Analysis of Contract Laws Cases - Assignment Example

Contract Laws Name Institution Question 1 Pat is a computer software consultant who entered into a contract with Big Industry Ltd. According to the contract, Pat was to design four computer programs that will be used to run automated manufacturing machines. Pat chose this contract hoping it would lead to work that is more lucrative in future (Vogenauer, 2006). The contract between Pat and Big Industry Ltd is a valid enforceable contract. The contract contains all the details required. For a contract to be enforceable, it has to comply with two basic concepts, which are the concept of statute of frauds and the concept of acceptance. Under the concept of statute of frauds, there are laws that require the contract to be written in order to be enforceable. If the contract has been orally agreed, it is not enforceable according to the laws. The statute is important because fraudulent people might use oral contracts as nonexistent proofs when things go wrong. Therefore, if one party of the contract does not sign the contract he cannot be held accountable. The concept of acceptance applies when both parties agree and accept the terms of the contracts. In this case, the contract is enforceable because Pat signed the contract, this shows that he agreed to the terms of the contract. The contract was also in writing, therefore it is enforceable. The contract becomes valid because it entails all the contents of a contract (Vogenauer, 2006, p.89). For a contract to be valid, the contract should be made by parties capable of contracting, there should be consent of both parties, the object of the contract should be lawful, and there should be a consideration clause. Both parties in the contract between Pat and Big industry were of sound mind and nobody coerced them. The contract deals with an object that is legal and both parties agreed to the contract freely and mutually. Both parties were going to benefit from the contract; Pat was getting paid while Big Company was getting the computer programs. In summary the contract between Pat and Big Industry Ltd had the following aspects; offer, acceptance, legal object, competent parties, mutuality of obligation and consideration. The contract specified the various terms clearly. The terms specify the responsibility of both parties, the timeline of the project, means of payment, and other aspect of the contract. Terms generally refers to the contents of the contract, the serious terms are called conditions while the less serious terms are called warranties. Terms can be implied or express in terms. In the contract between Pat and Big Industry, the terms included the duties of each party, dates of commencing and finishing the project, terms of payment. The contract specified the duties of Pat and the Big Industry Ltd. Pat was meant to develop four computer programs for the company over a specified period. Each program was to be created according to the specifications of the Big Industry so that it would support the different activities in the company. Each program had its own structure and complexities, which explains why other programs took a longer period to be created. Another term of the contract is the dates. The contract specified the dates in which Pat was meant to start working and the date of delivering the four programs. According to the contract, Pat signed the contract on 1st April and he was meant to deliver the software programs no later than 1st may. Another term of the contract is payment. The contract stipulates that Big Industry Ltd Will pay Pat on completion of the work. The contract does not specify the means of payment, but Pat will be paid once he has delivered all software programs (Beecher, 2009 p. 7). Another interesting term of this contract talks about modification of the contract. The contract states that no modification will be valid unless it is written down and signed by both parties. This clause prohibits the parties from making changes, unless they write it down and agree to it through signing. The April 15th call might be termed as an anticipatory breach of the terms of contract. One of the terms specified that Pat should deliver all the programs on 1st May, but he called to ask for an extension of time. Another term was that changes will only be written down, however Pat called instead of going to Big Industry and literally writing down the modification. Question 2 Pat can prevail in legal action against Big Industry Ltd, but it will require an experienced contract attorney that will look for all the necessary loopholes in the contract. Modification of contracts is a common thing in business. Modification of contracts can be written or orally made. When Pat called Hillary, who is the president of Big Industry Ltd to ask him for an extension of delivery dates Hillary seemed to agree with Pat. In as much as the contract had stated that modifications should be written down, Hillary did not object Pat’s request for an additional time. Historically, business courts have allowed oral modification as a form of modification in contracts. The clause that says that modifications of the contract shall be written has not always been enforced in a business court. It might not be enforced especially if the party/ parties that wanted modification of the contract relied on oral communication instead of written communication (Mss. Shell v. Mr. Gibbs). The court also acknowledges that parties in a contract cannot deny themselves the chance to make modifications just because it has to be written down, unless it is dealing with crucial businesses such as transfer of property or financial contracts. This particular contract might have banned oral communication, but when Pat called Hilary she did