Law of Contract - Chen - Math Problem Example

Law of Contract [Name] [Institutional Affiliation] Part a According to the details of the given scenario, it is clear that there is a valid contract between Chen and John. All the elements of a valid contract are present in the agreement between Chen and John. According to MacMillan & Stone (2012), the elements of a valid contract include an offer, acceptance, consideration, intention, and certainty of terms. MacMillan & Chen (2012) further note that if these elements do not exist, a court will find that a contract does not exist between the contracting parties. In order for a contract to be valid, there must be an offer that is accepted and for which a valid consideration is given. Additionally, there must be an intention to get into a legal relationship between the contracting parties, and the terms of the contract must be certain or legal (Clarkson, Miller, Jentz, & Cross, 2008). In the given scenario, Chen makes or communicates an offer to John to build an extension to Chen’s house at a certain price within a particular period of time. John agrees and communicates in response to the offer, and consideration is set at a certain price. Both parties intend to be legally bound by the contract, and there is certainty as to the subject matter and parties and how to deal with prices. This therefore indicates that there is valid, binding and enforceable agreement between Chen and John, a breach of which can be enforced in a court of law. Part b In this situation, Chen could argue that the express terms were certain that Chen would only pay John the cost of materials upon completion of the construction, and an additional $6000 as labor costs. Chen could then argue that the agreed payment for John’s services is consideration for John to complete the piece of work as per the expressly agreed terms. In return, the completion of the construction is consideration for Chen’s promise to pay. According to Allen & Overy (2010), consideration refers to something of value that is given for a promise so as to make the promise legally binding as a contract. In effect, the considerations for both Chen and John’s promises were clearly understood and offered, and accepted as per the express terms. Therefore, in light of the fact that John did not deliver his promise as per the agreed time, and Chen is actually willing to fulfill his promise to pay the cost of materials at the date of completion, plus $6000 for labor costs, Chen is not liable for any costs above these. Chen’s offers to John were very express at the time of forming the contract, and John’s acceptances to the terms of the offer were free from any form of duress. Acceptance can be defined as a final expression of assent to terms of the offer (Allan & Overy, 2010). John clearly had an objective manifestation of intention to be bound by the terms of the offer. In fact, John has breached the terms of the contract by failing to deliver his promise to Chan at the agreed time. Allan & Overy (2010) point out that a breach of contract occurs when a party refuses or fails to deliver what is due from his/her part under a contract, or delivers a defective, or deliberately incapacitates himself/herself from delivering. Consequently, Chan is not bound to pay for any costs that were incurred beyond the expressly agreed time of completion because such costs were not part of the contract. Part c Chen can claim that as a result of John’s breach of the contract, he suffered some damages. In fact this is a breach of defective performance because whatever John did was different to what he had promised in terms of time. According to Emerson (2009), defective performance occurs where an individual makes a promise to do one thing but instead does a different thing in terms of quality, time, or quantity. Consequently, Chen can claim for damages occasioned as a result of John’s breach of the contract. The damages in this case include the amount of monies spent by Chen to get hotel accommodation for his guests. Chen spent $3000 as hotel accommodation charges for his guests because John failed to complete the house which the guests were supposed to use for accommodation. Paterson, Robertson, & Duke (2012), note that damages are meant to compensate the injured person for the loss that the person has suffered due to the breach of terms of the contract by the other party. In order to determine whether there substantial damages for breach of a contract, the aggrieved party must demonstrate that actual loss has occurred as a result of the other party. Secondly, the injured party must demonstrate that the type of loss is recognized as offering entitlement to compensation, and that the loss is not very remote. In the given case, it is evident that Chan can show that all three elements of the breach (Paterson et al, 2012). Actual loss occurred in the sense that were it not for John’s delays in completing the work, Chen would never have spent &3000 dollars on hotel accommodation for his guests. Secondly, Chen can show that this type of loss is recognized as offering entitlement to compensation. Finally, this loss is not remote to the terms of the contract. In fact, the reason why Chen contracted John to perform the construction work is because he was expecting guests and thus needed additional accommodation. Chen could also argue that John misrepresented the facts when he was forming the contract. Misrepresentation has been defined as a false statement of fact by one party of the contract to