Valid Enforceable Contract between Pat and Big Industry - Assignment Example

Contract Law [Name] [Professor Name] [Course] [Date] Abstract: A contract refers to an agreement between two or more parties where each of the partaker voluntarily aims to fulfill a legal obligation. This paper examines the fundamental laws that underlie a contract between a case scenario of Pat and Big Industries. It review whether a valid enforceable contract exists between Pat and Big Industry, the terms of the contract, the effects of a phone call to modify a contract, the legal actions that the parties can partake and lastly, the remedies the parties may rely on the contract law. Valid enforceable contract between Pat and Big Industry There is a valid enforceable contract between Pat and Big Industry. The attributes of the contract are consistent with the definition of an enforceable contract. An enforceable contract refers to a legally binding agreement between two parties which is backed by a force of law. For a contract to become legally enforceable or valid, it must embrace certain aspects. First, it must be created in accordance with the set of rules of acceptance and offer. In addition, it must contain all the key aspects for a valid contract, in which case, should either of the parties under the contract violate the terms of the agreement, the other party may bring a legal action against the other1. In which case, if either of the parties in this kind of contract acts according to the terms of agreement, then it would be valid. Conversely, if either of the parties violates the terms, then the court cannot force them to do so2. For a contract to be termed as valid, it must have elements such as intention to form legal relation, capacity, form, legality, consideration, legality, capacity and agreement. Indeed, the law provides that written or verbal contracts must contain certain aspects that would qualify them as enforceable before a court. If any of the aspects is lacking, then the court would consider the contract as unenforceable3. In the present scenario where Pand and Big Industries have an agreement, in addition, the aspects of acceptance, written form, offer and consideration exist. However, even as it lacks the elements of legality, an intention to form legal relation, its attributes still classify it as enforceable contract. In commercial agreement such as in the presented scenario between Pat and the Big Industries, the court has always held that the parties involved in the transaction are legally bound unless stated expressly by both parties. For instance, the court held that contract between two companies in the case JR Crompton & Bros Ltd v Rose & Frank Co as both parties had wished that it not be enforceable by the court. In the case Carlill v Carbolic Smoke Ball Co, the court held that although the defendant had claimed that an intention to establish legal relations in its advertisement gimmick, the Court of Appeal held that a contract existed4. A “unilateral contract” was invoked in this regard5. Effects of the Phone Call In the second incident, on April 15 where Pat made a phone call to Hilary, it is clearly that the terms of the initial contract were terminated. However, oral contracts are still legally binding as Pat called to make a counteroffer and Hillary agreed. There was therefore an offer and counteroffer which made the contract binding. To create the contract, Pat and the Big Industries reached a mutual assent, through an offer and acceptance. Based on the “mirror image rule,” it can be argued that both the acceptance and offer did not contrast the terms of the offer. Indeed, in case the acceptance contrasts the terms of the offer, then it would not be an offer but rather a counteroffer, as a result rebuffs the initial offer. Since the courts cannot read minds, the intentions of the parties are interpreted impartially from the viewpoint of a reasonable person. This was noted in 1871 in the case Smith v Hughes. An example of a case that demonstrates contracts on phone is the Forum Global Equity Limited v Bear Stearns Bank PLC, where agreement was reached over the between the two parties. The defendant has later tried to circumvent the terms of agreement claiming that the agreement made was merely an “agreement to agree” and that they had not showed an intention to create legal relations6. The court however held that a binding oral contract existed between the two firms. Options for Pat and Big Industry Pat can bring a legal action against Big Industries for breach of contract. Pat may sue Big Industries for specific performance or money damages. From the aforementioned illustration, it can be viewed that the agreement is legally binding. An enforceable contract, such as that of Pat and the Big Industry, as is valid, can be fully remedied by the law since it contains some technical defects. Thus, it is capable of proof due to the want of written format. Even as contracts may be made in written format, they may also be made by conduct or orally. On April 15 Pat called Hillary to make a counteroffer over the phone. Under this circumstance, Pat might still argue that it is an implied-in-fact-contract, where he had reached an agreement despite not having done so explicitly7. Before the court, such a contract would be termed as a “quasi-contract” where the remedy would