Legal Aspects of Contract Administration - Assignment Example

Legal aspects of contract administration Question Introduction: The first Case Study scenario deals with the rights of contracting parties underCable Television laws in vogue within the United Kingdom, arising out of contractual privileges, obligations and administration. It also considers the resultant legal situation, wherein one party tries to dishonour part of contractual obligation to the other, and the remedial measures that affected, or the distressed party could avail of, within the ambit of the prescribed laws and practices in UK. Before moving into the deliberations of this specific case scenario, it is necessary to consider the structure of this case study. In the first place, the salient characteristics of this Heads of Agreement, in terms of Cable Television Rights, were presented and agreed upon mutually by the parties concerned. This would also consider the broad framework of legal elements that have been agreed upon between the two parties, in this case, Abedour Ltd (henceforth referred to as A Ltd) and Brighton Ltd (henceforth referred to as B Ltd) who had mutually agreed upon signed the Heads of Agreement in terms of Cable Television Rights. The agreement also stipulates how such signing of agreements incriminates the two parties, A Ltd and B Ltd, in terms of the duties and obligations under appropriate and relevant laws. The first part would consider the main issues involved, including action arising out of, and due to A’s apparent flouting, and breach of this agreement. Later, application of suitable rules governing this aspect of business, that is cable television business would be examined, including relevant provisions of law that have been infringed and need to be remedied contextually. Next, the analysis of this case scenario, and its impact and implications, including the alleged contention that the draft, as a matter of fact, contained large number of additional terms, including an obligation on the part of A to spend a minimum sum of $2 million for telecast promotion and gain of sponsors for TV programmes. Issues: A Ltd and B Ltd agree, through mutual consent to Heads of Agreement, to sign a contractual agreement which enjoins the following clauses: Clause 1: A Ltd agrees to acquire from B Ltd, who, in turn agrees to grant, exclusive right to utilise TV broadcasting license which B Ltd presently holds, which entails televising rights of ensuing 2012 Olympics. Clause 2: A Ltd agrees to televise all events staged during 2012 Olympics and to provide sufficient facilities to enable appropriate overseas telecasts to global viewers. Clause 3: A Ltd agrees to pay an upfront sum of £3 million to B Ltd. Clause 4: A agrees to pay such sum as B considers to be sufficient, in respect of revenue obtained from: (a) approved sponsors; and (b) overseas telecasters. Clause 5: Such other terms as may be agreed between these two contracting parties, acting in good faith and within spirit of co-operation and understanding needed for meeting of aims and objectives for which this contract relates, albeit these terms must be necessary in the best and effective interests of this joint venture between parties A Ltd and B Ltd, and also of the kind normally found in such kinds of contractual agreements in this kind of businesses. In this connection the main issues that legally emanate are: 1. What happens to the ensuing agreement now that A Ltd decides that the price is too high and refuses to comment on a draft of the formal contract prepared by B’s solicitors. Could his actions and inactions be construed as perceived notions of invalidating the letter of intent, and not accepting the invitation or offer made by B ltd? What should be the legal implications and consequences of the £2 million demanded by B to be paid by A for telecast promotion and gain of sponsors for TV programmers 2. “One of the more important terms in this letter, or as it is sometimes known “heads of 3. Agreement” is the financial protection it offers if the seller decides to terminate the deal. (Business sale contract, 2010). In this case, there are no such specific clauses that could address issues like non acceptances of terms of contract, by either party, A Ltd or B Ltd, nor are there any provisions delineating clear cut consequences in the event of breach of this agreement of contract. Rule: There is no valid contract between A Ltd and B Ltd in this case, since both parties have not agreed on same aspect in the same sense. In other words, there is no specific and perfect unanimity on purchase consideration payment and what is the quantum of payments that would have to be made. Mere vague and unsubstantiated statements like “B considers to be sufficient” cannot be tenable in Court of Law wherein the jury looks for formidable evidence and robust substantiations. Thus, this contract between A Ltd and B Ltd is still at its nascent stage and is unresolved. Next, whether the LOI between them or the signed Heads of Agreement are enough documents to enforce specific performance on part of A Ltd needs to be examined. In the case of British Steel v Cleveland Bridge (1981) 24 BLR 94, Robert Goff J., a similar situation arouse when the negotiation work was in progress and claims arouse, in the absence of a valid contract. “At trial Cleveland Bridge’s case was that there was a concluded contract between the parties with the result that they were entitled to claim damages for breach of contract. British Steel’s case was that no contract existed and that