Contract Law Case Questions - Assignment Example

CONTRACT LAW By Student’s Name Course Title Professor’s Name City and State Date Contract Law Question 1 James is a students who has just turned 18 years old. However, his little knowledge of contract law might land him in trouble. While everyone, including James has rights and liabilities when getting into a contract, his past situations puts him more at risk than benefitting from the financial instances. For starters, James refuses honest advice from Michael Concerning the Kenwood Excelon DNX9140, a high performance multimedia DVD receiver. It also has navigation and built in Bluetooth. Michael understood how attractive these features might be to a student but thought otherwise and in the benefit of James. He did everything to make sure that James understand that he would he running at a significant loss if he were to purchase the receiver. James, nonetheless, became liable based on his own words about the originality of material and that he would rather purchase it from Michael. This puts him in a situation where he cannot get out, since the contract was agreed on after offering advice to the customer, which in this case, is James. The fact that Michael even agrees to payment through instalments is proof that he knows James would find it difficult amassing that kind of money. The fact that he does not pay the remaining $500 makes him liable and punishable based on contract law. After the advice by Michael, he understood what he was getting into when he bought the receiver. The first two instalments are evidence that he agreed to continue with the contract. However, James defied the agreed terms by not paying the last instalment (Elliot & Quinn 2013, p. 56). Michael would be entitled to compensation based on the terms he outlaid to James (Fafinski & Finch 2010, p. 47). Based on this event, James should know that contract law will only be in his favour if he abided to its terms. Additionally, the company that offers a parking space reduces the liability risks by virtue of contract law. It ensures that every person who gets into the parking lot is aware of the risk they might be getting into when they park their vehicles at the place. The notification ‘Cars parked at owner’s risk’ is visible. It shows that the company did everything possible to make it notifiable to the clients that they might be getting into a situation where the company is not responsible for any damages caused (Eisenberg 2000, p. 1743). James should not have assumed this message, as it can and in any case, be used in a court of law to defend the company. However, the company night have to compensate the client by a small fraction based on the ticket, which had the message printed at the back. Most people never concentrate on the material printed at the back of tickets (Garvin 2004, n.pag). In this case, it was further warning that the client ought to know the degree of risk in parking the car at that place. It might be a long shot to file a complaint using this as the sole means to defend oneself along with the casual habit of other people, but logically, it does not stand a good chance against the company’s claim (Mckendrick 2014, p. 752). In case James failed to read the message printed at the back, he should have been notified by the bog notice that said how the risks lied with the owner of the car. Additionally, the company might also lay claim that the fact that James took to ticket was enough proof of acceptance to of the terms of agreement to the contract. In this case, the terms were laid out in the notification that the clients were to park their cars at the owner’s risk. The ticket would then serve as evidence in a court of law to acceptance to the terms (Mckendrick 2014, p. 752). James also risks losing a case against Sam after he sold his laptop to him. Although the contract is not written, it is clear that James agreed to sell it at the stated price of $500. At this stage, the contract is sealed, the price met and both parties satisfied. The fact that later on James discovers that he would have benefitted from the sale is irrelevant. It was not discussed in the agreement (Chen-WIshart 2012, p.364). It further puts James on the losing side. In each of these cases, James ought to weight the severity of each contract he may be getting into and the terms before agreeing to them. This approach will save him in future contracts. Question 2 Patrick is the sole proprietor in the business that he chooses to start. At first, he is a soil tester but decides to for a company to take over the business. The business will only flourish if the financial backing is sufficient to keep it on its toes. However, the situation is not as easy as it looked when he thought of starting the company. There are benefits and advantages of forming a business as the sole proprietor (Frey &Frey 2001, p.163). On one hand, one enjoys the benefits alone an on the other, he also suffers the losses all by himself. The first mistake he does, although it was a calculated risk, is selling the business to the company at an inflated price. As the sole shareholder, this price is bound to last but for a fleeing moment in the running of the company. Additionally, he piles up the costs by lending the company an extra $100,000. The only plus to this approach is the he lends the company. This money is secured and he can rightfully gain it back as the sole creditor. However, he can only do so if he is able to satisfy the claim of the creditors who claim $210,000 from the issued loan. The mortgage lent as security could serve to protect him if only it was worth much more than the loan. However, this is not the case. For this reason, he is not entitled to this amount ($100,000), based on the terms of the law. It is a contract that he signed and it is legally binding, should one not adhere to the terms stated. Patrick was offered the chance of securing the loan, but the mortgage did not suffice to cater for the additional deficits. The sum of money lent was a calculated risk that a regular investor is bound to make in any company and just as it was a risk, it had its consequences. The fact that the company made a profit at the beginning of the year is proof that the risk favoured him at the beginning but was not as beneficial towards the end of the year. There is little ground for claim for compensation. However, he is still entitled to it. It depends on the agreement that he signed when he took the loan (Chen-WIshart 2012, p.372). The terms of the contract need to state the compensatory rights of workers in the event the company runs insolvent or in in this case, is liquidated. The company will compensate the workers if it has the stated amount for compensation. The assets, when converted, point to a situation where compensation is improbable. If it was mandatory that the workers gain compensation, the laws that govern all the business can fight on his behalf. However, as a sole proprietor, he might have decided not to partner with such societies that look out for the welfare of workers. He had not looked at the benefits associated with joining such co-operations. The wages, as seen when he made a profit, were paid to the daughters and himself. One can assume that the daughters were assisting in the company labour. However, when the company started registering losses, Patrick started to put in extra hours. In such a situation, he is the sole benefactor and the contributor to the impact that the company faces. The creditors only loaned him the cash as a sign of goodwill (Frey &Frey 2001, p.164). This kind of turn of events will end up leaving Patrick with not only landless, but without sufficient compensation for himself and his daughters. He is also bound to suffer from losses after lending the company cash but failing to break even. The contract defines his agreement at the beginning and how he plans to service the loan and not how one deals with the losses. The securities would have been only as good as the loan were they of the same value (assuming the rate of the land appreciates at the same rate as the loan). References Chen-Wishart, M, 2012, Contract law. Oxford, Oxford University Press. Eisenberg, M, 2000, The Emergence of Dynamic Contract Law, California Law Review, vol. 88, no.6, p.1743. Elliott, C, & Quinn, F, 2013, Contract law, Harlow, England: Pearson Fafinski, S & Finch, E, 2010, Contract law, New York, Pearson Longman. Frey, M, A. & Frey, P, H, 2001, Essentials of contract law, Albany, NY, West/Thomson Learning. Garvin, L, 2004, Small Business and the False Dichotomies of Contract Law, SSRN Electronic Journal. Mckendrick, E, 2014, Contract law: text, cases, and materials, Oxford, United Kingdom; Oxford University Press Read More