Contract Law Case Study Assignment

John agrees to build an extension to Chen’s house. At the time they enter the agreement, the price of building materials is increasing week by week. John is reluctant to set a price for the work until he knows how much it is going to cost. Chen agrees in the contract that he will pay John “the purchase price of materials as at the date of completion plus $6000 for labour”. The parties also agree that the work must be completed by the end of June, as Chen’s family is coming to visit him at that time. Before the work begins, there is an unexpected increase in labour costs and an equally unexpected drop in the price of building materials. John tells Chen that he will need to increase the labour component to $10,000 or not do the job at all. Chen is anxious that the work be completed by the end of June so reluctantly agrees to the change. John builds the extension but does not finish it until the middle of July. Because of this, Chen had to pay for his family to stay in a hotel for three weeks at a total cost of $3000. Chen is now refusing to pay John more than the price of materials plus $6000 for labour. In addition, he wants John to compensate him for the money he had to pay for the hotel. Required: Answer the following questions. In each case, give reasons for your answers, and support your reasons with case law.


a. Is there a valid enforceable contract between Chen and John?

b. What arguments could Chen use to support his refusal to pay John more than the
original agreed price?


c. What arguments could Chen use to support his claim for compensation for the hotel?

d. What arguments could John use to support his claim to the $10,000 he wants Chen to
pay?

Issue: The question that has been given, itself is the issue, which is, if the contract between Chen and John is a valid one?

Rule:  “contract (or informally known as an agreement in some jurisdictions) is an agreement having a lawful object entered into voluntarily by two or more parties, each of whom intends to create one or more legal obligations between them. The elements of a contract are "offer" and "acceptance" by "competent persons" having legal capacity who exchanges "consideration" to create "mutuality of obligation."”- Common Law Legal System.

 

Analysis: the common law system and the contract law of Australia tell us that contract can be formed when certain conditions are fulfilled. When two or more parties (Chen and John), have a lawful object (building of the house extension), where john agrees to build the extension of Chen’s house (legal work) on a payment of certain sum (consideration) within the given period of time. When the definition of the contract is analyzed and the given situations is considered it can be seen that it lies parallel to one another. It also creates a mutual obligation between them which is that John would build the extension of the house within the given period of time and Chen in return will give him the payment they have agreed upon.

Conclusion: the contact law and the common law give a definition of how a valid enforceable contract can be formed. And the situation given fulfills all the given criteria; hence the contract between John and Chen is a valid enforceable contract.

 

Case law where the offer was a valid one: Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256

2. Issue: What arguments could Chen use to support his refusal to pay John more than the

Original agreed price?

Rule: a contract is formed on agreed terms between the parties who are getting into the agreement. Here the terms and the considerations has already been decided and no clause has been put in, as to change in either because of unforeseen circumstances, and since when entering into a contract the parties are into a mutual obligation to complete the given work within the stipulated time, Chen can refuse to pay on the basis of breach of duty or the mutual obligation by the other part (John) - Contract Law

Analysis: when we refer to the issue we see that there was a particular compensation that Chen had agreed to pay to John for building up the extension of his house within the given period of time, because his family needed accommodation after that time. what is seen after that is that there is an increase in the labor costs while there is a decrease in the price of the materials required for the building up of the extension, and because of this john asks an increase in the labor price, or else he would not work for Chen, to which Chen ‘reluctantly’ agreed because he wanted the work to be complete within the given period of time. But the work though is completed has taken one and a half more months, and because of this Chen had to face difficulties and pay extra for his family’s accommodation. What we see is that Chen had agreed to pay the given price only on one condition that is the extension should have been completed by June, which certainly has not been done. When the only reason on which the extra payment was agreed upon is not kept in mind by John, Chen can hence deny the payment on ground of breach of duty of John, and can therefore refuse to pay the extra charges that John had asked for.

