Business Environment and the English Legal System - Assignment Example

Legal Rules and the English legal System Case Study Iggins Ltd has entered into contracts with all of the 32 players. The 28 players have fulfilled the terms of their contract by arriving in Birmingham and Iggins Ltd will be expected to fulfill its side of the contract as well, since there are certain obligations that arise out of a contract1. In general English Courts have tended to favor the enforcement of contracts, especially when there has been a reliance on the terms of the contract.2 The issue that will arise is the question of breach of the terms of the contract, especially since Iggins Ltd is canceling at practically the last moment, before the event is scheduled to take place. Notice of any exclusion clause must be given well ahead of time, before or during the contracting process.3 As stated by Lord Hodson in the case of McCutcheon v MacBrayne:4 “the course of dealing on earlier occasions is often relevant in determining contractual relations but does not assist when, as here, there was on the part of the respondents, a departure from an earlier course….”. Moreover, Iggins will also be bound by the contractual principle of being bound by a document that one has signed5. There is a requirement of reasonableness by the courts in judging breaches of contract6, however this is evaluated on the basis of what the knew or ought to have known, when the contract was made. Therefore, unless Iggins Ltd had specified an exclusion clause in its contract that the event could be cancelled anytime, it will be liable for non performance of the contract, and for pecinuary and non pecuniary losses that may be caused to the 28 players through its failure to perform the terms of the contract, since such losses will be directly attributable to failure to perform.7 The mitigating factor in reducing damages could be the fact that a greater degree of foreseeability of cancellation of the event and resultant damages would be required under contract than under tort.8 Due to the fact that all the players are well known players, they could have cancelled other potentially lucrative arrangements in order to fulfill their contractual obligation with Iggins. Under the circumstances, there would be losses accruing to the other 28 players, not only for the expenses they may have incurred in traveling to Birmingham but also in other opportunities they may have missed, which will give rise to a cause of action for compensatory damages, apart from the restitutory damages that will be due under the breach of contract. The basic principle that will be applied in assessing damages will be to return the players to the position they would have been in had the breach never occurred. In determining the extent of liability of the players who have decided not to attend the event, the aspect of foreseeability will be relevant in the case of Brown, who like the others, has entered into a contract with Iggins to play at Birmingham and is obliged to follow through on it. A contract is formed on the basis of a mutual agreement between the parties which is conditioned on the basis of economic gain9. While it may be argued that he cannot travel without a passport and his breach of contract is therefore not intentional, the fact is that Brown should have foreseen that he would need his passport to travel and should have renewed it. He has a duty of care to perform the contract once he has signed it and it is his negligence that has led to him not renewing his expired passport, therefore he will be directly liable for pecuniary and non pecuniary losses that may be caused to Iggins.10 While assessing the damages that may be due from Brown to Iggins for breach of the contract, the key test which the Court will perform will be that of reasonable forseeability, as laid out in the case of Hughes v Lord Advocate11 and this will make Brown liable for pecuniary and non pecuniary losses as well. However, in the case of Green and White, the situation will be somewhat different. They are also guilty of a breach of his contract, however the element of foreseeability in their cases is not so pronounced as for Brown. While both these players would still be liable to the extent that they would be able to pay back any compensation they may have received from Iggins for their presence at the billiards event, they will not be held strictly liable as will Brown, since the events in question were out of their control and may not satisfy the test of reasonable foreseeability12, hence their breach is unintentional and unavoidable. Therefore, they will constitute mitigating circumstances which will reduce their liability for damages. The liability that arises will be the greatest in the case of Black. While it may be true that other players are being contracted on better terms than Black, this would not constitute reasonable grounds for him to breach the contract. Once a contract has been signed the terms are final and Black will be expected to perform his existing contractual duty.13 No contractual disagreements will be brooked on the basis of past consideration.14 The fact that Black was unable to renegotiate better terms is no justification for non performance of the terms of the contract that he has agreed to. The fact that he chose to not attend the event at all provides an indication that he has malafide intentions and this may render him guilty of willfully causing damages to Iggins. While it may be argued that damages caused by one player to Iggins’ billiards event are too remote, the criterion laid out in the case of Hadley15 will serve to establish the liability of Black, because the damages caused will not be deemed to be too remote if they flow naturally from the breach of the contract. While the obligations under the law of contract will demand a higher degree of foreseeability, it may reasonably be argued that Black could reasonably have foreseen that his absence at the billiards event would have been the source of damages to Iggins in one form or the other, therefore in non performance of the contract, he would have been expected to foresee that there would be damages accruing. His liability will be calculated not only under breach of contract but also in tort, because the fact that he deliberately chose not to attend imputes a deliberate intention to cause harm to Iggins, which would be actionable in tort. Black should have taken pains to fulfil his terms of the contract, irrespective of whether the final compensation that had been agreed upon was adequate to not. Past consideration16 will not be an issue that can justify a breach of contract. Since Black has signed a contract, he will be expected to perform it, irrespective of what he discovers later and will be held strictly liable for non performance of a contract that he has signed and thereby indicated his acceptance to at the time of signing of the contract. Since extenuating circumstances other than monetary considerations exist for breach of contract, he will be liable. Therefore, in conclusion it may be stated that Iggins can sue Black and brown and will be obliged to compensate or make restitution for losses suffered by the other 28 players if it chooses not to hold the event as scheduled. Case Study 2: In this case, by purchasing the product from Price Cutters, there is a contract that has been formed between Ashok and Price Cutters, based