they were entitled to the sum claimed as a quantum meruit.” (Curtis 1981, p.1). However, in the case of AC Controls Limited v British Broadcasting Corporation [2002] EWHC 3132, HHJ, the actual conduct between the parties to the LOI were examined and it was held that when the detailed provisions of the letter of intent were properly interpret, the financial limit did not apply and ACC was entitled to claim the full value of the work it had carried out. “It was held that the spending cap was not intended to limit the amount that ACC could recover, but was intended to operate as a trigger entitling the BBC to terminate the contract any time after the cap was reached. ACC was required to carry on working and was entitled to payment of a reasonable value for the work done.” (Atkinson 2006). Analysis: However, in this case of A Ltd v. B Ltd, there is no unison on the future payments that could be made although there is an amount of £2m to be paid towards telecast promotion and expenses for gaining programs. It is necessary to consider that the conduct of the parties does point to the fact that there are intentions on both sides to create legal relationships, although no format binding contract is visible. Besides the other essential elements of contract like consideration, legality, and competence of the parties to enter into valid contract is indeed present. However, this restrictive LOI does not have total acceptance of all terms of expected contract in terms of acceptance of the provisions by A Ltd. There has been an invitation to make an offer by B Ltd, but there has been no counter offer or action on the part of A Ltd. This LOI stops short of being a validated contract by A Ltd. Coming to the rights and remedies available to B Ltd, more than the question of law, the intentions of the parties and the impact of this quasi- agreement or LOI is more important and relevant. The laws cannot be enforced unless a valid contract is present and A Ltd could be seen as in breach of contractual obligations. At best, he could enforce the provisions of Clause 4 and Clause 5 which, itself is vague and not specific and clear. Conclusions: As such, legally speaking, the terms and conditions of a Letter of Intent (LOI) cannot be imposed, unless there are strong reasons for its enforcement. Besides the fact that LOI is not a legal document and is unenforceable in Court of Law, there needs to be fixed time frame and clear cut financial commitments in order to be even of workable prototype. Besides, there is absence of consent of same aspects in the same line of thinking by both parties. A Ltd does not seem to have agreed whole-heartedly to the terms and conditions imposed by B Ltd’s formatted contract. There is need for another set of negotiations between the parties on fresh misunderstandings, especially with regard to capping amount of sponsor and program costs, and both of them need to arrive on a mutually agreeable contract price, which, when negotiated, could form a full fledged, time bound written and registered contract between the two parties including how potential Dispute Settlements and future misunderstandings as the present one could be amicably resolved. Question 2 –mistake, misrepresentation, misleading and deceptive conduct Introduction: In this case the contract between Australian Museum of Marine and Dr Spender is void able contract. Void able agreement is lawful and binding at minimum one party to the contract and also which must accomplish small piece of the contract. After made an agreement between these two parties Dr Spender fails to fulfill terms and conditions of the contract. So that Dr Spender is liable for the punishment under civil law. The museum desires to obtain civil action in opposition to the man to get out of the contract, recuperate the $500,000 and the $55,000 spent on arranging a fresh display. So that, defendant is liable to pay the amount $500,000 and the $55,000 as compensation as monetary damage. Damages are a financial expense on behalf of a lawful remedy for violation of lawful rights. A contract is mainly an agreement enforceable law. And also if the contract becomes valid they must satisfy certain legal requirements. There are numerous courses of contracts which, however ideal concerning structure, contract and consideration, are not specified complete result for the reason that they offend in opposition to the rule of the law. Several contracts may be unlawful in the logic that they engage the charge of a lawful wrong, whether by law or the general rule or for the reason that they offend in opposition to elementary values of order or principle. Less offensive contracts may be merely invalid by universal law or act. The term contract is an agreement among two or more groups that can be obligatory at law. The equivalent lawful ethics commonly apply at universal law to all categories of contracts. Ultimately, the strict request of the universal law has been impacted by the doctrine of equity, planned by the judges to control unconscionable contractual effects and encourage justice. Statute rule has changed or reinstated the universal law with respect to a variety of features of contract law. There are generally six important ingredients essential for lawfully involving the contract progress. That are (1) agreement it consists of offer and acceptances made by the parties to the contract, (2) Offer must be made for the Consideration either in terms of money, property etc., (3) ability to enter lawful affiliation among the parties to the contract it means the party