The Law of Contract - Assignment Example

The Law of Contract Instructor Institution Address City Question 1 (A) Case Facts Mary, an owner of a hotel/night club realized that the performance of her business had been low, and hence, she decided to promote it by hiring entertainers. She contacted Joe, a promoter for a boy band known as “No Direction” and proceeded to sign a contract with him. With regard to customers’ preferences, Mary confirmed from Joe that the band would perform their famous “love” songs. Though it was not included in the written contract, this assurance led Mary to sign a contract. Precisely, the written contract did not indicate the types of songs the band would sing. The agreement indicated that the band would perform for three nights in April 2013 and for four nights in June 2013. However, the band failed to perform their famous “love” songs during the three nights in April and only played new songs with different, heavy metal rock style. As a result, many funs got disappointed and walked out of the night club. This raises an issue on whether Mary can get a legal remedy in a court of law for the failure to perform the “love” songs and whether she can get out of her June obligations. Argument As Stempel (2006, p. 5) stated, a contract is a legal binding agreement, whether it is written or oral. In some cases, an agreement includes both oral and written parts. In such cases, it may not be easy for a plaintiff to prove the existence of an oral contract or the terms of the oral part of the contract. This is worsened by the existence of parol evidence rule which limits admission of further extrinsic evidence in the process of determining terms of a contract. However, the contract law allows exceptions to the use of parol evidence rule in some contracts involving both oral and written terms. The law of contract provides that an oral promise, which exists in parallel with a written contract, can be enforced as a collateral (or second) oral contract since its consideration is the making of the written contract (Wollner 1999, p. 10). This argument was applied by an appellate judge in J. Evans and Son (Portsmouth) Ltd v Andrea Merzario Ltd [1976] 1 WLR 1078. He reached to a conclusion that the oral assurance that goods would only be transported below the deck constituted a second and separate contract from the written one and that this assurance overrode the inconsistent terms of the written contract. The written contract had allowed defendants freedom in handling and shipping the goods. In this case, Mary should argue that the oral part of the contract existed in parallel to the written contract with Joe. She needs to argue that the oral part is consistent with the written contract and argue that she only entered into the main contract on the basis of the oral promise that was made by Joe, as expressed in JJ Savage and Sons Pty Ltd v Blakney, 1970 case. As in Hutton v Warren [1836] 1 M and W 466 the contract law also allows for evaluation of how the parties acted under the present agreement, how they have been performing in earlier contracts similar to the current one and how other parties perform in the industry in order to determine the terms of the agreement. Thus, Mary should seek to prove that Joe acted differently in the present agreement than in other agreements, as well as other parties in the entertainment industry. If Mary argues her case well, the outcome of the case is likely to show that Joe committed an actual breach of contract by failing to honor the oral part of the contract. Joe may then be required to pay damages to Mary in compensation for the estimated loss that occurred. Mary may seek to terminate the contract and argue that the breach to the contract was essential and material given that the main condition for engaging in the contract (preference for love songs) was violated. She may refer to Poussard v Spiers case in which the employer was allowed to terminate Soprano’s employment due to her failure to honor oral terms of the performance agreement. This might help her to get discharged from her June obligations. Question 1 (B) Case Facts In the written contract, Mary and Joe had agreed that the band would perform for one hour every night on 5th, 6th and 7th of April 2013 and again for four nights in June 2013. However, they performed for 60 minutes only on 5th and for 45 minutes on 6th and 7th of April 2013. The shortness of the show also contributed to the funs’ disappointment. As a result, Mary incurred huge loss during the April performance. This raises an issue on whether Mary can get a legal remedy in a court of law for the reduced performance on 6th and 7th and whether she can get out of her June obligations. Argument Failure by the band promoted by Joe to perform for 60 minutes on 6th and 7th of April constitutes an actual breach of contact. An actual breach of contract occurs when a party refuses or fails to perform a contract at the time fixed for performance or when a party performs a part of a contract and fails or refuses to perform the remaining part (Tulsian 2000, p. 13). As in Bettini v Gye (1876) QBD 183, Mary should simply argue that Joe committed an actual bleach of the contract when the band failed to perform for 60 minutes and instead performed for 45 minutes on 6th and 7th of April. To show materiality of the breach, Mary may also argue that Joe breached the covenant of good faith and fair deal in this case. Though this may not be stated in a contract, it is understood or implied that each party should deal with the other party fairly and act in good faith in performing the contract as expressed in Sons of Thunder, Inc. v. Borden, Inc., 148 N.J. 396 [1997]. To achieve this, a party needs to be faithful and honest when performing the contract and must act in consistence with the expectations of the parties. In Brunswick Hills Racquet Club, Inc. v. Route 18 Shopping Center Assoc., 182 N.J. at 230-231 [2005] the plaintiff, a tennis club tenant, sued the landlord due to his failure to adhere to the terms of an agreement to purchase the occupied premises. The plaintiff indicated that he did not get the intended benefits as a result of the defendant’s conduct. The Supreme Court handling the case found that the defendant acted in bad intentions by failing to enforce some of the terms of the contract and was in breach of good faith and fair dealing. Generally, for Mary to succeed in this case, she needs to prove that the defendant engaged in deception or evasion or acted in bad intentions or motives in the performance of the contract and that this conduct denied her the intended or reasonable