The general law holds that minors cannot enter into legal contracts. The law clearly defines a minor as any person under the age of 18 years. According to English law, any contract between a minor and an adult is binding on the adult but not on the minor. However, the law allows a minor to enter into contracts for the supply of necessities if no adult can provide the necessities. In this regard, a minor can disaffirm a contract at any time without being legally responsible (O’Sullivan and Jonathan 18).
According to the British Columbia Infants Act, all contracts entered by a minor are unenforceable against the minor except for few contracts defined by the Act. However, the minors can ratify the contracts after reaching the age of maturity. The Minors Contract Act 1987 and Infants Relief Act 1874 also regulate the contracts that minors can engage in (O’Sullivan and Jonathan 20).
Asad is just sixteen years old and a minor under English law. He is, therefore, not legally bound by the apprenticeship offered by Abdul. The fact that Abdul has in the past offered the same apprenticeships does not ratify his current agreement with Asad. The law allows Asad to disaffirm the agreement at any time with no legal liability. On the same note, clause C in the agreement expressly states that the agreement can be terminated at any time.
A standard format contract is usually drafted by one party and is not open for negotiation. In other words, it is a contract that should be accepted the way it is. The contract has several advantages. Firstly, standard format contact eliminates the legal fee that is required when an attorney is asked to draft a new contract each time. As a result, it is cheaper to use standard format contracts compared to other types of contracts (O’Sullivan and Jonathan 39). On the same note, usually, negotiation consumes a lot of time because both parties will want their terms to carry the day. However, the standard format contract does not require any negotiation to take place. Therefore, it saves time, avoids legal complexities, and expedites the execution of the contract. Furthermore, having used the standard contract on many occasions, the parties involved finding it easy to use thus enhancing the speed of execution (O’Sullivan and Jonathan 41).
However, it should be noted that standard contracts have a host of disadvantages associated with them. To begin with, standard contracts usually tend fixing the prices of commodities. In many standard contracts, everything is supposed to be taken as it is written. Therefore, negotiation is not part of the process and one cannot be able to ask for fair prices. Moreover, the prices quoted are sometimes higher than average market prices. Secondly, the law uses language is rather a different way thus giving words different meanings. Therefore, different words used in a standard contract can be subject to different interpretations which can be unfavorable to the other party (O’Sullivan and Jonathan 43). As result, by accepting the use of standardized contracts, people usually find that they are legally obliged to do some activities against their consent.
On the same note, companies that draft standard contracts usually do it so that they can take care of their interests. In this regard, the contracts favor one party at the expense of the other. Similarly, like every contract, standard contracts usually have several conditions set out. Unfortunately, most people do not read these conditions taking them as too many (O’Sullivan and Jonathan 44). These conditions are known to leave out some crucial information that can exonerate the drafting company from legal liability in case of any mistakes.
Works Cited
O’Sullivan, Janet and Jonathan Hilliard. The Law of Contract. Oxford: Oxford University Press, 2011. Print.
Issues related to contract law and agreement may be essential parts of business decisions. An entrepreneur should consider their principles while managing operations within a company and organizing partnerships with other firms. This paper discusses how the principles of contract law and agreement may be applied to possible business scenarios and shows the difference between them. It concludes that an entrepreneur should consider all existing and possible factors to make decisions related to contracts and agreements.
Contract Law
Entrepreneurs that are starting any type of business can benefit from knowing the principles of contract law. According to Mayer et al., contract law is a vital part of modern economic and cultural aspects of society (326). Its aim is to create incentives for the parties that exchange services or goods and eliminate possible adverse outcomes of their cooperation. Contract law may have a significant impact on business as a formal written contract secures decisions and agreements, providing a legal basis for the parties’ claims and expectations.
For example, an entrepreneur owns a company that creates websites for individuals and businesses. He is contacted by an art school that offers $5000 for a website with a custom design. They create a contract that discusses the due date, the customer’s requirements, and other terms and responsibilities. If the art school refuses to pay the entrepreneur once the work is done, he or she will be able to file a lawsuit against the company.
Moreover, as many entrepreneurs hire employees to support their business, it is necessary to implement the principles of contract law in employer-employee relationships. For example, to secure the confidentiality of the information, it is crucial to have a signed agreement that requires a worker not to disclose sensitive data. This way, an entrepreneur may ensure that the information about his or her business ideas and financial operations will not be shared with his or her potential competitors and other individuals.
Agreement
An agreement is different from contract law and usually presents its core part. Mayer et al. note that agreement may be shown in any form, including unspoken conduct but is generally expressed through an offer and an acceptance (356). An agreement that is not followed by a contract has no legal effect. An entrepreneur should consider this fact while making business decisions. For example, a small business entrepreneur discusses a potential partnership with a larger company that is owned by his or her college friend. The collaboration may potentially result in the promotion of his or her firm.
The larger organization asks for the entrepreneur’s financial contribution of $2000 to ensure that the project has the sources for advertisement and promotional products. As the entrepreneur knows the owner of the company and can trust him or her, he can decide to agree on the terms without signing a contract. In this case, however, if the larger company violates the agreement, the entrepreneur cannot file a suit against it. As the partnership involves financial issues, it is advised to create a contract to secure the operation and have a legal basis for possible complaints.
Conclusion
The purpose of contract law is to ensure the security of operations or agreements between the parties, as well as eliminate possible adverse outcomes of a partnership. On the contrary, an agreement not followed by a contract has no legal effect, which may potentially have a negative impact on business. While making decisions, entrepreneurs should consider both the current situation and possible circumstances to ensure that their actions are beneficial for their organizations.
Work Cited
Mayer, Don, et al. Law for Entrepreneurs. The Saylor Foundation, 2012.
“A contract is a legally binding agreement between two or more parties which is enforceable by law or by a binding arbitration” (American Law and legal Information Organization 2). Contracts involve exchange of promises which if broken will attract monetary or other forms of compensation. Compensation can be in monetary or any other form depending with the contract’s terms and conditions. Usually, it is a payment of what would have otherwise been paid if the defaulter had honored the agreement. For a contract to be legally abiding, both parties must have an agreement concerning the terms and conditions.
The most important aspect of a contract is the offer and acceptance where one party offers an agreement and the other accepts (American Law and legal Information Organization 2). For a contract to hold any legal grounds, it must be a possible agreement, the parties must be of sound mind and must be above the required legal age for such kind of an agreement. Other than these conditions, consideration is a big part of the law of contracts. Consideration calls for a critical examination of how much a promise is going to cost. It must be sufficient, it must not be from the past and it must move from the promisee (American Law and legal Information Organization 2).
Case study
Case no. CA06-1281 was heard in Arkansas Court by Judge Karen R, Baker on 13 June, 2007. This was a breach of contract case. The plaintiff Steve Goldman claimed that the defendant had breached a contract. Steve Goldman entered into a contract with Hunter’s Green Development Co., LLC. Steve agreed to buy land from Hunter’s Green Development which would build a house on the land. David Carl was the developer.
