matter . If FTC find Span and Spic doing unfair business approaches, the business organization will be taken into custody and John will get his compensation.

Conclusion

Here John’s case is somehow unique because the rules and regulations of Span and Spic were in his hand in the form of customer receipt, but on other hand a dry-cleaning service provider is always expected not to damage any garment. If the organization does not take any responsibility for damaging after the dry cleaning, the organization should appraise the quality of the garments before taking order of dry cleaning. John is a business graduate and engaged in a reputed consultancy firm, so he is also supposed to be well aware of related issues before consuming any service. In this case, legal issues are appeared from varied aspects of doing business in addition to consumer dealing along with ethics and morality in providing any service.

When an individual joined an association, many papers has to signed by both of the employee and company and employee create desire for each other. On the same day they are additionally shaping another contract which is not visible and does not composed any paper. It is known as Psychological contract. (Rousseau, 2000) has defined psychological contract as “the terms of an exchange agreement between individuals and their organizations”. A psychological contract plays an important role for understanding how employee perceives their organizations. Thus, organizations need to be aware about the psychological contract for the employee job satisfaction and company’s outcomes. However, research on this psychological contract are useful to know the effect of its on organizations.

A psychological contract breach is defined as an employee perception that his or her organization has failed to fulfil one or more obligations associated with perceived mutual promises (Gakovic and Tetrick, 2003). When an organization has failed to fulfil the desire of employee who is aspect a lot than breach may occur on them. The psychological contract is only on the mind of employee it does not have any concerned with organization. It is very complex to figure out on the employee having breach. This contract might occur in every organizations. Therefore, study of psychological contract breach can help organization to be ready for finding solution on such breaches which could be occur in future.

When the employee experienced a psychological contract breach they can experienced a changes on their behaviour and attitude towards their company (Kickul and Lester, 2001). A psychological breach occurs between them due to broken trust of employee on organizations. The most studied attitudinal job outcomes of psychological contract breach can be seen on job satisfaction. Research has found that, lower the job satisfaction lead to psychological contract breach (Gakovic and Tetric, 2003). Employee with psychological contract breach are more likely to quite their job. Some of the research has also found that contract breaches might influence by the different age of group. Younger employee loose their sense of trust and commitment whereas older lose their sense of job satisfaction. It shows negative impact on team and negative impact on customer engagement and retention.

If you smile and are positive around someone, they will feel happy most likely carry that positivity to the next place they go, which can create a ripple effect. It is amazing when you realize how powerful a small positive can be. The same effect can occur projecting negativity. Take a moment and think about whether you feel good or bad around a positive person or negative person. It is all occur because of a phenomenon called emotional contagion which is very simple concept (Dr. Nicole Lipkin). Sigal Barsade, a professor at Wharton Business School, studied emotional contagion and observed that “People are walking mood inductor, continuously influencing the mood and then the judgement and behaviours of others”. In her research she has found out that when participated are cheer up positively the group behave more cheerful., But when the participated were acting on a angry way, the group become angrier. Positive emotions created more cooperation, negative can create conflict and decrease cooperate. The result is in every type of organization, small or large industry these effects are seen.

The breach of Psychological contract can lead employee to have an intention to leave the organizations, which is another widely researched attitudinal job outcome (Hess & Jepsen, 2009). Where workers are most absent, does not show up in the work. It can affect higher level staff to lower. In the working environment it could affect all the member of team as well as cause an issue on the organization. In addition, research has also found that employees with a relational psychological contract had a significant and positive relationship with intention to quit (Alcover et al., 2012).

An attitudinal job output of psychological contract breach is not research and find on most of the organizations. They don’t know about the employee satisfaction degree on their work. When the employee are looking for support from the company but the organization lack to give a time and does not focus on their deed it could be breach on employee. Examining, this effect organizational support to employee is important.

Organizational citizenship behaviour is one of the top researched behavioural job outcomes of psychological contract breach (Hess & Jepsen, 2009). When a psychological contract breach is face by employee they are not really surrounded by organizational behaviour and shows negative impact on organization. They are less likely to engage in organizational behaviour. Once employees feel that a psychological contract has not been fulfilled, they may become less satisfied with their jobs, may experience cognitive manipulation of the perceived inequities, and may change their behaviours by decreasing the amount of extra-role behaviours they perform (Jensen, Opland, & Ryan, 2009).

As the present study. The theory of Social exchange by (Blau, 1964; Robinson and Morrison, 1995) means that employee relationships which consist not only of economic exchanges but also of more diffuse social obligations. These obligations change over time, but research has shown that individuals feel most comfortable when they are in a balanced exchange environment (Gouldner, 1960; Wayne, Shore and Liden, 1997), an environment where they feel that there is a fair equilibrium between what they offer the organization and what they receive in return. It is important to understand because this breach can happen in anytime with anyone. Because employees are signed with different types on contract which could lead to psychological contract breach.

When the organization fails to fulfilled its promises, employees might feel that there is inequality in the employment relationship (Lester, Turnley, Bloodgood and Bolino, 2003) and might as a result be inclined to take actions to rebalance their work situation, by for example reducing their contribution to the organization (Rousseau, 1995). It is necessary to further examine job outcomes including job satisfaction, intention to remain with the organization, perceived organizational support, and organizational citizenship behaviours because these are the reactions organizations want their employees to positively experience. By understanding the outcomes of a psychological contract breach, organizations may be able to better understand how to avoid breaching employees’ psychological contracts and improve job outcomes. With that being said, the purpose of this research is to examine the relationship between psychological contract breach and job outcomes including job satisfaction, intention to remain with the organization, perceived organizational support, and organizational citizenship behaviours. This research will also examine whether the aforementioned job outcomes vary depending on the type of psychological contract an employee may have.

In the conclusion, the focal point of past research has for the most part been on mental contract satisfaction. The present examination analyzed whether the impacts of mental contract rupture on occupation results was subject to mental contract type. In spite of the fact that the present examination offered help for past investigations’ discoveries, new discoveries were made featuring the significance of associations satisfying the underlying guarantees made to representatives. The results of a ruptured mental contract can hurt an association to such an extent that workers may turn out to be less happy with their employments, may need to leave their association, may feel less bolstered by their association, and may diminish their hierarchical citizenship practices. It is particularly significant for associations to know about the distinctions in how workers respond to a break of their mental contract contingent upon the kind of mental contract workers have on the grounds that the responses can change drastically and influence the association fundamentally.

Reference

1. Gakovic, A. & Tetrick, L. E. (2003). Psychological contract breach as a source of strain for employees. Journal of Business and Psychology, 18, 235-246.
2. Rousseau DM. (2000). Psychological contracts in the United States: Diversity, individualism, and associability in the marketplace. In Rousseau DM, Schalk R (Eds.), Psychological contracts in employment: Cross-national perspectives (pp. 250-282). Thousand Oaks, CA: Sage
3. Kickul, J. & Lester, S. W. (2001). Broken promises: Equity sensitivity as a moderator between psychological contract breach and employee attitudes and behavior. Journal of Business and Psychology, 16, 191-217. doi: 0889-3268/01/1200-0191

A contract in relation to capital projects functions as a legally binding, enforceable, and reciprocal commitment governing the collaboration between owner and contractor (Berends, 2015; Turner, 2003). A contract should clearly define the roles and responsibilities of all parties involved as well as establish a clear framework that outlines the implementation of design processes, procurement strategies and construction methodology. It is designed to align the goals of the owner and contractor to meet a mutually favourable outcome (Turner, 2003). However, the inherent complexity, scope and scale, and long duration of major infrastructure projects makes them susceptible to future uncertainties and turbulence (Drexler and Larson, 2000). As a consequence, new risks and unforeseen events may arise as the project progresses which in turn cause potential disputes and breakdown of the relationship.

