Legal Environment - Assignment Example

Legal Environment Task A contract, which is an agreement between two or more persons, which is intended to create legally binding obligation, can be terminated or discharged. Discharge By Frustration For this case, the contract between Maldrive and Planright was discharged by frustration. This was due to the change in law. The government secured the enactment of emergency regulations, which prohibited with immediate effect the manufacture and export of the relevant weapon system. Planright had agreed to sell the machine to Mildrive but due to change in law, he could not sell the machine hence terminating the contract. Relevant case studied is that of: Baily v De Crespigny, 1869 De Crespigny leased land to Baily and agreed that he would not build on the land opposite that on which the premises stood. Subsequently a railway company compulsory acquired De Crespigny's land under the statutory powers, and the company built on it. It was held that Daily's obligation under the lease "not to build on it" had been discharged by change in law. Another case studied under this is that of: Walton Harvey Ltd. v Walker & Homfrays, 1931 In this case, an agreement was made to exhibit advertisement on the defendants' hotel for a period of seven years. During this time, Manchester Corporation, exercising statutory powers, acquired the hotel and demolished it. It was held that the defendant should have been aware of the risk of compulsory purchase, and must be taken to have implicitly accepted the risk. The contract could also have been discharged by frustration due to government interference. The government interfered causing a fundamental change of circumstance from the contemplated by the parties when the contract was made. This is because the government prohibited with immediate effect the manufacture and export of relevant weapons systems hence there was need for Maldrive to purchase the machine. This caused the termination of the contract. Relevant case on termination of a contract by frustration by government interference is that of: Metropolitan Water v Dick, Kerr & Company Ltd, 1918. In this case, the defendant had agreed to construct a reservoir for the plaintiff. Before the defendants had done so, the government acting in pursuance of war-time powers, stopped it. It was held that the contract was discharged through government interference. Discharge by Breach of Contract A contract is discharged by breach; that is failure of one of the parties to perform his obligation under the contract. Every breach of contract provides remedies to the innocent party, and this does not necessary discharge the contract. Thus if a party breaks a term of contract going to its root, known as condition the other party will be released from his obligations under the contract. But if the term broken is one collateral to the main term of the contract, known as a warranty, the innocent party will not be released from performance and can only claim damages. Maldrive, the manufacturers of weapons systems for exports had agreed to buy a machine from Planright but failed to perform his obligation under the contract. Failure of Maldrive to buy the machine from Planright discharged the contract. Rights and Remedies available to Maldrive and to Planright if contract is terminated by frustration. Maldrive could recover his deposit of |1000 pounds and was not liable to pay the balance. The law reform (Frustration Contracts) Acts 1943 England, amended the common law rule and provides what shall happen if the contract is discharged by frustration: All money paid before discharge is recoverable Money which become payable before frustration ceases to be payable. The court allow the parties to recover sums of money paid out in expenses incurred in connection with the contract, or to retain such sums from money already received under the contract. Where one party has received benefits, other than the money payment, the court may permit the other party to recover a reasonable sum as compensation for such benefit on quantum Meruit. A relevant case studied on the ruling of a case where a contract was discharged by frustration is that of: Fibrosa v FairBairn, 1943 In this case, the defendant, an English seller, agreed to sell machinery to the plaintiff, a polish buyer, part of the price to be paid in advance. The plaintiff paid 1000 pounds. The performance of the contract became impossible because when the delivery was due, German occupied Poland. Held that the plaintiff could recover 1000 and was not liable to pay the balance. Rules on Remedies of Innocent Party if Contract is Terminated by Breach Failure to deliver the machine by Planright to Maldrive gives Maldrive right to claim for damages. The aggrieved party is allowed to treat the breach of the condition as a breach of warranty if the other party expresses his willingness to perform the contract. For example if A sells his car to B, and delivery date agreed to be 1st May. B is released of his obligation of receiving the car and making payments. B can also sue A for damages. But if A subsequently