Business Law - Josh and Julie - Essay Example

Name Course Lecturer Date Introduction to Business Law Facts Josh and Julie placed an advert in a local newspaper on 5th August 2015 asking for quotes for the supply and installation of floating timber flooring for an area of 100 square metres. Brendan sent Josh a standard quote offering to complete the flooring at $3per square metre. Steward also prepared and sent a quote for the same work at $28 per meter; however, Josh and Julie were unable to read the email until 16th August 2015. On 13th August Josh accepted Brendan’s offer over the phone, and they agreed he would start flooring the next day. By 16th August, Brendan had been able to lay 55 square metres of flooring. However, after a heavy storm on the night of the 16th, the room became flooded and the land under the floor subsided. The floor also collapsed as a result of the flooding. The flooding was owed to the fact that Brendan left the door of the room open, and also placed his tool bag over the drainage outlet near the door. Josh chased Brendan away when he arrived to complete the work, and would not listen to his plea to complete the work at a reduced price. When Brendan left he asked Josh to contact him so they could arrange for the completion of the flooring However, Josh opened Steward’s email and phoned him to ask him to complete the flooring once the structural issues had been dealt with. Legal Issues A number of legal issues related to contract law can be found in this situation. These include: Did Brendan and Josh have a binding contract after Brendan’s action caused the collapse of the structure he was working on? Is Josh liable for negligence? Did Josh and Steward have a legally binding contract? Issue 1 Did Brendan and Josh have a binding contract after Brendan’s action caused the collapse of the structure he was working on? The Law According to Tramways Advertising Pty Ltd v Luna Park (NSW) Ltd (1938) 38 SR, a party is discharged from contract through breach, if they fail to perform the contract as stipulated in the required time1. The innocent party in a contract can terminate the contact on the basis of a breach by the other party. The innocent party also entitled to claim damages that arise as a result of the other party’s breach of contract. Startup v Macdonald (1843) 6 Mann & G 593 also assert that a party to a contract that has tendered performance, and is willing to perform the contract can be discharged from the contract2. The tendering party also has the right to claim damages, if the second party does not accept the performance as tendered. Application Josh cannot be able to terminate the contract on the basis that Brendan breached their contract. As defined in Tramways Advertising Pty Ltd v Luna Park (NSW) Ltd (1938) 38 SR, a breach is a refusal by one party in the contract to perform the contract as stipulated3. Brendan had not refused to perform the contract, and had already done more than half the work when the room became flooded. Josh also expresses his willingness to complete the contract at a reduced price, but Josh does not accept. Under the precedent in Startup v Macdonald (1843) 6 Mann & G 593, Brendan has the right to claim damages as he had shown his willingness to complete the contract. According to the case, a party that has tendered performance, but has had the performance rejected by the other party is discharged from performing the contract4. In addition, the party has the right to claim damages from the party refusing the tendered performance. Conclusion Josh and Julie should have accepted Brendan’s offer to complete the flooring at a reduced price. Brendan tendered his performance when he pleaded with Josh to allow him to complete the flooring. However, Josh rejected the performance which meant that Brendan was released from the contract and also had the right to claim damages related to the terminated contract from Josh. Issue 2 Is Brendan Liable for negligence? Law In Donoghue vs Stevenson it was recognized that each individual owes a duty of care to his neighbour5. This duty of care is defined as the responsibility of an individual to take reasonable care to ensure his acts or omission do not hurt or cause damage to other people. However, Davis v Pearce Parking Station Pty Ltd (1954) 91 CLR 642, at 649 asserts that a party in a contract can be exempted from liability for negligence if the contract includes an exclusion clause that covers negligence6. Application Brendan acted negligently as he failed to make sure the entertainment room he was flooring was free from the risk of flooding. The flooding that led to the collapse of the flooring and the subsidised floor can be linked to Brendan’s negligent action of leaving his bag spread over the drainage outlet. The facts show that the room would not have become flooded, if Brendan bag had not blocked the drainage outlet to the entertainment room. However, Brendan may escape liability for negligence by relying on the exclusion clause in the contract. The clause claimed that “Provider accepts no responsibility for defects in workmanship”. Unfortunately, Canada Steamship Lines Ltd v The King [1952] AC 192, at 208, asserts that an exclusion clause can exempt a contract party from liability for negligence7: If the clause explicitly states that liability for negligence is exempted, Or in cases where the clause wording is wide enough to cover negligence. A clause will not covered negligence even if its wording is wide enough to cover negligence, but also covers other type of liability. In this case, the exclusion clause did not explicitly cover negligence. Moreover, the wordings of the clause were not wide enough to cover negligence as the clause only mentioned liability for poor workmanship. Conclusion Josh can make a counterclaim against Brendan as the latter was liable for negligence. Brendan should pay for the damage caused by the flooding to the building as his negligent action blocked the outlet that would have protected the entertainment room from flooding. Issue 3 Did Josh and Steward have a legally binding contract? The Law In Australian Woollen Mills Pty Ltd v. The Commonwealth (1954), a contract is recognized as legally binding, if the offeree accepts the offer in the form that it is presented. According to the case, the offeree is bound to the contract once he accepts the offer8. However, the offeree is not bound to a contract if he make as conditional acceptance of the offer tabled. According to Treitel, a conditional acceptance acts as a counteroffer that rejects the original offer tabled by the offeror9. In effect, the offeree is only bound, if the given condition is met or a given events occurs. Application In this case, the offer acceptance analysis can be made to determine whether Josh and Steward entered a legally binding contract for the flooring of the entertainment area. Steward had emailed Josh with an offer for completing the flooring at a price of $28 per square metre. Josh responded by commenting that Stewards offer was the cheapest and he would like to give him the flooring work. However, Josh tells Steward he can complete the flooring once the structural issue have been corrected. Thus, Josh only makes a conditional acceptance of Steward’s offer to complete the flooring at $28 per square metre. As seen in Australian Woollen Mills Pty Ltd v. The Commonwealth (1954), the acceptance fails to mirror the offer10. Accordingly, Josh’s conditional acceptance can be treated as a counter-offer which has the effect of rejecting Steward’s offer. Therefore, Steward and Josh can only have a legally binding contract when the structural issues of the building to be floored are corrected. In conclusion, Steward does not have a legally binding contract with Josh as the latter did not accept his offer as presented. Instead, Josh accepted Stewards offer on condition that structural integrity of the entertainment area would be corrected. Conclusion Brendan is likely to succeed in an action of breach of contract again Josh and Julie. Brendan can argue that Josh prevented him from performing the contract as they had agreed. Brendan’s case for breach of contract is especially strong as he had already floored over half of the entertainment area. However, Josh may succeed in a counterclaim against Brendan based on negligence. Josh has the right to recover damages from Brendan as the latter negligence led to the flooding and the subsequent damage to the floor and the overall structure of the entertainment area. On the other hand, Steward has no claim for breach of contract as no contract between Steward and Josh existed. Josh had made a conditional acceptance of the flooring offer made by Steward. Acceptance would only be complete once the structural issues of the entertainment area were corrected. Bibliography A. Articles/Books/ Reports Treitel GH. The law of contract. Sweet & Maxwell; 2003. B. Cases Australian Woollen Mills Pty Ltd v. The Commonwealth (1954) Canada Steamship Lines Ltd v The King [1952] AC 192 Davis v Pearce Parking Station Pty Ltd (1954) 91 CLR 642 Donoghue vs Stevenson Startup v Macdonald (1843) 6 Mann & G 593 Tramways Advertising Pty Ltd v Luna Park (NSW) Ltd (1938) 38 SR Read More