Contract Law Issues - Term Paper Example

Contract law final exam Fact pattern # 2: Oscar, Billy, and Danny The first issue to be determined is existence of misrepresentation as a vitiating factor to the contract between Oscar and Danny. While Oscar has the knowledge that the subject property is prone to flooding, and that expected storms are going to flood the property soon, he does not disclose this issue to his agent or Danny, the buyer. Misrepresentation defines false representation that another party relies on into a contract and suffers as a result. Non disclosure does not however constitute misrepresentation due to the doctrine of caveat emptor, Swinton v. Whitinsville Sav Bank, 42 N.E. 2d 808 (1942). Oscar’s non-disclosure does not therefore amount to misrepresentation. Another issue in the case is existence of duress. Billy tells Danny that he will not consider his loyalty should Danny pull off from the contract. He also warns Danny of the potential bad image that will be portrayed should he not complete the contract, statements that force Danny to contract. This contravenes legal provisions that consent should be free from intimidation, Austin Instrument v. Loral Corp 324 N.Y.S. 2d 22 272 N.E. 2d 533 (1971). Danny can therefore avoid the contract and cite duress. Undue influence is another significant issue for determination. Billy, an agent in the field, assures Danny that the property is the best for him and Danny relies on his expertise into the contract. Billy also mentions existence of loyalty from Danny. Based on the rule in Odorizzi v. Bloomfield School District Dist. Cal. App, 2d 123, 54 Cal. Rprt. 533, undue influence exist, rendering the contract unenforceable and Danny is entitled to restitution. Estoppel is also determinable. While Oscar knows that the property is prone to the current floods, he does not stop Billy from misleading Danny to believing otherwise. This identifies estoppels based on Ricketts v. Scothorn 57 Neb. 51, 77 N.W. 365 (1898) and Oscar cannot deny his implied expression that the property is free from flooding. Offer, as an essential element into the contract is also determinable. Oscar offered to sell his property to Danny through Billy. His intention to implement the sale establishes a valid offer subject to the rule in Lucy vs Zehmer 196 Va. 493, 84 S.E. 2d 516 (1954). A valid offer therefore existed towards creation of a contract. The case also identifies principles of agency that further introduce elements of estoppels in agency. Fact pattern # 3: Charlie Coke The first two issues for determination are offer and acceptance. Charlie and Peter agree to enter into a contract for a weekly delivery. Agreement by parties to a contract and subsequent performance identifies offer and acceptance subject to rules of Lucy vs Zehmer 196 Va. 493, 84 S.E. 2d 516 (1954) and Ever-Tite Roofing v. Green, 83 So. 2d 449 (1955). Lack of contention between the parties at the time of agreement and subsequent weekly delivery constituted a valid contract. Mitigation of loss is also an applicable legal issue in the case. Charlie informs Peter, in advance, of his inability to supply Peter according to their agreement but Peter does not arrange for alternative supply. A party is however expected to take measures to minimize loss accruing from breach of contract, Payzu Ltd v Saunders (1919) 2 K. B. 581.CA. Peter failed to contract another supplier for mitigation of loss and this reduces amount of any possible remedy. Frustration of purpose is also applicable. Charlie’s equipments malfunctions and continued operation will make costs unrealistic. Frustration of purpose terminates a contract, Krell v Henry (1903) 2 KB 740. Failure of the equipments and the extremely high cost frustrated reasonable performance. Charlie can argue for termination of a contract by frustration to evade the injunction. Similarly, contributory negligence is a possible issue in the case. Peter fails to take reasonable care of his business following the knowledge that Charlie’s facility has malfunctioned equipment. A plaintiff’s action towards injury constitutes contributory negligence and liability in the suffered loss, Revill v Newberry (1996) 1 All ER 291, CA. Peter may therefore succeed in only claiming a portion of the suffered loss in unliquidated damages. Fact pattern # 4: Sammy and Rich The first legal issue is existence of an offer into a valid contract. Rich is interested in Sammy’s performance and negotiates to an agreement. The condition in