The Concept of English Contract Law - Essay Example

English Contract Law Situational Question English Contract Law situational question Introduction This paper providesa legal advice to A.com in connection to the counter claim of payment of £650,000 for contract value price less the costs assigned to task (V) that was not completed and a further £100,000 in damages for wrongful termination from completing the work. Whether there is misrepresentation of facts depends on whether the contract was performed and pre-contractual agreements between the two parties. The paper will also seek to establish whether there was wrongful termination or not according to the provisions of the contract and whether there was breach of contract1. Lastly, this paper will establish whether is a liability on the part of A.com owed to University of Warwick on promissory estoppels. Is there a wrongful termination of contract? According to the agreement the contract was to be performed by 1 September, 2013. However, A.com created a software that served only five functions but could not manage to create task V. Through the concept promissory estoppels a non-contractual promise that lacks consideration can be rendered executable to prevent an injustice2. The University made an ultimatum of four weeks for the remaining task to be accomplished failure to which the contract would be terminated but A.com wanted more time. A.com had a duty to make sure that the software was complete in four weeks through the non-contractual promise made by the institution that the contract will be terminated if the software is not delivered. Therefore, the University has a right to claim to claim for expense wastage in hiring A.com to develop the software because the company spent 1.5 Million pounds to buy an alternative software after the system that was created backfired. This decision can be similar to the case in CCC Films (London) Ltd v Impact Quadrant Films Ltd3 the judge allowed the petitioner to abandon its petition for loss of profits at the last phase of the trial and to replace the petition for a claim for expenditure wasted. The interpretation of the judge was that the case as allowing the defendant to provide proof, the burden rested on the case. It was reasoned that part of the expenses would have been consumed in any occurrence since the bargain was often going to be a loss event. The loss in this case was the cost incurred by the University to buy the alternate software and the cost incurred in the compensation of the students for exposure of their confidential information. Besides in this scenario, A.com has a burden to prove that their contract was terminated prematurely and hence amounted to wrongful termination. In spite of explaining to the University that part V of the software would take too long to complete the institution was only able to provide a duration of four weeks for which the contract was terminated. But when exactly should the contract be ended? Time is normally of essence to the person receiving the services. Lombard North Central v Butterworth4 it was stipulated that time is importance in connection to a specific agreement terms. This denotes that performance that is timely is a necessity of the agreement. The result is that postponement in the performance is taken as moving to the basis of the agreement with no regard to the extent of the violation of the contract. It then implies that where a person promising to provide a performance in time of any responsibility in line with the time is explicitly defined to be of importance. However, an injured party might decide to end the contract and recover the damages in line with the outstanding obligation of the promisor with no consideration to the extent of the contract breach. A.com was entitled to accomplish the work by 1st September, 2013 and in spite of being given an extra 4 weeks to finish the job, the company could only provide an excuse that majority of its staff were on holidays hence demanded more time. Therefore the University has a right o terminate the contract on the basis of essence of time and claim for recovery of the expenses incurred in terminating the contract and getting another substitute product. A similar ruling was also held in Hartley v Hymans5 where a remedy that gives room for one person in the agreement in this case the buyer to provide extra time to the other party is not actually unrelated remedy in the common sense. It is closely related with the rest of the remedies especially those that permit the parties to rebut the agreement. Whilst the facts of the question of the refutation are not implicitly explained, the connection between the allowance of extra time and other remedies inclusive of negation or contract avoidance might differ considerably. The buyer in most cases has an upper hand in repudiation of the contract if the contract is not delivered on time. In a normal commercial agreement for the sale of goods the principle apparently is that time is prima facie of the fundamental nature in line with delivery6 with exception of the unique intent from the terms of the agreement the provision concerning time of payment might not be great importance to the agreement of sale. In