MD Building Ltd Facing a Threat of Legal Action For Breaching Contract - Case Study Example

It has come to our attention that M Davis Building Ltd has somehow breached the contract with two contractors who apparently claim that they are bothentitled to work on the groundworks. Mr Morton is claiming that he had received an offer of work, which he had accepted on the telephone. However, he has discovered that Mr Parker Piling, a close competitor is already underway doing the groundworks job he was supposed to do. Mr Morton said that unless Mr Parker Piling is kicked off site immediately and let him carry out the work he was supposed to do, then he would sue M D Building for breach of contract and claim damages for loss of profit and injury to his professional standing. On the other hand, Mr Parker has threatened to sue the trainee manager in person for breaching the contract since it was agreed between the two and the later had promised to tell the Managing Director of M Davis Building Ltd about the latest developments when she is back into office the following week. Indeed, the issue has legal consequences on all parties involved. M Davis Building Ltd is on the center of the wrangle and the two contractors are entitled to sue for the damages caused whilst the trainee manager in person also faces the risk of legal charges for breach of contract. In this regard, the definition of the word contract should be put straight so as to try to find a solution to this impending legal issue facing the parties involved. Koffman L & McDonald E. (2007:1) define a contract as, “a legally enforceable agreement giving rise to obligations for parties involved.” Simply put, if you promise that you will do something for another person and in return, that person agrees to pay you something, then you and that person have made a contract. A contract can be in verbal or written form but the most important thing is that there would be an agreement especially between two parties. According to the labour laws of many countries, both the worker and the employee are bound by certain statutory regulations that would ensure that no party will breach the agreed contract. In this case the legal issues raised are quite complex and careful consideration has to be taken to avoid negative consequences. First and foremost, MD Building Ltd entered into an agreement with Mr Morton verbally whereby he agreed to take up the contract on the phone. Legally, he has entered into a contract but all the same, he does not feature up for the agreed inspection of the site and he does not give feedback. Mr Morton seems to be taking everything for granted by virtue of having been offered and agreed to undertake the contract. However, this does not go down well with the main contactor who has not heard from this person who has been offered a contract until she decides to delegate a trainee manager to look into the matter. The main legal issue between Mr Morton and MD Ltd is that he has entered into a contract with a registered company and had agreed to start work at the end of April or the beginning of May. Unfortunately a privately hired contractor apparently starts work the period he is supposed to begin the same job also. On the other hand, Mr Parker has entered into a contract with an individual on behalf of the company and has also threatened to sue the person he has entered into a contract with on his personal behalf. Mr Morton asserts that he entered into the contract with MD Ltd over the phone and under normal circumstances it is legal. They agreed that he would start the work probably at the end of April or the beginning of May. Whilst he did not pitch up for inspection of the plans as well as the site, he did not personally turn down the offer and it was still legally binding. However, the shortcomings on his behalf led MD Ltd to assume that maybe he had reneged on his promise and went on to consult another contractor. Mr Morton claims that he has legal ground to claim for damages caused to his reputation since he entered into this particular contract with a registered company which ought to inform him accordingly about any changes with regards to the contractual obligations. Mr Parker on the other hand claims that he entered into a contract though with an individual and would also sue for damages if his contract is terminated. Whilst both the claimants have the right to sue, the magnitude of their contracts have the ultimate weight that can be considered in the courts of law should either of them is kicked off the site. There are certain legal effects of each item in this case. If Mr Morton looses the contract, he can still go on and sue MD Ltd by virtue of the fact that he was approached and he agreed to take the job. It was also agreed that the job was likely to start towards the end of April so there was still time for him to still visit the site. The act of being sued in the courts of law would lead MD Ltd to suffer a severe blow as its reputation would be discredited by other players in the construction industry. Whether right or wrong, the act of being dragged to court over breach of contract would speak volumes about the organisation’s image which would be likely to be tarnished and can be very challenging to the organisation as a whole as it would need more effort to spruce its image in the face of negative publicity likely to emanate from the lawsuit filed against it. It can also be noted that Mr Morton officially entered into a contract hence there also ought to be some form of official termination of his contract should the need arise. He stands higher chances of winning the case given that he will argue that MD Ltd’s actions were informed by assumptions where there was no official correspondence after the agreement. Mr Morton’s case has legal weight in two main ways which include the following: his contract was an official invitation by a registered company and he would stand likely chances of success since MD Ltd would give in for fear of being discredited about its reputation for breach of contract. Mr Parker has the legal right to sue the trainee manager on his personal behalf since the contract was agreed between the two. The agreement seemed to have been reached in an informal way where there was no official correspondence. Whenever a person has decided to enter into an agreement with someone, both parties should have a common ground of understanding of the nature of the contract they would be agreeing upon. Given that he is entering into a contract with a big company, Mr Parker ought to have made every sure that there is official correspondence from the responsible authority not to simply just use assumptions. Indeed, he may sue an individual but it will have less impact given that he would only be an employee who cannot single handedly decide the awarding of contracts without authorisation from senior management staff. The advice that can be wise to Ms Smith is that the real legal position is that Mr Morton officially entered into a contract with MD Ltd as a company hence a lawsuit against the company would discredit its reputation as a renowned player in the construction industry. She would rather terminate Mr Parker’s contract whose legal case has less impact as the lawsuit would be filed against an individual not a company. An individual person is just a worker and a case against him would not tarnish the image of the whole company. According to information obtained from Indiana Courts’ website (2009) a person who sues in a civil case generally wants the court to order the person at fault to pay them money damages. In this case it would be rather advisable to pay the damages as an individual should they be levelled against him personally than to let the company risk its reputation of an issue of breach of contract. Over and above, it can be noted that MD Building Ltd is facing a threat of legal action for breaching contract when two contractors apparently clashed whereby one of them was awarded a contract officially but took time to start work though it was still within the time frame. The other contractor was given a contract by an individual employee who promised to discuss it with the boss when she is back. The legal implications in this case posit to the effect that a person who was officially given a contract stands better chances of winning the case as failure to do so would result in poor reputation of the whole company as a whole. References Koffman L & McDonald E. (2007), The Law of Contract, 6th Edition, Oxford University Press, Retrieved on 05 May 2009, from: http://books.google.co.za/books?id=8JtwkQrAC_kC Consumer law: What is a contract? Retrieved on 05 May 2009: from: http://www.paralegaladvice.org.za/docs/chap11/02.html Chapter 8-Labour Law, Contract of employment, retrieved on 05 May 2009, from: http://www.paralegaladvice.org.za/docs/chap08/02.html Indiana Courts, Types of courts, Retrieved on 05 May 2009, from: http://www.in.gov/judiciary/about/05-casetypes.html Read More