which Rich is to meet Sammy’s expenses implies that he made the offer. A party’s intention to be bound by his terms validates an offer, Lucy vs Zehmer 196 Va. 493, 84 S.E. 2d 516 (1954). Rich’s approach to initiate an agreement and later interest in performance induces his intention to initiate an offer. A valid offer therefore exists. Following offer is acceptance that culminates to an agreement between the two parties. Acceptance into an agreement establishes a valid contract subject to the rule in Ever-Tite Roofing v. Green, 83 So. 2d 449 (1955). A valid acceptance and contract therefore exist. Termination by frustration is similarly applicable in the case. Sales of tickets for the last two events fail to reach the minimum level, one of the singers falls ill, and bad weather makes it impossible to attract attendance. A contract is terminated by frustration, according to the case of Krell v Henry (1903) 2 KB 740. Inability to meet the minimum ticket sales level and inability of one of the singers to perform makes the contract between Rich and Sammy impossible. Sammy’s inability to perform also renders the contract between Rich and Mike impossible. The two contracts are therefore frustrated and consequently terminated. Similarly, efforts to mitigate consequences of breached contracts are identifiable. Sammy does not compromise to reduce risk of financial loss, Rich seeks a compromise with Sammy, and Mike offers solutions for Rich over the bad weather. The general common rule, as was established in the case of Payzu Ltd v Saunders (1919) 2 K. B. 581.CA provides that a plaintiff must take measures to reduce magnitude of involve loss. While Sammy failed to minimize losses with Rich, Rich failed to minimize losses with Mike in their respective contracts. This reduces their possible claims on the respective breaches. The possible breaches of contract in the case further identify equitable remedy of specific performance as a legal issue. Specific performance is an equitable remedy in cases of specialized performance that cannot be substituted as was established in Campbell Soup Co. v. Wentz 172 F.2D 80 (1948). Sammy’s services are personal and he is therefore liable for specific performance to Rich, unlike Rich to Mike. Fact pattern # 5: Bob, Paul and Alan The first contractual issue is existence of a valid offer. Paul makes an offer to Bob for construction of a house. A party’s intention to implements a proposed terms of a contract establishes validity subject to the ruling in Lucy vs Zehmer 196 Va. 493, 84 S.E. 2d 516 (1954). Paul’s intentions for construction of the house therefore establish a legal offer for construction contract. Determination of existence of a valid acceptance is also an issue. Bob accepted the offer towards agreement. This meets the definition of acceptance as was held in the case of Ever-Tite Roofing v. Green, 83 So. 2d 449 (1955). A contract therefore exists between Bob and Paul and is enforceable in accordance with its express terms. Another legal issue is the enforceability of a limitation clause in a contract. The contract between Paul and Bob provided for non-assignment. A party who is aware of, and understands limitation clauses of a contract is bound by provisions of the clause subject to definition by Henningson v. Bloomfield Motors 32 N.J. 358 (1960). Paul is therefore bound by the provision for non-assignment and Alan has no right in the contract between Bob and Paul. Privity of contracts is also applicable in the case. Alan sues Bob, over a contract between Bob and Paul. He also sues insurance company over a contract between the company and Bob. A third party has no legal interest in a contract and cannot sue for an interest in the contract, First Fla. Bank v. Max Mitchell & Co., 558 So. 2d 9 (Fla. 1990). Alan is not a party to the two contracts and his claims for performance are therefore illegitimate. The doctrine of quantum meruit is also applicable. Paul breaches the contract by assigning his rights to Alan leading to Bob’s claim of payment of already completed work. An innocent party is entitled to accrued remuneration in case of breach of contract or unaccounted for expenses, Sanford & Brooks Co. v. United States - 267 U.S. 455 (1925). Paul breached the contract by assigning his interest contrary to provisions. Bob is therefore entitled to recovery of accrued remunerations. Works cited Farnsworth, Edwards, and Sanger, Carol. Contracts: Cases and materials. New York, NY: Foundation Press, 2008. Print. Read More