not say that there was a breach instead she agreed to it. Business contracts are build on trust and faith, and Pat did called Hillary thinking they had already established a good working relations so he did not see a need to write the modification. Hillary’s claims of repudiation are not true, because repudiation is used when the other party refuses to perform under the current contract terms. Pat did not refuse to perform; he called to ask for an extension of time based on the complexities of the project. Hillary already knew that Pat will not deliver the software on time, this are grounds for anticipatory breach (Heffey & Jeannie, 2002, p. 120). Pat did breach a material term of the contract. Material terms are the serious terms of the contract that could lead to losses in a business world. However, this does not give grounds for repudiation; in fact, Hillary has committed a breach too by terminating the contract on repudiation grounds, yet the reasons for termination do not qualify as repudiation. Before the promise terminates the contract, she should consider different factors. First, Pat said he would deliver two softwares by 1st May. This shows that he was performing his duties well. The cause of the delay was not intentional. Pat could not deliver because the third and fourth software programs take time to be completed (Heffey & Jeannie, 2009). In fact, the computer’s hardware used in Big Industry Ltd is obsolete which made the process of developing the software programs impossibility on the stipulated time frame. Pat was not aware of the state of the company’s hardware therefore he should not be held responsible for the delay this are grounds for nondisclosure too which shows that the company did not tell Pat about the complexity of designing the software programs as well as the state of their hardware. Pat had made sure that he informed Hillary about his progress, even after asking for an extension, he called back to tell Hillary that he will deliver the software programs by 12th only to be told that the contract had been terminated. Hillary was certain that Pat would perform yet she terminated the contract, this is actually wrong. The modification did not cause any damage because the company was not using the software programs yet. Big Industry will defend itself that Pat ignored the terms of contract, which said that there should be no oral modification. The promisee’s defense will have an upper hand because Pat is the one who breached the contract. Big Industry can also argue that the breach resulted in damages. The company had stated the importance of the delivery dates in the contract; it may argue that the delay resulted in damages. The company had planned that the software programs will be in operation as from 1st May, however since there will be a delay the benefits that would have been accrued will not be realized. The Big Industry Ltd will defend itself that a breach in material terms of the contract usually exempts the innocent party from performing; however, the court will have to consider reasons as to why the breach occurred (Bernstein, web). Question 3 Contract law is a set of rules that governs the relationship, contents, and validity of a contract between two or more parties. Contract law comes in handy when there is a breach of contract. Remedies refer to the relief one gains when a breach occurs. The main remedies in a breach of contract are damages, specific performance, or restitution (Feinman & Brill). Damages are in form of monetary form, when the business court has determined the verdict of the case the party on the wrong side will have to pay damages. Compensatory damages aims at putting the victim at its previous financial state before the breach occurred. Punitive damages are usually aimed at punishing the party on the wrong side; however, it hardly applies in business. Nominal damages are considered tokens of awards given to the party that has been victimized while liquidated damages refer to damages that had been identified in a contract in case of a breach. If Pat wins the lawsuit, he will be paid the damages he incurred during the whole legal process such as attorney’s fee, emotional stress, cost of designing etc (Andrews, 2011). Specific performance is a court ordered performance of the party found guilty after the lawsuit. In the case of Pat and Big Industry Ltd, if Big Industry Ltd is found guilty the court will order it to improve the working condition of Pat, since the termination of faith results in bad faith one needs to work on rebuilding the relationship (Davis, 2006, p.34). Restitution as a form of remedy is where the innocent party will terminate the contract after the lawsuit and sue the other party. Cancellation is a form of remedy that leaves all parties free of the contractual duties. References Andrews, N. (2011). Contract Law. Cambridge: Cambridge University Press Beecher, F. (2009). The law of contracts in Michigan; exhaustively treating internal structure with forms. Grand Rapids: General Books LLC Bernstein D. E, Freedom of Contract. George Mason Law & Economics Research Paper No. 08-51. Retrieved from Davis, J.L.R, (2006). Contract: general principles: the laws of Australia, Melbourne: Thomson Lawbook Co. 2006. Feinman JM, Brill S.R, Is an Advertisement an Offer? Why it is, and Why it Matters. Hastings Law Journal. Retrived from Heffey, P & Jeannie M. (2002). Principles of contract law. Lawbook Co. Mss. Shell v. Mr. Gibbs, Marriage Proposal: A Legally Binding Contract? Retrieved fromhttp://ruckingfidiculous.blogspot.com/2008/07/marriage-proposal-legally- binding.html Vogenauer, S. (2006). The harmonization of European contract law: implications for European private laws, business, and legal practice. Oxford: Hart Pub. Read More