The construction began in January 2000 and was complete by August 2002. Hunter’s Green Development stopped construction after Steve refused to make further draws on the construction loan in May the same year. Steve based his refusal on Hunter’s Green Development’ purported failure to pay subcontractors and suppliers and failure to secure lien as required by the law of contracts. Steve the plaintiff, finished the construction on his own and sued the company for breach of contract. The person who did wiring and Gloria Hopkins, the defendant’s neighbor testified and the court entered judgment against the defendant.
The trial court held that the law stated clearly, “where a contractor commits a material breach of contract, the owner is entitled to recision of the contract and restitution of any payments” (American Law and legal Information Organization). It was established that the remaining balance of contract at the time of defendant’s breach of contract was $50,225. The accrued interests on Mr. Steve Goldman’s the complainant construction loan amounted to $ 8, 071.
In this case, the plaintiff was entitled to hiring another contractor since he wanted the construction completed. Damages were the difference between the unpaid amount of the contract price and the reasonable cost the plaintiff had used for construction. In this case, the difference amounted to $ 12,558 which was the reasonable cost the complainant incurred in completing the construction. It was therefore the amount he was entitled to in damages. The court ordered the defendant to pay the amount plus the accrued interest.
Reference
American Law and legal Information Organization. Legal information on contracts, 2009. Web.
A contract is a promise that is enforced by the law1. A contract is entered into by two or more parties and it should be legally binding. In order to determine whether there was a breach of contract, it could be important to establish whether or not the two firms, (i.e. Blackboard and PostersPLUS) entered into a legally binding contract. In June 2012, the firm entered into a contract to supply PostersPLUS with cast vinyl film for a period of one year. The contract between the two parties contained the four elements of a legally binding contract. The four components make promises enforced in a court of law.
First, Blackboard made an offer to provide PostersPLUS with vinyl film products. On the other hand, PostersPLUS was to pay the supplier a certain amount of money for the supplies. Second, there was an acceptance on the part of PostersPLUS to the terms and conditions proposed by Blackboard. Third, consideration was contained in the contract because there was payment in exchange for the supplies in the contract. Fourth, legality is an important element that must be contained in contracts. It is evident that the contract between Blackboard and PostersPLUS was legally binding because it was within the framework of the Australian law. Another important aspect to analyse is whether or not a contract for sale of goods was entered into by the two Australian firms. A contract for sale of goods is a legally binding promise between two parties, whereby one of the parties promises to supply goods at an agreed amount of money.
Blackboard and PostersPLUS entered into a contract for sale of goods because there was an agreement to supply goods at a specified amount of money and for a certain period of time, i.e. a period of 12 months. 2
There was a breach of contract on the part of Blackboard. It is clear that Blackboard was aware of the purpose that PostersPLUS intended to use the vinyl film at the time the contract was entered into between the two firms. PostersPLUS sold about 90% of the vinyl film labels purchased from Blackboard during the contract period to SEASTORM Containers. The following clause was contained in the contract: Blackboard gives no warranty that the goods are fit for any particular purpose.
It was illegal for Blackboard to use such a contract clause in the agreement because the management was aware that PostersPLUS was to sell the vinyl film labels to companies that would use them as labels on shipping containers. The issue at hand can be analysed in relation to two Australian case law examples.
First, Commercial Bank of Australia Ltd v Amado (1983) is based on legal issues that revolved around unconscionable dealing as a result of limited education and poor bargaining power. The case is a perfect contract law example, which is studied by many law students in Australia. It was held by the judges of the High Court of Australia that it was unlawful for the defendant to claim unlimited liability to the claimant because Amados was aware of the limit of the liability under guarantee. Also, the claimant had limited knowledge of the English language, which made him not comprehend all the issues presented in the contract3.
Thus, it can also be argued that PostersPLUS did not understand the contract clause, which stated that “Blackboard gives no warranty that the goods are fit for any particular purpose”. It could also be argued that the company representatives who signed the contract on behalf of PostersPLUS documents did not have adequate knowledge of English and business terminologies. However, Blackboard was aware of the purpose of the vinyl film labels at the time of signing the contract.
Second, although Burger King Corporation v Hungry Jack’s (2001) case was dismissed, it has important issues that could be used for argument in a contract dispute between Blackboard and PostersPLUS. Blackboard violated the clauses that are pertinent in the development of contracts. The clauses require specific procedures that are aimed at ensuring a high level of integrity and honesty. It could be argued that Blackboard did not act in good faith when signing the contract documents because it knew the implication of the warranty clause, but it did not disclose it to PostersPLUS. Thus, it can be concluded that Blackboard breached the contract.
How PostersPLUS’s damages will be assessed
Damages for a breach of contract are offered to a claimant to compensate for losses incurred as a result of breaching a contract. It is important to note that a victim can only be compensated if the damages are caused by the defendant.
PostersPLUS might claim two categories of damages from Blackboard. However, the final sum could be obtained by adding the amounts determined under individual damages. First, the firm will claim for special damages, which implies the amount of the actual money that it spent to provide new labels worth $10,000 to SEASTORM Containers at its own expense. Also, the firm might claim for damages incurred in the process of litigation, i.e. the total amount of money that will be spent in the legal process. In addition, PostersPLUS might claim for the defective labels that are worth $20,000. The labels are not used and they cannot be sold to shipping companies.
The damages are easily determined because of their nature. General damages constitute the second category of damages that PostersPLUS might claim. It could be quite difficult to determine the actual value of general damages using mathematical calculations. However, PostersPLUS should claim for the losses that might be incurred when SEASTORM stops purchasing vinyl labels from it because of poor quality. The assessment might estimate the value of transactions that PostersPLUS does with SEASTORM and other shipping companies. The actual value of general damages would be arrived at by the court after judges look at aspects related to the losses and determine a figure that is fair. Also, the figure should be legally and economically feasible to both parties.
Conclusion
Legally binding contracts are entered into by two or more parities. Contracts must have the four elements of legally binding agreements so that they can be used in a court of law. Blackboard breached the contract by supplying PostersPLUS with vinyl film labels that were of low quality. Also, the firm used a contract clause that was not made clear to the representatives of PostersPLUS at the time of signing the legal agreement. PostersPLUS will claim for both general and special damages from Blackboard for the breach of contract.
Footnotes
1McKendrick, E. (2012). Contract law: text, cases, and materials. Oxford, United Kingdom: Oxford University Press. Web.
2 Poole, J. (2012). Casebook on contract law. Oxford, United Kingdom: Oxford University Press. Web.
3 Qian, J., & Strahan, P. E. (2007). How laws and institutions shape financial contracts: The case of bank loans. The Journal of Finance, 62(6), 2803-2834. Web.
