Formation and Termination of a Contract - Assignment Example

SECTION- A a) Formation and termination of a contract: (i) Terms of the Contract A contract is a very particular term of legal action and hence it requires that all the relevant and necessary terms and conditions for the formation of a contract need to be fulfilled. While forming a contract, both parties do not have legally to specify all the details of their contract, but only those issues that are important to be explicitly covered. The contract is normally based on the intent of both parties to create or negotiate or terminate a legal relation between them and the legal contract is regarded to be concluded when the parties agreed upon the terms of the contract. A contract of sale must legally include names of parties, property or thing to be old or purchased, specifications or features of the items, terms regarding breach and cancellation of the contract etc. The fundamental idea in relation to termination of a contract is that a claimant can terminate a contract only where the term breached is an important one which is often termed as repudatory breach (Chen-Wishart M, 2007, p.505). While the contract is concluded, the contract made to another person is regarded to be an offer. (ii) Frustration of a contract John Murdoch (2001) defines Frustration of a contract as is applicable where due to some external events, the performance of a contract becomes impossible, illegal or absolutely different from what was first foreseen (335). If one of the parties in the contract was unable to comply with his contractual obligations, due to prolonged illness, death, natural disaster or any other sort of natural and external incidents, it becomes a frustrated contract. The frustration of a contract usually does not depend on opinions, or intention or knowledge of any of contractual parties. This is very limited in its applicability because, if a general law terminates a contract, it will interfere with the balance of risks among the concerned parties. According to Murdoch (2001), in the construction and civil law, the courts will recognize that one part becomes risk bearer in this, and hence to give risk bearing party an escape would unfairly distort this balance (p. 336). (b) Advising Mr. Harry. The contract in which Mr. Harry, who offered to sell his property to his friend, but could not sell to him because he has not received acceptance in due time can be considered to be a contract of frustration. It happened because of an unseen event that is the delay occurred in letter because of address change. Harry is not legally wrong. Harry can legally claim that the contract is frustrated. According to (2005) Frankowski and Bodnar, if the offeror hasn’t indicated any time limit for the reply, then that offer, if it is made in the presence of another party or by direct communication, is no more binding, if it is not accepted immediately (p. 48). This also shows that, Mr. Harry’s sale to another person cannot be considered to be wrong as he has not received a response in time. 2. Elements that a claimant needs to prove to make claim under the tort of negligence A tort is a legally wrongful activity committed by one on another or his property or anything that are interested to the later. Torts include negligence, educational misconduct, false imprisonment, assault and battery etc. the claimant is supposed to detail whether the consequences of the defendant’s act were foreseeable. The claimant has to disclose whether there was proximate connection between the parties. He has to detail whether it was a legal relationship or physical closeness. The claimant needs to prove that the defendant owes claimant a duty of care. The claimant also needs to prove that the defendant has broken the duty of care. Third and most important is to prove that claimant suffered a loss or damage of any that that is legally worth due to the breach of the contract. Murdoch (2001) emphasizes that it was laid down that a manufacturer of a product would be liable for negligently causing personal injury or property damage to a consumer (p. 338). 3- Principles of economic loss as a consequence of the claimant acquiring a defective item of property Product defects and economic loss have recently become a controversial topic in contract law. Till what extent a plaintiff can sue in the law of court against tort for non-personal injury is the core of this controversial issue. This non-personal injuries and losses are termed as ‘economic losses’. According to John S. Allee (1994), both economic loss and property damages are considered to be different. Property damage is damage to plaintiff’s property other than the defective product itself (p. 11-65). If a product is defective at the time of its sale or at the time of distribution, and the defect caused harm to the consumer, the seller or manufacturer is held liable for the harm. Harley Davidson was sued because of the rider, who was drunk, and therefore he involved in the accident. In this case, many plaintiffs have alleged that Harley Davidson has diminished its quality as being advertised or is not up to the standard being proposed, and hence any negligence, product liability and deceptive practice must be compensated. Lunney and Oliphant (2008) said that the duty of care which was formulated by Lord Atkin in Donohue v Stevenson, referred to foresight of physical injuries or loss or damages to the property as a consequence of negligent behavior (p. 282). It is to be noted that a manufactured product is not working and there is no damage on which the duty of care is based, the exact claim would considered being in the contract. The House of Lord, while rejecting the claimant’s claims, concluded that a builder’s liability with relation to tort is limited to those defects that can cause either injury to persons or physical damage to property rather than the building. Damage to the building itself can be considered to be the exact economic loss and hence it is irrecoverable (Murdoch, 2001, p. 313). SECTION- B- MANAGEMENT 4- (i) Effective teamwork A very effective and sound teamwork is crucial in building and construction industry as crucial in other business sectors. An effective teamwork comprises of values like collaboration and mutual understanding among members that are imperative for a successful management. One of the basic and necessary tasks of a project management is to shift the attention of tem away from individual interests to the common interest of project goals. Effective team work means an effective collaboration and work together for achieving goals. Uher and Loosemore (2004) find out that an effective team work comprises four elements namely respect, trust, openness and synergy. Respect to each other will lead to trust and disrespect will lead to stifle trust. Where there are trust and respect, the next elements openness and synergy will work out (p. 33) The development of an effective teamwork is not constrained by the traditional role of the team members. An effective teamwork force includes dedicated people with particular skills and capabilities and they all work together to achieve their common goal. In doing so, there would be increased number of challenges that need to be well faced by the team, especially in an ever changing construction industry atmosphere. Effective team must be able to provide solution to any problem that