Contract Law Case of a Small Restaurant in Selly Oak - Essay Example

Swarna1 Word count:2435 ID # 5448 d 22nd May 2009. Contract law part 2 Alley is the owner of a small restaurant in Selly Oak. He acquires his weekly supply of fresh foods on credit from Foods Galore Ltd., a whole sale dealer. The delivers to alley’s restaurant are made each Tuesday and Alley pays for them on the following Monday, using income earned during the week. This arrangement has been going on for the past two years. On Monday sept. 7, alley received a letter from foods galore claiming that alley owes £14,000 arising from an invoicing error which has continued for the past 15 months. Alley immediately telephone Brian, the general manager of Foods Galaore to dispute claim. A meeting was arranged for Monday Spet. 14th to discuss the matter. At the meeting Brian told Alley that if alley did not accept to pay the £14,000 claim food galore will no longer agree to make delivers on credit to alley and that the delivery for the next day will not be made. Alley was convinced that the claim by foods galore is unjustified; however, as he needed the credit arrangement offered by foods galore and since he did not have enough time to look for alternative supplies, he signed an agreement admitting that he owed foods galore £14,000. Part of the agreement was a schedule for payment installment on a weekly basis. Alley paid the full amount of £14,000 over a period of two years. One year later he commenced proceedings against Foods Galore seeking to recover the money on the grounds he signed the agreement under duress. Advise Foods Galore.   Foods Galore has already intimated Alley regarding the invoicing error that happened two years back and gave advanced notice for the same. However, Alley was not convinced for this additional dues claimed by Food Galore. According to English court of law, the buyer (Alley) or seller (Foods Galore) has the choice to appeal his case if the terms of the contract are violated (Pollock, 1952)) between two persons or parties. The violation of terms of contract in tender calls is governed ultimately by English contract law. In the present case study, it is clearly apparent that Alley has already agreed that he was having due to Foods Galore and hence the Alley committed a mistake by agreeing to pay in accordance with the contract law provisions. However, Foods Galore was challenged for its claim by Alley after two years which is a matter of concern. There is every possibility that Foods Galore may be drawn to court of law for reconsideration of his decision. Hence necessary legal steps have to be taken by Foods Galore to get protection. Foods Galore has not committed any mistake by asking the payment of dues intentionally from Alley. It wouldn’t be treated as violation of contract law and hence it shouldn’t be found guilty. If Foods Galore is found guilty in forcefully collecting the dues from Alley, it would be considered as violation with the principles of European contract law (Ole Lando et al., 2003; The commission on European contract law, 1999). In this case, Foods Galore didn’t violate the principles of European Contract law. It hasn’t violated the provisions of English contract law which prohibits the actions relating to the breach of contract (Samuel Williston, 1903). It was also found that Foods Galore was involved in the fair trading and hence doesn’t come under unfair contract terms act (1977). The unfair contract terms act (1979) declares that in relation to a contract term, the requirement of reasonableness for the purposes of this part of this act is to be met. Similarly, it further clarifies that the term should be a fair and reasonable one to be included having regard to the circumstances. The principle of reasonableness was not violated by the Foods Galore. The relevance of reasonableness in solving neglected legal cases was also noticed by Richard W. Right (2002). Hence, Foods Galore should take advantage of this principle of reasonableness. Moreover, Foods Galore has not violated any business ethics and in this way he has not beached the rules of contract law and hence he should not be punished under court of law. For getting protected under this case he should represent his ground with solid proof that he didn’t involve in any violation of implied contract or quasi contract. Foods Galore has not committed any thing with malafied intention. If no specific agreement between two Parties is made, as in case of Ball V Bridges (1874), the judgment can go in favour of Foods Galore and hence it would not come under breach of contract or business law (Turner and Martin, 2004). Had Foods Galore really breached the business contract law as in cases of Denton V Stewart (1786); Greenaway V Adams (1806), it would be in a delicate situation. But it didn’t commit any mistake as far as the legal issues of contract law are concerned. Similarly, the principles of European contract law and international commerce laws should be interpreted well by Foods Galore before construction of case for best judgment of contract law related cases (Ewan Mc Kendrick, 2007). His chances of winning the legal battle are very high in case against Alley. 