Conceptually, the choice of contract type depends upon a number of factors. And, it remains somewhat unclear as to why some contracts are used on certain projects, as there does not seem to be definitive process for contract selection (Badenfelt, 2008). Several factors have been presented in the literature, including the preferred risk allocation (relative risk appetite of the parties, ability to manage change), the project owner’s preference (relative importance of program, cost and quality, the desire to avoid moral hazard attitudes), the contractor’s capabilities, the project’s characteristics (complexity and definition) and the relationship between the parties (desire to cooperate and be fair).

Contract selection is becoming an increasingly important process, as more and more studies begin to identify the major cause of project failure to be the selection of an inappropriate procurement method (Love et al., 2008). Love et al. posits that project costs can be affect-ed by up to 5% depending on the procurement method (or contract type) selected. This proposition suggests that a large amount of infrastructure projects in Australia are still failing to reach an optimal outcome, which ultimately results in an inefficient use of company or government funds.

Even though the concept that contract selection can have significant financial impacts is becoming increasingly known, a survey conducted by Love et al. of senior project managers in Australia found that the traditional form of lump-sum contracts is still the preferred option, despite the acknowledgement that other forms of procurement could optimise project success.

CONTRACT TYPES, INCENTIVES & RELATIONAL CONTRACTING

In construction, the fragmented nature of the industry has led to unsatisfactory results in the past, which has prompted in-depth analysis into methods that could be used to improve it. One such approach is the concept of relational contracting, as the client-contractor relationship is said to be an important element in the delivery of major infrastructure projects.

The four contract types that are being explored in this study can be distinguished into traditional con-tracts (like lump-sum and cost-plus) and relational contracts (alliances and PPPs).

Traditional Contracts

Under a traditional contract, both parties are owed compensation in one way or another. For example, a project owner will pay a contractor in return for a new building that meets the quality and specifications of the contract. On the other hand, the contractor is owed payment for constructing the building for the owner. As such, both parties’ expectations exist in tension. These contracts require a clear allocation of risks and responsibilities from the outset to allow an accurate project cost to be calculated. However, as is inherent within any project, unforeseeable risks occur which are not allowed for, and disputes often break out regarding who is responsible for the costs.

Lump-Sum Contract

Under a lump-sum contract, the owner assumes a clear scope of works that distinctly outlines the performance specifications and functionality requirements. The contractor, for a fixed sum, is responsible for meeting these requirements in a way that they best see fit (Smith, 2002; Turner, 2003). The solution and delivery methodology are flexible, so long as the contract details are met. Because of this assumed certainty of scope, the project owner is likely to be less involved in the project during delivery (Suprapto, 2016; Berends, 2007), as the contractor assumes all the responsibility for any risks.

However, the downfall of a project procured under a lump-sum project can often be attributed to the ‘hands-off’ approach adopted by the owner. Limited coordination and information on project progress give rise to an attitude of ‘it’s not my problem’, generating an adversarial relationship. Contractors can often interpret clauses differently, and the lack of communication between contractor and client can result in more costly disputes and delays.

Cost-Plus Contract

A cost-plus contract is typically employed when there is more uncertainty in project scope and variance in design (Suprapto, 2016). This type of con-tract adopts a very different risk allocation, with the owner taking on all the risks (Muller and Turner, 2005). There is a common misconception that con-tractors will take advantage of the cost-plus contract by over-supplying and incurring unnecessary costs to gain more profit (Muller and Turner, 2005). In response, the project owner typically employs more re-sources to monitor and survey the progress and quality of the contractor’s work. This environment can institute feelings of distrust between the parties, em-phasizing the point made by Müller and Turner that the increased interaction under a cost-plus when compared to a lump-sum contract does not equate to a more collaborative and aligned relationship.

Relational Contracts

Under a relational contract, there is one core element of mutual co-operation and teamwork (Rahman and Kumaraswamy, 2004a). Alliancing and PPPs are underpinned by the principles of relational contracting, which considers a contract to be not just a legally binding document, but also the formation of a relationship between the parties by encouraging long-term provisions, allowing for degrees of flexibility and founded on a common understanding of objectives (Macneil, 1981).

Relational contracting was a concept first posited by Macaulay in 1963 as a social contract theory that enhances contractual relations from both an economic and social perspective (Macneil, 1981). Over time, many scholars have conducted further research and identified a set of norms that are essential to relational contracting. Ivens emphasised the need for a high degree of information exchange, a detailed conflict resolution platform, mutuality, and flexibility under the terms of the contract, and a long-term arrangement that encourages relational planning (Ivens, 2004).

The applicability of relational contracting in the construction industry attracted the attention of re-searches as a concept that could lead to more collaborative relationships and more successful project outcomes (Rahman and Kumaraswamy, 2004a). The typically conflicting attitudes of contractors and project owners under traditional construct-only lump-sum contracts can potentially be alleviated under a contract model that uses the concept of relational contracting as a basic framework to create a collaborative relationship as its primary objective that directs the project down a path of ‘win-win’ for all parties.

Alliancing

An alliance contract is a particular form of cost-plus or reimbursable contract where both the contractor and project owner are responsible for a project’s final costs. Typically, the parties will agree to a gain-share / pain-share arrangement whereby all parties to the contract share in the profit if the project performs above expectations, but all parties are liable to cover any losses if the project incurs any program or cost overruns. For example, a contractor and project owner enter into an alliance contract whereby both parties agree to take on 50% of the risks. If the project makes a $10 million profit, both parties will ‘share’ the profit in accordance with the percentages in the contract, in this case, $5 million each. However, if a contract overruns by $10 million, each party is only liable for $5 million each. The idea of making all parties liable for cost and program overruns is to align the goals and objectives of both parties and en-courage everyone to strive for the best outcome.

By aligning the objectives of both parties, an alliance contract aims to integrate clear dispute resolution mechanisms and joint risk management procedures founded on a culture of trust and collaboration towards a common goal (Suprapto, 2016). Alliancing instigates a cultural shift in the contractor-client relationship from a ‘best for self’ to ‘best for project’ and no-blame culture (Ross, 2003).

Public-Private Partnerships

Due to the unique relationship that is formed by a PPP contract, the project performance is dependent on the balance between public and private sector re-sources (Benítez-Ávila et al., 2018). Thus, it is understandable as to why literature is indicating that relational contracting is a critical element of success for PPPs (Tang et al., 2010).

The public sector remains strictly accountable for the profit-orientated private sector in the use of state and federal funds. Thus, the relationship be-tween the two sectors, and the parties’ managers, must be transparent and aligned to maintain control over risk transfer and infrastructure spending. This heightens the need for relational contracting.

Relational norms, as defined by Macneil (1981), in a PPP arrangement context enable an increased level of interaction between the parties, that translate contractual provisions as binding promises into opportunities to cooperate towards achieving a better project outcome (Benítez-Ávila, 2018).

Incentives

Incentive provisions are another common method of encouraging an increased level of contractor performance (Suprapto, 2016). Bubshait (2006) introduced four types of incentives common in the construction industry: (1) program incentives; (2) cost incentives; (3) performance incentives; and (4) safety incentives. Berends (2006) conducted a case study investigating the use of incentivisation in construction contracts and concluded that the use of one or multiple incentives generally enhanced the owner and contractor relationship.

Meng and Gallagher (2012) also deduced that the use of incentives can be used as a trigger to align the objectives of different parties and create a more collaborative atmosphere within the project team.

CONTRACT TYPES, INCENTIVES & PROJECT PERFORMANCE

Project success has been given many definitions in the literature. For the purposes of this research, a project is considered to be successful if it meets three main criteria: the correct cost, by a certain deadline and achieves a fit for purpose level of quality (Ghadamsi and Braimah, 2012).

