Analysis of Law of Contract - Case Study Example

Law of Contract By + Law of Contract Offer and Acceptance A contract involves a party making an offer and the other choosing to either agree or disagree with the terms mentioned in the contract. Many people do not know the terms offer and acceptance. In many cases of breach of contract, the presiding judge requests legal counsel to assess whether tin the contractual agreement under dispute there was an indication of acceptance to an offer made1. The party that makes the offer, in law, is the offeror, while the party expected to make a decision whether to or not to agree with the terms spelt out in the contract is the offeree. A contract is binding when the offeree makes the decision to accept the terms of an offer as presented. In the case study, there were several offers that were made, albeit verbally. One of the instances where an offer exists is when Jackie asked Kenzi whether he would agree to take up the job of repairing her roof. The moment Kenzi agreed, he enetered a contract. Kenzi was bound to perform his duty of repairing the roof. The second instance where there was an agreement is when Kenzi quoted the cost of repairing the roof to Jackie. After negotiating, Kenzi quoted a price, although that price was below what he considered a reasonable price. By agreeing to pay a specified fee for the work done on her roof, Jackie accepted Kenzi’s offer. In order for a contract to take effect, the party making the offer has to prove before the court beyond reasonable doubt that he or she intended that the contract bind them2. In this case, Jackie made the first offer, requesting Kenzi to take up a job to repair her roof. Before a trial, Jackie will need to prove that she intended that the contract binds her on the basis of their responsibility, provided that the other party, Kenzi, had agree to perform his duty as agreed. In the second case of an agreement, where Kenzi quoted a price to Jackie, since he was making an offer, he would prove to a trial that he intended that the contract bind him, such that he would perform his duties in the event that Jackie had accepted his price. Acceptance forms the second main part of a contract, the offer being the first. Once the offeree accepts an offer, the contract is legally binding to both parties3. It is imperative that the both parties to a contract understand what makes up an acceptance that qualifies as valid to establish whether the agreement binds both parties. In acceptance, there are three rules that are important in the determination of validity. First, the acceptance of the terms as set out in the contract has to be communicated to the party making the offer4. The law does not consider silence as an indication of acceptance. That fact was clear in the case study of Bindley v Felthouse. However, the offeree can indicate his or her acceptance of the terms through their conduct. For instance, in the case of EX-Cell-O Corporation v Butler Machine Tool, the court held that the offer made by the seller, Butler Machines Tool, was invalid after the buyer, Ex-Cell-O, made a counter offer. That meant that the price variation clause as provided in the offer made by Buttler Machine Tool did not hold. The law, however, recognizes that the conclusion to a contract applies on the terms as provided by the last party to communicate its terms before the contract’s performance begins5. In the case study, both parties agreed to the terms instantly, since both parties were present. The second rule of acceptance is that the terms under which the offeree is accepting the offer must be the exact to the terms offered by the offeree. In the event that there is a difference or more to the terms, there is the possibility of as counter offer, making the contract to be non-existent6. An example is in Wrench v Hyde, where an offer made by the defendant to sell his farm for £1000 to the claimant. The claimant countered the offer. The claimant offered to pay £950, which the defendant declined. Later, the claimant decided to accept the initial offer made by the defendant. The defendant, in his own reasoning, refused to sell that farm to the claimant. The claimant then took legal action against the defendant on the grounds of specific performance. The trial judge held that in Wrench v Hyde, there was no contract between the claimant and the defendant. The reason given was that in a situation where there is a counter offer, the initial offer ceases to exist. Therefore, the offer made at the first instance is not open for acceptance. From the case study, Jackie and Kenzi negotiated the cost of the work. When Kenzi quoted a price, which Jackie accepted, that contract was binding since the terms that Kenzi had offered were agreeable to Jackie. The third rule of acceptance is that there has to be certainty in the agreement. With regard to certainty, the law stipulates that there should be no vagueness in the agreement. In objective view, a contract has to have content indicating the exact subject of the agreement7. In the case of Jackie and Kenzi, the content of the contract was that Kenzi was to undertake some work on Jackie’s roof, and he was to receive a stipulated amount of money for the services rendered. Further, the agreement between the two was that Jackie would pay one-half of the total amounts to Kenzi before the commencement of work and the other half after Kenzi had finished doing the work. On the other hand, there is no acceptance in the event that a party makes an offer based on dishonesty8. Secondly, acceptance does not exist if the response by one party to an offer fails to communicate their willingness that the contract binds them. Further, acceptance does not hold when a party responds with conditions attached. In the case study, Jackie does not communicate her willingness to bind to the development when she tells Kenzi that she would give him extra money when he asked for more money. In that case, her acceptance to pay Kenzi the amount agreed upon does not hold. However, Kenzi was entitled to a payment since he did not attach conditions to his payment. He quoted a price, which Jackie, the offeree in this case, accepted. Further, an acceptance past the due date of response would fail to hold; therefore, the contract would not exist. Promissory Estoppel The law on Promissory Estoppel allows for the recovery of a benefit from a promise made, even in the event that a legal contract is inexistent. One can apply the doctrine of Promissory Estoppel depending on the significance of the loss arising from the non-satisfaction of a promise9. The judge or the jury would have to ascertain that by not fulfilling the terms of the promise, the complainant would suffer considerable loss. For the law on promissory estoppel to apply, certain elements have to exist. First, the promisor has to have made a promise that was significant to the extent that the promisee had to begin an action on it10. In