Business Law - Candy Coffee Cart - Assignment Example

Name Instructor Course Date Contract Law This case is about Candy, the proprietor of a Candy Coffee Cart who enters into an oral agreement with her old friend Blair for the supply of coffee beans and a written agreement for the lease of a brand new, state of the art “GrindrLux 9001” espresso machine. Candy signed the espresso lease contract that had no end date for the lease. Candy also entered into an agreement, a contract of sale, with Ariel for the purchase of a coffee shop - The Aromas of Alexandria - that was subject to the buyer obtaining suitable finance. The main legal issues Whether the oral agreement between Candy and Blair for the supply of coffee beans for five years is legally binding. Whether the contract for the lease of the “GrindrLux 9001” espresso machine is legally binding. Whether Candy can be able to terminate the lease for the espresso machine. Whether the contract between Candy and Ariel is binding and enforceable. Whether Candy is entitled to any remedies on the agreements entered into. Issue 1: The coffee beans agreement. Generally, a contract refers to a legally binding agreement made between two or more parties by which one or more parties acquire rights through acts of forbearances on the part of the other. Accordingly, such agreement may either verbal or written. In this case, Blair suggested to Candy over dessert of an agreement for the supply of twenty two, two kilogram bags of Sumatran coffee beans each month at his list price for five years. Candy initially expressed some doubts about the agreement, which Blair quelled by informing her that those were the standard terms and that he would rescind the contract early if the agreement did not work out. Generally, an oral or verbal agreement is enforceable but must be proved. Proof of an oral agreement will mostly be inferred from the actions of both parties in relation to the said contract. In this case, a contract can be inferred by the action of Blair supplying Candy with the coffee beans and Candy accepting the supply and making use of it. This means there was part performance of the contract, which Blair cannot deny. Therefore, the rules of equity would apply and infer the existence of a contract.1 The real issue here would be whether Candy can rescind the contract with Blair based on his ‘promise’ to rescind the contract if things did not work out. Since there was no written contract, Candy entered the agreement with Blair based solely on his promise to rescind the 5 year contract if things did not work out. This is seen when she expressed doubt on the contract and would not have entered into it except for Blair amending the terms.2 Blair would therefore be bound to perform the oral terms of the contract and rescind the contract and ‘let her out early’ as he promised to. Alternately, if the contract they entered into fall within the scope of contracts that have to be written, then the contract would be null and void abinitio. Issue 2: The ‘GrindrLux 9001’ espresso machine agreement. In this case, Blair and Candy entered into a written agreement for the lease of an espresso machine. Blair did not include an end date for the lease, as he was worried that Candy would change her mind. A lease contract is an agreement between a lessor and lessee in which the lessee is allowed to use the lessors property for a period. This lease agreement like all other contracts is subject to the stipulated terms and conditions provided therein. The effect of the lease agreement not having an end date was that the terms of the contract or lease would continue to run indefinitely. Since Candy signed such a contract, she is bound by its terms and conditions. However, each party has a right in a contract to terminate a contract. In this case, Candy has expressed her intention to terminate the contract by giving Blair her notice of intention to terminate. Blair in the other hand has ignored the notice and proceeded to invoice Candy on the lease. Candy can rely on a mistake on the general terms of the contract to terminate the contract. Candy can argue that she was mistaken as to the time to which the lease was going to run. She did not expect a continuous time, as she was to purchase a coffee shop, which would have its own equipment. 3 In any case, an end date is an essential part of any lease agreement and the lack of it would be a valid reason to terminate the lease contract. This should be done by first informing the lessor which Candy already did. Since he is still sending invoices, Candy should expressly state her desire to terminate the contract by giving another notice or maybe returning the espresso machine to Blair. This action will expressly show her intention to terminate the contract, which is well within her rights in the contract, and they can both come up with a suitable way to rescind the contract. Issue 3: The purchase of Aromas of Alexandria agreement. Candy entered into a written contract of purchase with Ariel for the purchase of the Aromas of Alexandria café. Since Candy did not have the funds to finance the sale immediately at the time of signing the contract, Ariel inserted a clause in the agreement stipulating that the contract of sale was subject to the buyer obtaining suitable finance. This Clause 37 was much more than just a term in the agreement or contract. It had the effect of a condition such that the validity of the contract of sale would be dependent upon the fulfilment of the condition. Some contractual terms are more important than others are. The most important ones are called conditions, the less important ones are called warranties, and breach of each brings about certain consequences.4 The validity of the contract was dependent upon Candy obtaining suitable finance to purchase the Aromas of Alexandria café. Since by the end of this case she had not done so and was not interested in purchasing the café anymore, and then she would not be bound under the agreement of purchase she signed. Ariel would have no form of redress, as he would be bound by the condition in form of Clause 37 that he inserted in the agreement. A major term of the contract had not been fulfilled; therefore, it would not be valid. Issue 4: Whether the three parties are entitled to any remedies. Whenever there is a breach of contract, the injured party is usually entitled to some form of redress ranging from performance of the contract to an award of damages. In the case of the oral contract between Blair and Candy, since an oral contract can be enforceable in court, Candy can have the contract rescinded just as he promised her. There was no contract that was signed by the two so the terms and conditions he stipulated would not apply since Candy did not have the chance to read and agree with them. She had taken part in the contact based on the promise of being able to get out of it in case she desired to do so in the future. Blair was therefore bound by his promise. Blair further intimated to Candy that the coffee beans would make her sales skyrocket. This was not so. The statement was made such she would not have entered into the contract had she not been told of it. This alludes to the statements importance and therefore making both these statements terms of the contract.5 Therefore, on the Coffee bean supply agreement, important terms of the contract have been breached and therefore Candy can have the contract rescinded if she so wishes. In addition, Blair would not have any form of redress but would be bound to release Candy from the contract and cease supply of the coffee beans. He would be entitled to consideration for the supply that he made and Candy receives. On the agreement for the lease of the espresso machine, since Candy signed the contract, she will be bound by it and its open-ended nature. Once a person signs a contract, they are obligated to fulfil their responsibilities under the contract. Therefore, Candy is bound to fulfil her obligations and pay the invoices on the lease agreement to Blair. Consequently, parties to an agreement are allowed to terminate a contract on various grounds. Candy could seek to terminate the contract on grounds of misrepresentation. Blair knew there was no end date on the contract and made no efforts to alert her hoping she would sign it that way. This would render the contract void for misrepresentation.6 Alternatively, Candy has the option to terminate the contract if it no longer serves her purpose. She has made steps to terminate by giving notice to Blair who is bound to begin steps to terminate the lease contract. Candy is bound to pay him for the lease period failure to which he can enforce this right in the courts of law for damages. In the contract for the purchase of the Aromas of Alexandria café, Clause 37 rendered the contract invalid when Candy was unable to fulfil its obligations. Candy is therefore not bound under that purchase agreement and can be able to be discharged from any obligations pertaining to it. Ariel has no redress or remedies under the contract because the clause he inserted, Clause 37, rendered the contract void until such a time as Candy obtained suitable finance for the purchase of the Aromas of Alexandria. Since Candy never obtained such finance and had no intentions of purchasing the café any more, then the contract is rendered void and cannot be enforced by Ariel. Read More