Contract between Big Industry and Pat - Assignment Example

Contract Law Assignment Student Name Date Validity of Contract between Big Industry and Pat A contract is a legally binding and enforceable agreement between two or more parties (Willmot, et.al, 2009). The obligations created by the parties cannot be derogated from once agreed unless by consent or by any other means stipulated by the parties. A valid agreement must have an offer which is an expression by one of the parties their willingness to be bound by certain contract terms for instance in the case of Storer v Manchester City Council (1974) the Court of Appeal stated that a contract existed because the communication was intended to be binding upon acceptance. In this case the offer to pay Pat $25000 for the four programs by Big Industry constitutes an offer and an acceptance. Acceptance is an equivocal communication by the party according to the case of Hyde v Wrench that the offer has been agreed upon not partially by fully (Julie, 2012). Acceptance can be implied through the conduct of the parties or performance by the parties of the obligations of the contractual agreement (Brogden v Metropolitan Railway Company (1871). Consideration has been defined in the case of Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd (1915) as the "existence of some right , interest, profit or benefit accruing to one party, or some forbearance, detriment, loss or responsibility given, suffered or undertaken by someone" (Radan, Gooley and Vickovich, 2010). The exchange of four programs for the sum of $25,000 is a valid consideration between the parties hence a binding contract exists because consideration must move from the promisee. The other elements of a binding contract are legality of contract, the issue of capacity to contract and the intention of the parties to be legally bound by the terms of a contract (Latimer, 2010). All the elements in the contract between Pat and Big Industry have been fulfilled hence binding on all the parties involved in the contract. Terms of the Contract A contractual term is a statement incorporated into an agreement between two or more parties and if the term is breached then a contract can be repudiated or rescinded (Davis, 2012). In the case of Pat and Big industry the term of the contract has been embedded into the agreement of the parties stating that “This is the complete and entire contract between the parties and no modification of this contract shall be valid unless it is in writing and signed by both parties.” In the case of Olly v Marlborough Court Ltd it was held that it can be implied through the signature of parties to a contract that a term is binding on them. Further in the case of L’Estrange v F Groucob Ltd it was stated that "when a document containing contractual terms is signed by the parties to a contract in absence of fraud or misrepresentation then the party signing the document is bound by its terms, this is immaterial whether the signing party has read the document or not"(Paterson, et.al., 2011) . Effect of the Phone Call to the terms of the contract A contract as stated earlier is a binding agreement between two more parties and therefore once made it cannot be derogated from unless by the consent of the two parties who created the contract. The initial agreement made on the 1st of April already stated that "it was to be the complete agreement by both the parties and any other agreement must be in writing and signed by both parties. What then is the effect of the phone call made on the 15th April by Pat stating that he would not be able to deliver the program until the 15th of May and the subsequent answer by Hillary stating that he would not go further than the 15th of May. Oral contracts in contract law are valid as long as it can be proved that the intention of the parties was to bind them on the basis of the statement. In the case of D & C Builders v Rees it is stated that a promise must be unequivocal and can impute the future conduct of the parties. It is arguable that the phone call was a new contractual agreement seeking to alternate the terms of the initial contract. It is material to state that Pat was making an offer to Hillary that he would send the programs between 8th May or closer to 15th May. It can be positively inferred that Hillary made an equivocal acceptance of the new terms of the contract because he did not revoke the other contract that subsisted. In order to prove that the contents of the phone call were binding on the parties, then one ought to consider the actions of the party in this case in relation to the phone call. The equitable doctrine of promissory estoppel and reliance applies when a party to a contract relies on the statement of the other party to their detriment (Seddon and Ellinghaus, 2008). The statements made during the phone call are binding on both parties, Pat and Big Industry and any breach would be a breach of contract. Chances of Pat winning a Civil Suit against Big Industry There is a chance that Pat can win a civil suit filed against Big Industry this is because if he can prove that there was fundamental breach of contract based on the phone