The Laws that Govern Different Contracts Depending on the Group of People that Are Being Dealt With - Coursework Example

USA Contract Law Insert Name Insert Course Insert Lecturer’s Name 11th December 2009 USA Contract Law: Introduction A contract is an agreement between two or more parties, one that promises to pay the other a sum referred to as a consideration if they accomplish a certain task. There are different forms of contracts that are governed by specific laws. These laws will generally be applied in cases when there is a disagreement between the contracting parties and to find out if the contract was binding or not. Clarke (p, 300) asserts that, “The laws concerning contracts are different from state to state and are only applicable if the right procedures are followed. There are various laws that govern different contracts depending on the group and kind of people that are being dealt with. Such contracts may relate to business units, hospitals and the likes. The doctrine of the insufficiency of existing obligations is a poor way of distinguishing between enforceable and unenforceable modifications of contracts. A contract may be enforceable or not considering the kinds of agreements that were entered into by the contracting parties. There are some contracts that are basically made on mutual grounds of which the law may not find a legal basis for intervention. This are however different from the different obligations that have to be fulfilled by individuals who are in certain position. Even though some contracts are not arrived at after a written or oral agreement, they are implied and therefore automatically enforceable by law. The law considers people that have an obligation to perform a certain responsibility as automatic parties to a certain implied contract (Ayres, 90). A parent may not need to enter into a written contract with their children promising to take care of them. By the virtue of them being their parents, they are obliged to take care of them and failure to do so may be punishable under the law. There may however be incidences in which a party to a contract is not able to meet the agreed terms due to lack of resources. For instance an individual may borrow money from another and promise to pay it at a certain future date. The contract may have been entered in to by such an individual with the full confidence that such an amount will be available by that date. According to Ayres (p, 94) “The court may consider the conditions and circumstances in which the contract was entered into and the possibility that the person that promised to pay the amount absconded the agreement and that for a contract to be enforceable there must be a promise and a consideration, a promise and antecedent benefit, a promise and unbargained for reliance and finally promise and form.” All cases that are forwarded to the court concerning contracts have to fulfill the above combinations. A promise is the oral or written implication while a consideration is the benefit that the person who has been promised will benefit from the agreement. For instance an individual will only agree to a certain agreement when they have been promised a certain kind of benefit. The benefit is generally the reward that prompts an individual to enter into such an agreement. There may be conditions that may make a certain contract to be enforceable by law depending on conditions that govern such a contract (Beatson, 128-133). The court may treat long term contracts differently depending on the nature of the agreement that was entered into. When handling such cases, the court will look at the terms of the contract and if the consideration is worth the services that are being provided by the party to the contract. In Angel v. Murray, a contract is subject to change if it is found that the consideration that was agreed on if the responsibility increases (Ayres, 87). Even though the plaintiff agreed to the contract on a certain initial agreement, it was found that the responsibility increased and hence he was justified to request for a higher consideration. In dealing with such a case the court will look at the real issue that has been brought about by the plaintiff. The court ruled out that because the agreement was made basing on the previous situation where the consideration was valid, but due to the increase in responsibility. The court therefore justified the case and required the council to increase the consideration. In this case it means that a party to the contract may reject the contract if the consideration later on fails to meet the necessary consideration. This is only applicable to cases where the terms of the agreement fail to meet the current consideration. However the case may not always be applicable to all circumstances; for instance the case involving Alaska Packers’ Association v. Domenico their consideration was not found valid by the court as they justified the original contract they entered into (Ayres, 84). The company and the sailors had agreed to perform a certain duty for an agreed amount of money, but later, they felt that they had the right to demand for an increase. The court ruled out that their consideration could not be adhered to considering that it was a contract and they hence started performing the task with the agreed consideration. The court could not justify the increase in the consideration even after the company promised to increase it. The court relied on the information of the original contract of which it found that the consideration being requested for was not valid. The law concerning contract may not rely on other information that was later agreed. They had to look at the terms that actually made the contractor to enter into the agreement. It is usually assumed by the court that before a contractor enters into an agreement to perform a certain task; they should make the necessary estimates including the any predictions on the increase of materials that will be needed to accomplish the task. The court assumed that the contractor agreed to perform the responsibility because according to his calculations and the other predictions, the contract was worth being entered into (Ayres, 77). Even though the company had agreed to increase the consideration basically because they could not hire another contractor, the court ruled that the current contractors had the responsibility of finishing the work basing on the agreements that were made between the contractor and the company. The cases above were given different rules by the court considering the agreements