Contract Law - Chapel v Nestle - Assignment Example

Students Name Course Instructor Date Contract law Question A In order to determine the validity of a contract, all the four elements of a contract must be satisfied. These elements include offer, acceptance, consideration and intention, must exist in every contract to make it a legally binding agreement,. It is clear that both an offer and acceptance is made in the agreement between the parties. It is also clearly indicated by the facts that the parties intended to get into a legally binding contract. The court in the case of Balfour v Balfour addressed its mind to the issue of creating a legally binding contract. In this case, the husband promised to pay the wife the sum of $ 30 each month if she accepted to remain in England. However, their relationship fluctuated and the husband refused to pay the amount due. Lord Atkin dismissing the contract as not legally binding upon the parties stated that the contract was not intended to be legally binding. From the facts displayed in this case it is clear that Chen and John intended to get into a legally binding contract. The next issue, to consider, is the consideration that passed under the contract. The parties did not only agree on the price of the building materials but set the price for the labor at $ 6000. The contract does not become void because the consideration has not been set. The promise, to pay the sum of money that would be the cost of the building materials at the time of completing the contract, is sufficient to bind the parties to the contract. A contract, that satisfies all the requirements for the formation of a contract, is enforceable. The contract between the parties can be enforced because it is valid. Question B Agreements are meant to be binding between the parties. The doctrine of pacta sunt servanda is applicable in this case. The amount of money, that was to pass through the contract, was to be $6000 for labor. The attempt by any one of the parties to the agreement to go against the express terms of the contract amounts to a breach. The attempt by one of the parties to exercise incompliance to the express terms of the contract amounts to creating a new contract. The only part of the contract that was to vary was the part on the building materials. The $ 6000 consideration was one of the terms of the contract. It is only this amount that was to be paid by Chen in consideration for the labor that was to be offered by John in building the house. The consideration should be sufficient in law but the consideration must not be adequate. John cannot claim that the consideration was inadequate. This was the position of the court in the case of Thomas v Thomas. In the case of Chapel v Nestle the court again addressed its mind to the issue of sufficiency and adequacy of the consideration given by a party to the contract. The court in this case held that chocolate bar rapper was valuable consideration. The consideration status of the rappers could not be affected by the fact that the value of the bar rappers could not be ascertained. The lack of value for the wrappers did not make the wrappers insufficient consideration. Chen can, therefore, refuse to pay the $10,000 proposed by John by arguing that to do would be to sanction a breach of the express terms of the contract. Vitiating factors affect the validity of a contract. A contract, that would otherwise be valid, can be vitiated by the vitiating factors such as duress, undue influence, mistake and misrepresentation (.Education Portal (2015). In this case, the acceptance made by Chen did not arise from a mutual agreement. In contract, there must be a meeting of the minds by the parties. The parties must be in agreement that they intend to be binding. The duress, under which the contract was made, affects the free will of the parties in making the contract. Chen agreed to the new terms not because it was agreeable but because he was desperate to have the building completed by June. The threats issued by John to Chen amounted to duress. Economic duress was brought to bear upon the second agreement. The threat, to cancel the contract if the demand of $10,000 was not met by Chen, amounted to duress and, therefore, vitiated the contract. The clause procured through duress is inoperative. The circumstance satisfies all the requirements required to demonstrate that there was duress that was brought to bear upon the contract. All the elements of economic duress have been qualified by the facts of the case. There are three elements that must be demonstrated while applying the doctrine of economic duress. First, there must be an already existing contract between the parties. Secondly there must be a threat to cancel the existing contract if certain new demands are not met by the other party to the contract. Thirdly, a party must have must have accepted the new terms to the contract to the contract out of duress, and the party had no alternatives. It is clear from the facts that Chen had no available options that he could resort. The time for the completion of the contract was to be June. It is the threat to cancel the contract that influenced Chen to accept the new terms. The terms introduced through duress cannot be treated as terms of the contract. The terms introduced through duress cannot be regarded as forming part of the contract. The court addressed its mind to the issue of economic duress in the case of Occidental Worldwide Investment Corporation v Skib. The court found that economic can exist, and it has the potential of making the contract voidable at the instance of the innocent party. In North Ocean Shipping v Hyundai Construction, the court again expressed its mind to the concept of economic duress. The court found that the contract had been procured through economic duress. The universal sentinel case is a locus classicus on duress. The submission to onerous terms by party because they have realized that no choice exists was identified by the court as what determines whether economic duress exists or does not exist. Question C Chen can claim compensation for the amount of money spent in hotel expenses. The contract stated that the construction was to be completed by June. Failure by the builder to complete the contract within the required time amounted to breach of the contract. Chen has, therefore, suffered injury as a result of the breach of the contract. The injured party must be restituted to place in which the injured party would have been if the breach did not occur. The injured party must be compensated for the loss occasioned by the breach of the party at fault. The innocent party must be restored back to the place that the party was before the breach occurred. The innocent party is entitled to $3000 spent in hotel expenses because the amount could not have been spent if the party at fault had not breached the contract. The innocent party is entitled to the remedy of damages. In the case of Attorney General V Blake, the court pronounced itself to the issues of restitution damages. The court awarded the government restitution damages due to breach of contract by the defendant. Chen should, therefore, claim damages directly suffered by through the payment of hotel expenses. Though the issue of restitution damages has remained clear, it is nonetheless an available remedy for the injured party to a contract. The party, which suffers loss, should be compensated to the extent of the loss suffered. The innocent party must, therefore, get the amount of money that was lost by the innocent party through the breach of the contract. Question D The parties to the original contract made a new contract which in effect amended the terms of the contract. The fact that John had made a new offer which Chen accepted means that a new contract was created. Chen was capable of refusing to accept the change to the contract proposed by the John. A new contract was, therefore, created by the changing the terms of the contract. Once he had accepted the new terms of the contract, he was bound by its terms. Chen must be stopped from claiming that the contract cannot be enforced since he had accepted the newly introduced terms. The final contract made between the parties had the consideration set at $ 10,000 for labor. This, therefore, means that the contract was binding upon all the parties to the contract. The creation of a new valid contract entered into by the parties had the effect of making the other conflicting clauses inoperative. Failing to take steps to avoid the contract precludes a person from relying on the doctrine of economic duress to rescind the contract. The failure by Chen to take any steps to avoid the contract as the innocent party makes his claims of duress infertile. In the case, Pao on v Lau Yiu Long the Court pronounced itself on the issue of economic duress and the elements that must be satisfied by the party attempting to rely on it. One of the requirements is that the party alleging the duress must have taken steps to avoid the contract made under duress. The complaining party must have taken all the steps necessary to protect his interests. Failure to do so stops the complaining party from relying on the concept of economic duress. Chen in the present had options available to him including changing the contactor. The building had not commenced from the time John attempted to introduce a new term to the contract. The case does not satisfy the condition laid out in the Universal sentinel case. Chen was not going to suffer any injury by choosing another person to carry out the work. If the work had commenced and so much time had lapsed, the party could rely on economic duress. References Education Portal (2015) “Economic Duress in Contract Law: Definition & Cases” Retrieved from http://education-portal.com/academy/lesson/economic-duress-in-contract-law-definition-cases.html#lesson Read More