to the contract must enjoy sound mind with majority of age, (4) Intention by the groups to enter into lawful affiliations, (5) must fulfill the requirement of the valid contract and (6) certainty. Contract may sometimes also turn into illegal contract if it fails to fulfill the requirements. With reference to certain agreements canceled in the above values its not completely apparent whether they are unlawful or invalid; but the difference must be prepared, for the reason that there are dissimilarities connecting unlawful and invalid contracts with regard to correlated contracts, severability and revival of possessions relocated or cash paid in such contracts. In this case Dr Harvey Edwards is the guardian of the Australian Museum of Marine Antiquities. Previous year he was approached by a person who commenced himself as Dr Richard Spender, lecturer of Cape York University who was a celebrated marine investigator specializing in pre- colonization ship wrecks. With this faith k the museum therefore paid the man $500,000 to perform the rescue and revival and began to map how such artifacts would be exhibited for crockery and jeweler. Such preparation cost $55,000. After received the money from the Harvey Edwards, Richard Spender, was disappeared. Further study exposed that the crockery and jewellery for in reality fakes and the genuine Dr Spender was found in a Queensland nursing home having undergoes a major stroke and was now permanently harmed. After widespread police searches the person was found in Western Australia and has at the present been extradited reverse to New South Wales to countenance illegal charges for deception. So that, the museum desires to catch civil action in opposition to the man to find out of the contract, get well the $500,000 and the $55,000 spend on organizing a new present. “If a contract is one which may be rescinded, then it is said to be void able. What this means is that the contract is perfectly good until avoided or rescinded. We have therefore seen that a contract may be void (eg for uncertainty) unenforceable (eg for non-compliance with the Statute of Frauds or Because a limitation period has expired) void able (eg for misrepresentation, mistake, undue influence, duress, unconscionability in bargaining.” (Paterson & Hocker1998). The duration of negotiations this participated a piece in influencing the further party to go into the agreement. This is called as a misrepresentation. As previously designated, the result that a misrepresentation has on the agreement is that it facilitates the deceived party to withdraw the agreement. As well as the remedy, there is also the option from exterior the rule of agreement of a right to compensation. This arrives from the rule of tort. So that it will remember that a deceitful misrepresentation produces a right to compensation for dishonesty; a neglectful misrepresentation may produce a right to damages in carelessness in the Shaddock and San Sebastian cases, leaving reverse to the case Hedley Byrne judgment of the Lords. The rule of misrepresentation is difficult for the reason that we have to seem to be to two foundations of rule: the common rule which is an mix of law and justice policy; and The Trade Practices Acts of 52 and its reasonable trade Act mirror necessities in all country and region. The Trade Practices Policy offers different types remedies for violation of s 52, together with a remedy relating to injunction which is suitable for marketing cases other than not for pre-contract talks. Case law “Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (HPH 1134), that the remedy of rescission was not granted in that case because it would have been very unfair on the seller to force it to take back a business which had been very substantially changed by the buyer.” (Paterson & Hocker1998). In this case there is mistake on the part of defendant so he liable for the civil action. This is described scarcely; no common right to be unconfined from an agreement on base of mistake. So that it does not envelop errors of decision. It does not work merely for the reason that a party afterward determines facts which would have influenced them not to come in the agreement had they recognized of them. Contract we can see in this particular case is the Void able contracts and it may occur in the course of misrepresentation, various cases of fault, nondisclosure, and force. The setting away of a void able agreement is resulted by rescission. Conclusion: In this case there is a breach of contract on the part of the defendant so that he is liable paying the amount $500,000 and the $55,000 as compensation. If the contract become valid parties to the contract must fulfill certain legal requirement. Or else he is liable for the punishment under civil law. Reference List Atkinson, D., 2006. Quantum merit: What is a claim for quantum merit? [Online] Atkinson Low. Available at: http://www.atkinson-law.com/library/article.php?id=51 [Accessed 18 October 2010]. Business sale contract, 2010. [Online] Contracts & Agreements. Available at: http://www.contractsandagreements.co.uk/business-sale-contracts.html [Accessed 18 October 2010]. Curtis, M., 1981. Letter of intent case summaries. [Online] Crown Office Chambers. Available at: http://www.crownofficechambers.com/downloads/134.pdf [Accessed 18 October 2010]. Paterson, H. & Hocker., 1998. Misrepresentation and misleading or deceptive conduct. [Online] LBC Information Services. Available at: http://law.anu.edu.au/colin/Layout/Misrep_h.htm [Accessed 19 October 2010]. Read More