is either superior or more challenging than those that are already developed. The composition of teamwork in construction field is of varying feature from place to place, project to project and time to time. Factors involved in selecting right team The team to be selected for the project must fit and must be qualified to be in a team. Some of the very important and factors that determine whether an individual fits for the need of project teamwork can be summarized as below:- Ability to set, clear and realize the achievable goal. Must have appropriate skills and both academic and physical qualification needed for project. Ability to develop mutual understanding and collaboration. Commitment and loyalty attitude to the project and teamwork. Ability to establish positive and open communication throughout the team members. (ii) Project and Common features A project has been defined as a temporary endeavor undertaken to achieve a particular aim (Heerkens, 2001, p. 10). This definition identifies the basic feature of a project that it is temporary in nature. Project normally includes a linkage between different activities, because it includes a well defined collection of small jobs. A project, let it be related to construction or any other industry, is carried out as solution to a problem. The problem is solved or the task is done with a well organized team who work for the project. A project is unique and the same is never done again. It will never be done again in the exact way, though the same type can be done with some changes. A project is normally associated with risk and uncertainty. It can never be predicted as how and when a project will be finished, although it can be planned. In carrying out a project, there would be difficulties, threats and limitations that cannot be just ignored. A project consumes resources. A manufacturing project consumes raw-materials, time, labors and so on. A construction project also consumes labors, management team, time, area or plot in which the project is carried out and raw-materials like cements etc. 5- Pros and Cons of scientific management To the worker According to the father of scientific management, F.W Taylor, the art of management has been defined as “knowing exactly what you want men to do and then seeing that they do it in the best and cheapest way” (Gilbreth, p. 1). Scientific management has played crucial role in the 21st century, but, notably there are many disadvantages to both employee and organization. The scientific management benefits workers in the way that there would be a mutual relationship and better co-ordination between employee and employer. It would result in mental and physical improvement and healthy feelings inside a workplace. The theory emphasizes to met the general objective of both employee and employer, and hence employee’s needs and wants are considered in a better way than it can be in other management system. The scientific management approach is to select workers according to the ability of workers that they are fit to. It gives freedom of choice to workers and same time appreciation to the skills and abilities that they have. But, same time, the scientific management viewed employees as ill educated and often not fit for decision making. This was considered as undervaluing the ability of workers as there are many who may be more able, skilled and capable of immediate decision making than that of employers. To the employer The scientific management school was directly influencing the productivity within an organization. More efficiency was achieved by subdivision of labor. When specifying and directing what exactly to be done, when it is to be done and how it is to be done, workers find it more easier as there are no controversies between management and employees and same time, employer could experience the best outcome as is targeted. Scientific management was best practice to employers in order to convince employees what to be done. It brought better channels of communications between levels of management and hence it helped employers to participate workers in the exact task. According to Beissinger (1988), all scientific management approaches contained enormous potential for abuse and it sparked worker dissatisfaction. Even the most scientifically determined norms easily floundered upon social fabric of the organization (p. 132). (ii) Advantages and disadvantages of tall and flat organizational structure Tall organizational structure refers to a structure of management system where there are more levels of managers and supervisors. As an organization grows and it further needs more people to be involved, it will become rich with many managers and the number of hierarchy of managers becomes tall. When the levels of management increase, the total problems and tasks of the organization will be scattered among many and same time all these managers would be more specialized. A tall organizational structure always experiences the great challenge of communication channels. There can be distortion in the commands and orders. A tall structured organization feels difficulty that time lag between top level orders and reaching it to the lower level managers may be longer and it may adversely affect the communication. Flat organization structure has few levels of management but it represents wider spans of control. As there are fewer levels of managers, there would be quick communication flow. Even though the number of managers in flat structure also is more, there can be more effective channels of communication than that of in the Tall structure. The Flat organization structure has been criticized that it leads to overworking managers. As there are few levels of managers and they do more jobs, it may impact the overall productivity as well. 6- Precedence Network Precedence network means the sequence or orders of activities in a project. If one activity has to be done before the other one to be started, the first one has precedence and hence it needs to be sorted in the first lines. The precedence diagram is shown below Project Duration Start up= 0 + (0) Setting up + Landscape = 3 =3= (highest is = 3) (3) Erecting Hutment+ clear up soil + excavate foundation= 2+ 3+ 2 = 7/3 = (3) Concrete , dpc, brick, window, door and ground floor, fitting (10) Clad roof, painting, drainage and erect roof (5) Cleanup (2) Total Duration=== 23 days (iii) Critical Activities Most critical activities in this project are identified as:- Concrete to foundation Erecting hutments Windows and doors Erect roof structure Excavate foundation References Allee J S (1994), Product liability, Revised Edition, Law Journal Press Beissinger MR (1988), Scientific management, socialist discipline and Soviet power, Illustrated Edition, I.B.Tauris Chen-Wishart M (2007), Contract Law, Edition -2 Illustrated, Oxford University Press Frankowski S and Bodnara (2005), Introduction to Polish law, Kluwer Law International Gilbreth FB (nd), Primer of scientific management, Adamant Media Corporation Heerkens G (2001), Project management, Illustrated Edition, McGraw-Hill Professional Lunney and Ken Oliphant (2008), Tort Law: Text and Materials, Edition3, Oxford University Press Murdoch J (2001), Construction contracts: law and management, Edition-3, Illustrated, Taylor & Francis Uher TE Loosemore M (2004), Essentials of construction project management, Illustrated edition, UNSW Press Read More