Whether the Standard of Agreement Makes It Impossible to Plead Mistake as a Non-Performance Excuse - Assignment Example

Name: University: Course: Tutor: Date: USA Contract Law Q1.) The objective standard of agreement makes it impossible for a defendant to plead mistake as an excuse for non-performance. While dealing with contract law or under this law, mistakes are considered to be erroneous beliefs, when contracting, some common and certain beliefs and facts are true. Mistakes are usually used as grounds to invalidate some agreement but it’s only effective in some cases (Biers, 2006). In the earlier days when laws were not placed and transaction among the parties was truly dependable on trust when one party fails to reach his end of bargain the other principal would result to a quarrel about the defaulting issue What would later follow was a disputed heated argument and in most cases end up in a gruesome fight, which in most cases death would result from this inhumane resolution. According to Speidel, R and Ayres, 2008 contract law was first formed by the Roman Empire though it not clear who had the upper hand in its implementation, the most recognized is the French Civil code though many other countries have roots and history of the formation of the contract law none of them really add up to where it originally started. So it is right to say that common mistakes were experienced and had something to do with the disagreement on contract law, this are common hindrances act that adheres to the smooth going and bleaching of contract or promise and excuses for non performance; Mistakes Misrepresentation Frustration of purpose Impossibility Impracticability Illegality Unclean hands Unconscionability Accord and satisfaction Most common laws depending on the state the offence of bleaching is committed identifies three types of mistakes, though in some states the mistakes are only two, but for further elaboration of common mistakes we will concern the study and use them as three; Unilateral mistakes Mutual mistake Common mistake Note; The states that only identifies two mistakes adjoins the mutual and common as one the basis are reflected and treated as same on the matters of those mistakes in contracts. Unilateral Mistakes This kind of mistakes is when only one principal to a contract has no basis of the subject matters and terms that were validated in the contract. This happens mostly in many contracts than all other mistakes. When looking at unilateral mistakes one has to first establish the link between business error and mechanical calculations. Mechanical calculation in this case allows the party involved to set aside the contract on basis that the other party due the mistakes affecting the contract does not try to take advantage of this situation or quickly snatching up the bid; because this bid is an offer the other party did not want to bargain for, but was betrayed by mathematical error. According to Lawnix (2008) if the mistakes are viewed by a reasonable person to make no sense to the other party then this is seen as an objective standard, the court will nevertheless uphold the contract unless that one party snatch up the offer which in this case is know to be one-sided because it only favored that principal only. There is no relief of a party is found or is guilty of a mistake in business judgment though this is only conversely. For this mistakes to be reprimanded so that those who take advantage of hasten contract dealing are brought to book and damages awarded to the injured party. There are factors to determine the risk allocation to the defendant; like in the case of Taylor v Caldwell, if the defendant had in mind that the hall would burn down to ashes, then the following consideration would have been brought up to the ruling against the defendant, that is if Caldwell knew of the inferno; Did the agreement allocate the risk to the defendant The defendant had in mind the nature of the mistake in the contract and treated the facts upholding to his limited knowledge as sufficient and true. Under this circumstances the court will rule under reasonable doubt to allocate the risk to the defendant The mistake can sometimes be committed due to haste or ignorance but the court will uphold and know if the mistake was done purposely or unintentionally. Though there is no justification on unintentional error because the court has no room for the error one party has to pay up for the errors. The eventuality of this leads to mutual mistakes and they go side by side, because in the case of third party involvement, when Caldwell contracted with Taylor an offer to use the hall four days, the fire plays as the third party, the fire took away the hall and both parties were at loss. Mutual mistakes this occurs when the principals involved in the contracts both have no idea or are both mistaken about the terms in their contracts. We can say that the parties are at cross-purposes. The contract is voidable hence the parties involved are mistaken, even though there is a meeting of the mind. The right of recession will not be afforded in the case of collateral mistakes; this kind of error does not directly affect the contract (Speidel, R and Ayres, 2008). The court emphasizes that for mutual mistakes to be void, materials items are the only grounds that the mistakes in this case are based upon. Questions of assumption of the risk arise where by the material mistake collide with the material aspect of the contract, the issues of inessentiality sole purpose of the contract arises. Who to bear the risk contractually? By customs who bears the risk? In the case of Caldwell and Taylor the parties agreed that a concert would be held on the latter’s hall but never at one time did they discuss the eventuality of any calamity that would have