Conclusion: the Contract Law provides provisions for the plaintiff if there is a breach of duty by the defendant, and hence gives provisions for the plaintiff to act in a certain manner when the duty has not been fulfilled. Hence there are reasons which Chen can when he refuses to pay the extra amount of labor cost as his work was not done according to the terms of the contract.

Case law: for breach of duty when a contract have been formed-  Payless Travel v Baba Krupa Holidays [2004] All ER (D) 503

3. Issue: What arguments could Chen use to support his claim for compensation for the hotel?

Rule: “Damages for breach of contract are viewed as a 'substitute' for performance - consequently, they are designed to put the plaintiff in the position they would have been in had the contract been performed properly. Punitive damages are not available. The loss claimed must not be too remote from the breach and the non-breaching party must do what is reasonable to reduce (mitigate) the damage they suffer.”- Australian Contract Law.

analysis: what has been discussed earlier is the part where John has delayed the making of the extension of the house by one and a half months which in a way is breach of duty because the terms of the contract which John and Chen had got into clearly stated that the extension of the house was to be completed by June because Chen needed the accommodation for his family who would arrive by then. And this was the only reason why eventually and reluctantly Chen had agreed on paying more labor cost to John. But since this term was ignored and the work took longer, Chen had to find accommodation for his family in the hotel for which he had to incur a cost of $3000 which could have been uncalled for if the house would have built on time.

Conclusion: ‘award for damages are compensatory’ states the central principle which is governing this law, hence Chen can claim his incurred cost from John.

Case law regarding award for damage/loss: (HLA [110-11060] eg. Johnson v Perez (1988) 166 CLR 351 at 355).

 

4. Issue: What arguments could John use to support his claim to the $10,000 he wants Chen to pay?

Rule: “This is a rule of evidence that precludes a person from denying the truth of some promise made by him or her of the existence of facts whether existing or not which he or she has by words or conduct led another to believe in.”- promissory/equitable/estoppels under the Contract Law.

Analysis: when the given case is considered it is seen that though John took more than the required time, he actually built the house extension, putting in the labor which was required in spite of the increased labor price (after Chen had agreed), and also that the materials had been used, for which Chen should pay., moreover Chen had agreed on paying the extra cost that was required by John for the labor and material input. By brining in the estoppels method, John can claim that Chen had actually promised him to pay the increased amount of labor cost and the material cost which on completion of the house extension, he cannot refuse to pay. It was only after Chen had agreed to pay for the increased prices that John had started working. This case may also see the reference where the third party (labor force used by John to complete the completion of the house) is used, and thus their payment has to be made as well from the payment that comes from Chen. Though the time taken by John to complete the house extension was more than promised, but he can also claim that the house extension wasn’t left incomplete, but was completed over the period of time. moreover if Chen was to refuse the payment which included the extra labor cost and also the price of the materials which have been used by John for completing the extension of the house, he could have said that when John asked for the extra payment or maybe just as the due date for building the house extension was crossed, without waiting for the completion to take place on a full and final basis. No earlier notice had been given to John regarding the nonpayment of the labor costs or the material costs, which had already been spent from John’s side for completing the extension of Chen’s house.

 

Conclusion:

what can be concluded after looking aspects of the contract law is that estoppels can be used as an argument by John in order to get the $10,000 from Chen which had been earlier promised by him, because of the increased labor cost and since, the house had been already completed, and that Chen had not given any notice regarding the nonpayment of labor costs earlier, John can actually go ahead and claim the money with the help of the given branch of contract law.

Case laws: where estoppels has been used as a defense or as an argument to get the other party to act in a certain way- Walton’s case, Walton’s Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 and Central London Property Trust v High Trees House Ltd [1947] 1 KB 130.

