Is There a Valid and Enforceable Contract between Pat and Big Industry - Assignment Example

CONTRACT LAW: CASE SCENARIO QUESTIONS STUDENT NAME TUTOR COURSE DATE QUESTION A Is there a valid and enforceable contract between Pat and Big Industry? A contract is a legally and enforceable agreement that binds two or more parties to perform particular obligations and when a party fails to meet the obligations stated then that party would be in breach of contract1. On April 1st Pat a computer software consultant entered into a written services contract with Big Industry Ltd to write four computer programs for use in the automated manufacturing companies. In the contract Big Industry would pay Pat $25000 on completion of the work and that the programs were to be delivered to Big Industry no later than May 1st. the main elements of a valid and enforceable contract are; offer, acceptance, consideration, intention to create a legally binding relationship and it being legal2. Consideration is a valid element in any contract and that a party must offer a promise that has value of some kind either monetary or an action or another promise of something meaningful3. In Hamer v Sidaway4 it was stated that the agreement that the nephew agrees to stop smoking and drinking until he was 21in return for $5,000 and it was held to be valid on the basis that a promise of value for a promise for value. The contract has been furnished with sufficient consideration that Big Industry would pay $25000 on completion of the four programs. The contract created between Big Industry and Pat has a mutuality of obligation because both parties as stated in Great Northern Railway Company v Witham5 to undertake their obligations in the contract. What are the terms of the contract? A term of a contract whether express or implied includes any statement that appears on a written agreement and makes the contract more binding as was held in Routledge v McKay6, with the statement having to go into the root of the contract. In the case of L’Estrange v Graucob Ltd7 it was held that a signature acts as a signifier that a contract is binding and a party cannot claim that he was not bound by it. In the case presented the terms of the contract was “this is the complete and entire contract between the parties, and no modification of this contract shall be valid unless it is in writing and signed by both parties.” The term of the contract therefore sought to state that no any other contract made by the two parties would be valid unless it is written and signed by the parties. As of that date of signing the agreement was binding as well as the term within the contract. The term in this case can be stated to be a condition because it goes to the root of the contract and any breach of the term in the contract would give right to the innocent party a right to repudiate or seek damages What is the effect of the April 15 phone call on the contract terms? On the 15th of April Pat called Hillary the President of Big Industry who executed the contract and said he said ‘ he had problems with program number 3, and I would have it delivered to you until at least May 8, may be closer to May 15. He further stated that he does not write program number 4 at all because your computer hardware is nearly obsolete. But I’ll get programs numbers 1 and 2 to you by May 1” The effect of the phone call was to modify the old contract entered into on 1st April, and therefore was it a valid modification as stated in the term of the contract. Acceptance of a special circumstance might be found implied in a contract if communication of them is made beforehand and the defendants still opt to enter into the contract. In the case of the Attorney-General of Belize v Belize Telecom Ltd8 it was stated that “it is very difficult in every case to spell out the entire provisions into the contractual agreement. The main meaning and the effect of the conversation was to change the underlying contract and therefore one can say that as per the case of Chapelton v Barry Urban District Council9 it was to change the entire contract as well as there was a reasonable notice and an understanding of the parties. QUESTION B Can Pat sustain a Legal Action for Breach of Contract against Big Industry? A breach of contract is effected when a party to a contract fails to perform, precisely and exactly the obligations that are stipulated in the contractual agreement. There are two forms of contract breach that is anticipatory breach occurs where a party to the agreement announces in advance of the due date of performance that he intends not to perform his side in the bargain as stated in the case of Hochster v De La Tour10. The actual breach occurs where one party refuses to perform his side of the bargain on the due date or performs incompletely as held in Poussard v Spiers11 and in Bettini v Gye12. Performance of a contract implies that parties to a contract must effectively undertake to be fulfilled. It is a breach of contract if one party fails to fulfill their part of the bargain then a claimant might sue for non-performance of the contract as stated in the case of Williams v. Roffey Bros and Nicholls (Contractors) Ltd13The effects of a breach in contract entitle the innocent party to either seek particular remedies for breach of contract. Defences available to Big Industry can rely on in contract It is important to state that the case presents a circumstance of an anticipatory breach and not an actual breach, and therefore the party affected can choose to repudiate or terminate the contract immediately. This is because one party has indicated the impossibility to perform the contract in the future. The party that is in breach can argue that the innocent party in this case Pat failed to mitigate the loss incurred. It is stated in the case of British Westinghouse Electric v Underground Electric Co. of London14. The defendant in a case however has the burden to prove that the plaintiff failed to mitigate the loss. The other defence available in this case would be on the basis that the agreement created on the April 15th during the phone call was not reduced into writing. This is because the term of the contract stated that no modification to the contract signed on 1st April would be effected by without both parties signing the contractual agreement reduced into writing. The other defence would be the impossibility of performance by Pat even though the case presents a unique circumstance of an anticipatory breach as per the case of Hochster v De La Tour15. This is because Big Industry was not at fault and that it did not avoid its responsibility in the performance of the contract. QUESTION C Remedies available in contract law The remedies available to innocent parties in breach of contract include; Common law remedies Discharge or Repudiation; in contract law there are particular breaches of contract such as breach of condition, in nominate term that entitles the innocent party to bring the contract to an end either through repudiation or rescission. Damages: Damages are a major remedy in common law and is usually in monetary value. In determination of whether a person is entitled to an award of damages, he must prove that he has incurred actual loss but would be given nominal damages if a person has a reasonable cause of action. Remoteness of loss as stated in the case of Hadley v Baxendale16 that “where a party is in breach of contract the other party is to receive damages that arise naturally from the breach of contract itself. Damages when awarded as stated in Victoria Laundry v Newman Industries17 is in most instances to put the innocent party into the same position he would have been in had the contract been properly performed. Equitable remedies Specific Performance is an equitable removed awarded by a court of law that requires positive contractual obligation and it’s just and equitable to do so. It is not available if; damages provide an adequate remedy, when it would cause undue hardship and when not sought promptly it would be bad by the equity maxim of “delay defeats the equity”. Specific performance is a remedy suitable in the enforcement of a contractual obligation to pay sum of money according to Beswick v Beswick18 An injunction is a remedy and a decree ordered by a court for a person to refrain from doing a certain act. In the case of Page One Records Ltd v Britton19 it was stated that an injunction cannot be granted where its effect would be to compel a person to do something which could not have been done subject to order of specific performance. References Peterson, J., Roberston, A. and Duke, A. (2012) Principles of Contract Law, 4th edn; Law Book Co. Seddon, N.C. & Ellinghaus, M. P. (2012) Chesire and Fifoot’s Law of Contract, 10th edn, LexisNexis Weitzwnbock, E. M. (March, 2012) English Law of Contract: Terms of Contract. Norwegian Research Center for Computers & Law. University of OSLO Read More