affected the existence of the hall, so they assumed that all was well coming the day of the concert. This is a representation of not a mutual mistake but mutual assent failure. In this occurrence no contracts have been formed, since in the formation stage of a contract requires mutual assent. So it right to say that the contract between Taylor and Caldwell was not valid or in simple term there was never a contract between the two parties but this only concurred with mutual mistakes. Both Caldwell and Taylor had no idea about the inferno and further more no one was responsible for the cause of the inferno, which razed down the hall or the material on the center of controversy. Although they formed a pact they did recognize the mutual mistakes law in their contract. Common mistake only applies when both party involved in the contracts hold the same facts that are mistaken by beliefs, common mistake can only cancel a contract if the performance of the contract is held to be impossible due to the mistake of the subject matter is abundantly fundamental to render its character differing from what was contracted. This is best seen in the case of Bell v the Lever Brothers Ltd in the House of The Lords. This best mistake that both Caldwell and Taylor had it all figured wrong. They assumed that the hall altogether will be there on the day of the concert as seen in mutual mistake the same applies here the only difference is the mistake is based on terms, which the aggrieved party should have adhered to. However the assumption was the eventuality and this assumption could not void the contract because the identity of the inferno was never in the term of the contract. Both the defendant and the plaintiff held the same common mistake and assumed, and this legally bound their contract, but due to the aftermath the plaintiff sued on wrong grounds. In the United State the courts of Contract law identifies the categories of mistakes but the court differentiate the mistakes and try to identify if the error was “decisional error” and cannot be uphold in the court of law, (making of wrong choice when face with two choices) or “ignorant error” this mistake is where the party has no idea of the true state of affairs. Misrepresentation is a false statement which is used by one party in a contract to induce the other into a contract. This usually happens in cases where the promise or statement is made under certain circumstances by a seller of goods on regards of the nature or quality of the products, although the information is false. When the law accesses and identifies misrepresentation it allows damages to be paid to the injured party or this can void a contract. In contract law there are two type of misrepresentation; inducement fraud and factum fraud. The focuses of, if the principal in the contract knew if they were entering in a contract and if the party had no idea that the juncture was a contract then it void and no meeting of mind was there, this is what is known as fraud of factum. However if the party misrepresented the statement and induced the other into contract ship that induce fraud, the contract is hence forth void. Frustration of purpose this occurs when both parties enter into legal contract and meeting of mind in good faith but a third party or a natural hindrance cause the performance of the contract to void, because the item in the contract does not exist hindering performance. Impossibility can be base of change in circumstances can be an excuse for nonperformance of duties, preexisting circumstances discovery can also affect the contract. In good faith of a legal contract there should be mo difficulties or unexpected cost arising to affect the performance on one party. An impracticability doctrine states in the common law of contract that a duty can be excused by performance, in the case that the duty is not accessible, expensive or difficult to the principal who is to perform it. Illegal agreement because the court of law work is to uphold laws of the land and state the means which result to ending of this contract is thwarted because of it been illegal. Unclean hand or dirty hand also found under the doctrines of clean hands applies when the defense is equitable, the defendants pleads that the entitlement of the plaintiff to obtain a remedy of equity on unethical or act of bad faith with respect of unclean hands from the latter. According to Joe, (2006) unconscionability or unconscientious dealings according to the laws of contract, this happens when one party is unfairly held to be enforced to a contract, this would excuse such party under the jurisdiction of unfairness in the contract. Accord and satisfaction in contract law doctrines states that concept which allows the debt obligation of a purchase. The actual performance of original obligation payment is not paid but if so the payments are far much less than the actual amount owed. The difference in liability depends on the passive process of information or incorrect information processing in the extent to which one is considered innocent in this chain of information. However there are rules that regulate the principal or entity cannot be assessed as liable by merely been in the information chain and in good faith the passing of information along conceived to be true. Without knowledge or consent that the information has likelihood of falsity or inaccuracy. Severance, Uncertainty and Incompleteness This is another major fall out that many foresee when engaging in matters concerning contracts. If the terms of the contracts uphold the above fallout then the contract and the parties involved have not reached a lawful agreement. A contract is not constituted by an Agreement to agree, key issues disagreements inabilities, this may include key issues like safety