Arguments that Can Support Chens Refusal to Pay John More Than the Original Agreed Price - Case Study Example

Arguments that can support Chen’s refusal to pay John more than the original agreed price Chen and John were in a contract that bound both of them to its terms. In what transpired between them, John failed to adhere to the requirements of the contract by failing to finish the work before June ended. As a result Chen could not agree to pay John as agreed; the cost of materials plus $ 6000 for labour. The agreement was that the job be completed by the end of June but this never happened. Chen could use this argument because paying John the amount of money agreed upon was to be done with the condition that the work be completed in the agreed time. Chen’s argument can be strengthened by the fact that finishing the work before June was a key condition in the contract agreement. Therefore since it has been violated then the terms of the contract do not stand anymore. Looking at the case of Associated Newspapers Ltd v Bancks (1951), the findings of the High Court were that the term was key to the contract and therefore it was taken as a condition (Miller, Jentz 2009). On the side of Chen the work being completed before end of June meant a lot to him. Delaying the work costed him $ 1500 in expenses at the hotel. He can therefore say that if John knew that he was unable to finish the work in time he could have come out clear so that Chen would have explored other options or avoid the contract all together. Chen can decide to look at the term as a condition and argue from that view point. The term was expressed in such a manner as a condition and held a lot of significance to the contract. The loss that Chen incurred by paying $ 1500 to the hotel was painful to him since it was not planned for. He could argue that this greatly interfered with his budget and other financial needs he was planning to attend to. His refusal to pay John as agreed earlier would be strengthened by the argument that the money he wasted at the hotel is what he could have used to pay him if only he completed the work in the agreed time. Chen can also say that he only agreed to the terms of the contract because he was misled by John. He can argue that the contract was based on deceitfulness on the side of John and therefore John wants to obtain money from him unlawfully (Sweeney & O’Reilly 2004). He can site section 18 of the Australian Consumer Law (ACL) and argue that the John displayed the conduct or pronounced the misleading statement in the process of negotiating in a business agreement. He can also say that John’s conduct misled him because he depended on the ability of John to finish renovating the building before end of June as a reason to enter the contract. Based on section 18 of the same legislation he can site a breach of the law and sue John for damages bearing in mind that this breach of the law made him incur a loss that could have been avoided (Sweeney & O’Reilly 2004). John misled Chen to believe that the work would be finished by the end of June which made Chen go a head to plan for the arrival of his family and in the end he landed into losses. Given that he was anxious to see his family come to the house and the circumstance he was in at the moment he can argue that he could not see beyond the deceitfulness of John and so he entered into the contract. Looking at Holmes v Jones, Redgrave v Hurd and Peek v Gurney as reference case Chen can argue that although misrepresentation was not a major inducement, he was attracted to sign the contract because it was one of the reasons why he agreed to the contract. He really believed that the work would be complete before June ended and he relied on the information to this effect. He was also eagerly expecting the work to be over in time for the sake of his family that was planning to visit at that time and this made him to show reluctance at the change of the price in the contract (Emerson 2009). Chen can also say that he knew he was bound to the terms of this contract and therefore he was still willing to do his part in the contract before June ended and before it was terminated. In the case of Foran vs. Wight (1989), Wight could not adhere to the settlement date and therefore it turned out to be a breach of the condition in the contract. The court determined that the settlement date carried a lot of significance to the contract. Arguments that can support Chen’s compensation claim In seeking for compensation Chen could argue that he has the right to sue John for damages because he breached the contract. He is therefore supposed to be compensated because he suffered losses as a result of the contract that was breached. Chen is supposed to be brought back to the position he was financial before the contract was breached. This should be taken care of through the damages. Chen’s argument should include the claim that the failure of John to renovate the house in good time made him lose $ 1500 paid to a hotel for the expenses incurred by his family. Chen has to look at the Australian Consumer Law and the remedies for breaching section 18 of this law. Based on section 18 of ACL damages can only be awarded by law if deceptive conduct was the one that led to the loss (Cripps 1994). Chen could say that because of the failure of John to complete the work as agreed he suffered disappointment, embarrassment and anger and that the damages he expects John to pay because of the loss are not very remote. Reference to this can be found in the case of Hadley v Baxendale (1854). He should go ahead and say that John was a ware of the planned visit of Chen’s parents even when he was delaying the work (Graw 2002). John had all the knowledge that the work needed to be complete in the allocated time and failing to say early enough that he was not able to complete the renovation should make him pay for compensation. He therefore sat on that knowledge and refused to advise Chen early enough about the possibility of him failing to finish the work according to the contract. Based on Gould v Vaggelas (1985), another argument for Chen could be that deceitfulness was just among the things that caused the loss. Contract law and ACL have different ways of calculating damages. Looking at GIO v Marks (1998), Chen’s position at the time and the position he could have been in if section 18 was not breached are used for calculation of damages in section 18. Arguments that John could use to claim the $10,000 from Chen John’s arguments should be those that will counter the reason in the arguments that Chen makes. John can argue that Chen never relied on representation that the work should be finished by end of June. He (Chen) was in a position to enquire more to whether the work was headed to its completion by end of June. He should say that he did not breach section 18 of ACL, his conduct was not misleading and that prior to entering the contract Chen was not guided by the ability of John finish the work by end of June (Pentony et al. 2002). John can say he had no intention of inducing Chen because he accepted the contract because he chose to. Holmes v Jones, Redgrave v Hurd and Peek v Gurney can illustrate this. He should counter the argument that he delayed in completing the renovation. He should say that there was no condition in the term that the work should be over by end of June. They had not agreed on any condition and that the term was not key to the contract (Emerson 2009). He should use this to show the validity of the contract. Bettini v Gye (1874) shows that time becomes a condition if the contract is considered as a whole to see if the people involved wanted the time factor to be the core of the contract. John can say that he only delayed by three weeks and that time stipulation was not the core of their contract but the renovation of the building was. He can go a head to argue that Chen failed to immediately terminate the contract when $ 10,000 was quoted as the new price. Chen therefore lost his right of rescinding the contrast. John should argue that he should be allowed to get the $ 10, 000 because Chen got a benefit of his expense (Beatty & Samuelson 2009). References Beatty JF, Samuelson SS (2009), Introduction to Business Law, Macmillan publishing Cripps C. (1994) Law in Commerce and administration, Palatine Emerson W. R (2009), Business Law, New York, Baron’s Education Series Graw, S. (2002). An introduction to the law of contract. (4th ed.). North Ryde, NSW: Law Book Company. http://www.cch.com.au/ Miller RL, Jentz AG, (2009) Fundamentals of Business Law; Excerpted Cases Cengage advantage books Pentony B. et al. (2002). Understanding business law. (3rd ed.). Sydney, NSW: Butterworths. Sweeney, B. & O’Reilly, J. (2004). Law in commerce. (2nd ed.). Chatswood, NSW: Butterworths. Read More