However, project performance can often be interrupted differently by different parties. Where clients and project owners often consider project success to be a product of satisfying the desires of key stake-holders, contractors tend to place a heavy emphasis on cost and duration (Ghadamsi and Braimah, 2012).

Suprapto (2016) suggested that improved construction performance can be traced back to the use of a more collaborative or relational contract instead of the traditional construct only lump sum and cost-plus contracts. However, Merrow (2011) showed that this assumption does not always hold true, with a study of 318 projects highlighting that alliancing does not necessarily result in a better project performance.

Parker and Hartley (1997) investigated the merits and results of collaborative contracting by studying the procurement of the UK defence. The UK’s defence procurement adopted a policy of partnership sourcing as the superior value for money approach due to its wider economic benefits. However, the results of the study showed that partnership sourcing and implementing a long-term buyer-seller relation-ship did not necessarily result in a more cost-effective solution when compared to traditional adversarial and competitive procurement.

In line with this view, Lowe (2007) postulated that project performance is not dependent on the contract between the two parties but relies more on the relationship between them. Whilst traditional contracts are believed to be more adversarial by nature when compared to alliancing or PPPs, Lowe believes that the relationship between the parties is par-amount to project success. Several scholars, whilst they tend to agree, argue that the contract type has an impact on the relationship by the level of collaboration and team-work that is inherent within those contracts (Berends, 2007; Müller and Turner, 2005). As such, the contract selection can be a key tool in promoting a relationship that is aligned towards the success of the project.

Lump-sum and cost-plus contracts tend to create a relationship between contractor and owner that does not require an alignment of interests. This can lead to information asymmetry, increased level of disputes and lower project performance. Suprapto et al. (2015), in the alternative, quantified the positive effect of teamwork, collaboration and relational attitudes on project performance.

Public-Private Partnerships

Raisbeck et al (2010) conducted a detailed analysis into the performance of PPPs in Australia when compared to projects completed under traditional forms of contracting such as lump sum construct only. The investigation took the available data from 21 PPP projects and 33 traditional projects in Australia and compared the cost and time outcomes of the project. Whilst these measures are not the only forms of quantifying success, these are typically the first deliverables that people consider.

From a cost perspective, Raisbeck et al’s (2010) results demonstrated a significant advantage when it came to projects procured under a PPP contract rather than traditional contracts.

During the delivery phase of a project, the con-tractor holds the biggest influence on the project outcome under any form of contracting (Raisbeck, 2010). Under a lump-sum contract, the contractor would be 95-100% responsible for the outcome due to the nature of the risk allocation in the contract. Under a PPP the risk allocation would differ significantly, but the contractor remains the party primarily responsible for the construction of the project. The results of the study identified a cost overrun of $672.5 million under traditional procurement methods, which represented 14.8% of the expected costs. This is in stark comparison to projects procured under a PPP where they experienced only a $57.6 mil-lion overrun, or 1.2% of the expected costs.

Specifically, for major infrastructure projects, projects procured under traditional methods were generally completed over budget and by a significant margin (Raisbeck, 2010), whereas the three largest projects procured under a PPP came in on budget. This research clearly demonstrates the greater cost discipline under a PPP contract when compared to traditional projects.

Similarly, from the same research study, PPPs were found to compare favourable to traditional procurement methods in relation to delivery a project on time (Raisbeck, 2010). Whilst the numbers showed the more traditional projects were completed on time than PPPs, a number of factors were suggested as an explanation.

Firstly, traditional projects generally begin once the design and specifications are known to the client and contractor, which allows the contractor to assume the responsibilities of any risks. PPPs, on the other hand, these aspects of a project are developed during the early phases of the project (Duffield, 2008).

Secondly, PPPs are generally subject to more scrutiny from the public due to the involvement of local, state, and federal governments, meaning the decision-making process can be longer due to the need to consult key stakeholders throughout the process.

These factors reflect PPP’s as a favourable comparison to traditional contracting when it comes to delivering a project on or ahead of schedule.

However, PPPs are not without their drawbacks. A concept labelled ‘opportunism’ can often be present in PPP arrangements. O’Brien and Williamson (1976) defined opportunism as the act of “self-interest seeking with guile”. Opportunism tends to arise in prolonged PPP arrangements and when there is an imbalance in the access to information (Xu et al., 2007). Due to the principal’s reliance on the con-tractor for a lot of the information regarding the construction of the project, the level of dependence can be taken advantage of inappropriately. The quality of the relationship between the two parties will ultimately determine the level of opportunism acted up-on by the contractor of the principal.

Incentives and Project Performance

Incentivisation has been posited as a key contractual strategy with significant potential to increase project performance issues on major infrastructure projects (Meng and Gallagher, 2012).

However, it has been found that positive incentives are not necessarily bound to improve the likelihood of project success (Merrow, 2011; Berends, 2006).

Whilst it is not statistically significant, the success rate of projects under incentivisation was less than those without incentives. Now, this proposition is not to say that incentives should not be used as they show no benefits in improving project outcomes. The sample of projects taken for this study may not be flawless, and other factors may have been at play that affected the project outcome. For instance, the contractor, whether under a contract with a financial incentive to complete the project ahead of schedule or not, may have not been capable of completing a project of such magnitude. Or, the incentives were inappropriate for the circumstances of one particular project. Merrow (2011) argued that project execution is about achieving target cost and duration, and not necessarily to create ‘value’ in the form of profit. For this reason,

Prior to this research, Bubshait (2006) identified four common types of incentives that could be used in isolation or in conjunction with other incentives to improve project performance.

Schedule incentives are designed to encourage contractors to complete the project on or ahead of schedule. On occasions, disincentives can also be implemented to penalise contractors for finishing be-hind schedule. Price incentives, as are common in cost-plus contracts, are often discouraged because they create a positive incentive for contractors to in-crease costs. Performance incentives are activated when the contractor reaches a predetermined level of quality of technical specification. Safety incentives are less researched and are yet to be proven as capable of improving project performance (Bubshait, 2006)

Meng and Gallagher (2012) followed this with a quantitative and qualitative analysis of incentivisation, providing empirical evidence to establish a link between incentivisation and project performance.

Ultimately, contractual incentives are designed to align the interests of the owner and contractor, and when employed correctly and in the appropriate circumstances, they can enhance team-working which leads to increased project performance (Suprapto, 2016; Meng and Gallagher, 2012).

The Black’s Law Dictionary defines a contract as a lawfully binding pact among two or more parties which promulgates commitments, any violation of these commitments result in remedies in the form of damages or by any particular enforcement of the contract. Contract law explains the obligations of any persoms who would have entered into an agreement. Contract law in other words encompasses two divisions of jurisdiction. These are the rulings resulting from case law and regulations from statutes and Acts from the legislature. The non-existence of a factor that inhibits with an agreement is crucial to the creation of a contract. This feature is termed a vitiating element and this feature causes the contract to turn out to be voidable. Several vitiating factors affect the soundness of a contract, among these factors are duress, undue influence, and unconscionable or unfair conduct. J Poole (2010) infers that duress and undue influence are well established doctrines in the domain of English Law. These doctrines were enacted as the route through which a plaintiff can render a contract unenforceable on the grounds that there was unfairness or unfair pressure exercised to coax the other party into accepting the contract. This position adopted in this research paper is that duress and undue influence, both as doctrines are a suitable law in addressing unconscionable contracts principally because they deal with matters of disparity in negotiating power among contracting parties. The writer will first of all define duress and undue influence thereafter the characteristics of these two that make them apposite law against unconscionable contracts will be explained.