that were made. They are similar in a way that the parties did not agree to the terms of the agreement and wanted a higher consideration. In the first case the plaintiff was justified to demand for a revised consideration because the terms of the contract had changed he agreed to clean the place with the consideration because the number of people that were staying at the location was few and thus the consideration was valid (Beatson, 58-62). However as the years went by, the population increased and thus requiring him to do more work than it was earlier agreed. It was therefore justifiable for him to demand for an increase because the terms of the contract had also changed. In the latter case, the consideration was not justifiable because the conditions had not changed. There was no evidence that the conditions of the contract had changed and thus increasing the cost of the contract. It was assumed by the court that the contractor new the estimated cost of carrying out the project and thus agreeing to the terms. There was hence a possibility that he decided to change the terms because he knew the company could not hire a different contractor as the work had already commenced. The court made such a ruling to prevent the contractor from exploiting the company by demanding for a higher pay. Even if it was justifiable for the contractor to demand for a higher pay probably because he wanted to increase the number of labor or experienced an increase in construction materials, the court could not defend them. A contractor has the responsibility of carrying out a market research and to evaluate the contract before agreeing to the terms of the agreement. The court can not defend a contractor who fails to carry out adequate research as that is part of their professional requirement. There are various situations that may arise in the course of the contract that may require the modification of the agreement. This will however be justified by the court of law only if they find that the consideration that was earlier agreed on is not profitable considering the changes (Ayres, 72). The court has to establish that the modification is genuine and that unless implemented, one party may gain and the other one will loose. For a contract to be valid, their must be a mutual benefit between the parties which should be beneficiary. A contract where one person loses at the expense of another one gaining can not be considered as a valid contact. In another case, Roth Steel Products v. Sharon Steel Corp, Sharon entered into an agreement with Roth and agreed to sell them steel at a cheaper rate than the initial market rate. This was considered a good deal of which the agreement was sealed. However, Sharon modified the agreements when the price of steel was increased. He took advantage of the raised market process and hence decided to also increase the prices and thus requiring Roth to buy them at higher prices. Even though the prices that Roth was offered was still below the market price, the court ruled out that Sharon behaved out of bad faith. In her initial agreement, it was ruled that she was ready to incur losses by selling the steel at lower prices than the market price. Sharon did not specify in her initial agreement that the agreement might change with changes in price. It was presumed that by the time the agreement was being made, the steel was available and was only awaiting transportation. Even though Roth bought the steel at the revised price as there was no where else they would have obtained the steel at such a cheaper rate, the deal was not acted in good faith (Beatson, 98-103). Despite the provision on economic duress that Sharon could defend herself with, she was found guilty by the court for being dishonest. Roth entered into the contract with Sharon after considering their production needs and the amount of money that they were to spent in fulfilling the task. By indefinitely modifying the contract, Sharon caused a lot of inconveniences to the company by interfering with their initial budget. Sharon may have taken advantage of the fact that she is the only one that could offer the products at such a cheaper price. Sharon had also no alternative but to purchase the products at that price since they needed the steel. The law on commercial duress allows modifications to be made to a contract when it is found that without its modification the individual will incur loss. The modification to the contract can be sought out before the modifications are made to the contract. Sharon should have applied to the court before officially announcing the new modifications to the clients. The court will therefore have to justify if the modifications are valid or not. Sharon taking the decision on her own and making the adjustments proved to the court that she had no valid reason to make the adjustments. Different from above cases, there may be instances where by the contracting parties leave the agreement open. This is usually true for cases that involve the supply of fast moving consumer goods. There is always no guarantee that the price will remain constant especially if the contract has been applied for an average period of five years. There is however an agreed consideration where by the party supplying the product agrees to adjust the prices at a certain level. There will be a constant agreed amount to be paid considering the current market value which can be adjusted at a certain period when the prices increase. In the case involving Rehm-Zeiher Co. v. F.G (Ayres, 95), Walker Co, the company supplying the whisky agreed to make the necessary adjustments after a certain period when the prices go up. In the agreement, the company that was supplying the whisky predicted that the price may go up and hence required them to pay the advance payment. This was done on condition that if the prices do not increase within the first two years of the five year period of the contract, then the company supplying it will release them from the contract and probably refund them the extra amount (Clarke, 225). During the first two years the company ordered for lesser quantity than it was earlier on required and in the third year, the prices increased. The court could not find any justification to the case since the conditions for changing the agreement were not specific. In Clarke book (p, 228) “The contract was entered into subject to adjustments that were to be related to unforeseen reasons which were subject to the company that was being supplied by the whisky.” The plaintiff sued the company for