You are hired is a television program that was introduced by Simon. The show provides room for different participants to compete then the winner gets a prize and become the manager of the show. The television did one show in the United Kingdom and got it a success. Simon the owner would like to improve his venture to become an international television program to get more competitors across the globe other than the United Kingdom only. This is a brilliant idea, but it involves rules and regulations from all the countries (Gardner, 2002). In fact, he wants to get the international celebrities to carry out judges duties.
For instance, he has identified some of them like Lucy Lui, Shilpa Shetty and singer like Beyonce and Shakira to be among the judges. The nationalities of the celebrities who have shown interest in his work come from different nations that operate on different rules and regulations (Atiyah, 1999). It is important for Simon as the founder of the program to include laws that he is familiar with so that the workers do not make irrelevant mistakes that can lead to termination of their contract. This paper provide an extensive view of the English Law that will see the judges work within the Law, and if there is any breach of law by any party in the contract, then the law can take its course.
Terms of a contract in English Nations
A contract in an English nation is an accord that gives rise to responsibilities recognized or enforced by the Law. A factor that differentiates a contract from other legal requirements is that they come from agreements of the parties that enter into the contract. A contract has different terms according to the English Law society.
Express Terms
Mister Simon has to understand that obligations and rights of the parties contracting groups should first ascertain stipulations of their contract. In most cases where the terms are not available, one should understand whether it is a contract or just a representation (Hill, 2005). To determine a legal contract, the courts look for the following into the contract; the transaction stage, which the transaction took, place, the importance that the representee connected to the declaration together with the skills or knowledge of both parties. In reality, it is important that before Mister Simon and his expected employees enter into a contract they should discuss important issues like terms of payment, the nature of the work they are expected to do and the duration both daily and the length of the contract (Kessler, 2003). It is also important that Mister Simon enlighten all the judges to be aware of the contract requirements to avoid any confusion in case of infringement.
According to the laws of England, once the terms and conditions of the contract are set, the court may apply objective tests to interpret the meaning of the terms and conditions. The essence in this is to interpret what an ordinary person may understand the terms that influence other parties. Just in a nonprofessional language, what the terms mean generally. To this effect the English judicial system requires that any person who may enter into a contract, the terms should contain facts and not stories (Steyn, 1997). This will help the two parties to solve any problem that arise or for interpretation purposes of the court. A legal contract must entail information that all parties can understand in the same case as Mister Simon and his expected judges.
Most of the current contracts are in written form. Therefore, a written or an oral statement forms a base of the actual contract. All the written and oral contract materials in law depend on the relevance of the parol proof of the rule. Some of points to consider in ruling out of the contract information are contained in s94 although it gives some arguments. Some of the arguments base on the fact that s94 may not exhaust all the exceptions in the rule. Mister Simon must understand that the rules in s 94 and s 93 apply in some occasions.
Implied Terms
Implied terms are those terms that the court adds to the agreed terms. If the court realizes that it is not important for it to introduce some rules in a contract, it may decide to leave it the way it is. The terms, which the judiciary adds to the already agreed terms, must not oppose any of them. Therefore, in this case, Mister Simon has to ensure that the terms of service he sets should be clear and easy to follow through.
The judiciary can fill blanks that may have been left out by the contracting parties stipulates some implied terms (Llewellyn, 2001). Mostly the gaps are left out so that one party can benefit more than the other party can. Therefore, a perfect contract should consider the benefits of both parties without prejudice. For Simon to be on the safer side, he must ensure that the contract he signs with the judges must contain all the required information to avoid any additional terms by the courts. Although the courts do not re-write the whole contract, it should clearly spell out the role of each party. That is a legally acceptable contract. Some implied terms are required by the public policy or statutory.
Classification of terms
Contract terms can be put in different categories. For example, those that relate to conditions of the duties, intermediates or warranties in other words innominate terms (Smith, 2004). With regard to classification of terms, it is important that the parties that are the judges and Mister Simon should explain in their terms on how they want their terms. On the other side, without stipulating on how to classify terms, the court has its own means to crosscheck through the wording of the contract and get their meaning. In some occasions, the statute may give direction on how to classify specific terms. A good contract should classify terms and conditions, as the statute requires.
Discharging a Contract
Discharging a contract is where a contract comes to a halt due to unfulfilled performance by one of the parties. It can be the judges as in this case or the owner of the program, Simon. Discharging a contract can take place in different ways as discussed below.
Performance Discharge
A contract normally specifies the period for which it will exist. If the time limit elapses, the contract can end or can be renewed. In some occasions, contracts never reach at the required destination. This is because of one of the party failing to perform up to the required standards agreed up on, then the contract may terminate. Causes of terminating a contract are ignorance, negligence, or de minimis, payments and delivery.
Defective performance
Simon may find that some of the judges do not perform to the required standard defectively through a non-trivial style. The contract may also terminate and in this case, the law in the English nations provides varied responses together with remedies, but depending on the kind of failure in performance.
Discharge through Agreement
In the first place, all the involved parties talk to agree to join as parties with specified interests through a contract. During this period of discharging, the parties should talk and agree on the process (Stevens, 2004). This type of agreement may have resulted from forming another contract of termination. This can take place through providing a notice to the concerned party. On the other hand, the parties to a contract may decide to enter into a new contract of release (Simpson, 2007). The company that request for the termination of the contract may be required to provide some form of payment in exchange of the release agreement. That is when the party requested to terminate the contract and does not owe any extra form of debts or balances to its partner. On another account, can be an obligation that is not at its perfection, which may be conditional due to earlier events or contractually precise counter-performance by the opposite party toward the contract (Atiyah, 1999).
Lastly, the teams may contractually issue a non-performance from certain past events to avoid breach. This is called Force ‘Majeure.’ The other form of discharge is discharge due to frustration. Several effects accrue from breach of a contract. They include contract damages and can lead to discharge.
Judicial Remedies for contract Breaching
The judiciary allows the parties to contact the contract information to identify the breach of contract. After identification, the aggrieved group gets the opportunity to terminate the contract (Mitchell & Mitchell, 2008). This is in the view as a self-help remedy (Gardner, 1992). This is because the solution does not involve the judicial system in solving the matter.
In the case, that the aggrieved group has financial losses resulting from the breach or where releasing of the party in breach can cause serious financial losses then the party in breach can get another punishment from the judiciary.
Conclusion
The English judicial system provides regulations that parties, forming a contract, can greatly benefit by getting information on how to form contracts. Therefore, for Mister Simon it is possible for him to work internationally with the provisions in the constitution from the English states. In case of breach of the contract, the contract can easily terminate or it can be on probation for some time to allow possible changes in the respective party.
References
Atiyah, P. (1999). The Rise and Fall of Freedom of Contract (Clarendon). Journal of Contract Law 22 (1), 150.
Gardner, S. (2002). Trashing with Trollope: A Deconstruction of the Postal Rules in Contract. Journal of Legal Studies, 23(1), 170.