Undue influence is a situation wherein one contracting party yields real authority over the other contracting party with the result that the will power of the other contracting party is subjugated. Consequently this domineering position is utilised to assume unfair advantage over the other party. In addition there are three kinds of undue influence. The first type is actual undue influence and in this type its required that there be a demonstration that undue influence was actually exercised by a contracting party over another in the contract. The second type is called presumed undue influence, in this the connection among the contracting parties sums up to an assumption of undue influence if the contractual agreement can be demonstrated to have been existent. The other type is the one covering relationships of trust and confidence; in this case the connection between the persons equates to an assumption of undue influence. The trust ascribed to the other party, places conditions that makes it possible for the other party to appropriate unjust gain or concessions from the other. Lord Justice Lindely in the case of ALLCARD V SKINNER , gave explanation for the principle of undue influence by stressing that its fundamentals were based on the idea that there is need and necessity to avert abuse of some persons unfairly. Further to this the case of PATEL V THAKORE , the East African Court Of Appeal accepted the description of the then Indian Contract Act in Tanzania that undue influence prevails where one of the contracting parties in the contract; has the ability to gain a superior edge against the other contracting party by utilising his superior edge position to override or overturn the independent decision making power of the other party, in the end utilises that superior edge to do this.

Duress in a contract is a situation of inequality wherein someone is coerced through threats, coercion or gross coaxing to settle to the conditions of a contracting agreement. A contractual agreement which would have been performed under conditions of pressure from the end of the party performs it, the courts will nullify such an agreement. To begin with if the innocent party had accepted the contract in the absence of force, the other contracting party that issued the threat is still answerable grounded on the notion that the threats had affected the innocent party except if the contrary is demonstrated. Thus, the contract is nullified (voidable). There is need to point out expressly that the compelling power for the creation of the contractual agreement has to be illegal. For example, if the contracting person was issued threats but provided enough time and caution to recover the contractual terms, the contractual agreement would not be voidable. The contract will not be voidable at law because a valid promise to complete exists. The Competition and Consumer Act (No 3) 2010 (Cth) perfectly made provision for duress and undue influence where it is prohibited for a person to use physical force, or undue pestering or pressure, in relation to the supply or likely supply of commodities; or the payment for commodities, or any such similar commercial dealings in land.

The doctrine of undue influence provided a way for shielding weak contracting parties from being exploited. This is an equitable doctrine that provides a solution for contractual agreements that were entered into by persons under unsuitable pressure but not necessarily equating to duress. The courts may interfere in situations where there is some connection among the contracting parties, where the underlying connection would have been utilised to gain an unfair benefit. Undue influence can be related to conflict of interest in some instances. In the case of Alderton v Prudential Assurance Company Ltd, both unconscionable dealing and undue influence were observed to have tainted the deal. The claimants were all in circumstances where it was probable that the respondent was dominant, and the claimants would depend on his dominance. The claimants showed lack of appreciation of the form and implications of the deal, and that subsequently they were unduly coerced because of the dominancy the defendant had over them. Furthermore, the claimants were at a noteworthy disadvantaged position because they lacked independent advisory, and were ignotrant of the unfamiliar conditions of the agency loan. The defendants knew of the other parties lack of independent guidance, and the defendant never made any effort to ensue that the claimants had access to independent opinions. In this particular case, the evidence obviously points to claims in both undue influence and unconscionable dealing. In these two claims, the importance is on safeguarding the claimant’s helplessness, where it will be unconscionable for the courts not to interfere. It is obviously the element of conscience in safeguarding the weaker contracting parties that makes the doctrine of undue influence most appropriate for dealing with unconscionable contracts.

It was recognized in the case of Williams v Bayley that the doctrine of duress could not be relied upon for vitiating a contract, however the court was ready to give compensation under the doctrine of undue influence mainly because, the court was able to recognise a special connection where there was undue influence . This is appropriate whenever the connection between the parties concerned as a consequence of the dominance imposed by the other party in a bid to appropriate unfair benefit over the other. The court concluded that a pledge to pay the money will an effect of vitiating a contract, if attained by threats to prosecute the one proffering the promise or his spouse or family member for a illegal act. The relationships of the contracting parties must be existent as a crucial factor to prevail for a litigation under undue influence. In Daniel v Drew it was ruled by the appeals court that while real undue influence involved actually performing actions to “twist” the independent decision of the other party, as with regards to presumed undue influence the courts were concerned with the actions that had no been undertaken in the situation. Particularly, adopting precautionary measures to make sure that the deal was premised on the free and independent will of the benefactor. Notwithstanding, as mentioned in the case Turkey v Awadh , the case involved a contract in which the claimant’s daughter and his son in law arranged to handover his shareholding for a long lease agreement in their landownership to the respondent in exchange for him to agree to pay off the loan on the land property and additional debts. The appeal court ruled that the supposition of undue influence was not prevalent because the contract could be easily defined, by the type of connection that obtained among the contracting persons. In any case the assumption of undue influence was to emerge before giving room for rebuttal based on the reality through determination that the deal was a consequence of the utilisation of free will power and autonomous choices.

J Beatson, A Burrows and J Cartwright (2010) pointed out that duress and undue influence obtains in a situation where one of the contracting parties has pressured the other party or used such dominion that the domineered person’s free will was considerably dented. The consequence of both duress and undue influence is that the agreement is voidable, and not essentially annulled. If the fundamentals of an enforceable contract are prevalent and there is proof that the persons ab initio intended to make a legal bond, the court will be extremely hesitant to nullify the agreement. The courts are thus customarily akin to adopt the opinion that a contract obtained by either duress or undue influence is not void but voidable. This position is predicated on the belief that in spite of the existence of rudiments of duress and undue influence, there is also that of willingness to enter into an agreement and therefore the wronged party cannot allege that there was non-existence of a contract or intention adequate to render the agreement void. Nevertheless, he is still in a position to maintain that his appendag of the offer was obtained by coercion which the law considers to be inappropriate and unconscionable and thus these have to grounds for overturning the contract.

Duress has to be accompanied by physical, violence or forceful acts. In the matter of Latter V Bradell, a domestic worker was directed by her employer to undergo medical examination, the employee attempted to not to conform with the directive but later on acceded to the directive of her boss. The court concluded that her acceding to the demands of her employer were not on the basis of duress as there were no threats of physical harm or infliction of such on her person while undue influence is applicable where there is inappropriate pressure not equating to duress in relation to common law. In Williams V Bayley it was upheld that a promise to make a payment will be overturned if it was secured by threats for prosecution to the one who made the promise or his close relations for a illegal doings. In Barton v Armstrong, an ex-chairperson of an enterprise issued death threats to an incumbent managing director if he did not authorise payment for the past chairman’s stocks. The plaintiff was able to prove that there was adequate duress which had predisposed his accord in the implementation of the contract. It has to be pointed out, that the contracting person making use of pressure commits a crime that can be punished at law and the ensuing contract can be suspended. The agreement was overturned on these grounds. In the case North Ocean Shipping Co. LTD v Hyundai an agreement was concluded to manufacture a super tanker at a set agreed contract amount. The contracting party was to supply the tanker then declined to finish his portion of the bargain demanding that the buyer make a commitment to pay an extra ten percent above the initially agreed amount. The buyer in turn acceded and effected the payments demands. The court ruled that the additional amount paid by the buyer has to be reimbursed on the basis of economic duress. According to Pool, economic duress can be described as circumstances where a contracting party issues threats of a violation of contract except some modification is done, and the other contracting party accepts the modification (renegotiation) instead of suffering catastrophic consequences after the violation of the contract. The other crucial issue to be deliberated is whether or not the consideration was adequate in the original contract made, in the matter between North Ocean Shipping Co. LTD and Hyundai. One crucial aspect of contracts, is that consideration does not have to be apposite in order to render a contract binding, but rather just sufficient. This implies that the courts will not involve themselves with a badly bargained deal negotiated by individuals in a contract out of their own free will. In the circumstances that the buyer acceded to a modification to pay 10% extra to the contract amount of his own free choice, the agreement was going to be biding because; the buyer would be assumed to have agreed to these changed conditions for some unknown reasons. It is possible that the buyer would have agreed to the modification of the contract for the following two reasons. Firstly the buyer could have intended to use the tank imminently such he accepts to pay the exra 10% out his own choice. Secondly the buyer could agree to the modification of the contract and agree to top up the amount with 10% probably maybe because other suppliers were charging above the extra 10% offered to the buyer such that the present supplier was still cheaper.