or price, and this may result to failure of the contract. Interpreting a sound construction of the contract, the court will however attempt to give result where possible to commercial contract. External standards which the court also looks into the contracts are neither mention explicitly, or in certain field are implied by common practice. Addition to this the court may also term an implication; in exclusion of price, reasonable price may be implied by the court, with exceptions and uniqueness of second hand goods and land. The option of resolving the true meaning of the contract will fail if the clauses in it are either incomplete or uncertain. However if the contract includes a severability clause it can be possible to dissolve and void the most precious clause. This is a determinant if a reasonable person can be able to see through a contract standing even without a clause this test of whether the clause is dissolvable is known as an objective test. In the case of Caldwell v Taylor the latter had omitted many vital material requirement of a contract that the contract was incomplete and uncertain. They had no clauses in their contract and so they foresaw the mutual mistake and the common mistake respectively. The most common mistake perpetrated by Taylor was ignorance to assume that the hall would be there on the day of performance. Ignorant error and decisional error are both here the case perpetrated by this latter. He did not look into the eventualities or emergencies not only of the fire but maybe earth quakes, land slide or avalanche, but willingly and knowingly entered into this contract. The court must have foreseen Taylor ignorance when they gave out the verdict ruling against him, and all the mistakes involved and the incompleteness of the contract. The case excused Caldwell on grounds that the first excusable aspect was mistakes on the contract as explained thoroughly above, secondly the other excusable performance of the contract is impossibility on the contract when the hall was razed down and the defendant had no involvement in the inferno. Another excusable to performance is impracticability where when the hall burned down both Caldwell and Taylor could not do anything because the fire had consumed the hall to the ground and Caldwell was not the arsonist. Although the physical performance could not be attributed it is not in good faith that Taylor demanded damages knowing that also Caldwell had suffered a huge loss than him. This shows self centrism and greed on the part of one Taylor and the court did a reasonable thing letting the loss to lie where it fell. Q2.) Taylor v Caldwell has introduced enormous confusion into the understanding of the nature of contractual liability. The United State Contract Law, coats requirements which are established by agreement (implied or expressed) or promise among private principals. As a result of increase of widespread implementation of the code of uniform commercial, contract law has become highly standardized nationwide in transaction involving the sale of goods. A legal binding contract can be constituted if there is any oral agreement between two parties and as long as the goods and services involved in the transaction are legal. Though in this matter there is limitation for there is no material evidence, and is always advised to avoid such verbal transaction for it can be uphold in a court of law as a promise that were was made when two minds met and an agreement was formed. An example of this is when one offer to give another a book as a gift on a given date, that other party is entitled to the ownership of that book coming to the due date the promise was agreed on. Although in this case there no damages that may be awarded if the principal issuance of the book loses the item before the due date the performance of the promise is void, no compensation is awarded and the court lets the loss to fall where is lies. This example is best to assume the court used in the ruling on the case of one Caldwell v Taylor. The best contract has to have material evidence so as the court to attest that the binding facts are legal and the formalities were agreed upon on the consent of the principals, and neither was forced to come to terms of the contracts. Written contracts are advised and required by many statutory laws within various jurisdictions and mostly is advisory to the parties involved in the contract. This mostly is advised in commercial contracting on matters that involves large amount of cash like buying of a house, car or land. Depending on how extensive a state has codified the common law of contracts or adoption practices of Restatement (Second) of Contracts these significantly diversify the interpretation of other kinds of contracts. Any legal agreement that binds in a court of law and is enforceable and is what is known as a contract, so long as the contract is neither indeterminate, trifling illegal or impossible. The law in a contract is based on principle portrayed in a Latin phrase “pacta sunt servanda” translated “pact must be kept” or in a more layman term “agreement are to be honored”, the law provides remedies and reprimand those who bleach contracts this bleach gives rises to the damages. Under the Federal Arbitration Act principals are allowed to concur to arbitrate disagreement arising from their contract. Contracts occurring under federal or state law are interpreted and covered by that act. Civil court of law (non criminal) that interprets the contract after one party has defaulted and bleached the contract; their main function is when the plaintiff takes the matter to a court of law and the court validates that the contract was binding and legal, the case has basis and the defaulter can be charged for the damages the plaintiff appoints. Under