Hill, S, (2005). Flogging a Dead Horse – The Postal Acceptance Rule and Email. Journal of Contract Law 22 (1), 151.
Kessler, F. (2003). Contracts of Adhesion—Some Thoughts About Freedom of Contract Columbia. Law Review, 43(5), 629.
Llewellyn, K. (2001). What Price Contract? An Essay in Perspective, Yale Law Journal 40(3), 741.
Mitchell, C. & Mitchell, P. (2008). Landmark Cases in the Law of Contract. Yale Law Journal 40(3), 740.
Simpson, A. (2007). A History of the Common Law of Contract: the Rise of the Action of Assumpsit. Journal of Contract Law 22 (1), 151.
Smith, S. (2004). Contract Theory (Clarendon). London: Long Horn Publishers.
Stevens, R. (2004). The Contracts (Rights of Third Parties) Act 1999, 120. Law Quarterly Review, 292.
Steyn J. (1997). Contract Law: Fulfilling the Reasonable Expectations of Honest Men, 113. Law Quarterly Review, 433.
Contract law is a legally binding agreement between two or more people. A valid contract should have the following.
Offer. It is a proposal of one person to another on a certain thing. An offer usually has terms or conditions which are definite that if agreed by the person, the offer becomes accepted. Under the contract of CG and Cambridge city, the offer was given by the city to the CG to collect the garbage in the area of 3000 households for three years with the expectation of 1000 household growth in three years. The payment was $400000 a year.
Acceptance of the offer. After an offer has been made by the offeror to the offeree and the conditions are favorable, then the person can take the offer. By taking the offer terms an abiding agreement is formed. For instance, in this case, CG was given an offer with the conditions to collect garbage for three years at a fee of $400000 a year. CG accepted the offer
Consideration of the contract. The offeree does something or gives a promise to the offeror in a return for accepting the offer. Under consideration, both the offeror and the offeree benefit in one way or the other and the benefit must be of a certain value. Under this case, the CG would get $400000 in return for garbage collection services.
Alteration of the contract is changing the conditions of the contract by the agreement of both parties. When a contract is altered, the older contract becomes void and a new contract comes into force. Usually, a contract is altered to suit the parties or to create more benefit. Under this case, the alteration was needed to benefit both the CG and Cambridge city.
As per the agreement of CG giving services for three years with the expectation of 1000 households growing in that period the contract was formed. But after a year, the household growth was by 1000 which meant that the growth would be higher than expected. CG expected not to make a profit of $75000 as projected. A new contract is needed to be signed so that CG can benefit.
Frustration is when one of the contract parties fails to honor the agreement due to the occurrence of an unseen event and the other party, therefore, suffers frustration. In this case, the agreement was that CG should remove garbage for three years for $400000 per year. If CG failed to do so, then it would not have performed the promise. Likewise, if CG performed the service but Cambridge city failed to pay CG then CG would have suffered frustration and would have sued Cambridge for damages.
Novation occurs when the contracting parties go on with their duties to each other although a new agreement is made to replace the old one. CG could continue with the services it is giving to the city of Cambridge but they should agree otherwise on the payment as more households are coming in.
A breach of contract can occur when one of the parties completely fails to perform the promise or the performance is defective to the other party. Under this case, a minor breach could have occurred if, for example, CG hired another firm to collect garbage on their behalf. A material breach would have occurred if the performance of the contract would have cost the other party a financial loss or time wastage. A fundamental breach would have come if one of the parties failed to perform the duties leading to contract termination.
Lastly, an anticipatory breach would have occurred if one of the parties communicated to the other that it is not possible to perform the agreed work. For example, if after the contract performance for one year, CG communicates to Cambridge that it will not carry out the services because the payment seems to be below, then CG would have breached the contract for not honoring the promise.
Damages are payments by one of the parties that have broken the contract to the other. Damages are usually given so that the party affected by the breach is left in a position that the person would have been if the contract was not breached. If Cambridge fails to pay CG the agreed money, the CG can file a case of breach of contract and claim to be paid the money. On the other side, if CG failed to perform the contract, Cambridge would have sued them and claimed either the service to be completed or payment of financial loss suffered by them from CG (Halson13).
CG can opt to breach the contract by informing Cambridge city that it will not be possible to perform the agreed work for three years. This option will be good if CG finds it is better to break the contract and pay the damages later than to perform the said work. The other option is for both of the parties to alter the contract. CG had agreed with the offer by foreseeing a 1000 household growth within a year. The contract for the first year brought a profit of $75000 to CG.
With the expectation of more growth in the other two years, CG predicts a loss. Therefore both parties need to agree again on new terms. CG should alter the contract and come to an agreement with Cambridge city on a contract that is beneficial to them. If Cambridge refuses to alter the contract, CG should revoke the contract. If Cambridge sues CG over the breach, it is most likely that CG will be directed to perform work for the remaining time but over an increased fee.
CG had projected a growth of 1000 households in three years. CG would have managed this risk by not being specific on the growth number. CG would have agreed with Cambridge that in case of growth of more than 1000 households the fee would be increased.CG would also have managed the risk by bargaining with Cambridge to pay for the household service rather than an area. If CG was to charge based on each household, then the growth would have been handled because it is Cambridge which would approach CG for contract alteration.
CG is a company formed by Jillie and Spencer. As the law defines, a company is a legal person separate from the owners. If a company enters into a contract and breaches it, then it is the company to be sued not Jillie and Spencer.
Tort is an act of one person to another in which there is an injury suffered. A tort is usually compensated with monetary damage. In the case of jack and Jill, Jeff suffered an injury in which he lost his tooth because of the fight caused by Jack and Bob. The concert delay and lack of enough security contributed to bob to be rowdy. The damages that Jeff is to receive are monetary to compensate for the medical expenses and any other cost that would have resulted because of the accident (Harlow 9).
Negligence is the act of failing to give the act of care to the person entitled to that care. In this case, Panhandle Productions were negligent to the funs for not starting the concert on time making the funs drink excessively. Secondly, Panhandle Productions was responsible for the rowdy crowd because of the dark and noisy situation that could have been avoided if the concert started on time. On the other hand, Secure Ltd was negligent by not proving enough security in the concert as per the expectation. If the security was enough, the fight between Bob and Jack could have been stopped in time to avoid injury (Harlow 9).
Occupier’s liability is a law that gives them a duty of care to a third party or entrants who either visits or trespasses a property occupied by somebody else apart from the real owner. The Panhandle Productions had rented Metro Centre for the concert performance and therefore the production company was reliable for the safety of the concert funs that it had invited. Nevertheless, Production Company was not reliable for the injury suffered at the concert because it was the duty of Totality ltd to give enough security, but out of their negligence to contain the crowd a fight broke out (Harlow 10).