United Scientific Holdings v Burnley BC7 the contractual stipulation that necessitated the tenant to complete the arrears from the hiked rent from the date of review to the date of revision was considered lawful. Rent was taken as a contractual payment for the utilization the property of the landlord. There is legal rationality as to call for rent review in operation. Since this not a rental practice, the University is not entitled to demand A.com to pay the for the expense wastage. Breach of contract Besides, the University can prove that the software that was developed by A.com was of poor quality given that hackers were able to access the students’ files and use them to destroy the image of the institution. Development of computer software system in the current days for use by various institutions comes with anticipations that the software will execute the function it was built for and that it will have adequate firewalls or protection from hackers or malice users. This is not the case the case with A.com. The software built was easily hacked and the image of the institution was placed at stake. This means that it did not meet its intended quality or use which amounts to poor performance of the contract. In British Westinghouse v Underground Electrics8 the house of Lords determined the case on the presumption that the petitioner was under obligation to assume similar steps to the ones done on condition that they were considerable. There is no right for the assumption that where a plaintiff is under obligation to mitigate his loss by performing in a particular universal way, the benefit of which accrues to him for performing is to be initiated. By evaluating the damages for the breach of any loss encountered by the claimant this had to be weighed against any benefit to the claimant emerging directly out of the performance they had done to reduce the results of the violation. Even though the claimant had not been committed to purchase the new machines, having acted so the consequential benefits in profits and saved costs had to be put into account. The saving went beyond the value of the machines and hence the claimant received nothing under his account. In this case, A.com is entitled to nothing from the contract. Therefore, it can be said that A.com did not meet the expected performance of the work which amounts to breach of contract. Substantial Performance On the part of A.com there is a huge reprieve which can be used by the company to defend its position against the retraction of the contract by the University. This is based on the concept of substantial performance. In common law this is a principle that is applied to the rule of prefect tender. It enables the court to involve a concept that permits a substantially or partly similar performance of a contract to substitute for the performance outlined in the agreement9. This rule is appropriate when the performance of the contractor is somehow not according to the performance even though it might not have been acted willfully by the contractor10. However, it is nearly equal to what might be termed as reasonable or relevant for the owner to refuse the contracted payment11. In case the contractor effectively shows a substantial performance, the owner will remain indebted to satisfy his own part of the bargain minus the damages encountered due to the defect in the work done by the contractor12. Therefore, A.com made a software that served the intended purpose of registering the students. Even though there were various defects in connection to the hacking incident, A.com has a right to counter-claim for payment of £650,000, which represents the contract price less the costs allocated to task (v) on the breakdown of costs, and damages of £100,000 “for wrongly preventing us from completing our work”. In cutter v. Powell13 the court failed to grant the petition that confirmed the rule on substantial performance that unless the parties that were involved made an otherwise agreement, there is no recompense for partial performance of executor agreements. The principle in this case was subject to a de minimus exemption. In case the unfinished or defectively accomplished portion is considerably immaterial in the comparison of the entire contract, the contract will be established to be performed substantially and the litigating party will not be entitled to end the contract, yet will be in position to petition for a contract price reduction. Accepting unfinished performance of full responsibility can also be taken into defense by A.com. In Sumpter v Hedges 14 where it was held that the action of the plaintiff failed. Therefore the defendant had no option but to admit incomplete performance as he was left with unfinished house on his property. The consideration in this case is the worth of the materials consumed and the value of the entire work that has been done. A similar principle also applies in case of frustration. For example in Appleby v Myers15 where the reform on law has seen the emergence of frustrated contracts16. A.com will have to go a head in suing the University for the value of work that has been done given the contract had been terminated. The university will have to be compelled