state laws the defaulter not meeting the promise as required in the agreement is charged with fraud. Habitual in civil law system is the best classification of contract law and sides along as law of general obligation in general also classified with the tort law, unjust enrichment or restitution. According to the revelations of one John William Salmond a scholar and philosopher a contract is “creation and definition of obligation required in an agreement of two or more parties”. A contract relies on the idea of consensual trade as ways of economics ordering and has been seriously scrutinized on in broader sociological, economics, and anthropological terms. The term escapes beyond meaning of legal and encompass agreement in broader category. There are five key elements that have to take place and be effective in common law requirements for a contract to be legal and binding; Acceptance and tender (agreement or “concurrence of will” ) Deliberation ( “the price of promise”) Intention of creating legal relationship Legal competence (inclusion of third parties to ascertain the agreement) Formalities Stature of fraud under some contracts formalities must be complied with, because in Civil Law system the concept of consideration is not central and that what adds to the formalities of those contracts. There are different kinds of damages that are applicable and awarded in the case of bleach of contract by court; Compensatory damages, fostering two loses direct Consequential damage Exemplary damage Liquidated damages Nominal damages Punitive damages Contractual term; Any provision formatted as part of a binding contract is called contractual term, every term have a rise in giving obligations in contractual basis, rise of litigation is affected by the bleach of this kind of contract. Terms differ from state to state in the United State of America and vary in the density of the legal weight as some are peripheral objectives in the contracts while others are not stately expressed. Categories of terms; Condition or warranty terms Innominate terms Status terms Implied terms Factual terms Law terms Condition or warranty terms have firm basis in the root of a binding contract, repudiation of the contract is seen when the contract is bleached, and this paves way for the other party to legally discharge the contract. Innominate bleach does not go to the core of the contract depending upon the nature of the bleach; the bleach of this term will result to payment of damages incurred by the injured party introduced by lord Diplock in the case of “Hong Kong Fir Shipping v. Kawasaki Kisen Kaisha Ltd. In status term bleach a party can only take legal action for non fulfillment as status as term is very important as opposed to mere puffery or representation. Contractual obligation legally speaking can only be stated to that amount of term creation. Implied term may either be an implication or expression, in contractual document written or negotiated are stated by parties to express this term. In implied terms the provision of the contract is not stated but nevertheless formed. Facts in terms are implied due to the proceeding by which the contract was formed. Law terms are in standardized relationships implied, numerous instances of this are seen in this term, mostly usually among shipping and employment contracts Taylor v Caldwell The case of one Caldwell (D) versus Taylor (P) has resulted to controversy on grounds of objective impossibility and anticipatory bleach. Objective of impossibility is the inability of either party to perform if the parties involved did not allocate the risk in the agreement of the contract, the court in this case will definitely have to let the loss lie where it falls. And no damages can be awarded to the plaintiff, for the other principal also suffered a loss and the contract was not a positive one. Incase Taylor had agreed on terms of positive contract which allows damages to be paid whether the performance of the contract ceasing to exist had been affected by the other principal or had not, he would have been liable for the damages incurred in the preparation of the concert and the court would have honored his request of reimbursement (Lawnix, 2008). Another example is the quasi contract or implied law if the chap Caldwell foresaw and knew of the inferno and did nothing to prevent it and withheld warning from Taylor then the court would have ruled against him, however neither did he have any idea the hall would be razed down by the inferno, so the court hold no liability on the basis of quasi contract. In the case of Caldwell (D) v Taylor (P), Caldwell had been in a contract agreement to permit Taylor at Newington the use of a musical hall that he had retained possession of, Taylor was only to use the hall for four days in presenting four concerts, to this he was to part with 100 pounds daily for the next four days. This contract was not a positive one nor would it be referred and implied as quasi, for Caldwell never implied or expressed any fear of an inferno. The most important aspect that Taylor should had considered when he agreed and signed the contract should have been fore sighting of calamities; the contract of this two did not cover the basis of “incase of” or “anticiparatory bleach” so that this thesis could be used in a court of law to award the plaintiff damages measured that way, the court could have awarded funds for restoring the economic position that the Taylor had earlier occupied at the time the contract was entered, this is known as the “reliance measures” and it is implemented and designed to foil the defaulting party from unjustly enriching themselves, the term for this act is (“restitution”) from the funds that was offered on the contract which has been bleached knowingly, fraudently or