Basic Principles of English Contract Law - Essay Example

?Contract Law Introduction Contract Law is a multifaceted but well defined area of law in the English law. The Contract Law focuses on areas including the formation of contract (offer, acceptance, consideration, intention), capacity to enter into a contract, contents of contract (terms, exclusions, privity), discharge of contract (performance, breach, agreement, frustration), vitiating aspects (misrepresentation, mistake, duress), and remedies (compensation, damage, injunction) (British Law, n.d). An agreement that is enforceable by law is a valid contract. It is an agreement legally enforceable between two or more parties having a set of mutual promises as its core, which create the rights and obligations of the parties (Advocates for International Development, n.d). All contracts can be enforced in a court of law and if one party to the contract meets his contractual obligation and the other party does not, then the aggrieved party that is the non-breaching party is entitled to receive compensation through the court. Moreover, regarding the competency to contract, minors, persons disqualified by law, and persons of unsound mind lack the legal capacity and cannot enter into a valid contract. Minor is a person who has not attained the age of majority as prescribed by the law. Here in the given context, there are two situations presented for analysis and to provide advice; Miss K Martin with Willis Vents Ltd and Miss K Martin with Malcolm Rogers. The following chronology provides a brief idea about the events happened in the course of time in the business of Miss K Martin with both the Parties. Chronology January 2011 Miss K Martin contracts WV for a quote to build a chilled section April 2001 WV and Miss K Martin agrees to go ahead with the work for a total cost of ?5,000; the work to be completed on 1st August 2011 July 7, 2011 WV asks for an additional ?750 to complete the work on time; Miss Martin reluctantly agrees to do so. August 1, 2011 WV completes the work on time; Miss K Martin pays the actual contract price of ?5000 August 8, 2011 Payment of ?125 due from Malcolm Rogers August 15, 2011 Another payment of bill amounting ?145 due from Malcolm Rogers August 22, 2011 A third bill for ?140 is due from Malcolm Rogers August 30, 2011 WV sent an invoice for the payment of remaining ?750 August 30, 2011 Miss K Martin sends an invoice for the total amount of ?410 from Malcolm Rogers September 6, 2011 Miss K Martin responds to the reply from Malcolm Rogers regarding the invoice dated 30th August, 2011, and agrees to receive half of the amount due—amounting ?205, in full and final settlement as offered by Malcolm Rogers Willis Vents Ltd vs. Miss K Martin Contractor: Willis Vents Ltd Contractee: Miss K Martin As per the information given, Miss Martin intended to improve her storage facility and contracted Willis Vents Ltd. (WV) in January 2011 for a quote to build a chilled section within the garage and to install air conditioning throughout. The WV quoted the proposal for a total cost of ?5,000. And in April 2011both parties agreed upon the terms and conditions and entered into contract for a total cost of ?5,000, requiring the work to be completed on 1st August 2011. However, later, on July 7, 2011 Nick Parsons from the Willis Vents informed Miss Martin that unless an additional amount of ?750 is paid, the work would not be completed on the stipulated time; and she had to reluctantly agree in order to keep the work moving and to finish on time. It is evident that both the parties have entered into a legally valid contract, meeting the requirements as required in the Principles of European Contract Law. According to Chris Field (2010), the primary requirements for a valid contract are Offer, Acceptance, and Consideration. The WV had quoted contract (offer) for a total amount of ?5,000 (consideration) and Miss Martin agreed with the terms (acceptance) of the contractor. According to the Section 1 Article 2.101(2) of the Contract Law, “a contract need not be concluded or evidenced in writing nor is it subject to any other requirement as to form” (European Union, 1998). So the contract between two parties does not require being neither in the written form nor in condition to further requirements. In effect, one party has made the offer and the other has accepted it, and a valid contract has come into force, and so both the parties are legally required to fulfil their own contractual obligations without any further conditions, the failure of which, from either party, may be amounted to breach of contract. Moreover, the Section 1 Article 2.101(1) (b) states that, “a contract is concluded if the parties reach a sufficient agreement without any further requirement” (European Union, 1998). Therefore, as soon as the contract has come into force, both the parties are bound to the provisions of the contract and neither of them can adjoin further conditions to the contract. And hence, Miss K Martin (contractee) seems to be on the safer side as MV (contractor) had no provisions to ask for further payments from the contractee. The contract is unconditional and any attempt to vary the terms of the offer may be considered as counter offer and void. Once an offer is accepted, it cannot be withdrawn or modified because it has been changed by its acceptance into a contract. Furthermore, the MV’s offer on phone to complete the work on time on an additional ?750 does not possess all the characteristics of a valid offer. And so, its acceptance by Miss Martin cannot be validated in a court of law as there are no primary evidence of offer and acceptance. The impersonal characteristics of the electronic media can affect the process of offer and acceptance of a contract thereby invalidating the contract and turn it into a void. Wright (2008) points out that contractual acceptance through e-mail or telephone continues to be unsettled by judicial review or decision and so there still exists a high degree of uncertainty regarding the issues of offer and acceptance in contract through e-mail or