Under the circumstances of duress the threats of physical harm have to be on the other contracting party and must not be directed at their property, this means that it doesn’t deal with issues of third parties. In the case of Skeate V Beale, the court ruled that an undertaking made for the salvage of property that had been illegally withheld didn’t constitute duress adequate to nullify the contract. The threats issued weren’t directed at the contracting party and again they did not embody violence, the threats were just directed at the goods in particular and the court was reluctant to nullify the contract on the basis of such kind of a threat. Nevertheless although undue influence also covers third parties, this mostly addresses the perculiar safeguarding of spouses. In the case Barclays Bank plc V O’Brien, the court of appeal spelt out the guiding principles for protection of certain category of persons. It highlighted that the connection between the guarantor and main debtor should have been clear to the creditor by the time the contract was promulgated. Also acceptance to the agreement should not have been obtained by undue influence or distortion of the major debtor. Lastly the creditor should have botched to take rational actions to make sure that the guarantor had a complete understanding of the contractual commitments that are involved.

In the circumstances of duress it’s needless to demonstrate that duress was the only reason for persuasion the agreement. It is adequatet if it was an enticement and when duress is purported the the contracting party who exerted the duress bears the responsibility to demonstrate that the party didn’t entice the contract. In the case of Barton V Armstrong, the court ruled that it is enough if it was an enticement and when duress is realised the onus is on the person who exerted the duress to demonstrate that the person didn’t entice the agreement. On the other hand under undue influence, where it can be confirmed that the individual has an upper hand to influence the thinking of the other contracting person and the resultant agreement in its form appears to be shortchanging the interests of the feebler contracting person or entity, then the domineering party bears the responsibility to demonstrate that he didn’t unduly influence the weaker contracting person or entity.

The courts require that threats be the only reason for appending to a contract for them to ascribe such a contract as duress. Lord Scarman proffered significant guidelines for establishing coaxing of the will in circumstances of duress in the matter of Pao On V Lau Yiu Long. He indicated that in establishing if there was violation of the independent decision making power under duress to the end that there was no accord, it is vital whether the contracting party supposed to have been coerced protested or not, if at the point of enacting the contract, the contracting party didnot have an alternate option available to them like an acceptable legal solution. Also it needs to be confirmed, if the contracting party obtained autonomous legal advisory. At the apex of the matter it has to be confirmed if the individual undertook any measures to evade the agreement after agreeing to it. All these actions constitute duress. In contrast, in the case of C.H Patel V Pankaj S. Thakore, the court established that for undue influence to be successful in evading the contract, it needs to be demonstrated that the undue influence was used by one of the contracting parties to the on the other in the agreement. For the agreement to be overturned it had to be confirmed that the alleged party who had an upper hand was able to domineer the will of the seemingly weaker party and that they utilised this unfair superior position for their benefit. Thus the foregoing are the fundamentals that constitute undue influence.

GH Treitel (2003) maintains that in similar fashion to the doctrine of duress, the doctrine of undue influence scrutinizes the way in which the decision to be part of a contractual deal came about. It occurs principally where a contract is agreed due to coercion which is next to duress in common law since there will be no use of violence to the other contracting party. Elliot and Quinn (2007) highlight that if the decision to contract came about through improper means, the rule of undue influence doesn’t not all the contract to remain standing and the courts may overturn it or amend its terms so as to allay the shortcomings on the aggrieved contracting parties. The case of the Royal Bank of Scotland v Etridge (No 2) [2001] provided a clear illustration of this principle. N Enonchong (2006) contended that because an array of demeanor that was not viewed as improper at law was viewed so by equity, there was a protection loophole between these two doctrines, with equity giving broader protection through undue influence as opposed to what common law gave by means of duress.

To sum up both the doctrines of duress and undue influence are targeted at safeguarding that contracting parties do not coerce each other into agreeing to enter into contracts. In the event that such a scenario happens the aggrieved party is given respite to have the agreement pronounced voidable. At common law, when duress is established it offers remedy to the aggrieved contracting parties as an entitlement and the agreement can be overturned. In the case of undue influence the plaintiff must not just demonstrate the undue influence but the plaintiff also have to demonstrate that it was equitable for the courts to provide a remedy. It can be thus be concluded that duress and undue influence do constitute an suitable law in addressing unconscionable contracts.

A contract is a written or verbal agreement in which responsibilities and duties of the involved parties are mentioned. Nowadays every business works on some contracts or agreements it became a necessary part of our life. Contracts help businesses to run smoothly without having any conflicts, if one party get involved in any misconduct which goes against the duties and responsibilities mentioned in the contract, so on the basis of that contract, other party can sue against them. Any contract has four elements a) offer, one of the parties come up with an offer, b) acceptance, after the offer is made than other party accept it, c) consideration, it means desire to come into a contract, it is really important to make an agreement viable, d) intension, parties must have an intension to come into a contract. All these four elements makes a contract valid

Throughout the time various changes has been took place in contracts, in traditional contracts parties get involved in a long negotiations about the contract, they have their lawyers with the, parties consider their lawyers, parties mutually draft a long written contract which was signed by every party, which was involved in the contract, after the signatures, this long written draft is always stored in some files.As businesses go on large scales, industrialization took place, companies started trading between many nations, this leads to demand a less sophisticated type of contract contracts which can be more flexible and do not ask for the physical presence of both of the parties, then modern contracts are considered as smart contracts because these contra are electrically generated, these contracts are technology based contracts which represents the obligations of the companies, internet is used for such contracts to take place, this contract really facilitated business all around the world. However in future some more positive change are going to be happen in case of contracts.

As organizations adopted modern contracts it came up with huge advantages, traditional contracts used to take a very long time, whereas, modern contracts can be done by one click only. In traditional contracts other party read the contract properly before signing it, which causes a huge delay and chances of potential partners are also reduced due to this long process, now modern contracts have really helped businesses in terms of saving time. Now the question arises, what makes e-contracts so flexible and less time consuming, so the answer is its digital format. It allows the parties to sign digitally, they can receive it on electronic mail or any other digital platform, which makes it easy for the parties involved to read it anytime on their smart phones, laptop or tablets.

Digital contracts have also its pros and cons, if we consider its setbacks, so there are possibilities of getting an human error while drafting a contract by the creator. Furthermore, sometimes it happens that after the signature of both of the parties, it is possible that one of the party can edit the content because digital platforms are highly vulnerable. This can lead to conflict between parties , so they must have to get involved in a legal conflict case, which is really not good for the health of businesses.

Electronic agreement programming permits you to perform speedy quests through a solitary archive or all through your whole database to discover what you are searching for. You can discover a term, an expression, a sum, or another snippet of data all through the online agreement rapidly. Envision how much time and vitality you can spare through fast pursuits. composing and changing agreements can become tedious. Electronic agreement programming permits you to make layouts and electronic marks that you can utilize on different occasions for several clients.