The message at the back of the ticket was protecting the Metro center. Since Metro center is the owner of the concert place, the contract signed makes Panhandle Productions owe visitors the duty of care. Metro center is not reliable for any damage caused by the negligence of the occupiers since the time of the injury Panhandle was occupying the place.
Risks should always be avoided in any way. In this case, the three parties were not able to avoid the risks. Metro center could have ensured that Panhandle was able to take control of the situation before signing the contract. Panhandle on the other hand was supposed to ensure the timely start of the contract. It is good for the metro center to insure the place so that any risk suffered by the third person or the property is offset.
Agency law is a legal situation whereby one party (an agent) gets orders to act or perform duty on behalf of another party (principal). Metro center signed a contract with Panhandle production to perform a concert on their behalf. As the agent’s law dictates that if in case of a breach of duties by the agent, the principal in most cases becomes liable for the damages. Therefore, in this case, the metro center could be responsible for the injury.
The first law concerns the formation of the business. This law outlines all needs or recommendations a business needs to operate. For example, a partnership act gives guidelines for a partnership. The partnership business always operates strictly on the Acts requirements.
Consumer protection legislation protects the consumers from consuming defective goods from the businesses. The government ensures that the consumer is protected by checking the quality and quantity of the goods through bureau standards.
Employment rules guard the business employee against being misused. The business is supposed to take care of its staff, give good remuneration and ensure workers’ safety when on duty. For example, an employee may get injured by one of the machines when on duty, the business is supposed to pay the hospital bill of the employee. If the business fails to do so, the employee can sue the business over the breach of the law (Halson28)
The rules are important to the business because they define to what extent a business should exercise its operation. The relationship of the business and the other parties is also defined which clarifies the rules and rights of each party’s way of working together in the right way.
The rules are in practice and work very well. For instance, if a company enters in business not defined in the memorandum with another party, the company is said to act outside its objectives and can be sued. In most cases, employees through trade unions have fought for their rights within the business. Commodities sold by the businesses to the consumers are put to the mark of quality by the government to ensure the goods are good for use.
The rules can be improved by ensuring putting in tight measures to the business to ensure that the purpose of the business formation is strictly followed. To do this the government should issue operating licenses to the businesses. The government should also educate both the consumers and the employees on the rights they have from the businesses.
Although it is good to inform the consumers and the employees of their rights, some of them would be so ignorant of the certain situation making the business continue with violation of their rights. As the government tightens the business formation law, some of the businesses will find a loophole to operate illegally.
In the context of English law, contract is defined as a promise or an array of promises for which contravention the law offers remedy or recognized as a duty by law when performed. From this definition it is apparent that contracts have three interconnected elements namely a promise, a legal duty as a result of the promise and a remedy for the breach of promise (Beatson, 2002, p. 3). According to the English laws, reference to the promise is always seen as ambiguous. English laws require tangible agreements that are binding and do not give significance to mere promise. For instance, a promise to take someone out for lunch has no legal obligation, whereas business contracts give rise to legal obligations (Halson, 2001, p. 6).
English law differentiate bilateral and unilateral contracts. Bilateral contracts bind both parties, for instance, buyer and the seller. The buyer has an obligation to pay the price and the seller is obligated to transfer ownership to the buyer. On the other hand, unilateral contracts give rise to obligation to only one party. Unilateral contracts normally arise in the sports arena where the organizers promise to give prizes to the participants, whilst the participants have no obligation to attend (Beatson, 2002, p. 8).
English contract laws bind both England and Wales. This law shares a heritage with the common wealth countries. To consider remedies for breach of contract under English law, you have to understand the distinction between common law and equity (Hill, 2001, p.151). Historically, England has had two legal systems working side by side and each have distinct rules. Common law was administered by the courts of common and King’s Bench, while equity administered in court of chancery presided over by Lord Chancellor. Nevertheless, these two set of laws nowadays are administered in the same court, even though they are still two different set of doctrines (Halson, 2001, p. 2).
Fundamental principles of English contract law
According to the English common law contracts have three fundamental elements and these are agreement, contractual intention and consideration. The first requirement is that parties must reach an agreement and these involve one party making an offer which must be accepted by the other party (Halson, 2001, p. 8). To establish whether an agreement was reached English courts normally applies objective test (Tetley, 2004, p.7).
The English common law defines an offer as willingness to contract on particular terms that binds two or more parties. The offer must show intent that is biding to be accepted by the other party evident in the case Bell v Lever Brothers Ltd. [2003] 119 L.Q.R. 625. The offer may be addressed to an individual, a group or a general public. An offer can be expressed or conducted. What distinguishes a statement as an offer or an invitation to treat is the intent with which it is made. Intentions to treat are normally not legally binding unless the individual to whom it is addressed to accepts the terms. Examples of invitation to treat include all the product promotional activities (Beatson, 2002, p. 3).
The most relevant case is the famous case of Carlill v Carbonic Smoke Ball Co [1892] 1 kb 532. The company advertised its new drug, carbonic smoke ball, as a cure for flue and any consumer who was dissatisfied with its results would be refunded £100. The company was sued for making an advertisement a legally binding offer, but it defended itself that the advertisement was a mere gimmick or invitation to treat. Nevertheless, the Court of Appeal established that the advertisement was not a mere invitation for treat but an offer. This was supported by the fact that the company had deposited some amount a thousand pounds for the cause.
Acceptance of the offer implies that there is an objective expression, by the recipient, of an intention to be bound by the terms of the offer. This must in accordance with exact terms in the case of agreement as exhibited in the case of Kleinwort Benson Ltd v. Lincoln City Council [1999] 2 A.C. 349. However, the acceptance has no legal basis until it is conveyed to the sender or the one who issued an offer. In case of postal acceptance, it takes effect immediately the mail is posted. However, that are a number of offers which require acceptance to be conveyed in a particular manner and this must be adhered to. In the case of instantaneous medium, for instance, e-mail or SMS, this takes effect immediately the message is received (Halson, 2001, p. 18). There are cases of counter offer where the recipient may accept the offer but on his/her owns terms. The offeror may choose to reject or accept those terms. According to the Contract Act of 1999 revocation of counter offer must be communicated to the offeree. The revocation requires a third party who acts as a witness or else it is considered ineffective as evidenced in the case of. The parties are considered to be in agreement once the offer is accepted. This acts as a basis of a contract but is not enough to create a legal obligation.
According to the English common law, the contract is binding unless it is supported by consideration evident in the case of Stover v Manchester City Council [1974] 1 WLR 1403. A consideration is any valuable that is given as a promise or required to make the contract enforceable. This is normally detrimental to the one promising since on breach of contract he/she must part with a valuable. This supports the fact that informal unwarranted promise is a not legally binding/ contract. The considerations have to be sufficient, but not necessarily adequate since they do not interfere with bargain made by the parties (Halson, 2001, p. 12).