intentionally. However the latter fore saw no calamity and this was unexpected to both parties, for neither had anticipated the hall would be razed down by the inferno. The contract they had agreed upon had no express stipulation regarding disasters only stating that the hall must be fit for concert. The basis requirement of the hall Caldwell had provided Taylor with, had met his entire requested requirement, for the hall was fit for the latter concert qualifications. When disaster stroked in the eve of the first concert this was a big blow to Taylor financially and mentally, though it was neither fault that the hall was razed down, and so the concert had to be cancelled for it couldn’t be held any where else (Lawnix, 2008). Taylor took the matter legally, and sought reimbursement for the loss and cost incurred in preparation of the concerts and bleaches of contract and sued Caldwell on these grounds. The nature of the contract here as valued by the court as that the performance of the contract was in either way altered by Caldwell and the impossibility in the performance was excused in this ground, and the latter had no obstruction with the razing down of the hall so he holds no liability in affecting the concert from being performed, because there were no ill motive by the latter, for he too lost the hall to the inferno. The most important aspect that one should look at here is that if the contract was a positive one because Taylor never anticipated the inferno. For he never foresaw the implication that could had resulted if the hall did not continue to exist, and it did cease to exist after the inferno without the interference of Caldwell, we will conclude that this was Taylors point of ignorance, although the case cites that the contract was not a positive one and Caldwell was excusable on basis that Taylor did not anticipate the anticipatory bleach of contract and pen it down on the agreement terms of the contract performance. Caldwell is not hold reliable for he never at one time even joked, implied or expressed warranty about the extinction of the hall; the court foresaw no bleach of contract even after the hall discontinuation of existence. For there was no implication linking Caldwell with the inferno, and neither would he have torched the hall for it was worth more than the Taylors offer on the contract so the loss was much greater on Caldwell side than Taylors. If the contract between the two latter was a positive one, then Caldwell would have incurred the loss experienced by Taylor, in this contract anything implied or expressed cannot hinder the agreement but any unforeseen and accidental occurrences are legible for payment of damages. Taylor would have been fully compensated the damages incurred in the preparation of the concert and any other damages that are required by any bleach of this form of contract. This best example of a not so positive contract and also an example of objective of impossibilities, neither Caldwell nor Taylor could perform any business transaction on the hall after the inferno had razed it to the ground, incurring loses to both parties financial and mentally. For Caldwell suffered lose of the hall and Taylor the loss of invested resources for preparation of the concerts. The rule may seem like to many it favored Caldwell though it ruled on the basis that neither the party was at fault in the inferno. And if the nature of the contract agreement was a positive contract the latter would had incurred the payment of the funds Taylor had used in preparation of the concert, also if the contract was considered quasi the implied law would have justified the payment of damages incurred by Taylor. There is some aspect that looking at them in legal terms lacked in this contract between the two, first the warranty was not included in the contract, and terms were not included or implied in the contract. The lack of the following left the court with no possible doubt that maybe (and this my conclusion that the contract was bound in a hurry and left out key element of closing a contract and avoiding clauses that are important in a contract and no warranty was enforced) with this reasoning from that the latter, Taylor only had a week for finalizing formalities in the lease contract. This means the contract had no legal implication of the anticiparatory bleach of contract and had no offering on warranty and was based on assumption that all will be well and this implied assumption were neglected in the contract. There are two mistakes on this contract; Unilateral mistake Common mistake Unilateral mistake was mostly due to Taylor’s part of binding in a contract that had no warranty, although neither he nor Caldwell foresaw the need for one so it wasn’t Caldwell fault for the inferno. Common mistake was induced by both parties in assuming all will be well with the hall coming to the day of use by the latter Taylor. They both held on facts and subjected the hall to warranty the safety of the transaction and none had anticipated the shortcoming of an inferno. Contract is therefore throughout the world common as a form of economics ordering and can only be differentiated by the jurisdiction application rules in the civil laws, this is assumed to have come from historical accounts of the Roman law principles but is advocated by all kind of law from Islamic law, socialist law, legal system and customary or local laws. Work Cited Biers, S. (2006). Sherwood v Walker. Joe, (2006). Williams v Walker-Thomas Furniture Co. United States Court of Appeals, District of Columbia Circuit, 1965. Lawnix. (2008). Taylor v Caldwell - Case Brief. November 12, 2008. Lawnix. (2008). Sherwood v Walker-Case Brief. November 12, 2008. Speidel, R and Ayres, I. (2008). Studies in Contract Law. Berkeley: Foundation Press Read More