not honoring the agreement of not selling the whisky at full amount in the third years after the prices went up. The court could not rule out the case in favor of Rehm Company because they had all the powers to manipulate the contract for their own benefit. Considering that unforeseen reasons could mean anything that would come their way, it meant that the contract could not be noenforceable (Ayres, 56). There was no specific mutual agreement between the two companies on the circumstances that would make the court to justify any of their claims. When entering into the agreement the two companies would have specified whether the conditions were due to the increase in prices or lesser orders. Enforceable and non-enforcable contracts will be determined by the initial agreement that were made between the contracting parties. Incase of any modifications to the contract, they have to be justified by the court of law. No party is allowed to make modifications without considering the legal implication of the same. There are various sections of the contract law that allows parties to make modifications which must however be applied in good faith. There may be no assurance that the court will act in favor of the plaintiff or not. All conditions will have to be considered to see whether the modifications are justifiable or not. The best procedure is hence to consult with the law before making subsequent modifications to the contract. It is highly misleading to say that the compensation of the plaintiff is the goal of contractual remedies. According to Beatson’s book (p, 58), “The court will require that the plaintiff be compensated for the damages and inconveniences incurred for breach of contract.” This is a step that is usually taken to ensure that people make the necessary inquiries before venturing into a certain contract. However, it may not always be that the remedies that are required to be faced when a party breaches the contract are always to compensate the plaintiff (Beatson, 62-68). Even though there are circumstance where by the plaintiff has to be compensated, the court may at times rule out the case in his favor but fail to grant him the necessary compensation. Remedies that are subjected to an individual for breach of contract are not mainly for the benefit of the plaintiff but to ensure that justice has been achieved. The plaintiff will not always be granted the favor of the court unless it has been identified that the contract is not according to public policy. The court requires that both the parties to the contract understand the general and legal implications of the contract. The court will only intervene in situation where by the contract was breached not because the party did not understand the terms but because he failed to honor the consideration. A person that has been hired to perform a certain task is required to value the possibility of the task being performed and not enter into contract blindly (Clarke, 128-131). A person who accepts to enter into a contract before verifying whether the task can be performed or not, may not be favored by the court of law. Citing a written case by Sam Biers, where he says, “In a case that involved rockingham country v luten bridge co., luten bridge co. was given a contract to construct a bridge a cross the road.” The company therefore embarked on the construction assignments but later on the road was moved. The people in the area were against the area which the road was located and therefore voted for its removal. Considering that the company had started constructing the bridge, they were to stop and probably claim for a compensation for the damages that had been caused to them. They were however given a go ahead by certain country commissioners to go ahead with the construction of the bridge of which they obliged to. After finishing the construction process, it was ruled that the bridge was useless since it was constructed at a place where it was to serve no purpose. The bridge company sued the country for not compensating them for the damages that had been caused on them. The court made a ruling to the company that even though they were given a contract to construct the road at that particular location; they knew that the purpose of the bridge was for the sake of the road and hence no fulfilling its purpose (Ayres, 98). They were in the right mind to realize that the construction of the bridge could not be continued if the road never existed. The bridge company was expected to stop the construction of the bridge once they realized that the location of the road was changed and wait for other directions. The company would have been granted compensation for the part that they had constructed before the location of the road was changed. The bridge company may have considered that because they were contracted to build the whole bridge of which they would receive considerable compensation. The consideration that they were promised was for the accomplishment of the construction work which they had to finish. They may have looked at the legal bindings of the contract and considered that unless they finish the work, they will not be rewarded. The case has been viewed as complicated considering that all the parties had a valid reason for acting the way they did (Clarke, 220). Even though the bridge company had the right to demand for their dues considering the work that they had successfully finished according to the initial agreement, they could not be favored by the court because they knew they were constructing the bridge at the wrong place yet they continued with the work. According to the doctrine if mitigation, a party should use common sense when it comes to performance of duty. Despite the terms that were initially agreed upon, they are supposed to consider whether the contract will still be valid even as they perform the task. The court may not defend the plaintiff incases where it is realized that they were in a position to stop performing the task when they realized that it was not enforceable. In this case there was no remedy for compensation despite the fact that some damages had been incurred by the company. The company had to in fact bear the consequences of ignoring the fact that the contract could not be enforced due to the subsequent changes. It was a change that was considered obvious and they therefore did not need to be told by anyone to stop or continue. In the case that involved Bomberger v McKelvey, Bomberger entered into a contract with McKelvey and agreed to demolish a building on the lot for a cost