A contractual agreement, even if supported by a consideration, is not legally binding unless there is a legal intention. In other words, the parties must intend the agreement to be legally binding. For instance, in the case of Balfour versus Balfour, the husband who was employed overseas promised his wife, who was based in England, an allowance of £30 on a monthly basis. The wife’s attempt to enforce the promise was unsuccessful since they did not intend to legally bind the arrangement (Allen and Overy, 2003, p. 4).
Contracts can be made formally or informally. Informal contracts include those formed by word of mouth and in some cases there is no oral or written communication. These informal contracts can still be legally binding under the English law similar to written contracts. Nonetheless, most contracts are made formally through writing or by deed. The terms of a contract can either be express or implied. Express terms are the ones that the parties lay down their agreement. Implied terms are not specifically stated but implied and this can be as a result of the law or intention of the parties or through custom.
Remedy/ Damages
Breach of contract takes place when a party fails or refuses to honor the terms on the contract without legal excuse. Breach of contract also includes defective performance or deliberate incapacitation to avoid performing what is due under the contract (Halson, 2001, p. 21). The English law lay down remedies for breach of contract and is intended to compensate the party injured or who has incurred the loss. However, before the injured party is compensated, he/she has to show that the actual loss is the result of the breach, the type of loss is recognized and entitled to compensation and lastly, the loss is not excessively remote (Allen and Overy, 2003, p. 4).
According to the Sale of Goods Act 1979, the fundamental principle behind the remedy is to place the injured party, to as close as possible, in the position he/she would have been had the contract been fulfilled. However, damages can sometimes be insufficient remedy. There are numerous equitable remedies, which are unrestricted, directed at making sure that the injured parties are not unfairly treated by being restricted to the remedies of the common law (Allen and Overy, 2003, p. 5).
The common law allows the court to grant specific performance or injunction as a remedy to breach of contract. Specific performance obliges the party in breach to fulfill the terms of the contract and is only granted if it is equitable to do so. However, it may be rejected if the claimant is unjust or unfair according to equity. Injunctions are normally aimed at regulating the position of the parties pending the hearing (interlocutory injunction). However, prohibitory injunction requires the defendant to reverse the effects of the existing breach. An injunction is usually granted when specific performance is unobtainable (Halson, 2001, p. 22).
Conclusion
Contracts are part and parcel of our everyday’s life. Employment, insurance and consumer services among others are all governed by contract laws. Even though the above three situations have specific laws, they are all governed by an array of fundamental principles usually known as general law of contract. However, although in the current legal environment there are no cases that involve pure contractual principles, it should be noted that the basic rules are still essential in understanding more complex situations. There are two sets of English laws-common law (generally referred as law) and equity. It should be noted that equity was developed to mitigate and correct the rigidity of the common law. In the case of Simon and Beyonce, Simon must make sure that the contract adheres to the principles of English law- agreement, contractual intention and consideration. In the event that Beyonce breaches the contract Simon can seek for specific performance or injunction from the court. But he must prove to the court that he suffered losses as a result of the breach, he is entitled to compensation or the loss is not too remote.
References
Allen, G. and Overy, T., 2003. Basic principles of English contract law. London: Oxford Press.
Beatson, J., 2002. Law of Contract (28th ed). Oxford: Oxford University Press.
Bell v Lever Brothers Ltd. [2003] 119 L.Q.R. 625.
Carlill v Carbonic Smoke Ball Co [1892] 1 kb 532.
Contracts (Rights of Third Parties) Act 1999. (c.31), London: Stationary Office Ltd.
Halson, R., 2001. Contract Law. London: Pearson Education.
Hill, S., 2001. Flogging a Dead Horse-The Postal Acceptance Rules in Contract. Journal of Contract Law, 17, pp.151.
Kleinwort Benson Ltd v. Lincoln City Council [1999] 2 A.C. 349.
Sale of Goods Act 1979, U.K. 1979. (c. 54), London: HMSO.
Stover v Manchester City Council [1974] 1 WLR 1403.
Tetley, W., 2004. Good Faith in Contract Particularly in the Contracts of Arbitration and Chartering. Montreal: McGill University press.
The English Contract Law is considered to be very unique due because it relies on the Common law. As such, there are noticeable differences between the English Contract Law and contract laws from other countries. Simons TV wishes to enter into a contract with the four judges and the contact in question needs to be invoked in a UK court. Owing to the unique nature of the English Contract Law, Simons TV needs to act in good faith and avoid any legal conflict that might arise during this period. This report highlights the requirements and content of the contract, as well as the consequences for breach of contract by the judges.
Requirements And Contents Of The Contract
Due to the increased influence and significance of transnational law, contracts under the English contract law needs to be established in good faith (Sims 2004). Under the English Law, in order for a contract to be considered legally binding, an agreement has to be reached. This is often achieved in three phases and they include acceptance, the offer, and the invitation to treat. However, they do not have to be administered in that order. Legal experts understand that the distinction between these three stages is not usually clear-cut. Owing to the lack of a clear-cut distinction, the three phases often conflict with each other.
In order to avoid such conflicts, it is important to indicate when the contract becomes legally binding, and when a legally binding offer was made. Approaching the four celebrities for the possibility of their inclusion as judges should not be considered as an offer but as an invitation to treat since the move is intended to enter them into negotiations for a contract (Young 2010; Out-Law 2008). Since Simon has already had preliminary talks with the four celebrities who have all shown interest in the job, it is important to indicate that an invitation to treat has successfully been issued.
The next phase involves making an offer. This is a very crucial stage and Simon’s lawyers need to identify the best way to make the offer. The scenario does not involve selling goods but it involves offering services. As such, Simon should avoid making an informal offer. In this case, a formal offer has to be made through a written document. The most appropriate way to make an offer is through a letter addressed to each of the four celebrities. Additionally, the contract should not be a collective agreement but only a legally binding agreement to the extent that the individual contractee is involved (Direct Gov 2011). The letter must also state clearly the intentions of the contract in order to establish legal relations and the point at which the offer (contract) becomes legally binding.
Additionally, the letter must also constitute terms of business, and also indicate that accepting the letter does not involve accepting the offer. This is important in order to allow for further negotiations and counter offers before the actual contract is signed. It must be established within the contract how the acceptance is to be made, if at all it is to remain legally binding. In this case, acceptance should become legally binding once each judge has signed the contract. There are certain instances in which the time between the offer and acceptance creates legal loopholes. In this case, it is important to issue an explicit statement on the time the offer lapses. To avoid such problems, the offering letter must explicitly state the duration of the offer, after which the celebrities must either accept or reject the offer. This implies that acceptance can only be made as long as the offer is still open, so that it can be legally binding (A4ID n.d.).
Under the English Law, a consideration is usually a necessary requirement if a contract is to be binding. In this case, consideration should be on the value attached to the business relationship. The judges should that they will offer sufficient services. For this promise to be considered as having contractual force, something valuable (in this case, financial compensation) is required (A4ID n.d; Atiyah 2000). However, the consideration should not interfere with the bargaining process between Simon and the judges (A4ID n.d.).