be quantum meruit. Since Hillary had called that there would be a total failure of consideration on the part of Pat, Pat still has the right to seek compensation based on quantum meruit. In the case of Angel v Murray, the court held that contract modification does not need consideration in case the modification is accepted by both parties and effected in good faith8. Pat’s case can still be argued from the basis of total failure of consideration using the case law DeCicco v. Schweizer, where the court held that the plaintiff (daughter) could impose a promise made by her father to her husband that he would pay to pay her money in installments since she was fully aware of the promise9. Next, although contracts may be written or oral, a written one is easily acceptable in the common law legal system. In the United States however, the UCC (Uniform Commercial Code) demands that a written contract for commodities that are tangible whose values are more than $500 be in writing. However, Pat’s products do not fall under this category as software programs are intangible commodities. Thus an oral agreement would still hold as legally binding. However, under the present scenario, Big Industries may still claim that the contract was void as the intent to create legal relations lacked. Secondly, Pat communicated a new offer to Big Industry over the phone on April 15, as so long as Hillary accepted the offer on behalf of the company, then it can be viewed that a legally binding contract was in effect. However, the terms of the contract had ruled out any further modification of the contract “unless written and signed by both parties.” Big Industries can argue from this basis, that the counteroffer signified a modification of the contract and therefore the new offer was invalid. Big Industries might also plead on the basis of the “parole evidence rule” which provides that once a written contract is set out between the parties to a contract, then further modifications must be done in writing. This is demonstrated in the case State Rail Authority of NSW v Heath Outdoor Pty Ltd, where the judges made a ruling based on the argument that parol evidence rule is convincing10. Remedies The basic legal remedy pertinent to a breach of contract is ‘damages.” It is the commonest remedy that the injured or innocent party. Usually, the object of damages includes an award of money to place the innocent party in a position they would have been had terms of the contract remained inviolate, such as in the case Addis v Gramophone11. This indicates the remoteness of losses, as demonstrated in the case Hadley v Baxendale, where the court held that in case a party breaches a contract, the innocent party should be awarded damages that can be reasonable and fairly seen to arise from the violation of the terms of contract. As in the case Hadley v Baxendale, both Pat and Big Industries must, as the claimants, may only be awarded the damages, they must naturally arise from the breach of contract12. To recover significant damages, the injured party will have to demonstrate that he suffered significant damage, and if there is no actual damage, then the court may award nominal damages13. Both Pat and Big Industries may claim for damages based on ‘inconvenience.’ Big Industries may also still claim for damages based on “repudiation,” which would bring the contract to definite end based on Pat’s breach of condition, such as in the case Bettini v Gye14. On the part of Pat, he can still plead for the damages of rescission, where the court places both parties in their former positions of pre-contract, such as in the case Caldwell v Car & Universal Credit15. Alternatively, the court may grant Pat the remedy of “specific performance,” where Big Industries is asked to undertake its contractual obligation, such as demonstrated in the case Nutbrown v Thornton16. In conclusion, this paper examines the fundamental laws that underlie a contract between a case scenario of Pat and Big Industries. It concludes that a valid enforceable contract exists between Pat and Big Industry through examination of the terms of the contract that justify that the agreement was legally binding. Further, it argues that even though Pat made a phone call to modify the contract, which contravened certain clauses, Pat cans still bring a legal action against Big Industry. The possible remedies the parties may rely on the contract law are also discussed. References Case Notes Angel v. Murray, 322 A.2d 630 (RI 1974) Addis v Gramophone [1909] AC 488 Bear Stearns Bank plc v Forum Global Equity Ltd. [2007] EWHC 1576 Carlill v. Carbolic Smoke Ball Co (1893) 1 QB 256 (CA) State Rail Authority of NSW v Heath Outdoor Pty Ltd[1986] 7 NSWLR 170 Hadley v Baxendale (1854) 9 Ex Ch 341 Bettini v Gye (1876) QBD 183 Car & Universal Credit v Caldwell [1964] 2 WLR 600 Nutbrown v Thornton (1805) 10 Ves Books and Articles McKendrick, E. (2005). Contract Law - Text, Cases and Materials. London: Oxford University Press Schabaz, C. (1927). “Quantum Meruit recovery on Enforceable Contracts.” Marqutte Law Review. 11(4) 235 242 Sullivan, C. (2012). “The Puzzling Persistence of Unenforceable Contract Terms”. Ohio State Law Journal, 70(5) 1144-1152 Willmott, L, Christensen, S, Butler, D, & Dixon, B 2009 Contract Law, Third Edition, Oxford University Press, North Melbourne Read More