Legal Remedies for Breach of Contract - Dissertation Example

Report on Legal Remedies for Breach of Contract Contract Definition, Analysis and Transformation: Contract form an indispensable aspect in the modern commercial world. Contract is a promise meted out to any one, which demands indemnity or other remedy if there is a breach, and on successful execution of it is recognized as a duty. There are three interconnected elements in a contract which form the fundamental of it: 1. A promise English law, states that a mere reference to a promise is factually incorrect and misleading. The fact is that English law will not give effect to a mere promise and the next important issue is that an agreement, or consent of parties interested to execute a contract, is required in exchange of a consideration may be legally binding on the parties making such promise. 2. A legal obligation arising from that promise In English contract there is a distinction between bilateral contract and unilateral contracts. In a bilateral contract there is obligations on both sides i.e. both parties are equally responsible for the smooth execution of the contract, Collins (2003). Breach of contract is punishable with damages or other remedies under the English system of justice. In respect of remedies two types of remedies are available under the English Law one under the common law and the other under equity. England had two different systems of law, which are operating simultaneously; they have different set of rules altogether different from one another. The courts of common pleadings called the King’s Bench, also called the common law, which takes care of common law justice, the other, presided over by the Lord Chancellor, which delivers the justice under equity, Collins (2003). The next major issue that comes to light is what consists of breach of contract. So in order to determine the existence of contract it has to be decided first that weather the promise made can lead to the legal obligation alternatively an executable contract. The court prepares a questionnaire to deduce weather an enforceable and lawful contract is in place. The set of questions which needs to be asked are: 1. Was a promise made? 2. Was it made to seriously execute some objective and needs implementation? 3. Was the promise made with certainty and definite? 4. Was there acceptance of the promise made? 5. Was there some actions done to implement the promise into concrete action? If after asking the above questions the court thinks that there is reasonable ground to believe that the answers received from the above questions are affirmative then it can be concluded with reasonable confidence that an enforceable contract exists. With the help of these legal reasoning a credible and definite set of rules comes up which if applied to the facts of the case will lead to the exact and righteous conclusion. The rule concludes at two different points one leads to the facts, which proves the point or fails it. In the case of Carlill v Carbolic Smoke Ball Co proves the extension of the law of contract in 19th century and its formal and logical conclusion. Here the court deduces to reach the logical conclusion to prove the existence of economic relation. The fundamental analysis of the law of contract depends on the voluntary choice of an individual. The contract law was initiated to facilitate voluntary choices in close touch with the legal aspect. In order to achieve this goal the law identifies and desists those contracts, which are not voluntary. The list of questions specified earlier proves the means of determining the choices of the parties as in Carlill v Carbolic Smoke Ball Co case. In this case the court directed that the manufacturer of smoke ball is liable ostensibly for breach of contract as it voluntarily chose to enter into a contract and later on failed to carry on its obligation. In the traditional doctrine the courts only stressed on the voluntary aspect and did not paid any attention to the inconsistent rules and doctrines like fairness of the terms of contract. Even in modern contract law this traditional doctrine of contract finds place, which is based on the idea of voluntary choice, Collins (2003). The modern day contract penetrates deeper into various aspects like contractual relationship; there are separate laws, which regulate the rights and remedies that the parties may enjoy and also the safeguard for their contractual rights. So it is clear that the age-old principle of voluntary and involuntary choices is diluted with new doctrines and aspects of law. It is a common and customary fact that businessman enters into big deals with a man’s word or a handshake or putting faith in one’s honesty or decency. Such business deals may be of enormous risk involving both money and risk. It is customary for the diamond merchants in the Jewish community to enter into deals of enormous amounts with a mere handshake, which has grown out of close bonding between an immigrate community. Even in case of dispute settlement private arbitration is common amongst the community. There are instances where the usual trend is in favor of formal agreements, but dealing in informal way is not uncommon and parties are