6. Catherine and Martin were engaged to be married to each other. Martin owned a house worth £230,000 which was in his sole name. In contemplation of the marriage, he transferred the house into their joint names. Martin also bought a car worth £8,000 and shares in a company worth £15,000 as gifts for Catherine. Shortly afterwards the parties split up and the wedding was cancelled. Martin now seeks to have the house re-transferred into his sole name and to recover the car and the shares from Catherine. He claims that in making these gifts he induced by Catherine’s undue influence. Advise Catherin. How, if at all, would advice be different if the girls were made after the parties were married? According to the contract law, the parties would be made responsible for the violation of the terms and conditions mentioned in the contract. According to this, the marriage contract made between the Catherine and Martin would certainly provide justice to Catherine. However, claiming the house under sole ownership of Martin is unjustifiable. Catherine should have equal rights under the ownership of house as the registration was made under joint names legally. Martin should be proved guilty under unfair contract terms act (1977) and principle of reasonable ness was also violated by Martin. He has intentionally used these properties to influence Catherine during his time of necessity which is to be condemned strongly. It is also against the principles of European contract law and English contract law. If it is after the marriage, Catherine would have claim for equal rights and compensation for the breach of contract by her husband. She will also have claim for being together as it would affect her right for living together. One more strong point is that the present case qualifies the act of Martin as Duress. According to the contract law, the following requirements must be met for treating it under duress. (1) Threat may be of immediate and inescapable nature. (2) The defendant is involved in the situation though no fault is committed from his or her side. This was proved right in case of Barton Vs Armstrong (1975). Taking this case as an example, martin can be prosecuted and Catherine must be provided with equal ownership along with the Martin. However, in case of marriage situation, the equal rights for Martin as wife would be well protected under marriage contract terms and agreement. 7. Discuss critically the impact of the Privity of Contract and the Contracts Act 1999 and Reasonableness and the common law doctrine of fundamental breach. Privity of Contract The rule of privity of contract is nothing but the principle that a third party cannot sue for damages on a contract to which he is not a party. This rule has attracted severe criticism as it benefits the third party. Surprisingly, European Union also recognises and enforces such contracts. This rule also led to origin of collateral warranties. Moreover, collateral warranties bypass the rule as they creat separate independent contracts collateral to the consultancy or construction contract. Under this rule, assessment of damages for breach of contract is made. It facilitates the party to the contract to sue for his loss but at the same time, it does not allow him to sue for the loss done to a third party. Contracts (Rights of Third Parties) Act 1999 It is an important act made for provision for the enforcement of contractual terms by third parties. It was enacted by the Queen’s most Excellent Majesty. According to this act, the right of third party to enforce contractual term will exist if a person who is not a party to a contract (a “third party”) may in his own right enforce a term of the contract under following circumstances (Contracts (Rights of Third Parties) Act, 1999) (1) “the contract expressly provides that he may, or subject to subsection (2), the term purports to confer a benefit on him. (2) The third party has to be expressly identified in the contract by name, as a member of a class or as answering a particular description but need not be in existence when the contract is entered into”. Reasonability Test The test for reasonable ness is one of the important criteria that is followed for judging the acts under contract law. In some circumstances, even the parties have violated the provisions of the contract, if the reasonability test is qualified, they may be given relaxation under contract law. Fundamental breach of contract Fundamental breach is nothing but a milestone concept incorporated under the United Nations Convention on Contracts for the International Sale of Goods (CISG) as it is the necessary precondition for avoiding the contract under articles 49(1)(a) and 64(1)(a)). This act provides several safeguards for the customers in cases of faulty supply of goods by the manufacturer or supplier. Fundamental breach of contract by the seller also entitles the buyer to claim delivery of substitute goods (art. 46(2)), and to enact remedies in spite of the risk having passed to him (art. 70). It will be sufficient to entitle the aggrieved party to claim damages (art. 74) and to claim a price reduction (art. 50). 