 

 

References

  1. .. (2006). Contract law: Topic 2 Common law elements of contracts.Available: https://sielearning.tafensw.edu.au/MBA/19194J/commerc_law/lo/u5_t2_commonlaw/u5_t2_commonlaw_02.htm. Last accessed 14th Jan 2015.
  2. John Arthur. (). Damages and Equitable Compensation in a Commercial Setting .Available: https://www.gordonandjackson.com.au/uploads/documents/seminar-papers/Damages_and_Equitable_Compensation_-_John_Arthur.pdf. Last accessed 14th Jan 2015.
  3. .. (2009). Contract Text.Available: https://www.insitelawmagazine.com/ch9remedies.htm. Last accessed 14th Jan 2015.
  4. Julia Clarke. (). Australian Contract and Consumer Law.Available: https://www.australiancontractlaw.com/index.html. Last accessed 14th Jan 2015.
  5. .. (). Networked Knowledge - Law Lectures Consideration - in Acceptance of Contract.Available: https://www.netk.net.au/Contract/04Consideration.asp. Last accessed 14th Jan 2015.

Contract Law Case Study Assignment Help

Contract law is one of the major branches of legal studies. Students pursuing legal studies need to know the various aspects associated with contract law in which they need to prepare an assignment case study.

Before you embark on this mission to prepare your contract law case study, learn the most important concepts of contract law here.

What is Contract Law?

A contract refers to the voluntary agreement between two or more parties and contract law refers to the whole body of laws governing it. Every written and even oral agreement involves an exchange of goods, services, money and properties. The body of law governs the agreement and also encompasses the obligations of the parties, limitations, privities, obligation and jurisdiction and its termination (Businessdictionary.com, 2016). It also incorporates the possible remedies and legal actions in case of breach of the contract by any party. Though mainly used for commercial purposes, it also holds significance for civil purposes.
Students pursuing law are required to prepare a contract law case study assignment to exhibit their knowledge in this discipline. However, most of them do not have a firm knowledge and grip over this subject and feel helpless when they are assigned a contract law case study.

Elements of Contract

Before learning contract law, the students must have a clear idea about the different element of the contract which would help them to understand the subject better.

Offer and Acceptance

Offer and Acceptance are the most important elements for any successful contract. The offer is a statement of willingness to provide the contract on specific terms by the offerer whereas acceptance refers to the unconditional assent by the offeree with the intention of accepting the contract (Lawhandbook.org.au, 2016).

The parties of the agreement must enter into a legal agreement to make the contract effective. It creates a legal relation between the parties as the agreement gets enforced by law. It is also important that the offerer and the offeree understand the legal implications and consequences that will follow (E-lawresources.co.uk, 2016).

Consideration

To make the contract binding, it should be supported by a valuable consideration. Consideration refers to the value promised by one party to another at agreed benefits or returns. Consideration can be money, some kind of service or right. The court or any legal institution will not question the adequacy as long as consideration exists (Study.com, 2016).
The court will never interfere in any matter of dispute if one of the parties in the agreement thinks that he made a bad deal. The deciding consideration depends on the individual value and capacity of the parties. But the court can intervene if one of the parties accuses the other of influencing or forcing the former in the deal.

Legal Capacity

The parties or people who wish to enter into the legal contract must possess the legal capacity under the purview of law. As people who are mentally impaired, minors, bankrupt, prisoners and other people explicating stated cannot enter into a contract (Lawhandbook.org.au, 2016).

Consent

All the parties expressed their willingness to enter into a contract should enter it freely with a proper understanding of the contract details. They should not take their decision from external influence, intimidation, threat or false hope and misrepresentation (Contracts.uslegal.com, 2016).
To devise a strong contract law case study, the students must have a clear idea about these essential five elements. But there are many students who have several queries on different aspects of contract law. Consulting contract law case study sample or contract law case study example will help them in these circumstances.

Contract law : All Your Queries Answered

Not always a contract law case study sample is able to answer and suffice all the queries. The students have numerous questions in their mind with this vast discipline under law. Here are the most important aspects of contract law discussed in detail.

Breach of Contract

Breach of Contract refers to the legal action taken by any party when the other party does not honor the binding agreement or any of its clauses. If a person within an agreement breaks the contractual promise and does not perform the duty expected according to the contract, then it can be referred as breach of contract (Smallbusiness.findlaw.com, 2016). According to the severity and gravity of the breach, it can be classified into:

  • Minor Breaches
  • Material Breaches
  • Fundamental Breaches

While minor breaches refer to the slight violations, fundamental breaches are drastic violations ensuing legal action.