comfortable with such terms without bothering to carry on with formal contracts but relying simply on telephonic conversation. There is an interesting example in this regard, which is in respect to the chartering of vessels through the shipbrokers in London. Though there are instances of such informal means of contract but it does not mean that this is always the usual trend. In case of more complex transactions like complex joint ventures, partnerships or long standing supply contracts formal legal contracts find a indispensable aspect to carry out a long standing business relationship and build up a solid foundation for a flawless business activities in future. Despite all the formalities involved it has to be kept in mind that the real dynamic of a successful contract lies on the commitment of the parties to execute it successfully and also sacrifice immediate gains in favor of a some long term achievent which will ultimately lead to accomplishing some goal which will help fulfill the commitments for which the contract came into existent. The main aspect of successful contract lies in the visible intention of parties to implement it with all the ability the aim being to protect business interest and reputation for long term. Contractual behavior can be coined in the following brief points. It reveals the conduct of the parties towards a particular frame of behavior; these are explained here. The most important point is the trust that should be there in order to enter into a contract or at least the willingness to enter into a contract. It is absolutely necessary to have a strong foundation in the way of trust, which will act as an adhesive to bring together two parties to set the ball running as the first step. The second step involves that the deal is fair for both the parties i.e. it should be a win win situation. There should be a feeling from both sides that they are equally gainful if the contract is executed, Collins (2003). All these years there has been significant changes in contract law and these changes are not due to induction of new doctrines or principles but more than that it has been a transformed way of interpretation and a whole different approach that has taken place due to the changes brought about in our society and commercial way of life. Redefining of new laws and the change in concept may be due to new interpretation of law, but that does not mean that traditional concepts are put under the back burner. The truth is that these old concepts acquire new meaning with advent of modern commerce. Legal doctrines of estoppels or undue influence are more rigorously enforced. But this transformation theory is controversial as some analysts think that such change is for greater protection to consumers. So now law has been molded to bring more opportunities and satisfies need. Another aspect of modern day contract is distributive justice that is the give and take between two parties must be just and equitable that is the percentage that he gives is what he should get in return; there should be some kind of reciprocity, Collins (2003). English law in particular can be in any form, i.e. English law does not necessitate a contract to be in any particular form. So in principle an agreement can be oral also. Even if there is a signed contract the court can insist that the written document does not specify the whole content and there is need to examine the contract in an holistic approach i.e. other external points need to be considered. A statement, which may be oral or written, constitutes the term of the contract, it constitutes a promise made by the parties to the contract during the course of negotiations. If the statement made by either of the parties is untrue then the other person affected or suffering loss because of the false statement can claim for damages or bring a suit for damage or take action as per law. It is to be pointed out that a written contract can be in several forms. It is broadly termed as the means by which the intention of the contractor id conveyed to the client. A contract document is a means through which an intention of one party is conveyed to the client. It can be said that such a document can be in several forms including a letter and even oral and may contain terms of a contract. In a given case if the statement in such document is seen to be false then the innocent party may bring an action for breach of contract. If the statement is a method to induce the other party then action for misrepresentation can be brought against the party, but the sting of action is most in breach of contract. It need to be noted that whether a statement is just a representation or statement, if it is at an early stage then it is a representation and a statement made by an expert can be assumed as term. In construction contract the decisive aspect is a signed document by parties are a contract document and signifies the contract as whole where as any other statement, promise and assurance is a representation, Murdoch and Hughes (2000). Remedies against Breach of Contract and Alternative Dispute Settlement: In case of breach of contract there are a number of remedies like monetary damages i.e. damages equivalent to money. There are