Business Relationships - Assignment Example

Business Relationships A contract refers to an agreement which is made between two or more parties which creates an obligation for the parties to do or not to do something. A breach of contract therefore refers to the existence for an agreement or a bargain for exchange whereby if one of the parties fails to honor without giving a valid legal excuse or to live up to the responsibilities given under the contract. Several actions can result in a breach of contract; when one fails to fulfill a promise, or when one makes it practically impossible for another person to do his part or work, or when the person makes it known that there is an intention for one not to perform. A contract may either be breached in part or in whole. The most common applicable remedy for breaching a contract is usually damages which lead to compensation for the losses incurred Keenan (2005, p. 46). In this case, Mr. Johnson breached the contract with Mrs. Lastic when he failed to avail the White Rolls Royce car for Mrs. Lastic’s daughter’s wedding. Mrs. Kay breached the contract with Mrs. Lastic when she failed to take the wedding photographs during the day of the wedding and Mr. Leslie breached the contract with Mrs. Lastic when he served the guests with chicken which were contaminated with Salmonella during the day of the wedding making the guests sick. Mildred also breached the contract with Mr. Johnson after she failed to avail the car to Mrs. Lastic on the day of the wedding as they had earlier on agreed. My advice to Mrs. Lastic: Though it is not always a must, it is highly recommended that all contracts must be in writing. The Statute of Frauds is intended to prevent people against making fraudulent claims which may arise in the breach of contract. In this case, Mrs. Lastic made an error when she failed to have the contract in writing. This might turn out to be difficult for her to sue Mr. Johnson, Mrs. Kay and Mr. Leslie because she had no written contract with them. But on the other hand, Mrs. Lastic can be able to sue them because the Statute of Frauds states that given the type of contract, she can be able to enforce the contract because she orally agreed with the parties mentioned above as she can clearly memorialize the contract. Mrs. Lastic is therefore liable to sue for breach of contract which lies within the Statute of limitations. The Statute of limitations are laws which set the maximum period of time or the deadline within which one can be able to file a lawsuit. It will therefore be advantageous for her to sue quickly because the right to file a lawsuit or sue someone may be barred if the claim or lawsuit is not filed before the required deadline set by the state. A statute of limitations can be extended over the set time if certain conditions are possible. Mrs. Lastic cannot be able to sue Margaret because despite Mr. Johnson telling her to avail the Car for the wedding of Mrs. Lastic’s daughter, she failed. Margaret in this case is a third party and therefore Mrs. Lastic cannot be able to sue her for she was not involved in the initial arrangement between Mrs. Lastic and Mr. Johnson. This is well laid out in the decision of Taylor v Laid (1856) which stated that it was unfair to bind a third party to an offer in which they had no knowledge at all. The contract that Mrs. Lastic agreed with Mr. Johnson was that it was required of him to avail the White Rolls Royce car for Mrs. Lastic’s daughter’s wedding on the day agreed. Mr. Johnson breached the contract by breaching its terms. As a result, Mrs. Lastic went ahead to hire some other car and in the process, incurred a lot of expenses which could have been avoided only if Mr. Johnson could have availed the car as earlier on agreed. This is our condition term in this contract. Mrs. Lastic can therefore sue Mr. Johnson for pecuniary damages which led to her financial losses. Under the pecuniary damages, Mrs. Lastic will seek for Restitution damages because she will be seeking the return of her money which was innocently paid to Mr. Johnson who breached the contract for not availing the car on the wedding day. The act or service for which Mr. Johnson was paid did not succeed and therefore the money should be refunded. The recovery of damages are clearly laid down in the decisions of 1854 in Hadley V. Baxendale (1854) 9 Exch.341: (i) The damages must flow naturally from the breach of contract; or (ii) the damages, although difficult to predict in the ordinary case, were reasonably foreseeable because the unusual circumstances were communicated to the defendant. Mrs. Lastic is therefore in a good position to sue because all the foregoing remoteness tests in this case have