benefits. If Mary is able to provide this proof before the court, it is likely to be held that the defendant violated the implied covenant of good faith and fair dealing by reducing performance times on 6th and 7th of April. This will be treated as an actual breach of contract, and it is likely to attract remedy in the form of financial compensation as in Quigley v. Pet, Inc., 162 Cal. App. 3d 877, 887-88, 208 Cal. Rptr. 394, 399-400 (1984). As in Omnium D’Enterprises v Sutherland [1919] 1 K.B. 618, CA case Mary may get out of her June obligations by arguing that the defendant may not be trusted to perform his contract obligations in the future. She needs prove that the actual breach of contract led to an enormous loss and also insist that the implied covenant of good faith and fair deal is essential to the contract. Question 2 The legal principles (test) for a claim of negligence Negligence refers to failure to exercise due care like a prudent person would exercise in a similar circumstance, leading to eventual harm. In the law of Tort, Negligence involves harm resulting from carelessness and not necessarily intentional. There are three major tests for a claim of negligence: the defendant must owe a duty of care to the plaintiff, the defendant must be in breach of duty of care, and the claimant must have suffered loss or damage as a result of the defendant’s breach (Feinman, 2010, p. 54). The principle of duty of care is well illustrated in the case of Donoghue v. Stevenson. In this case, a friend to the appellant purchased a bottle of ginger beer Paisley and gave it to her. The bottle of beer contained a decomposing snail and eventually the friend of the appellant became ill. The bottle containing the beer was made of a dark glass, and thus, the decomposing snail could not be seen. The retailer of the beer had no contractual obligation with the friend to the appellant since she had not purchased the beer. Consequently, the appellant sued the manufacturer of beer on behalf of the friend. In his ruling, Lord At Kin stated that “a manufacturer of products sells them in a form in which he intends them tom reach to the consumer with no possibility of intermediate examination and with the knowledge that the absence of reasonable care in preparation of the products may lead to injury to a consumer’s life or property.” Thus, the judge concluded that the manufacturer owed a duty of care to the defendant. The judge also noted that duty of care exists only where the harm is reasonably foreseeable. In Caparo Industries pIc v Dickman, it was held that duty of care exists where the harm is reasonably foreseeable, where there is proximal relationship between the defendant and the plaintiff and where it is reasonable, fair and just to impose liability. In the case of Donoghue v. Stevenson, the appellate judge also noted that the claimant needs to prove that the defendant committed a breach of the duty of care. He has to prove that harm occurred as a result of a negligent act or omission of the defendant and that the defendant failed to take reasonable care. The breach of duty occurs where the defendant knowingly exposes the claimant to harm or fails to realize the risk which a prudent person in the same situation would realize. This is also evident in the case of Bolton v. Stone where House of Lords concluded that the defendant should only be regarded as negligent if the harm caused to the plaintiff was reasonably foreseeable from the conduct of the defendant. The case of Donoghue v. Stevenson also established that harm must have occurred to the claimant or his property as a result of the negligent act by the defendant. In Constantine v Imperial Hotels, the judges involved concluded that a claimant can only rely on a legal remedy if he proves that he suffered loss. A claimant can prove that he suffered harm in various ways. For instance, if the negligence act led to physical injury of the claimant, the claimant may provide proof by showing the injury, by showing medical tests or by showing that he had paid medical bill. If damage occurred on the plaintiff’s property, he may show the cost of repair or the income lost when he was unable to use it. Why business owners need to be aware of the principles of negligence The aforementioned principles of negligence are quite relevant to business owners. As (Feinman, 2010, p. 57) explains, there are two forms of negligence under the negligence law. In one form, an individual engages in a careless act, which a prudent person would not do. In the other form, an individual fails to take action that a prudent person would take in order to avoid harm. Both forms may result in a negligence lawsuit to any business owner filed by consumers. Thus, a manufacturer has a duty to produce products that are not defective or that do not lead to harm to the consumer or his properties. A car manufacturer, for instance, has a duty to produce cars that are free from dangerous defects. If he produces and sells a car with defective brakes, he violates the duty of care to the user since the car may lead to an accident. If the buyer is involved in an accident as a result of the defective brakes, he could potentially sue the manufacturer. As in the case of Palsgraf v. Long Island, the manufacturer may be required to compensate a consumer due to his own negligent acts, as well as the negligent acts of his employees. Generally, it is vital for business owners to be aware of the acts that may lead them to be judged as negligent. References Feinman, J. (2010). Law 101. New York: Oxford University Press. Stempel, J. W. (2006) Stempel on Insurance Contracts, 3rd ed., Pearson Education Limited. London. Tulsian P. C. (2000) Business Law, 2E Tata McGraw-Hill Education, New Delhi Bettini v Gye (1876) QBD 183. Wollner KS. (1999). How to Draft and Interpret Insurance Policies, Pitman Publishing, London. Bolton v. Stone, [1951] A.C. 850. Brunswick Hills Racquet Club, Inc. v. Route 18 Shopping Center Assoc., 182 N.J. at 230-231 [2005]. Caparo Industries pIc v Dickman [1990] 2 AC 605. Constantine v Imperial Hotels Ltd [1944] KB 693. Donoghue v. Stevenson [1932] AC 532. Hutton v Warren [1836] 1 M and W 466 J. Evans and Son (Portsmouth) Ltd v Andrea Merzario Ltd [1976] 1 WLR 1078. JJ Savage and Sons Pty Ltd v Blakney, 1970 119 CLR 435. Omnium D’Enterprises v Sutherland [1919] 1 K.B. 618. Palsgraf v. Long Island Railroad Co., 248 N.Y. 339, 162 N.E. 99 (N.Y. 1928) Poussard v Spiers [1876] 1 QBD 410. Quigley v. Pet, Inc., 162 Cal. App. 3d 877, 887-88, 208 Cal. Rptr. 394, 399-400 (1984). Sons of Thunder, Inc. v. Borden, Inc., 148 N.J. 396 [1997]. Read More