call made on 15th of April, then he can win the case. Application of the doctrine of promissory estoppel and the doctrine of relation would ensure he wins. The doctrine of promissory estoppel as applied in the case of Central London Property v High Trees implies that “once a party to a contract makes a promise by words or conduct to another party, and the party acts on it believing it to be true alters his reliance to their detriment, then the court would invoke the principle to prevent unjust enrichment” (Davis, 2012). It is an unjust enrichment for Big industry to retain the amounts due under the performance of the contract since Pat had performed the whole contract. It is arguable that Pat had not breached the contract materially because he fulfilled his obligation to deliver the programs but not on the same date as agreed in the April 1st Agreement. The breach in this case can be considered as an anticipatory breach, because when Pat saw he could not perform the contract on that date he sought an extension of time. The contract had not been totally frustrated because the program was delivered and Pat had not breached the terms of the contract. Potential Defences If Big industry specifically plead the Breach of contract by Pat that was signed on the 1st of April and not the alteration of the contract on the 15th of April was invalid since it is a fundamental breach of the contractual condition or term. In the case of Spiers v Lombard (1950) it was stated that a material breach of contract gives the innocent party the opportunity to abandon or terminate their obligations under the law. Generally misrepresentation, fraud, undue influence and illegality are defences available to a party breaching a contract. In this case however in the law before acceptance, the parties to the contract may vary or rescind the promise however after acceptance, their terms of the promise and the duty of the promisor or be varied or discharged only with consent of the promisor and the beneficiary. In this case in reliance with the holding in Tiverton Estates Ltd v Wearwell Ltd if the contract created does not fulfil the parties conditions then it would be null and void. Remedies Available in Law for the Parties Contract law has evolved over the years to provide remedies in common law and remedies under the laws of equity. In the case of Universal Cargo Carriers v Citati [1957] 2 QB 401 the remedies that are available to innocent parties under a contract encompasses "cancellation and damages , an order for specific performance, declaratory order and Exceptio non adimpleti contracts (A party cannot perform because the other party failed to perform )" Common Law Remedies The most common contractual remedies provided by the court of law are that of damages. Damages are awarded to restore the innocent party to the position they were in before the contract was performed. Termination of the contract is usually a remedy that can be awarded by the court or by agreement of the parties to end their obligations under contract. Termination absolves reprehensibilities from the parties and the contract would be considered as null and void (Julie, 2012). Equitable Remedies The courts of equity award equitable remedies if by awarding damages as a remedy would be insufficient to compensate the innocent party from the loss incurred. The remedies include: Specific performance which is a remedy given when damages would be inadequate. An injunction is a contractual remedy that is awarded to refrain a party in a contract from doing something. For instance an injunction can be awarded to stop Big Industry from awarding another contract to another person since it would have an adverse effect on Pat. Equitable estoppel is a remedy given by the court in order to avoid the detriment incurred as stated in the case Waltons Stores (Interstate) Ltd v Maher. The remedy should be proportionate to the unconscionability. Normally this will be reliance loss rather than expectation loss for instance compensation for loss incurred in reliance on the assumption rather than making good the expectation of the parting invoking estoppel. References Books Davis, J. Contracts: General Principles Laws of Australia Thomas Reuters, 2012. Latimer, P. Australian Business Law 29th ed CCH Australia, 2010. Paterson, Robertson & Duke, Contract: Commentary and Materials, 12th ed. Thomson Reuters, 2011. Radan, Gooley & Vickovich, Principles of Australian Contract Law, Cases and Materials, 2nd ed. LexisNexis, 2010. Seddon and Ellinghaus, Cheshire and Fifoot's Law of Contract, 9th Australian ed. LexisNexis, 2008. Willmott, Christensen, Butler & Dixon, Contract Law, 3rd ed. Oxford University Press, Melbourne, 2009. Cases Brogden v Metropolitan Railway Company (1871) Central London Property v High Trees D & C Builders v Rees Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd (1915) L’Estrange v F Groucob Ltd Olly v Marlborough Court Ltd Tiverton Estates Ltd v Wearwell Ltd Spiers v Lombard (1950) Storer v Manchester City Council (1974) Waltons Stores (Interstate) Ltd v Maher. Websites Julie Clark, “General Principles of Contract Law” http://www.australiancontractlaw.com/. Read More