8. Alfred decided to purchase a package holidy for himself, his wife Sue and their daugther Mary from Sunnyhols Ltd, a tour operator. When the family reached their destination they discovered that the hotel they had booed had not yet been built and that various facilities they had been promised were not available. On their return from holiday Alfred notified Sunnyhols Ltd. That he intended to sue them for breach of contract in respect of the holiday. Sunnyhol s Ltd replied saying that they were willing to compensate Alfred for his disappointing holiday but that they were not willing to pay any compensation to Sue and Mary. Advise Sue and Mary whether they have a claim for breach of contract against Sunnyhols Ltd. In this case, it is unjustifiable on behalf of Sunnyhols Ltd. In not providing a meaningful accommodation according to the terms of the contract and hence it clearly comes under violation of provisions of the contract law. It is really illogical to find a response from Sunnyhols Ltd. Not to compensate the family members of Alfred. All the affected persons must be paid the necessary compensation for the inconvenience caused by Sunnyhols ltd. And hence Sue and Mary must also be paid the compensation along with Alfred. If it is further denied by Sunnyhols Ltd. Sue and Mary can file a case against Sunnyhols Ltd. Under the European contract law and English contract law (Applebey, 2001). Punishment can also be sought for the damages for misrepresentation (Misrepresentation Act 1967). According to this act, where a person has entered into a contract after a misrepresentation has been made to him by another party thereto and as a result thereof he has suffered loss, then, if the person making the misrepresentation would be liable to damages in respect thereof had the misrepresentation been made fraudulently. Mary and Sue can get compensation under this act. 9. Identify the circumstances in which the concept of “past consideration” may apply. In what circumstances may a contract supported by a past consideration by enforceable under the doctrine in Re Casey’s Patents as explained in Pao On v. Lau Yin Long? In some of the cases, the past consideration may have relevance in assessing the acts of the parties under contract law. Though principle of past consideration is treated as invalid for several circumstances, it has exceptions under some cases for protecting the genuine interests of the buyers or customers or any aggrieved parties. An act already performed may be valid consideration for subsequent promise if the act done at promisor’s request; and parties understood at time that the act was to be compensated for. Similarly, the promise would have been legally enforceable had it been made prior to the act. This was proved right for Pao On v. Lau Yin Long (1980). References Applebey, G. 2001. Contract law. Sweet & Maxwell publication. ISBN: 9780421571204. Ball V Bridges (1874). 22 WR 552, 30 LT 430. Barton Vs Armstrong. (1975). 2 AER. 465. Contracts (Rights of Third Parties) Act, 1999. (1999). Chapter31.http://www.opsi.gov.uk/ACTS/acts1999/ukpga_19990031_en_1. Cunnington, R. and Stone, R. (2007). Text, Cases and Materials on Contract Law. Routledge-Cavendish publication, London. P: 1229. ISBN 10: 1859419135. Denton V Stewart (1786). Cox Eq Cas 258, 17 Ves 276n. Greenaway V Adams (1806). 12 Ves 395. Contracts (Rights of Third Parties) Act (1999). CHAPTER 31.Http://www.opsi.gov.uk/ACTS/acts1999/ukpga_19990031_en_1 Ewan Mc Kendrick. (2007). Contract law, Palgrave Mcmilan publication, P:512. ISBN : 1403948690. Misrepresentation Act 1967. (1967). c.7. Damages for misrepresentation. Section 2(1). http://www.statutelaw.gov.uk/content.aspx?LegType=All+Primary&PageNumber=61&NavFrom=2&parentActiveTextDocId=1185735&ActiveTextDocId=1185735&filesize=10126 Ole Lando, Eric Clive, Andre Prum and Reinhard Zimmerman. (2003). Principles of European contract law. Part 3. Kluwer Law international publication. P:352. ISBN: 9041119612. Pao On v. Lau Yin Long. (1980). AC 614, 634. Pollock. (1952). Principles of Contract (13th Edn, London). Richard. W. Wright. (2002). Justice and Reasonable Care in Negligence Law, American Journal of Jurisprudence. Vol. 47, p. 143. Samuel Williston. (1903). Rescission for Breach of Warranty, Harvard Law Review. Vol. 16, No. 7, pp. 465-475. The commission on European contract law. (1999). Principles of European contract law. Part 1 &2, Brill publication, P:512.ISBN: 9041113053. Turner, C and Martin, J. (2004). Unlocking Contract law (Unlocking the law). Hodder Arnold publication. P:448. ISBN-10: 0340815663. Read More