upon a promise of good performance in purchase of the product. However, through the fact that the product has not performed as per expectations, there arises a breach of promise. Professor Atiyah has argued that agreements in practice should also be enforced where one party has worsened his position by reliance on a promise, not merely because there has been an exchange of promises. Ashok has relied upon the implicit promise that underlies Price Cutters’ offer of the product. While English law does incorporate promissory estoppel in protection of a promisee’s rights, this has not reached the position that exists in American law, where consideration and detrimental reliance are also methods of enforcing promises. The exchange between two parties is based upon the principle of “consideration” which Stone defines as “what one party to an agreement is giving, or promising in exchange for what is being given or promised from the other side.”17 In return for the payment that Ashok has made for the product, is the promise of satisfactory performance. Therefore when the product has not lived up to its promise, there is a cause of action that arises in the case of Ashok, for damages that have resulted as a failure of that promise. Another important issue that arises in this case is the question of privity of contract. It is the manufacturer who is in fact, liable for the defective performance of the product, but their contract is with Price Cutters and not with Ashok and Indra, thus the doctrine of privity prevents them from filing a suit directly against the manufacturers. However, it is possible that they may be able to file a contract against the manufacturers through the principle of collateral contract, established in the case of Shanklin Pier v Detel Products18, by which the manufacturers would also be liable to Ashok and Indra who have purchased their product from another party. In the case of Shanklin, there was a specific main contract, however even in instances where such a main contract may not exist, the manufacturer may still be liable under the extension of the collateral contract principle of Wells (Merstham) Ltd v Buckland.19 Price Cutters will also liable since they are the ones who have supplied the defective product to Ashok and Indira. Another important factor that must be taken into consideration is what kinds of exclusion clauses exist on the purchase of the product. The fact that Price Cutter has recalled the product indicates that it may not have indemnified itself of liability in the case of any problems, therefore the suit against them must be filed on the grounds that is their responsibility to make restitution for damages suffered by their consumers, as a result of the supply of a defective product. The receipt for purchase which Ashok and Indira have constitute the terms of contract between consumers and suppliers of the product, and the exclusion clauses will not completely absolve Price Cutters or the manufacturers of liability. Damages that may be claimed by Ashok and Indra will extend not only to a refund of the price they have paid on the product, but would also include reimbursement of expenses they have incurred for restoration of their living room and repair of all the damages that have been caused by the fire. In addition, the claim for damages will also include medical expenses for Asho k and Indira, apart from the tortuious liability that arises on the manufacturer for the pain and suffering that may have been caused to the two consumers. There is a strong case that is in Ashok and Indra’s favor under the principle of tort law, wherein harm should have been caused to one party by another. There are also various causes of action that can arise in tort, but in this case, it would be for negligence and for producing a defective product, which has caused harm, pain and suffering to Ashok and Indra. There is also restitution that will have to be made for the damages they have suffered. While applying the law of restitution, it may be noted that (a) there has been enrichment in Price Cutter/the manufacturer’s case since they have received the purchase price of the product (b) such enrichment has occurred at Ashok and Indra’s expense (c) this enrichment is unjust because the promised service was nor delivered and the product was defective and (d) there are no defenses that allow Price Cutter/the manufacturer to retain such enrichment in the circumstances of the damages that Ashok and Indira have suffered. The best course for Ashok and Indira to follow will be therefore to press a claim under the tort of negligence which rests on the principle that compensation must be paid for loss caused through fault. The fault in this case, would be the supply of a defective product.Price Cutter, through its actions to reach others who purchased the product and recall it, has already done its but for restitution, therefore it will be more difficult to establish negligence on their part, while the problem with the manufacturer is that the doctrine of privity of contract may interfere with the compensation. Hence it is better for Ashok and Indra to file a suit against both Price Cutter and the manufacturer – under the tort of negligence, so that they can claim not only the compensation for the damages they have suffered but also additional damages in tort for pain and suffering, hospital expenses, stress and strain and other incidental expenses. While filing for compensation under the tort of negligence it will be necessary to establish fault, otherwise the suit will fail. Hence by including Price Cutter and the manufacturer under the extension of collateral contract, it will be possible to ensure that the fault of the manufacturer is established. If the manufacturer is not made a party to the suit, then Price Cutter can push the blame on to the manufacturer and reduce their liability. However when both are made a party to the suit, then Price Cutter will also be held responsible under its contract to Ashok and Indra. While there may have been some exclusion clauses rendering Price Cutter immune to any liability arising from any problem with the product, the major issue will be the breach of a warranty of service that is extended with the product, which has not been fulfilled and has caused damages to boot. While the manufacturers/Price Cutter can try to avoid liability on grounds that it was an accidental defective product, they will still be liable to pay compensation for the injuries that have occurred as a result of it. Bibliography Books: * Atiyah, P.S, 1986. Essays on Contract Oxford University Press * Poole, Jill, 2004. Textbook on contract law 7th edition. Oxford: Oxford University Press. * Stone, R. Modern law of Contract, 5th edn. Cavendish Publishing: 74. * Trietal, G.H.,1999. The Law of Contract, 9th edn. Sweet and Maxwell Cases: Hadley v Baxendale (1854) 9 Exch 341 Hughes v Lord Advocate (1963) AC 837 Sudbrook Trading Estate Ltd v Eggleton (1983) 1 AC 444 The Heron II [1969] 1 AC 350 Overseas Tankship (UK) Ltd v Morts Dock & Engineering Co. (The Wagon Mound No. 1) [1961] AC 388 Olley v Marlborough Court (1949) 1 All ER 127 L’estrange v Graucob (1934) 2 KB 394 McCutcheon v MacBrayne (1964) 1 All ER 430 Stilk v Myrick (1809) 2 Camp 317 Shanklin Pier v Detel products (1951) 2 KB 854 Roscorla v Thomas (1842) 3 QB 234 Wells (Merstham) Ltd v Buckland Sand & Silica Co Ltd (1965) 2 QB 170 Read More