telephone based communication; and furthermore, in the UK, the issue stays vague even while following the ECA. It is true that internet and electronic communication media has changed commerce, but the basic principles of offer and acceptance in the contract law remain concrete. Miss K Martin vs. Malcolm Rogers Contractor: Miss K Martin Contractee: Malcolm Rogers In this case, it is seen that since 2005 Miss Martin has been supplying Malcolm Rogers (MR) with nearly all of the vegetables and some fruits required for his restaurant—“The Jollyboat”. The supply of the goods and the payments had been going smoothly until in August when MR failed to settle payment for three consecutive orders. She sent him an invoice and refused to supply further unless the due payment was made as she faced financial difficulties with the cash flows. At this juncture, MR apologetically responds to the invoice and offers to pay half of the amount due, which is ?205 in full and final settlement against the total payment due of ?410. She had to reluctantly agree as to have something better than having nothing in order to overcome her financial difficulty to stay afloat. First of all, it is important to obtain information from Miss Martin about whether or not both the parties had entered into a written Call-off Contract. A Call-off Contract can be defined as the promise to supply specific quantity of goods or service over a given time period, subject to prices, specifications, and terms and conditions agreed (Canterbury City Council Online, n.d). Such contract is resemblance of a framework agreement except that it is legally validated and can be enforced in a court of law. There are two methods for the delivery of goods in the Call-off contracts; either according to a delivery schedule set within the contract or on the separate call-off orders placed with the supplier. If both the parties had entered into a Call-off contract for the purpose of supplying vegetables, the conduct of MR can be amounted to breach of contract. Miss Martin can claim for damages for the non-payment of the amount due and can legally obtain the remaining payment. According to Section 5 Article 9.501(1) of the Principles of European Contract Law, “the aggrieved party is entitled to damages for loss caused by the other party’s non-performance.” (European Union, 1988). In the general course of action, when a party sings a discharge voucher in full and final settlement, the party no longer holds the usual position to subsequently bring a claim on the settlement. However, there is an exception to this provision. If the party can prove that he had to sign the settlement voucher under coercion or duress, the agreement to discharge the full and final settlement does not become a valid agreement, and so the party can file a suite or consult an arbitrator to revoke the agreement. For example, consider the case (cited in Lodha, n.d.) the Union of India & Ors vs M/S. Master construction Co. on April 25, 2011, where the Court held that an arbitrator can investigate into the issue and declare the final settlement claims were made if there is no evidence of coercion, duress, or misrepresentation. Therefore, merely signing a discharge voucher alone cannot be sufficient to keep the claims aside to rest, and discharge vouchers alone do not validate the full settlement claims. At this point, the party has to prove duress in order to find a way out of the settlement agreement. In the present case between Miss Martin and MR, sufficient information should be collected from the former to know whether she had signed the discharge agreement for full and final settlement under duress, coercion, undue influence, or misrepresentation. On receiving additional information From the additional information provided by Miss K Martin (KM), they had not written down their agreement, but were very clear about the terms and conditions and both agreed that the work would be starting in May and be completed by 1st August, 2011. Here, an oral contract has come into existence and to prove its existence there is secondary evidence of a correspondence letter from WV. So KM can prove in the court that an oral contract was made between the parties. So, when a contract has come into existence, the Section 1 Article 2.101(1)(b) states that, “a contract is concluded if the parties reach a sufficient agreement without any further requirement” (European Union, 1998). Thus, MV’s asking for further payment is illegal and can make the actual contract void. Therefore, Miss K Martin is on the safer side and can withstand any kind of lawsuit moved against her. Regarding the agreement with MR, it is clear that Miss Martin had already entered into a valid contract with MR in 2005 supplying goods he ordered and taking payment on delivery. And it is seen that MR breached the contract by not making the payment for three consecutive weeks. And his proposal to pay half the total amount due in full and final settlement was made with a view to take an unfair advantage over KM, as he knew that she was facing financial crisis and would have no choice but to take up whatever he offered. Therefore, KM can prove in the court that she had to discharge full and final settlement under the pressure from the other party to accept less than what she owed, and hence can claim the balance from MR. References Advocates for International Development, ‘At a glance guide to basic principles of English contract law’ (n.d) accessed 04 January 2012. British Law, ‘Contract law’ (n.d) accessed 04 January 2012. Craig S Wright, ‘Electronic contracting in an insecure world’ (2008) SANS Institute Canterbury City Council Online, ‘Types of contract’ (n.d) accessed 04 January 2012. Chris Field, ‘Elements of a contract’ (2010) The Law Handbook accessed 04 January 2012. European Union, ‘The principles of European contract law 1998, Parts I and II’ (1998) accessed 04 January 2012. InfoSec Reading Room accessed 04 January 2012. R. Lodha, ‘Union of India & Ors. vs M/S. Master construction co. on 25 April, 2011’ (2011) Supreme Court of India accessed 04 January 2012. Read More