Law of Contract - Case Study Example

Running header: Law of contract Student’s name: Instructor’s name: Subject code: Date of submission: The facts of the case Compuhelp is a company that provides technical support assistance. The company is contacted by John who owns office supplies about their services. Compuhelp through its sales representative Sophie after conversation with Office supply states that Compuhelp can provide the services requested by Office supply and promises to send a contract for Office supply to review. Compuhelp’s standard contract is emailed to John who after reading the contract is surprised about its provisions which states that the term of the contract is one year and that the customer will agree to pay on an hourly rate. The hourly rate stated on the contract is $000.00. John assumes that this is a special promotion by Compuhelp that involves provision of free technical support for the first year. John is eager to take advantage of the deal and hence quickly signs the contract, scans and sends it to Sophie. Though Sophie receives the contract, she does not print or sign it and is not signed by anyone in the company. Later when John has a computer problem, he calls Compuhelp for assistance where Compuhelp assistant spends two hours in solving the problem. One week later, Compuhelp sends John a new contract and an invoice for Compuhelp’s work for $200 with the l cover letter stating that the hourly rate is $100.00 and not $000.00 with the correct contract enclosed with a request for John to sign it and pay the enclosed invoice. John protests this indicating that the two companies had had a deal and that he will not sign the new contract and that he expected Compuhelp to honor the agreement. Compuhelp thus decides to terminate the contractual relationship with Office supply for refusing to pay the invoice. Office Supply files a lawsuit against Compuhelp seeking to compel Compuhelp to perform the contract or pay damages alternatively. The issue The issue is whether Office Supply and Compuhelp have formed an enforceable contract and whether Office supply is likely to win the lawsuit for breach of contract against Compuhelp. Another issue is whether Compuhelp would have any defenses to Office supply breach of contract claim. Finally, another issue is the possible remedies available to Office Supply if indeed they succeed in the breach of contract claim against Compuhelp. The law of contract is clear on the elements that make up an enforceable contract. These elements will be analyzed in detail to determine whether the contract between the two parties is enforceable. In addition, the law of contract will be analyzed to determine whether there is any consideration paid to Compuhelp by Office supply and if so whether it fulfills the conditions set for considerations by contract law in assessing whether Compuhelp has any defenses against Office supply. In the same respect, the effect of a typographic error on a contract will be analyzed in a bid to establish whether Compuhelp can use it as a defense. Finally, the remedies available in a case of breach of contract will be analyzed in a bid to determine the remedies available to Office supply in case they succeed in the breach of contract claim. The rule Issue 1: Whether contract is enforceable The law of contract stipulates that for a contract to be formed there has to be an offer which is a clear statement of the terms on which an offeror is prepared to be contractually bound. For the contract to be formed, there also has to be acceptance which should be unqualified assent to the terms of an offer by the offeree1. However, once a contract has been formed, its enforceability is affected by a number of factors including intention to be bound as well as consideration among other factors. Regarding intention to be bound, it is presumed that business or commercial agreements had the intention to be legally bound. However, social and domestic arrangements are not enforceable contracts as was held in Balfour v Balfour though the case in Todd v Nicol is an exception2. For a contract to be enforceable there has to be consideration. This is the price paid by the promisee for the promisor’s promise. It is worth noting that if there is no consideration, an agreement will only be enforced if it is a formal contract or in the form of a deed. As was held in the case of Thomas v Thomas, consideration need to be something of value in the eyes of law3. However, consideration need not be of an equivalent market value to the promisor’s promise. Issue 2: Defenses available to Compuhelp As stated above, there has to be consideration if a contract is to be enforceable. One essential element of a consideration is that it has to be something of value. As stated above, the consideration paid need not be of an equivalent market value to the promisor’s promise. The promise need to be sufficient but not adequate if the promise or contract is to be enforceable in law. In the case of Thomas v Thomas, the $ 1 paid was held by the court to have been sufficient consideration4. However, a paying nothing will not be considered to be sufficient consideration since nothing is no value. it is worth noting that a typographical error will also affect the enforceability of a contract to some extent especially where what was agreed on orally is substantially altered in writing as a result of the typo. In this case, it has to be proofed that the parties never noticed that anything was wrong and did not intend the typo to be present. In this case, the remedy would be to reform the contract so that it reflects the true intentions of the parties. As was held in Findorff v Findorff5. However, the burden of proof would be on the party that seeks reformation. The party is required to offer clear and convincing evidence that the parties agreed on facts different from those set forth in the agreement as was stated in Hajec v Novitzke6. Even if the error is not mutual but is considered to be an ambiguous provision, the intention of the parties will be the ultimate factor to be considered as was held in Wilke v First Federal sa and Loan ass’n of Eau Claire 108 Wis. 2d 650,6557 Issue 3: Remedies available to office supply The law of contract states that where one party breaches a contract in a major way, the innocent party may choose to treat the contract as terminated and can still sue for damages though it is not required to continue performing their part of the contract8. In this case, the other party may be forced to monetary compensate the innocent party for foreseeable loss that arises out of the breach. The aggrieved party may also sue for specific performance where the other party will be required to perform the obligations that they undertook to perform under the contract9. The court may also offer rectification where the written contract will be rectified to reflect what was agreed without the typo. Analysis Issue 1: Whether contract is enforceable Arising from the above analysis of relevant case laws and legal principles, it is clear that a contract was entered to between Compuhelp and Office supply. The written contract contained an offer by Compuhelp to provide technical assistance to Office supply help where Office supply would have to pay $000.00 per hour for the services. The agreement by Office supply to be bound by the written terms communicated by way of signing the contract and sending it to Compuhelp composed acceptance. The parties were involved in a commercial agreement and hence enforceable contract as there was intention to be legally bound. In addition, $000.00 per hour was the consideration paid by Office supply. In this case therefore, the contract is enforceable and hence the decision to terminate it by Compuhelp constituted a breach of contract. Issue 2: Defenses available to Compuhelp As stated above, consideration must be something of value. It has to be sufficient though not adequate. In this case therefore, Compuhelp could argue that the consideration paid by Office supply does not constitute consideration since $000.00 does not constitute something of value and that it is not sufficient. Therefore, Compuhelp should seek the court to declare that no consideration was paid by Office supply which therefore means that the contract is not enforceable. Compuhelp could also cite mistake in the form of typo. The company will seek the court to have the contract reformed to reflect its will and intentions since it would not have intended to earn nothing by providing the services for the whole year. Compuhelp could also argue that if it intended it to be an offer, it would have indicated it in the contract. Therefore, it would pray the court to order for rectification of the contract to the intended form. Issue 3: Remedies available to Office supply From the analysis, the remedies available to Office supply include specific performance where the company would pray the court to compel Compuhelp to perform its obligations as per the contract the two companies entered into. The company could also pray the court to award it damages. However, it must show that Compuhelp’s action resulted to monetary loss on Office supply’s part. Finally, the Office supply could also pray the court to have the contract rectified to the intended form. Conclusion From the analysis above, it is clear that the court will most likely find Compuhelp in breach of the contract and hence award damages to Office supply. However, Compuhelp could pray the court to find that no consideration was paid and hence have the contract terminated. In addition, it could pray the court to have the contract terminated to the intended form. Finally, if Office supply succeeds, it will have such remedies as damages and specific performance available to it. Read More