Do you have to change your online agreement marginally for an alternate gathering of clients? Don’t sweat it. You can without much of a stretch work from a current format and just change the segments or electronic marks that apply to new clients. The product will handily spare your layout with the goal that you can come back to it. You can likewise spare numerous variants of the layout and use them whenever. This spares you a ton of time in drafting or re-drafting a customary agreement. As far as drawbacks for e-contracts are considered, A few customers will incline toward paper contracts. On the off chance that paper is what they’re utilized to, they might be reluctant to utilize computerized ones. Besides, recollect that a few customers probably won’t have a method of e-marking the agreement in the event that they don’t have the best possible programming on their gadget, or on the off chance that they don’t have a clue how to utilize them. The other option – printing, marking, and examining the agreement and returning it by email – may appear an excessive amount of work for them. One drawback of utilizing computerized contracts is that you’re depending on access to the web or your PC framework. In case you’re on the spot, particularly in rustic zones, you will be unable to get to your advanced agreement exactly when you need it most.

There are some ways in which we can deal with the pros of e-contracts, When voyaging, particularly to rustic territories, bring reinforcement paper duplicates of the agreement. This will spare you on the off chance that you lose administration association. It will likewise support you if customers are experiencing difficulty utilizing a computerized agreement – simply send them over a paper duplicate by fax, post, or hand conveyance.

On the off chance that your agreements are put away in a cloud framework, ensure you have them spared elsewhere, as well, similar to the inner office framework, a neighbourhood drive, or an outside hard drive. Many cloud frameworks will give you the alternative to reinforcement elsewhere. At that point, you won’t need to stress in case of a framework crash. So at last by looking at huge benefits of e- contracts there are huge opportunities in its growth.

References

1. DiMatteo, L. A. (2013). CONTRACT STORIES: IMPORTANCE OF THE CONTEXTUAL APPROACH TO LAW. Washington Law Review, 88(4), 1287-1322. Retrieved from https://search-proquest-com.libraryservices.yorkvilleu.ca/docview/1491801534?accountid=142373
2. Staff, E. (2006). Legal issues of securitized auto loans in an e-contract world. Asset Securitization Report, , 1. Retrieved from https://search-proquest-com.libraryservices.yorkvilleu.ca/docview/195513318?accountid=142373
3. Murray, J. E., J. (2000). E-contracts present courts with special legal challenges. Purchasing, 129(3), 119-120. Retrieved from https://search-proquest-com.libraryservices.yorkvilleu.ca/docview/214462870?accountid=142373
4. Bernstein, G. L., & Campbell, C. E. (2002). Electronic contracting: The current state of the law and best practices. Intellectual Property & Technology Law Journal, 14(9), 1-11. Retrieved from https://search-proquest-com.libraryservices.yorkvilleu.ca/docview/227144152?accountid=142373

The scenario must be analysed in order to advise Claire on whether any contracts have been made or not, and if so, on what terms they have been agreed. The key requirements for a valid contract are offer and acceptance (known as agreement), consideration and intention to create legal relations.

The first issue to consider in this scenario is the legal status of the advertisement made by Virtue Plus. As a general rule adverts are considered an invitation to treat, which comes before an offer and is an invitation from one party to another with the aim of commencing negotiations. Kadir[footnoteRef:2] summarises effectively the main reasons adverts are considered invitations to treat not offers, it is usually to protect the seller: [2: Rokiah Kadir ‘Rules of advertisement in an electronic age’ (2013) INT JLM 42]

The main justification for the decision upholding the invitation to treat is the concern to avoid the risk of depletion of stock…. The second justification supporting the decision of the invitation to treat is the concern to avoid the risk of making contracts with everyone.

However, an offer includes much more clear and certain terms so that both parties know what they are entering into. A case example concerning an advert is Carlill v Carbolic Smoke Ball Company Limited[footnoteRef:3], the advert was offering a £100 reward to anyone who used the smoke ball properly and still contracted the flu, the court ruled that the advert was an offer and acceptance took place when a member of the public fulfilled the requirements of the offer. Carlill was an example of a unilateral contract which means only one party assumes an obligation under the contract[footnoteRef:4]. This means the other party does not necessarily have to fulfil their side of the offer. In contrast for a bilateral contract, both of the parties are assuming an obligation. [3: [1893] 1 QB 256] [4: Catherine Elliot and Frances Quinn, Contract Law (12th edn, Pearson 2019) 3]

Looking at the original advert made by Virtue Plus we see they make the promise of additional free goods with purchase of hand sanitiser to the first 10 customers. Since they are relatively clear about what will be provided to these select customers this statement would be considered an offer and therefore, they are under a legal obligation to provide. This is very similar to the aforementioned case of Carlill[footnoteRef:5], since that advert also promised to pay if the public met the terms, which in the scenario means being one of the first ten customers, and the court in that case did rule it was legally binding and they had to pay Mrs Carlill for meeting their terms. It can also be seen that the phrase “you won’t be disappointed” is closest to a trade puff. This means it is not seen as an offer as it is just a marketing technique with no legal consequences, as it would be very difficult to prove whether or not a customer was disappointed. The advert for the hand sanitizer could be considered as being for a bilateral contract as it is for certain goods, although a fixed price is not given, this means it is almost certainly considered an invitation to treat because it encourages further negotiation between the seller and any potential buyers. Such as in Partridge v Crittenden[footnoteRef:6] where the courts ruled that the advertiser could not be charged for unlawfully offering a wild bird for sale since the advert was actually considered an invitation to treat not an offer on the grounds that there was not enough detail provided, for example, the exact quantity of birds available, this is similar to the scenario as Virtue Plus do not actually provide an exact number of bottles of hand sanitiser available for purchase, instead, they encourage potential customers to enquire first. [5: Carlill (n 2)] [6: [1968] 2 All ER 421, [1968] 1 WLR 1204]

If the advert were to be considered an invitation to treat then any acceptance of the advert would not be legally binding, whereas acceptance of an offer forms a contract. In the case of Gibson v Manchester City Council (1979)[ the court ruled that the council providing a letter with the price to purchase amounted to a mere invitation to treat and was not considered an offer. This is very similar to Stevens situation as he telephoned to enquire about the price of the hand sanitiser. [7: [1979] 1 WLR 294]

Between Steven and Claire it is unclear as to whether there was ever valid acceptance. To begin with his telephone call to her was a request for information. Requests for information can make it unclear where the offer and acceptance actually take place. For example, in Harvey v Facey[footnoteRef:8] they enquired about the lowest price which was the request for information, the sellers then responded with £900 which is the supply of information, then by saying in return they would pay £900 the offeror became the offeree. So to apply this to the scenario, it could be said that Steven enquiring about the price was a request for information and when Claire gave him her answer over the phone she was simply providing that information not providing an offer. If this is the case then Stevens letter was actually the offer and it was up to Claire to accept. Therefore, there would be no contract between them and no legal obligation for Virtue Plus to provide Steven with the hand sanitiser. If the phone call were to be seen as an offer and Stevens letter were to be seen as acceptance then we must consider whether The Postal Rule would apply. It is the rule that when a term of the offer is that acceptance can take place via the postal system, the acceptance takes place at the time of its posting. One of the requirements for the rule to be valid is that use of the post is reasonable, if it is clearly specified that acceptance can only take place once the offeror has received it then the Postal Rule is not applicable. In Adams v Lindsell[footnoteRef:9] the defendants had already sold the wool to a third party before they had received the acceptance letter, however the court ruled that acceptance had already taken place upon postage of the letter so a contract had been formed and they were legally bound to provide the claimants with the wool. There are some exceptions to the postal rule such as when acceptance is communicated via an instant method such as telephone. In Brinkibon v Stahag Stahl and Stahlwarenhandels GmbH[footnoteRef:10] the offer had been sent by telex from Vienna to London, then acceptance was sent back the other way also via telex, therefore it was decided that the contract had been made in Vienna as that is where the acceptance was received. Looking back at the scenario, Claire did say to Steven to telephone back to place an order, which is an instant mode of communication unlike a letter sent in the ordinary post, therefore his acceptance would not be valid as he did not meet the terms provided had it been an offer. In addition, his letter arrived too late as Claire only opened it in the evening, so he missed the 5pm deadline, and she verbally informed him that he must communicate to her. This means she would have had to have been made aware of his offer/ acceptance before the given deadline. In Entores Ltd v Miles Far East Corporation[footnoteRef:11] Lord Denning explained how acceptance must be communicated, to quote Elliot and Quinn [footnoteRef:12]‘if A shouts an offer to B across a river but, just as B yells back an acceptance, a noisy aircraft flies over, preventing A from hearing Bs reply, no contract has been made.’ This explains the concept very well and can be applied to situations where acceptance is communicated via other methods, not just verbal. [8: [1893] AC 552] [9: [1818] 1 B & Ald 681] [10: [1983] 2 AC 34, [1982] 2 WLR 264] [11: [1955] 2 All ER 493] [12: Elliot and Quinn (n 3)]