the case under study, both Jackie and Kenzi made some promises. First, Jackie promised to pay Kenzi the specific amount he had asked for. Secondly, she promised to pay him in two halves. Thirdly, after Kenzi had requested for more money, Jackie promised to give him more money the following day. Jackie satisfied her promise to Kenzi, albeit with alterations arising from Kenzi’s need for money. Finally, Kenzi, by virtue of accepting the terms of work, promised to repair Jackie’s roof properly. The second element is that the person who received the promise has to prove reliance on the promise11. In the event that Jackie had failed to keep her word and failed to give Kenzi the amount of money that he had asked for, Kenzi could apply the doctrine of promissory estoppel. The third element making up the promissory estoppel is that the promisee, up to a significant degree, suffered a detriment because of the non-satisfaction of the promise. From the case study, Kenzi would have to prove before a trial that he had suffered in certain ways after Jackie failed to honor her part of the agreement in the event that Jackie had not paid him the agreed amount of money. The final element making up the doctrine of promissory estoppel is that the party receiving the promise can only get relief when the promisor satisfies the promise. With promissory estoppel, it is not necessary that a contract exists between the parties12. The courts only need to prove whether the position or situation of the promisor has changed. The change would have to bear an effect such that they can no longer satisfy their promise. The court would also have to look into the level to which the party promised relies on the satisfaction of the promise to a degree that the court would find to be significant13. In Murphy v McIntosh (1970), the conclusion was that an oral agreement between McIntosh and Murphy that the employment would last a year had enough significance such that McIntosh had relocated more than 2000 miles to undertake a job as a sales person in Murphy’s car dealership. A promise by Murphy for a yearlong employment and a subsequent termination of the contract caused McIntosh to sue Murphy for Promissory Estoppel. Breach of Contract A Breach of Contract case amounts from a failure to perform any promise forming either part of or the whole contract without any excuse backed by the law14. A breach of contract also applies in a case where a person fails to perform as per the standards set by the industry or as per the requirements of any implied or express warranty. In determination of a case of Breach of Contract, the judge has to determine if a contract exist, either verbally or in writing. There has to be a clear determination of the subject of the agreement between the two parties. The court would also have to determine whether there was a change on the terms of the contract at any point during its execution. After that, the court would proceed to find out if there was indeed a breach in the contract15. The moment that one party breaches the contract, the non-breaching entity is no longer under any obligation under the contract, since an agreement is enforceable whether it exists in written form or it was a verbal agreement. The party that sues for a breach in the contract can be rewarded damages by a court. However, the remedies for a breach of contract case do not intent to punish the party responsible for the breach16. The motive for issuing the rewards is so that the non-breaching party can returned to the position in which they were before the breach occurred and the terms as set out in the contract were satisfied. In the event where the breaching party cannot raise the amount of money required for the compensation of the aggrieved party, the court may reach a decision to award specific performance, forcing the party responsible for the breach to fulfil the terms of the contract as initially stipulated17. In the case between Jackie and Kenzi, a verbal contract existed. The contract was that Kenzi would repair Jackie’s roof after it had spoilt. Kenzi repaired Jackie’s roof in an unprofessional manner. The poor quality was determined after Jackie’s roof collapsed because of a storm. It became apparent that Kenzi failed to repair Jackie’s roof as per the standards set out in the profession, causing harm to Jackie and her property. Jackie, therefore, has enough ground to sue Kenzi for a breach of contract based on poor performance by Kenzi. Kenzi did not have a legal excuse for not performing the duty for which he had received payment from Jackie with utmost professionalism. Tort Breach of Contract Duty In every contractual agreement, the traditional expectation is that the parties would both perform their roles as agreed upon in the contract. There exists a breach of contract duty in the event that there is an omission or a violation of either a moral or a legal duty to perform the stipulated terms18. The failure or neglect by a party to fulfil an action on a proper and just manner amounts to a breach of contract duty. The duty to perform the terms of the contract in good faith is offended when a party to the contract fails to perform in discretion, therefore affecting the anticipated benefit due to the other party19. Both parties to a contract are bound to the terms, therefore they are required to exercise discretion for whichever purpose that falls within the contemplation of both parties20. When a party to a contract uses the discretion to recapture opportunities that they have already forgone, they are acting in bad faith21. From the case study, Jackie can argue that Kenzi committed a breach of contract duty as agreed upon by both parties. By agreeing to work on Jackie’s roof, Kenzi had an obligation to perform his satisfactorily. He had a duty to repair Jackie’s roof as per the standards set in the industry. However, he used the wrong material to repair the roof, leading to weaknesses in the structure of the roof. It became clear after a storm had occurred that the work done on the roof by Kenzi exposed Jackie and her property to harm. Jackie will have to prove that the poor job done by Kenzi caused considerable damage to her and her property. It emerges from the details of the case, however, that the poorly repaired roof was the cause of Jackie’s losses. Jackie can pursue legal action against Kenzi from that argument. Bibliography Breach of Contract., n.d., Judicial Education Center. Retrieved August 23, 2014, from http://jec.unm.edu/education/online-training/contract-law-tutorial/breach-of-contract. Burton, S., 2007, Breach of Contract and the Common Law Duty to Perform In Good Faith. Law Journal, 2(4), 2-16. Elliott, C., & Quinn, F., 2007, Contract law, 6th ed., Harlow: Pearson Longman. Fafinski, S., & Finch, E., 2010, Contract law, 2nd ed., Harlow: Longman. Oliveira, N. M., 2009, The Private Law Society and Contract Law Application. European Review of Contract Law, 5(1), 29-40. Read More