the other party, which, although not a term of the contract, entices the other party to agree to the terms of the contract (Paterson et al, 2012). Emerson (2009) further points out that an actionable misrepresentation has to be a false statement of fact and a representor must never misleadingly present the truth partially. Chen can argue that John did not tell the whole truth about the time it would take him to complete the project. Chen can claim that John only agreed to the time of completion of the construction work to induce him to enter into the contract. Therefore a statement that fails to provide the whole truth can be a misrepresentation. Additionally, whenever a statement was true during the time of presenting it but because of changes of circumstances it becomes false, a duty to disclose the changes arises (Loots & Charrett, 2009). It was John’s duty to disclose any changes in circumstances that would have prevented him from fulfilling the terms of the contract. Consequently, there are several remedies that are available once it has been proven that there was misrepresentation, and damages such as those Chen is claiming may be one of the remedies. Part d John can use the Constructions Contracts Act 2004, Western Australia, to support his claim for $10000. According to Evans (2005), this Act provides for the security of payments within the construction industry using quick adjudication procedures for determining payment disputes. The provisions of the Act apply to both written contracts and oral contracts. Fundamentally, the act provides for implied terms in cases where the terms of the contract are silent on terms related to construction work (Bailey & Bell, 2011). One clear objective of the act is to imply provisions within construction contracts with regard to certain issues if written provisions concerning these issues in the agreement do not exist (Evans, 2005). In cases where a contract involving construction does not have written provisions with regard to issues like variations, manner and mode of making payment claims, and payment entitlement procedures, Schedule 1 of the Constructions Contract Act shall imply terms within the context of contracts involving construction work (Bailey & Bell, 2011). John can claim that there were implied terms in the contract. According to Carter (2011), a contract may have terms which are not stated expressly but which are implied. Terms of a contract can be implied because the parties intended to have it that way, or through the operation of law, or through custom or usage. In the given case, John can claim that certain implied terms related to the operation of the law. These terms are also implied in fact. Carter (2011) defined terms implied in fact as facts that are not expressly stated in the contract but which both parties must have intended to include. For instance, it is acknowledged that construction work delays may be occasioned by factors such as weather conditions, or availability of supplies. John can thus argue that Chen should have considered any delays that would have been caused by changes in circumstances. Additionally, John can refute the claim that he misrepresented facts because they never discussed about what would happen in case of changing circumstances that may occasion delays to delivery of the promise. John can also claim that there was an anticipatory breach of contract. An anticipatory breach occurs when, before performance of the contract is due, a party to the contract either repudiates the contract or disables himself/herself from performing it (Loots & Charrett, 2009). In this case, John can argue that Chen failed to accept the breach when he allowed John to continue working on the project after the agreed time had lapsed. Therefore, Chen remains liable to perform and also retain the right to enforce the obligations. According to Loots & Charrett (2009), if the injured part fails to accept the anticipatory breach, he/she becomes liable to perform and also retains the right to enforce the other party’s obligations. John can also claim that the terms of the contract expressly stated that Chen would pay for the labor costs. Although Chen may argue that the terms expressly stated the amount, $6000, it is implied that the cost of labor may change due to market changes. John can claim that because he delivered on the main promise of the contract, Chen is liable to pay for the additional costs because he did not raise any objections when he realized that a breach regarding the time of performance had occurred. List of References Allen & Overy (2010) “At a Glance Guide to Basic Principles of English Contract Law”. Advocates for International Development. Evans, P.J. (2005) The Construction Contracts Act 2004 (WA): What Engineers Need to Know. The Engineering Industry. Vol. 7. Bailey, I. & Bell, M (2011) Construction Law in Australia. 3rd Ed. Sydney: Lawbook Co. Carter, J.W. (2011) Cases and Materials on Contract Law in Australia. LexisNexis Butterworths. Clarkson, K., Miller, R., Jentz, G., & Cross, F. (2008) Business Law: Texts & Cases. 11th Ed. Cengage Learning. Emerson, R.W. (2009) Business Law. Barron’s Educational Series. Loots, P. & Charrett, D. (2009) Practical Guide to Engineering and Construction Contracts. Sydney. CCH Australia Limited. MacMillan, C. & Stone, R. (2012) “Elements of the Law of Contract”. London: University of London International Programs. Paterson, J.M., Robertson, A., & Duke, A. (2012) Principles of Contract Law. Sydney. Thomson Reuters. Read More