If the advert were to be considered an offer then Stevens request for information would not be considered a counter offer, therefore the original offer is still open to be accepted. Stevenson Jacques Co v McLean[footnoteRef:13] is a case where they asked for credit and then the offeror sold the iron to someone else, this was a breach of contract because the offer had been made to one party and they had not actually provided a counter offer, it was simply a request for information. [13: [1879-80] LR 5 QBD 346]

The next issue presented by the scenario is whether a contract was formed when Sabrina made her online order. When goods are displayed for sale, such as on the website, it is considered an invitation to treat. For example, in Fisher v Bell[footnoteRef:14] they were offering illegal knives for sale in the shop window, the court ruled that it was only an ITT and thus the seller could not be convicted. In addition, in Pharmaceutical Society of GB v Boots Cash Chemist (Southern) Ltd[footnoteRef:15] the issue was concerning medicines only being sold with the supervision of a qualified pharmacist, the courts ruled that the sale took place when goods were presented at the counter where the pharmacist was, and not when the customer picks them up off the shelf. So, it could be said that when Sabrina placed her order she was actually making the offer, thus becoming the offeror. Even though this did not take place in a shop like the aforementioned case, it was actually online, but the case is still relevant as the core concept is the same. Also since Virtue Plus included in their terms and conditions that acceptance only takes place upon dispatch and Sabrina failed to read them of her own accord yet still agreed to them, they are under no obligation to ship the goods to Sabrina and should be advised to issue a full refund instead as the contract was never completed and legally binding. [14: [1961] 1 QB 394, [1960] 3 WLR 919] [15: [1953] 1 QB 401, [1953] 2 WLR 427]

In addition, Sabrina’s order was logged on the system half an hour after Claire and Raj had entered into a contract, so she was technically too late as all of the stock had been signed over. However, it could be said that Raj’s contract was not actually valid as the terms must be clear and certain which “the entire stock” is not as there is no specific numerical value. A case where there was uncertainty but the parties carried on with fulfilling the contract was Foley v Classique Coaches Ltd[footnoteRef:16]. In this case the parties agreed to purchase petrol but with no fixed price, the defendant then tried to claim after quite some time that the offer was never clear and therefore there was no contract. However, the courts ruled that there was enough certainty in the terms for agreement to take place, and so the contract did in fact exist. In the scenario, though the quantity number is not fixed, there has been agreement from both parties so going by the rule of this case it would be said the contract was still workable and therefore legally binding for both parties. It could be that if another contract is already effective then the ownership of that part of the stock is already gone, meaning the whole stock is not actually what Raj had expected. The seller would then have the option to choose to honour both contracts, had there been a contract formed with either Steven or Sabrina as well, even if that means Raj would receive far fewer items than he had expected. Acceptance is only valid in relation to a certain offer, so either party could argue the contract is flawed even though it says they entered into it, and therefore it would be void. Meaning it would not have any legal status and it would be as if there had never been a contract, so the stock could still be sold to Sabrina and Steven. [16: [1934] 2 KB 1]

It would also be worth mentioning The Unfair Terms in Consumer Contracts Regulations 1999 with reference to Sabrina. As the term included in their online contract regarding when acceptance takes place may be deemed unfair for the customer. This is due to the fact the company could technically take the money and never send the goods but would be covered by their own terms and conditions.

With regards to Raj’s situation, it is most likely a legally binding contract has been formed because both parties did agree to it on the terms of buying all the outstanding stock and this was agreed at 11am. This is 30 minutes before Sabrina’s order was logged on the system even though she paid before his contract was formed, however as previously explained acceptance for Sabrina had not yet taken place. In addition, Stevens letter had still not been opened. Therefore, Raj is legally entitled to the stock and Claire could not be sued for breach of contract by either Steven or Sabrina since there was never a valid contract formed with either of them.

Bibliography

Journals

1. Kadir R, ‘Rules of advertisement in an electronic age’ [2013] Int. J.L.M

Legislation

1. Unfair Terms in Consumer Contracts Regulations 1999

Books

1. Elliot CF Quinn, Contract Law (12th edn, Pearson 2019)

To begin, I would advise that Bob crave the contract to be held as valid, as this would allow him to receive the goods for the contracted price. Lothian Quality Building Supplies will likely make a claim of uninduced, unilateral error calculi, in which they can crave a void contract.

First, one must distinguish whether the contract is a matter of error or not. Considering the matter dealt with a factual matter within the contract, one can clearly see it was not a matter of misprediction, and thus a case for error can be heard. Furthermore, due to the fact the dispute regards the price of the contract, it would qualify as one of the “five essentials of contract” as found in Stewart v Kennedy, and is thus a matter of contract in transaction rather than a matter of contract in motive.1 The first debatable fact is whether both parties are in error, indicating a shared error in which the contract is void, or if only the pursuer is in error, indicating a unilateral error in contract. Seeing as this case regards the misrepresentation of information rather than a patent mistake of subject-matter, it would be held that the case does not regard mutual error but unilateral error.

Upon the declaration of the matter being that of unilateral error, one must consider whether Bob induced the party to enter the contract by misrepresentation. The error was one made solely by Lothian so this can be dismissed; Bob was not involved in the arithmetical error. That being said, it cannot be held as induced unilateral error, and one must consider an uninduced unilateral error. It is important to note, however, that Bob can claim induced error by misrepresentation if he wishes to void the contract. Due to the arithmetical error, Bob concluded to contract with Lothian rather than other dealers due to the purported pricing; we can say he would not have entered the contract if the error were not present.

Following, one must investigate whether the matter is regarding the basis or root of the contract, that is, an error in substantial bus. Since the matter deals with the pricing of the contract, we can declare that the error deals with the substantials of the contract.

Regarding uninduced, unilateral, error in substantial bus; one would see most of the case law favors the pursuer. For instance, in Sword v Sinclair a scribal error lead to the price of tea being reduced in the contract of sale. Knowing this was advantageous, the buyer accepted the deal at a reduced rate; this contract was held void.2 Similarly, in Steuart’s Trustees v Hart, purchase of land was made for a price substantially lower than that which would be considered reasonable; the contract was held voidable and reduced (if the pursuer would properly reimburse the defense).3 However, in both instances, the cases were determined on the grounds that the defense either knew of the error and chose not to act. In the instance of Bob, it is not stated that he was aware of the error calculi, thus he should not be held to the ratio decidendi of the two aforementioned cases; none of the negotiations indicated to Bob that there was an error.