It is also important to identify how the contract is brought to an end. There are four basic ways of ending a contract and they include expiration, termination, vitiation, and, frustration (A4ID n.d.). The contract should spell out clearly the expiry date and in this case, it should be come after a specific time following the end of the reality show. Secondly, termination may occur when either of the parties breaches the terms of contract. The contract must express what constitutes a breach of contract and how the termination is to be made. Additionally, the contract should express the rights of parties to terminate the contract upon refusal to perform (repudiation), when the parties are disabled and hence unable to perform, or when the parties fail (due to incapacity) to perform. Vitiation involves a scenario in which a mistake, misrepresentation or omission of a fact is noted after the contract is made. Thus, the contract must offer remedies either through rescission, indemnity, or payment of damages. Lastly, the doctrine of frustration stipulates that when there are instances when unforeseen occurrences make it impossible to execute the contract, the parties have the right to terminate the contact. Since it is impossible to foretell these circumstances, the contract must therefore express what should not lead to frustration (Young 2010). In this case, the contract needs to express the fact that frustration does not include breach of contract, fault, or weaknesses by one of the parties. It is important for all parties to note that the doctrine cannot be invoked when one of the parties made a bad bargain (A4ID n.d.).
The type of business engagement involving Simon TV and the four celebrities is likely to cause injuries and/or loss to either of the parties. These injuries are likely to emanate from poor performance or breach of contract. In this case, the contract should contain a detailed clause that stipulates the potential types of injuries and/or loss and the remedies for each of them. The clause should be made in such a way that damages are based on losses made and not the gains made from the injuries. This contract also needs to include an injunction clause that restrains any of the parties from committing a breach of contract in case of a dispute (A4ID n.d.).
Much of the conflict in the contract can however, be avoided through the two types of contract terms. Express terms involves the terms of agreement and in this case it includes the remuneration, compensation, tasks for each judge, contract duration, and working hours, among others. The terms involved in this agreement must be taken in the conventional meaning, unless there is valid reason for the use of unconventional means (A4ID n.d.). Secondly, there are other terms which are implied, by fact, by law, or by custom. Either way, these terms can act as grounds for conflict. To avoid such conflict, implied terms should be appendixed in the contract, and their implications agreed upon by the parties before signing the contract. The intake implied terms may involve the conduct of the judges during the entire duration of the show. Simon TV trusts the judges to act in a manner that is not likely to sabotage the integrity of the show. In this case, implications of such terms need to be appendixed.
Consequences Of Judges’ Breach Of Contract
As stipulated earlier, the contract needs to have remedies for breach of contract. There are two principle parties involved; Simons TV and each of the four judges. In this case, what would be the consequences should the judges breach the contact? To avoid draconian consequences on the judges, it is imperative to follow the common norm which involves taking a 10% percent of the judge’s contract worth as deposit to be forfeit should the judge breach contract. This consequence will be accompanied by rescinding of the contract (Ilex n.d.). In case the breach of the contract results in massive losses for the TV Company, the judges will be compelled to pay the cost of damages incurred. Of course, if the contract is substantially performed, the judges could only be required to pay the difference between the gains made and the cost of correction (Peel and Treitel, 2011).
Conclusion
Although the contract in question is based on the English contract law, all parties involved should understand their specific rights, duties, and responsibilities. A good contract operates without seeking legal redress. As such, by understanding the rights, duties and responsibilities, Simon TV and each of the four judges need to furnish themselves with relevant details that necessitate the performance of the contract.
Reference List
Atiyah P 2000, An Introduction to the Law of Contract, Clarendon, London.
A4ID. n.d., Basic principles of English contract law. 2011. Web.
Direct Gov. 2011., Employment contract terms. Web.
A contract is an agreement entered into by two or more persons with a view of creating legal obligations (Saleemi 2002:135). A contract differs from an agreement in that while an agreement does not contemplate to create legal obligations, a contract intends to create obligations that are legally enforceable (134-5). Generally, agreements relate to domestic relationships while contracts relate to commercial relationships.
Voluntary consent
Voluntary consent implies an agreement based on free will. Voluntary consent is a salient feature of contracts. It therefore follows that where there is no free consent, there is no contract unless the person for whom the contract is entered into is incompetent to contract (Abott 2007:408). In the case of Jerome and Philip, the contract is not valid. This is because Philip relies on the fact that Jerome is completely dependent upon him for upkeep to coerce him into consenting to transfer his rights to the land to Philip at a cheaper price. Philip had a social and moral responsibility to care and provide for the ageing Jerome especially that he was a kin to the elderly Jerome.
It is to be found that Philip exerts undue influence on Jerome to have Jerome consent to this transfer. Arising from the threat of losing Philip’s support, Jerome had no otherwise but to consent to transfer his rights in the property to Philip in order to continue surviving. To this extent, it is pretty obvious that had it not been for Philip’s coercion and undue influence, Jerome would not have consented to. As a vitiating factor, Philip’s undue influence on Jerome awards Jerome the chance to set aside the contract (119-120).
Contract by Minors
Minors are such persons who have not attained the legal age to contract/consent (Abott et al. 2005:214). In many countries, agreements that contemplate legal obligations are considered voidable to the extent that one of the parties is incompetent by virtue of being a minor. The minor in such situations is the one to annul it. In terms of liability, it is upon the court to determine whether the value ($500 per month) of the apartment is up to the prevailing standard of living and not exaggerated in value. If it does not fall within the range of standard living, then the contract was in deed void ab initio.
According to the British Columbia Infants Act (Miller and Jentz 2005:404), all agreements contemplating legal obligations and which involves infants cannot be enforced against the infant. This is in disregard of whether the subject matter of such contracts is necessities or beneficial services. Here, infants can avoid the obligations at their choice but the adult party is entirely bound. In this regard, Kalen was right in terminating the contract and handing over the key given the fact that he had not even reached the majority age, while in the contract, to ratify the contract (Abott et al. 2005: 214-216).
Impossibility of performance
This is a legal excuse or defense for setting aside of that which the contract anticipated (Adams 2010:122). It is a defense in the sense that the two parties had agreed to perform the contract but had not factored in such other contingencies that could render the whole or part of the contract unfeasible. Impossibility of performance therefore excuses performance of the duty imposed on the basis that had the parties foreseen the occurrence of the condition, they would have altered the terms (p121-123). In the case of Millie and Frank, Millie is bound to succeed in her defense by relying on the doctrine of objective impossibility.
This is because while contracting, the two had not anticipated the occurrence of drought, which is beyond human control. The drought had rendered the contractual duty impossible to perform both physically and commercially. The nonoccurrence of drought was the basic assumption in their contract (Miller and Jentz 2005:406).