of three thousand five hundred dollars Bomberger wanted to construct another building at the location and thus required the demolition to take place fast. The building had skylights of which Bomberger had agreed to sell them to McKelvey for a cost of five hundred and forty dollars. Later on Bomberger instructed McKelvey to stop the demolition as he had also postponed his earlier plans of constructing another building (Ayres, 65). Bomberger did not however stop its demolition as he needed the skylights to accomplish his other contract that was almost due. McKelvey benefited from the building for a monthly rent of three hundred dollars while the estimated cost of the building was twenty six thousand dollars. This generally implies that McKelvey incurred a loss because he was not going to construct a new building that would generate him the required amount. Even though Bomberger was required to stop the demolition of the building, he could not do that as his benefit had already been determined from the demolition of the building. In ruling out the case, it was concluded that Bomberger acted reasonably because delaying the demolition of the building would also delay his other construction contract that required him to have the skylights. McKelvey could not be compensated for the losses because he had already entered into a contact with Bomberger to demolish the building of which he would also benefit from the skylights that were required for his next contract. The above cases shows an example of contracts that the plaintiffs could not be compensated for the damages that had been caused to them because the contract had either been passed or did not act reasonably to grant them compensation. Compensation will not always be guaranteed to a plaintiff even if there is considerable damage and inconveniencies that have been experienced by them. If compensation was guaranteed then luten bridge co would have been compensated by the country for the damages they caused them by allowing them to build the bridge at the wrong place. The company could have been justified about their claims because they were given a go ahead to proceed with the constructions from commissioners that claimed to be government representatives. The company was waiting for the government that gave them the contract to stop them from the construction but instead it was misrepresented and gave the contractors the assurance. The court had to look at all the conditions that surrounded the case for it to make a ruling on whether the plaintiff deserved compensation or not. It is usually assumed by certain individuals that once a contract has been entered into and an agreement made between the parties, the plaintiff will always seek the address of the court and automatically claim compensation once it is verified that the contract was done according to the terms (Clarke, 85-90).. The role of the court in dealing with contract law is to ensure that justice is administered to both parties and that the correct procedure is followed. The court will not favor a plaintiff who entered into an agreement and went a head to perform it even when the conditions imply that it is void. The court in its ruling on contracts will also look at the mutual benefit of the parties’ and therefore not permit the compensation that is needed. Like in the case that involved Bomberger v McKelvey, the court considered the benefit that was attached to the accomplishment of the contract which had already been signed. The court could not justify the need for bomberger to be compensated despite the fact that he had stopped McKelvey from demolishing the building. The agreement had already been made, of which he was also to be given the consideration according to the agreement. If contractual remedies were made specifically for compensation, the aggrieved parities would have successfully been granted the necessary compensation. Contractual remedies are put in place to ensure that the rights of the contracting parties are fulfilled and met. They are basically to guide individuals who enter into contracts and to prevent the exploitation of another party (Beatson, 120-125). They are also to serve as a warning against parties that enter into contracts without understanding their implications. Contract remedies serve the purpose of alerting the parties that efficiency performing the contract may not always mean that there will be a mutual benefit between the two. Even though the initial purpose of entering into such a contract was for the mutual benefit of the two parties, the case may not always be, by the time the work has been completed. This is revealed in the two cases above, the company that was to be granted the necessary compensation lost because he failed to use common sense. In the latter case, the individual that hired the contractor lost after his efforts to stop the contractor from accomplishing his task failed. Even tough the plaintiffs expected the courts to rule in their favor considering the necessary efforts that they could consider legal; the conditions in which the obligations were carried out could not grant them legal favor. Conclusion Despite the availability of the law that governs all forms of contracts, it may not be a guarantee that the court will follow the set guidelines. Contracts take various forms some of which may not be addressed by the law. Contract law is also a wide topic that cannot be summarized and provisions made for every kind of contract that exists. Considering the forms that the contract takes, there may be many more contracts that may arise which the court will be required to address (Clarke, 345). If the court has to rely on the legal formalities that have been laid down by the law, the judges may have nothing to refer to incase they encounter a case that is completely different from the cases that have ever been addressed. The court has therefore decided to be flexible when handling cases that pertain to contract law by looking at the various conditions that surrounded the agreements that were entered into, and the circumstances that surrounded its performance. This is basically the reason why several people that expected the court to act in their favor got surprised when the court uses a different formula to enhance justice. Bibliography Ayres, Ian, Studies in Contract Law: New York, West, 2008. Beatson, Jack, good faith and fault in contract law: Oxford, Oxford University Press, 1997. Clarke, Philip, Contract Law: Commentaries, Cases and Perspectives: Oxford, Oxford University Press, USA, 2007. Read More