Further reinforcing this argument, one can reference the opinions of the Lord Justice-Clerk and Lord Young in Seaton Brick Co, Ltd. v Mitchell. In this case, Mitchell sent forth a contract for a lump sum of work. Upon contracting (as decided by the court), he claimed an error in contract as he miscalculated the final summation. As stated by the Lord Justice-Clerk, “if he blundered, and by mistakes made in his own office offered to do the work for a sum which would not pay him, sibi imputet”; one cannot crave for exemption from liability simply based on the grounds of their own error calculi, as they were not induced by the other party, nor did the other party knowingly take advantage of these errors. 4

Despite all of this, Gloag offers a counterargument on his writings on contract, where the failure of providing a lump sum, despite giving fixed items, is discussed. According to the work of Gloag, the provider is entitled to be paid the correct summation; he states, “it is conceived that a man is not bound by a clerical or lingual slip in making an offer, even although the party to whom it is made accepts in good faith”. Gloag knowingly states this is contrary to the decision in Seaton Brick Co, Ltd. v Mitchell. 5 Similarly, one should consider the opinion of Lord Moncrieff in the case. Although agreeing the contract should be held, Moncrieff argues that, in the instance the individual items were listed (rather than simply a contract of lump sum), that the defense could claim error calculi on the objective grounds of the specifications indicating the true cost.6 This claim by Moncrieff is reinforced by the unanimous decision provided in Patrick Jamieson v Duncan M’Innes, in which it was held the contract must be paid on the grounds that the contract was one of the scheduled rates rather than lump sum.7

Ultimately, Bob should be able to hold Lothian Quality Building Supplies accountable for providing the materials originally contracted. However, this argument only stands valid if Bob can prove that 1) he did not know of the error from previous negotiations and 2) the contract was one of lump sum rather than that of scheduled payment. The contract was a unilateral, uninduced error with no knowledge of such by the defense, and thus should be held valid rather than an error in transaction. If, however, Bob fails to prove a previous knowledge of the error from negotiation or that the contract is one of lump sum, he should file a counter-claim for unilateral induced error on the grounds of misrepresentation of substantial fact. This will allow Bob to exit the contract and deal with other companies, assuming this would be advantageous to him from a financial standpoint.

Introduction:

Joey Joystick was approached by Great Games Pty Ltd for an internship for designing a game which afterwards benefited the company and helped it to gain some prestigious awards. Due to this they later approached it for a 3 year contract with the clause of not undertaking any design activity for any other company during the contract period. Also it included that joey can also not participate in any design activity within Australia for any gaming or entertainment purpose and for this he was given the salary that a senior designer usually receives . After 2 years he was approached by CAN a film company to design for them with an appealing starting salary which was 5 times that GG Pty Ltd was giving him.

Common Employment Contract Laws and Rules:

Great Games Company made some clear contract with Mr. Joey and it wants to stop him from joining Company Animated Films Inc. When a company engages with an employee, a common law contract is made. It is usually written and state, federal laws will certainly be applied to comply with the conditions. It is a legally binding agreement between two or more parties (Rachel, 2013).[footnoteRef:1] Once it is created, both the parties are obliged to do their part. If any of the parties fail to do so, they call it as “in breach of contract”.This might include factors like misrepresentation, outside influence etc. [1: Rachel S. Arnow-Richman, ‘Mainstreaming Employment Contract Law: The Common Law Case For Reasonable Notice Of Termination’ [2013] SSRN Electronic Journal.]

The process of making a Contract:

• Formation: there are 5 elements for the formation of a contract. They are:
• Agreement : This happens between the both parties.
• Consideration: Bargaining for one’s own interest.
• Capacity: Whether it fits between the laws or community and federal standards.
• Intention: Maintenance of legal relations
• Certainty: Duration and completion of the contract,

When a contract is made, it includes some factors and some of those are discussed below:

• Acceptance: Agreement happens when it is accepted and this has been communicated to the party offering. Once itr has been accepted it becomes legally binding for both parts.
• Counter offers: It may not be straightforward and sometimes an offer may be met to the law which is a ’counter offer’. In terms of law this might be a request by the employee for extra pay or other related benefits from the employer.
• Intention to do the contract: For a contract to be enforced legally, the parties must have intention to give rise to legally binding obligations (Richard,2013).[footnoteRef:2] [2: Richard Stone, Contract Law (Routledge, 2013).]
• Express terms and implied terms: In employment law there is an implied term that says the employees will put the business interests of the employer before their own personal interests.
• Termination: Termination of the employment contract is a complex area of the law. It is largely dealt with by state and federal industrial laws for many years(Sarah,2015).[footnoteRef:3] The state and federal industrial relations tribunals have established a comprehensive structure of law surrounding unfair redundancy and dismissal. [3: Sarah Bankins, ‘A Process Perspective On Psychological Contract Change: Making Sense Of, And Repairing, Psychological Contract Breach And Violation Through Employee Coping Actions’ (2015) 36(8) Journal of Organizational Behavior.]

Managing a Breach of Contract:

The main remedies for a breach of contract are: Damages,Specific Performance and Cancellation and Restitution.

Damages: Payment is the most common remedy for a breach of contract(Roger,2016).[footnoteRef:4] There are many kinds of damages, including the following: Compensatory damages, Punitive damages, Nominal damages,Liquidated damages etc. Award of damages is known to be the easier and common method for breach of contract as one party seeks compensation for the financial losses it faced due to the breach . [4: Roger Bernhardt, ‘Purchaser’s Damages For Breach Of Contract’ [2016] SSRN Electronic Journal.]

Specific Performance:

If damages can not be adequate as a legal source of remedy, the non-breaching end may ask for an alternative remedy named specific performance. It is best described as the breaching end’s court-ordered performance of duty under the contract

Cancellation and Restitution:

A non-breaching party may cancel the contract and go to sue for restitution if it has given a benefit to the breaching party.

Application of Contract Law in the Breach of Contract:

An employment contract creates obligations that are to be fulfilled by the sides who are in the agreement. One party’s failure to satisfy any of its contractual obligations is known as a ‘breach’ of the contract. A breach can occur when a party fails to perform in accordance with the terms of the agreement. A breach of contract will usually be specified as either a material breach or an immaterial breach determining the appropriate legal remedy. When a breach of contract occurs , both of the parties wish to have the contract enforced on its terms, or try to recover for any financial harm caused by it. If a dispute arises and informal attempts at resolution fail, the next step possibly is a lawsuit. Courts and formal breach of lawsuits are not the only options for people involved in contract disputes. The parties can agree on a mediator to review a contract breach or may agree to binding arbitration of a contract dispute. When the total payable is excess of the probable damage, then it is called penalty. If the contract mentions a payable amount at a certain date, then the additional number is named as penalty. This is because the delay in work is unlikely to cause damage to the employer side.

Conclusion:

Mr. Joey is bound to work under Great Games Pty Ltd for 3 yearsAccording to the duration of the contract and meanwhile Joey can not join another company. After two years of the contract, Joey went CAN for an illegal agreement. As Joey has not completed the 3 year term under GG Pty Ltd, it can sue or file for lawsuit to prevent Joey from joining CAN. Moreover, GG was paying Joey higher as a beginner from the start which was beneficial for him and Joey agreed on obliging to the contract, so, if he tried to break it , it may be referred to as the breach of contract law. Also , Great Games can further renew or extend the contract via suggesting new salary or job benefits as he is an excellent employee.

References:

1. Arnow-Richman, Rachel S., ‘Mainstreaming Employment Contract Law: The Common Law Case For Reasonable Notice Of Termination’ [2013] SSRN Electronic Journal
2. Bankins, Sarah, ‘A Process Perspective On Psychological Contract Change: Making Sense Of, And Repairing, Psychological Contract Breach And Violation Through Employee Coping Actions’ (2015) 36(8) Journal of Organizational Behavior
3. Bernhardt, Roger, ‘Purchaser’s Damages For Breach Of Contract’ [2016] SSRN Electronic Journal
4. Stone, Richard, Contract Law (Routledge, 2013)