Build and Co Ltd - Assignment Example

Order 190930 Topic: N/A Introduction: This paper seeks to write and discuss given questions of a case study (Appendix A) underan EU law. Questions range from possible avoidance of liability under certain conditions, the advisability and benefits of having arbitration, resolution of more prevailing doctrines under the given case facts, remedies in case of cheque returned marked ‘R/D’ by the bank and where goods are being delivered including preventive measure to prevent erroneous shipments, and product liability in relation of EU harmonization rules 2. Question and Answer: 2.1.a. Should completion of the work not be met on time, can Build & Co. Ltd avoid liability for breach on the ground that the weather conditions and labour disputes have frustrated the contract? Should completion of the work not be met on time, Build & Co. Ltd can avoid liability for breach on the ground that the weather conditions and labour disputes have frustrated the contract if these conditions and labours disputes are completely beyond the control of Build & Co. Ltd since said events would be considered force majeure (). However, from the surrounding circumstance of the case, it would seem it is really difficult to believe that it could be used as an excused because of the provision of the contract that “a penalty would have to be paid by Build & Co. Ltd for every day that they exceeded the completion date [inserted at the request of the English Rugby Union (ERU)]. It could therefore be deduced that completion of time is of the essence of the contract. Since the company is in the business of contraction, the possibility of weather conditions getting worse and affecting its business is something that is within its experience to forecast. The company is chargeable the possibly knowing situations it may encounter before it entered into contract. With more reason that Build & Co. cannot be free of responsibility and control of its labour problems or labour disputes since a labour dispute is something what is foreseeable by a company. The company may therefore not use its lack of foresight or as a ground for frustration to avoid a liability with A and B, the owners of the hotel. To argue that that it could use the same to avoid liability then perhaps it is even possible for the company to create it own situation so as just to justify everything so as to avoid liability. But the same would removing the ability to foresee responsibility and removing the duty of care which an inherent obligation of obligors in contracts. 2.1.b. Would Build & Co. Ltd. have gained any advantage if a clause was included in the contract agreeing to arbitration for resolution in the event of a breach? Penton Media, Inc. (2007) defined arbitration as the voluntary submission of a dispute to an impartial person or persons for a binding or non-binding determination. It has identified advantages of arbitration which included that the fact as far as the parties are concerned, the courtroom may help preserve the business relationship and increase the level of confidentiality. In addition there are the streamlined procedures, such as limitations on pre-trial proceedings and discovery, and the ability to schedule a reliable hearing date, generally therefore arbitration could really save time and money. There is however a requirement to select a decision-maker with requisite levels of experience, knowledge and skill to these advantages Not all cases however are appropriate issues for arbitration. Hence, Penton Media, Inc. (2007) said that choosing what issues to arbitrate is the first step. It explained that any language that may cast a net over any controversy or claim arising out of or relating to this or that agreement is not appropriate in the leasing context. Citing for example that evictions are not good candidates for arbitration due to the fact that most states do provide summary, which is speedier, judicial procedures, Penton Media, Inc. (2007) explained that it would just be inapplicable to apply it in an unlawful detainer action the purpose of which is to regain possession, not to resolve disputes. It added on the other hand, disputes over the calculation of fair market rent, CAM and other charges, questions of compliance, enforcement and interpretation, and virtually any issue involving a determination as to what is reasonable, such as in alteration and assignment provisions, invite third-party review and for which arbitration is proper. It also emphasized that construction and maintenance disputes can also be suitable candidates for arbitration (Penton Media, Inc.,2007). As to whether the issues in the case at hand is appropriate for arbitration, it may be argued that the interpretation of what level of weather condition or labour dispute that may have helped the company to determine objectively may possibly be part of arbitration but the same may still the approval of the A and B, the other party and looking from the perspective of A and B, it would be hard they would have agreed for the arbitration because it would appear that time is of the essence in the contract. But with the earlier emphasis of the applicability of arbitration to construction and maintenance disputes, this paper believes that it could really help the contractor had a clause was included in the contract agreeing to arbitration for resolution in the event of a breach. However it may be argued that there are other rules that must be understood before the partied could really make use of the process. Penton Media, Inc. (2007) reminded that an arbitration provision should state the applicable procedural rules to be followed, be they state law or those of a private dispute resolution organization such as the American Arbitration Association (AAA) or JAMS/Endispute. After admitting that –about the presence of different sets of rules available for different categories of dispute resolution; Penton Media, Inc. (2007) suggested that the parties should make sure the rules selected are appropriate for the issue or issues identified for possible