Given that there is bound to be an increase in production cost on the part of Millie if she can agree to pay in the next season, Millie is bound to succeed in her defense especially that the additional cost is to be occasioned by an unanticipated contingency. According to UCC (2-702(3)), failure in crops occasioned by contingent forces relieves the farmer of the contractual duty relating to such crops not to deliver full amount provided such farmer fulfils a reasonable and fair performance. Under this situation, the other party is at liberty to accept the reasonable share or set aside the contract altogether.
Breach of Contract
In the case of Bannister and Bemis Company, it is a question of non-compete covenants (otherwise referred to as Covenants Not to Compete -CNCs) and how reasonable such a covenant was. Such covenants are generally enforceable so long as they are reasonable and time bound (Gifis 1996:134). While contending that such a covenant was valid during the course of work, obligations imposed by such a contract after the termination could be treated as not binding if no sufficient consideration is furnished. In the case of Bannister and Bemis Co., the covenant was reasonable to the extent that the company had to protect its trade secrets (p136).
The company breached the contract by failing to compensate Bannister after the termination of work as it was expressly agreed in the covenant. As a result of which, the plaintiff had incurred economic problems for the nine months he was out of employment (p134-135).
Merchant’s firm offer
In the case of Jennings and Wheeler, there was a binding contract since the offer made by Jennings was accepted by Wheeler, the intended offeree, within the intended period (Saleemi 2002:132). In accepting the offer Wheeler in fact furnished consideration thereby binding Jennings to it. And therefore, Wheeler has rights to enforce the contract. By going ahead to sell the same car, which was an object of Jennings and Wheeler contract, to another party was in breach of the contract. Jennings was in fact transferring a defective title (Abott et al. 2005:217).
Wheeler accepted the offer when he signed the letter and sending it to Jennings accompanying it with consideration of a value that was proposed by the offeror. Wheeler is therefore bound to succeed in seeking for damages because the injury or loss sustained is in the ordinary/normal course of things (Saleemi 2002: 133). This is on top of taking possession of the car as it was legally his.
Shipment and Destination Contracts
The Uniform Commercial Code provides that a sale is said to have occurred upon the analysis of all the forms material to the contract.
In the case of Carlsons vs Monaco Coach Corp., there was an initial offer which was offered by the seller and accepted by the buyers by appending their signature. Here, according to UCC, a sale has occurred. Since the acceptance was not expressly conditional on its part, it is not a counteroffer but simply terms complementary to the offer and there do not alter the contract (UCC 2007:2-207(3)). Given that the buyers did not object to the fact that the seller had in deed delivered the vehicle when the offer was signed, the contract binds.
But given that the two parties were dissimilar in the sense that the buyers were not merchants, they therefore relied on the seller’s expertise in determining the state of the vehicle before accepting. Now that this was not the case, the buyers are bound to rely on implied warranties of fitness and of merchantability and they can sue for damages (2-713).
Works Cited
Abott, K., Pendlebury N., Wardman K. (2005) Business Law. 8th ed. Paperback.
Adams, A. (2010) Law for Business Students. 6th ed. New York. Paperback.
Gifis, S.H. (1996) Law Dictionary. 5th ed. New York. Barron’s Educational Series, Inc.
Miller R.L. and Zentz G.A. (2005) Business Law Today: The Essentials. 7th ed. Paperback.
Saleemi, N.A. (2002) General Principles of Law Simplified. Nairobi: N.A.Saleemi Publishers.
UCC (2007) Official Text with Comments. California. The American Law Institute.
In this case, MSC had contracted BSC to perform an overhaul that was to take 100 days to be complete. MSC was aware that at the time of the formation of the contract, BSC was proceeding with a bankruptcy arrangement yet it signed the contract. However, there were several changes required in the performance. In fact, they were in terms of hundreds and each time any came up, BSC served MSC with a change order. The delays and disruptions MSC worsened the financial conditions of BSC. Eventually, BSC abandoned the contract. MSC sued for termination of the contract for BSC’s breach requiring damages of $9.2 million and it was granted this in summary judgment. BSC appealed first to the district court and later to the Supreme Court, which affirmed the previous courts’ judgments.
The laws in issue here include the Master Agreement for Repair and Alteration of Vessels, and specifically section 13, which advises on Federal Acquisition Regulation (FAR). This clause talks about situations where a contractor can justifiably abandon a contract. In BSC’s argument, it presented several cases for instance, Air-A-Plane Corp., v. United States, 187 Ct. Cl. 269, 408 F.2d 1030 (1969) in which the formulation of the definition of “cardinal breach” took place. Another case was Magoba Construction Co. V. United States 99 Ct. Cl. 662, 690 (1943), which stipulates delays and disruptions as inevitable in the execution of any contract. The discussion and definition of the concept of ‘beyond the contractor’s control’ took place in the Southeastern Airways Corp., v. United States 230 Ct. Cl. 47, 673 F.2d 368, 377-78.
Issues
Can the Boston Shipyard Corporation’s cessation of provision of services constitute justifiable abandonment or is it a breach of contract, justifying the government’s action in termination of the contract? This is in light of the fact that BSC had served MSC with service orders and that MSC knew from the beginning that BSC was bankrupt. Does the knowledge of a contractor’s financial incapacitation not serve as a buffer for legal action? Especially in the event of a breach of contract by the contractor due to the other party’s follies, does it not count as a defense that the other party was aware of the defendant’s incapacities?
Holding of the court
The appellate court affirmed the decisions of the lower bankruptcy and district courts in other words judging in favor of MSC. They upheld the summary judgments, which had found BSC in breach of contract thereby allowing MSC’s termination of the contract to hold.
Court’s rationale or Reasoning for its Decision
The judges reached this decision after taking several legal issues as well as case laws into consideration including Clause 13 of the “Master Agreement”. This clause stipulates that a contractor should “proceed diligently with performance of this contract, pending final resolution of any request for relief, claim, appeal or action arising under the contract, and comply with any decision of the contracting officer.” (Delaney 38) Accordingly, BSC had to continue working until the courts or MSC made a decision on the orders commissioned. It was therefore in breach. Therefore, the appellate court upheld the decision.
On the matter of justified abandonment, BSC’s inference to “cardinal change” as a defense with reference to MSC’s delay and disruptions was denied. The court held that the magnitude of the change orders did not satisfy the requirements of cardinal change, as expected in that type of contract: an “open and inspect” contract with a change clause. Based on ruling, BSC’s financial incapacity had been in effect since before the formation of the contract. Therefore, the claim of MSC’s delay and lack of sufficient payment justified the abandonment stood out as inaccurate. Due to the nature of the contract at hand, one could anticipate the resultant changes, which caused BSC to cease performance of services.
Works Cited
Delaney, John. Learning Legal Reasoning: Briefing, analysis, and Theory. Bogota, NJ: John Delaney Publications, 2004.