expresses his willingness to deliver the car, B has an option to accept the car and claim damages for the late delivery. A contract can be discharged by Breach by Renunciation. This happen when even before the time of performance arrives, one party to a contract repudiate his liabilities. The innocent party may sue for breach of contract immediately or wait until the contract should have been performed and then enforce his remedy. A contract can also be terminated by breach of contract in self-disablement. This occurs when the defendant disables himself from performing his contractual obligation or does some act which makes the performance of contract impossible. Planright was the innocent party and he suffered from the sale he would have made. The remedy for a breach of contract to the innocent party is action for damage. Planright suffered nominal damage, which is awarded where the plaintiff proves a breach of contract without suffering any actual cost. The sum awarded is usually very minimal, but nevertheless awarded as an acknowledgement that plaintiff has proved his claim. Mitigation of loss However, when a breach of contract takes place, the party suffering from breach must make all reasonable efforts to minimize his loss and he is entitled to recover those damages, which he could easily have eliminated had he tried. Planright should minimize the damage by looking for another buyer for the machine. Planright must have tried to sell the machine in the available market and claim damages not more than the difference between the contract price and the market price plus any incidental charges. A relevant case is that of: Brace v Calder, 1895 Brace was wrongly dismissed from his service but was immediately offered employment on his previous terms. Brace declined employment and sued for wrongful dismissal. Held that although the dismissal was irregular and was technically a breach of contract, Brace was entitled to nominal damages only. Task 2 Right Available to Nadim This case is under the tort of negligence. Negligence is the breach of a duty caused by omission to do something, which reasonable man, guided upon those considerations, which ordinarily regulate the conduct of human affairs, would do or doing something with a prudent and reasonable man would not do. Nadim can recover for damages from Lister Properties Ltd. This is because the defendant who is Lister Properties Ltd. Owed Nadim a duty of care, there was a breach of legal duty and Nadim was injured. When Lister Properties Ltd. Bought the derelict building to renovate they boarded up the windows and doors. Children due to the fact that they like to explore anything around managed to break in and play. Lister Properties Ltd. Did not take reasonable care to ensure that the building was secured enough for the children to get there and play. There is a lot evidence that Lister Properties Ltd. Neglected their part and that the accident would not have occurred if the building was well secured. There was contributory negligence because the law takes into consideration any act or conduct of the party injured, which may have contributed to the injuries, he received. The rule seems to be that an infant can recover full damages although his conduct contributed to the injury if the defendant is shown to have failed in his duty to the infant. The Occupier's Liability The occupier of the premises owes to the visitors to whom he gives permission to enter and must be measured by his knowledge of the habits, capacities and natural inclination of such persons. Children by their very nature are very inquisitive and would love to explore anything new around them. Hence an occupier is responsible for an injury the children may suffer. The defence of volenti non fit injuria is available to the occupier if he can show that the entrant knew of the risk, appreciated and assented to it. Rights Available to Pat Pat has no right to sue Lister Properties Ltd. For the injuries she suffered. The case is under tort of negligence. Lister Properties Ltd. did not owe Pat Duty of Care because at the time of the accident when Nadim fell she was not there at the accident scene. A relevant case is that of: King v Philips, 1952 The defendant, a tax driver, carelessly reversing his car, ran over the cycle of the plaintiff's son who was playing in the street. The child screamed. His mother in her house nearly heard the scream and saw the cycle of her son crushed under the taxi. She was convinced that her son was killed and suffered a nervous shock. She sued the taxi driver. Held that her claim must fail as the defendant did not owe her a duty of care as at the time of the accident she was not there. (1708 Words) Bibliography Chirelstein, Marvin A, Concepts and Case Analysis in the Law of Contracts (University Textbook Series), 2001 Emanuel, Steven L, Fundamental of Business Law, 2004 Glannon, Joseph W, Laws of Tort: Examples and Explanations, 2005 Penrose, Roger, Road to Reality: A Complete Guide to the Laws of the Universe, 2005 Jertz, Gaylord A, Miller LerRoy Roger, Fundamentals of Business Law, 2004 Read More