arbitration. There are also other certain considerations that may taken into mind before one can get or maximize the benefit of arbitration on of which is the selection of qualified arbitrators. Penton Media, Inc. (2007) argued upon identification of the appropriate issues and rules there would be the need consider the desired background of the person the parties you want to decide certain categories of issues. In citing that a retired judge or senior real estate partner in a law firm may be fine for deciding questions of real estate or contract law, Penton Media, Inc. (2007) advised on the other hand that issues involving audits, fair market rental values or leaky roofs may be best handled for review by accountants, brokers, contractors and engineers. If speed and cost-effectiveness are motivating factors for choosing arbitration over litigation. It also reminded that by all means specifying that one arbitrator, rather than a panel of three, should be mutually selected by the parties or assigned by the administrating organization. The latter view is for simpler decision making. As to other considerations, Penton Media, Inc. (2007) argued since time is of the essence, there is the need to provide a timetable for starting the arbitration, selecting the arbitrator or arbitrators, exchanging documents and having the decision rendered. It therefore advisable to agree on a venue for the hearing in advance, especially if one or both parties maintain offices at a considerable distance from the shopping centre location. In addition it is desirable to give thought to providing for or modifying pre-hearing discovery rules, depending on how much information a party believe is its side will have or need. The reality that some administrative rules and state laws automatically provide for limited discovery, while other do not may be material in considering the options. (Penton Media, Inc., 2007) Another important issue in deciding whether arbitration should be included is the costs of the arbitration. Experience would bear that arbitrators usually require fees up front; hence the need to make sure that each side is required to advance its share of the costs until a final decision is rendered. As a final advice there is need to verify that the arbitration provision which must comply with any legal notice requirements (Penton Media, Inc. (2007). 2.1. c. If A and B had promised an additional payment of £250 000 in return for Build & Co’s undertaking to complete the work on time, which of the cases Stilk v Myrick, or Williams v Roffrey would be the decisive precedent? This paper believes that the case of Williams v Roffrey should be followed over the case of Stilk v Myrick more. To explain this paper revisits what happened in the both cases. The case of Stilk v Myrick [1809] 2 Camp 317 is believed to still be considered robust, despite the numerous attempts to find ways around it. The facts of the case provide that a group working as a team of eleven sailors contracted themselves to crew a ship from London to the Baltic and back but after sometime in the journey, two sailors deserted in the Baltic, that had cause the remaining nine refusing to work. The captain then was pressed for higher wages and was made to agree at the time but ultimately refused to pay. When the sailors sued the captain, they lost. Two interpretations are possible for the court’s judgment in the case with the first one that assumed the fact the the captains offer was not supported by any consideration on the part of the sailors, hence the absence of any contract. This is on the premise that the sailors are only performing what they had agreed to do all along. Another view is to consider that there was indeed a consideration; hence a contract should be upheld. Attempts were made to interpret Stilk in the second sense in the past, to enable courts to accept as consideration a promise to complete an existing contractual obligation as there was indeed a basis in equity that the there was indeed a change in the situation of the parties. But the standing decision involving the case of Stilk is first one where there should be no new contract on the basis on the on the ruling that consideration cannot derive from an existing contractual obligation. This paper can now discuss the case of Williams v Roffey in comparison. In the latter case, Roffey was obliged under a contract to refurbish a block of flats and had sub-contracted the carpentry work to Williams. Having started the work, it became apparent that Williams had undervalued the cost of the work and this caused him to be in financial difficulties. Roffey, wanting and worried that the work would not be completed on time and that as a result they would cause them to suffer penalties under the given clause in their main contract with the owner, decided instead agreed to pay Williams an extra amount of money per flat. In other words, there was an incentive to finish the contract. Williams was able to finish the work on more flats but did not receive full payment and this caused him to stop work and to bring an action for damages. While in court, Roffey argued that Williams should not be entitled to any new pay as the latter was supposed to be only doing what he was contractually bound to do and so had not provided consideration. The court making the final judgment however did not agree with Roffey and instead upheld the new contract on basis of new accepted offer. With the case at hand, that is if A and B had promised an additional payment of £250,000 in return for Build & Co’s undertaking to complete the work on time, the same would approximate the case of Williams v Roffrey over that of Stilk v Myrick. 