to accept the incomplete work. This is because the work that has been done already can be considered as substantial work. The principle of substantial performance and what constitutes to substantial performance can also be noted in Hoeing v Isaacs 17 where it was held that in a construction contract that taken, in the event there is a substantial performance of the agreement, the money should be paid. The job has been done and the claim of damages on the faulty parts of the agreement was immaterial and hence the defendant was to pay the full value of the contract. This implies that the claim for the expenses can be repudiated and the claim for total payment of the contract by A.com can stand trial. But such a ruling will not stand where substantial performance is not proven for example in Bolton v Mahadeva 18 where no substantial performance was not established since the system under the contract did not serve the intended purpose that is to give off as much heat it ought to have done. However, according to the law commission report19 if there is no substantial performance that has been proven the builder can only recover a considerable worth of the job prone to deduction of any losses incurred by the buyer of the service20 Conclusion In view of the above proceedings, both parties might use various principles to argue their case but with A.com the argument might be incline to the concept of not being given an adequate time after asking and making of the counter claim would have been under the principle of substantial performance. According to promissory estoppels A.com would argue in terms of informing the University of the possible length of time that would take to complete the remaining part of the contract due to the complexities involved. Nonetheless, the company has to ready itself in defense over breach of contract in connection to expected quality of performance. The company must be aware that it had the sole duty of producing a software system that could stand hacking given this is what is expected in the software system21. On this point of view the company has to be cautious of the possible demands from the university to compensate for the loss of reputation among the students due to the exposure of their information to hacking. Bibliography Books cited Taylor, Richard D., and Damian Taylor. Contract Law. (2013). Bar, Christian von, and Ulrich Drobnig. The Interaction of Contract Law and Tort and Property Law in Europe: A Comparative Study. (München: Sellier European Law Publ, 2004). Bar, Christian von, and Ulrich Drobnig. The Interaction of Contract Law and Tort and Property Law in Europe: A Comparative Study. (München: Sellier European Law Publ, 2004). Barnett, Katy. Accounting for Profit for Breach of Contract: Theory and Practice. (Oxford: Hart Pub, 2012). Blum, Brian A. Contracts: Examples & Explanations. (Austin: Wolters Kluwer Law & Business, 2007). Cartwright, John. Misrepresentation. (London: Sweet & Maxwell, 2002). Chen-Wishart, Mindy. Contract Law. (Oxford: Oxford University Press, 2012). Eggleston, Brian. Liquidated Damages and Extensions of Time in Construction Contracts. (Chichester, U.K.: Wiley-Blackwell Pub, 2009). . Helewitz, Jeffrey A. Basic Contract Law for Paralegals. (Austin [Tex.]: Wolters Kluwer Law & Business, 2010). http://books.google.co.ke/books?id=0pjru3veKjMC&pg=PA105&dq=Breach+of+a+contract&hl=en&sa=X&ei=koxXU6ysJqqX1AXHhIDwCw&redir_esc=y#v=onepage&q=Breach%20of%20a%20contract&f=false Leisinger, Benjamin K. Fundamental Breach Considering Non-Conformity of the Goods. (München: Sellier European Law Pub, 2007). McKendrick, Ewan, and Nili Cohen. Comparative Remedies for Breach of Contract. (Portland, Or: Hart, 2005). OSullivan, Janet, and Jonathan Hilliard. The Law of Contract. (Oxford: Oxford University Press, 2012). Poole, Jill. Textbook on Contract Law. (Oxford: Oxford University Press, 2012). Rowan, Solène. Remedies for Breach of Contract A Comparative Analysis of the Protection of Performance. (Oxford: OUP Oxford, 2012). . Rustad, Michael. Software Licensing: Principles and Practical Strategies. (Oxford: Oxford University Press, 2010). http://books.google.co.ke/books?id=sc9MAgAAQBAJ&pg=PA234&lpg=PA234&dq=cases+of+substantial+completion+on+software+development&source=bl&ots=qN-4a2I1MQ&sig=GjU7rc6hLudhMaOF7wVVMmSgofM&hl=en&sa=X&ei=vIhXU_PmOeaK0AX6x4GwCA&redir_esc=y#v=onepage&q&f=false Cases cited Lambert v Lewis [1981] 2 WLR 713, [1982] AC 225 United Scientific Holdings v Burnley BC [1977] 2 WLR 806, [1978] AC 904 Bolton v Mahadeva [1972] 1 WLR 1009 (CA) (noted BBF 563) Lombard North Central v Butterworth [1987] QB 527 (BBF 605) CCC Films (London) Ltd v Impact Quadrant Films Ltd [1985] QB 16 Hartley v Hymans [1920] 3 KB 475, 484 (BBF 574) United Scientific Holdings v Burnley BC [1978] AC 904 (noted BBF 575) British Westinghouse v Underground Electrics 1911] 1 KB 575 cutter v. Powell (1795) 101 ER 573 Sumpter v Hedges (1898) 1 QB 673 (BBF 559) Appleby v Myers (1867-67) LR 2 CP 651 (noted BBF 483) Hoeing v Isaacs [1952] EWCA Civ 6 (BBF 560) Laws and Acts Cited Law Commission Report No.121 (BBF 563) Law Reform (Frustrated Contracts) Act 1943, section 1(3) Sale of Goods Act 1979, s.10(1) (BBF 574) Read More