been passed. In this case, failure by Mr. Johnson to avail the car on the day of the wedding led to Mrs. Lastic spending additional expenses in hiring of another car. On the other hand, Mrs. Kay breached the contract with Mrs. Lastic because her camera jammed on the day of the wedding and as a result of this inconvenience; no photographs of this event were able to be retrieved. The condition term in this contract is that as a result of her camera’s failure, Mrs. Lastic and Lucy can have no tangible evidence of the event and thus Mrs. Lastic can sue for the inconvenience caused by Mrs. Kay. Mrs. Lastic can also sue Mrs. Kay for the distress caused to her and her daughter as a result of failing to take pictures as earlier on contracted to do so. Mrs. Lastic can therefore successfully seek for damages because of the mental distress which was caused as a result of the breach of contract. Mrs. Lastic could have sought for Liquidated Damages from Mr. Johnson, Mrs. Kay and Mr. Leslie only if she could have set the levels of damage under which a certain amount of money could have been paid in the failure of the parties to perform the duties they were assigned or in the case of breaching the contract. My advice to Lucy: Lucy on the other hand cannot be able to sue Mr. Leslie because initially, the contract was not between her and Mr. Leslie but it was made between Mrs. Lastic and Mr. Leslie. My advice to Lucy was that she could use her mother to sue Mr. Leslie for Non-Pecuniary (general Damages). Non-pecuniary damages are those which lead someone to feel pain and emotional distress. Mrs. Lastic and Lucy suffered pain and emotional distress as a result of falling sick because of consuming chicken which were infected by Salmonella. They also suffered emotional distress because of the embarrassment they got when many of their guests were violently sick and ill after eating infected chicken. Mrs. Lastic can therefore be able to sue on behalf of her daughter under the Newell V. Canadian Pacific Airlines Ltd (1873) L.R 8 C.P. 131 (C.P) which provided that damages should be paid for non-pecuniary losses which arose from the breach of contract. The Hadley test of foreseability would be applied because though it was difficult for Mr. Leslie to determine if the chicken were infected with Salmonella, he could have gone ahead and determined if the chicken were fit for human consumption by carrying out the necessary tests. By so doing, Mr. Leslie could have easily avoided the illness that befell the guests during the day of wedding. But because he failed in ascertaining whether the chicken were fit for human consumption, then it is in Mrs. Lastic’s best interest that he is sued. Advice to Mildred In practical terms, a contract as defined above is an agreement entered by two people or more which gives an obligation to either party to perform their part. Breaching a contract is a situation whereby initially there existed a contract or an agreement between two or more parties and one of the parties fail to honor the contract without a lawfully convincing explanation to live up to his or her obligations under the agreement. One is said to have breached a contract when he or she fails to perform as expected to, makes it impossible for other party to execute his or her mandate or making it known that there is an intention not to perform. In a legal platform there are remedies for breaching a contract which is called damages. Damages are basically compensation for the losses incurred. Other equitable remedies like injunction and specific performance may also apply to the situation. Damages are made or designed to compensate for losses caused in the event of breaching a contract. The aim of damages is to restore the innocent party in a position that he/she would have been in if the other party had performed according to the contract. Damages are of two types i.e. pecuniary or non-pecuniary which are generally financial loss or pain and emotional distress. Citing Hadley versus Baxendale (1854)9 Exch. 341: it was established that damages must flow naturally from the breach of the contract; or the damages, although difficult to predict in the ordinary case, were reasonably foreseeable because the unusual circumstances were communicated to the defendant. Mildred from the explanation given, I personally regard her as one who has breached the contract. Prior to her buying the Rolls Royce Car she bought it on a condition that the car will be available at Lucy’s wedding to be used as a bridal car. Mildred was obliged to make sure that, all the undertakings at the wedding go smooth enough not to cause any emotional harm to Lucy. Although she comes in as a third party, the initial agreement