2.2. Build & Co. Ltd recently advertised in a trade journal of its sale of a quantity of RSJs. Build & Co. Ltd received a fax order/enquiry for a quantity of RSJs subject to their being supplied by next Wednesday. Build & Co. Ltd faxed their answer by return indicating stock availability, and enclosing their terms of trade on the reverse of the invoice. The following day a cheque is received with the acceptance counterfoil completed and signed. Build & Co. Ltd banks the cheque, crates the goods and ships them by rail to the customer’s address. The cheque, however, is returned by the Bank marked ‘R/D’. What can Build & Co. Ltd now do to protect the goods, and how should the company regulate its business in future to avoid similar problems? Build & Co. Ltd. should hold the complete delivery of the goods before the same reached the customer. By the present level of technology this is possible to happen as the case the does not yet say the goods have reached the customer. It should be borne in the mind there was an ineffective payment since the cheque is returned by the Bank marked ‘R/D’ and it must be presumed that the company could have reserved the transfer of ownership to the seller until the payment from the check should have been cashed when the company “faxed their answer by return indicating stock availability, and enclosing their terms of trade on the reverse of the invoice.” As to how should the company regulate its business in future to avoid similar problems, should be easy, that is shipping out of the goods should be done only the moment that payments are converted to cash to lessen the risks of having to return the check to its customer with message ‘R/D’ which could indicate insufficiency of funds of the issuer of the check which was used for payment. Moreover under the present level of technology there are more faster modes of payment rather just using check. These include payment through credit card system and the use of electronic currencies which has facilitated trade among them. By having a faster way of verifying payment , the company would be able to save a lot of cost and hence helping the company to attain its financial objectives. 2.3. Discuss the statement that ‘product liability’ is the one area in which the European Union has successfully brought about substantial harmonisation of national rules’’. Dalby, J. (1998) stated that harmonization of product liability laws has been principally achieved by the Product Liability Directive 85/374/EEC [1985] OJ L210/29). He explained that as the European Commission found ahead of its original proposal, legal protection differed under the domestic legal systems of the members states on the availability of damages and their need for proof of fault, which he believed to have translated into cost differentials thus distorting competition and affecting the free movement of the goods and there causing uncertainly for the consumer. Dalby, J. (1998) therefore argued that the EU directive defines the circumstances in which the liability may arise and the extent of that liability. He noted however that the directive does not regulate general domestic law governing negligence. It was also further explained by Dalby (1998) that the chief principle of the directive is that the producer shall be liable for the damage suffered by anyone using his product where the damage is caused by the defect, irrespective of fault or contractual relationship. 3. Conclusion: It may be concluded in construction contracts there are indeed rules that must be obeyed that must be obeyed for the protection of the parties. These rules may be best understood with parties entering into contracts that may define the obligation of the parties in the performance of contract for the accomplishment of its purpose as well as the consequence and responsibilities of each in case of non-accomplishment of the objectives of the contract. But given the enormous risks of the project from both parties, an international practice of using arbitration would really help in resolving various conflicts and problems that may arise in the life of the contract. Harmonizing a product liability rules among EU members through a directive could be a big step in settling disputes among contracting parties that get their contracts governed by the EU law. Appendix A- Case facts Scenario You have been employed as a trainee at a medium build & construction company - Build & Co. Ltd. Your manager asked you to research the information for Build & Co. Ltd on matters related to a contract for a refurbishment of the Hill Penny Hotel and unpaid cheque from a customer. This information is necessary to determine whether Build & Co. Ltd should seek help of a legal firm or whether the matters will be dealt with ‘in-house’. In addition, your manager would like to have some information, for his own reference, on harmonisation of ‘product liability’ rules under the EU. Assignment 1 1. In early Spring, A and B, the owners of Hill Penny Hotel, contracted with Build & Co. Ltd. – a reputable company of builders – for a refurbishment of part of the hotel and training area, at a total cost of £5.5 million. A term of the contract stipulated the work to be completed y 20th October, 7 days before the hopefully victorious England Rugby squad would return from their World Championship success in France. A further term of the contract stipulated that a penalty would have to be paid by Build & Co. Ltd for every day that they exceeded the completion date [inserted at the request of the English Rugby Union (ERU)]. In mid-August, Build & Co. Ltd, at a progress meeting with A and B, asked for an extension of the completion date, due to the very difficult weather conditions, and the ongoing labour disputes they were experiencing. A and B, however, were adamant that the original date had to be adhered to as they had contracted with ERU on the basis that the accommodation and training area would be available for the celebratory homecoming party and thereafter for use as the headquarters of the English International Rugby Squad for the forthcoming Six Nations Rugby Competition. Reference: Dalby, J. (1998) Eu Law for the Construction Industry, Blackwell Publishing Penton Media, Inc. (2007) Arbitration Disputes {www document} URL http://retailtrafficmag.com/finance/leasing/retail_arbitration_disputes/, Accessed November 14,2007 Stilk v Myrick [1809] 2 Camp 317 Williams v Roffey Bros & Nicholls (Contractors) Ltd. [1991] 1 QB 1 Read More