three types of monetary damages like compensatory damage, nominal damage and punitive damage. Other than these there is Equitable damages like specific relief, rescission, restitution and reformation. The above dispute resolution is by way of action in the courts under common law or under principles of equity. Other than that there is alternative dispute settlement where the parties feels that the cost of court proceedings are too costly then they can opt for negotiation, facilitation, mediations, arbitration and private court, Cameron (2003). In construction industry there is requirement for speedy and expeditious settlement of dispute so alternative dispute resolution is very helpful and growing trend. In a private informal dispute resolution process a neutral third person helps both the parties reach a settlement though he does not have any power of binding the parties with his decision. In arbitration an arbitrator is selected by the parties who give an order according to his judicious discretion which may be binding on the parties and can be ratified by court if the agreement is such, Cameron (2003). Analysis of the Existing Dispute with Probable Remedies in Statute: The report on contract act its principles and doctrines and the trend by the courts of justice can throw some light in the case of Ormskirk Builders Limited and Happy Breakfast Restaurants Limited. In the given situation it was the in house project manager of Happy Breakfast Restaurants Limited, Harry Chalmers, who approached the construction company and asked for a pricing by telephone and Ormskirk Builders Limited send their contracts director who gave a report to the Managing director of the company and they specified a quote. There were verbal negotiations and finally it was settled as 45000 GB Pounds and after that a letter was send to Happy Breakfast Restaurants Limited who gave a go ahead as per the letter. In this case the letter can be taken to be the contract statement and the information contained in it the terms. As the restaurant did not give any other objection the court will presume that the intention of the parties were positive and favored the terms of the letter. So the construction company was within its obligation and had an honest intention to carry on its part of the terms of contract as per the specification. So it sends the work force to the site on the date of 25th April 2009 as specified in the letter. On the given day when the work was supposedly to begin Happy Breakfast Restaurants Limited said that they are not ready to carry on the expansion of the kitchen area and only build the extension and unilaterally revised the price at 30000 GB Pounds. From the given circumstances it is clear that the other party is not serious about the construction contract and showed unprofessional attitude, which puts a question mark on their intention to perform their obligation. The Ormskirk Builders Limited can bring a suit of breach of contract and ask for compensation because of the damage suffered due to the failure to carry on the obligations of the contract by the Happy Breakfast restaurant. More over it can pray to court to enforce the fulfillment of the obligation in the contract by Happy Breakfast according to the agreed terms. Here as the construction company denied to carry on the work in accordance to the new terms so the best action will be to file for damages in the court for the breach of contract as it has suffered loss of its idle workforce as well as its valuable and precious time and charges it had to bear to hire its qualified workforce. It is clear from the facts that the court may consider the charges against the restaurant and the damage suit may find a favorable response from the court. On the other hand there is little defense for Happy Breakfast as the details of the case clearly indicts them for their malicious intention. As they have failed to inform their intention beforehand though they were the party that approached the firm. Their only defense can be to plead for an altogether new negotiation for their reduced requirement. It is still difficult for them to escape the damage. In a case decided between PJ Carlin Construction Co v Whiffen Electric Co. Inc. the Court held that it is customary for contractors to rely on oral offers and the determination of the terms will depend on the intention of parties so it will be difficult for Happy Breakfast to plead that there was no contract or terms of contract was unambiguous, Krol (1993). It seems that the judgment of the Court will favor the Ormskirk Builders Limited and they will succeed in the damage suit for breach of contract against Happy Breakfast Restaurants Limited. (Total word count 2576) References Cameron, J.G. 2003 A practitioners guide to construction law ed 3 p 19-1,2 Carlill v Carbolic Smoke Ball Company [1893] 1 QB 256; Court of Appeal, 1892 Dec Collins, H 2003 The law of contract Lexis Nexis London ed 4 p8 –14, 15,16, 41 Krol, J. J. P. 1993 Construction contract law John Wily &Sons New York p 5,6 Murdoch, J. R. Hughes, W. 2000 Construction contracts: law and management p 131-132 Spon Press London ed 3 P.J. Carlin Construction Co. v. Whiffen Electric Co., 66 A.D.2d 684, 411 N.Y.S.2d Read More