between and Mr. Johnson was that the car must be available at the wedding. With regard to the prevailing situation Mildred is liable to pay Restitution damages to Mrs. Lastic; whereby she is required to pay back the money paid to Mr. Johnson for hiring the car. She did not perform the agreed service prior to her buying the car. Her negligence to honor the agreement between herself and Mr. Johnson exposes to legal implication. She was honest enough in her transaction with Mr. Johnson and entered an agreement that she will be faithful and that the car will be available for Lucy during her wedding day. Lucy expected that her wedding day will be the happiest day in her life, dissimilar to her coveted joy and passion her wedding day was destroyed by Mildred. The Roll Royce car was intended to give Lucy the best ever satisfaction in her life. Mildred completely made the wedding bleak and therefore she must pay for the damages she caused. In relation to Jarvis versus Swan Tours Ltd. [1973] Q.B 233 (C.A.) in this case damages were awarded for the loss of enjoyment of a holiday due to breaching of the contract. Mrs. Lastic depended solely on Mr. Johnson to Provide hi Rolls Royce car, on the other hand due to unavoidable circumstances Johnson sold the car to Mildred on condition that the car must and should be available at Lucy’s wedding. This gives us an impression that Mildred was the sole person to be relied upon in order to make the wedding a success. Considering this, Mildred is legible to be sued for reliance damages. This is because she never met her contractual obligations. She displays herself as somebody who can not be relied upon given that in the first place she agreed that she will make the car available after purchasing it. All the cost incurred in reliance on Mildred’s performance during Lucy’s wedding should pay up. Mildred never honored her contract with Johnson and therefore, she must cater for everything that went amiss. For this particular case all parties are expected to benefit from the contract. For instance, Mildred was the first benefit of the latter. She acquired the Rolls Royce car from Jonson on the fact that the car will be present and available to be used as the bridal car for Lucy. When Jonson sold his car to Mildred he expected that Mildred as a beneficiary of the contract will act as agreed. In contrast Mildred never adhered to the contract agreement and deliberately never submitted the car to be used on the wedding day. With regard to this Mildred should be sued for Expectation damages. Advice to Mrs. Kay Taking photographs on a wedding day is one source of joy and in addition the photographs are kept for historical purposes in the life of the wedding couple. When Mrs. Key’s camera jammed, it completely ruined the expected pleasure on the wedding day, the events of the wedding were not captured to be stored for future reference and also many looked down on the wedding committee for not planning the wedding in advance to put everything in order. In relation to the above mentioned circumstances Mrs. Key can be sued for pecuniary damages; that is restitution, reliance and expectation. First and foremost, Mrs. Key had been paid in advance for the services she was to deliver on the wedding day. She could have made sure that her camera is in good condition to capture all the happenings at the wedding. In addition she could have taken into consideration that her camera can jam at any instance, and therefore having a spare camera was vital for the task. In this occasion she should pay or return the money already paid to her by Mrs. Lastic (Innocent party). Mrs. Key breached the contract. Secondly, Mrs. Lastic wholly relied on Mrs. Key to take photographs during Lucy’s wedding. The photographs were not taken in reliance on Mrs. Key’s meeting her contractual mandate to take the photographs. Failure of Mrs. Key to perform as it was agreed upon in the contract, she caused reliance damages to Mrs. Lastic and Lucy. The contract between Mrs. Lastic and Mrs. Key was expected to benefit all the parties. In contrast, Mrs. Key never lived up to what she was expected to do. After being paid for the job she was to do, she never performed as expected. Mrs. Lastic and Lucy were not satisfied with Key’s performance and therefore they never benefited from the contract. With reference to this Mrs. Key caused expectation damages to Mrs. Lastic and Lucy and therefore she is liable to pay for expectation damages. Hadley V. Baxendale (1854) 9 Exch.341 Newell V. Canadian Pacific Airlines Ltd (1873) L.R 8 C.P. 131 (C.P) Taylor v Laid (1856) (154). Jarvis versus Swan Tours Ltd. [1973] Q.B 233 (C.A.) Keenan, D.J. 2005. Business Law. Prentice Hall, New York Read More