Consequences of contract breach

Firstly, both the parties can try to get into a solution through informal meetings when a dispute arises. But when they fail, the non-breaching party can seek legal remedy. This is performed through formal lawsuits and the established court system of the respective country.
The parties can also agree to hire a unanimous arbitrator who will review the contract dispute and breach and deliver a solution. But when the arbitrator too cannot provide a universally accepted remedy, it reaches the court of law.
In case of direct and proved breach of contract, the court can provide relief to the other party by awarding a remedy borne by the violator.

Damages

The violator needs to compensate the other party for the damages caused due to the breach of contract. According to the extent of the damage caused by the responsible party, the amount of compensation is decided.

Specific Performance

When the damages caused cannot be recovered through compensation then the court can ask the violator for a specific performance. Specific performance can be defined as any activity directed by the court that the breaching party must perform. But it is done when the compensation does not suffice the damages incurred. Generally, the court of law rules specific performance as a remedy when the product or service promised in the agreement is unique. Such as the real estate industry is referred to as unique where there cannot be a duplicate property with same facilities. But even the court will enforce this specific performance on the violator when the agreement made is fair and equitable without providing any undue advantage to any party.

Cancellation and Restitution

The non-breaching party can get authorization from the court of law the cancel the contract and sue for restitution when the violator get compelled to bring back the position it was before the contract was formulated.
These are the main consequences of contract breach (Contractsandagreements.co.uk, 2015). Breaching contract is a serious offence and a common reason of lawsuits.

Silence as Acceptance

Generally, silence or not responding to the offer does not get considered as a sign of acceptance. However, in some specific cases or situations, silence can be treated as acceptance. Then the question arises, when the silence of a party can be regarded as a sign of acceptance? Suppose a person X sends a packet of food to another person Y and also informs that the former expects payment for it. If person Y without agreeing eats the food then this activity can be regarded as acceptance. There are some specific requirements which when sufficed can be treated as acceptance (Legalmatch.com, 2016):

  • One party has made the offer while the other did not reject the offer
  • The offerer renders a particular service to the offeree
  • The offerer provides the service at his own free will without being influenced by any other person
  • The offerer informs the offeree as the former anticipates and expects a payment from the latter
  • The offeree has complete knowledge of all the above-mentioned events
  • The offeree should have used or accepts the service in some form which can be interpreted as acceptance under court of law.

This rule can cover other formal exchange of services other than the sale of goods. But unsolicited goods sent to people without formal acknowledgement cannot fall into this category. It would be treated as gifts.

Contract law : The basics

To make a contract viable under law it must accomplish certain requirements. It includes an offer and its acceptance, consideration, purpose, eligible parties and their consent. Other than these general rules, the associated parties, depending on the type of contract may need to fulfill additional requirements.
The term contract refers to the agreement in written form which includes the following elements. It must be verified under the court of law.

  • Introduction clauses (provisions)
  • Defining the parties and key terms
  • Statement (s) of purpose
  • Obligations of each party
  • Assurances and warranties
  • Attachments
  • Signature block
The contract can also be seen as a process which can be typically divided into three separate stages (Nolo.com, 2016).

Both the parties (can be even more) contemplate about the prospective deal by examining the arrangement and the risks associated with it.

Phase 1: Evaluate the deal

Both the parties (can be even more) contemplate about the prospective deal by examining the arrangement and the risks associated with it.

Phase 2: Reaching the agreement

In this stage, the parties negotiate and agree on the final deal with stated agreements. Then with accordance to the consent, the written contract is finalized which will act as documentary evidence.

Phase 3: Implementation and performance

The agreement after signed by all gets implemented. All the parties must remain obligatory towards their agreement and perform accordingly. If any of the party fails to perform their task, the other party can draw them into a legal suite.

Contracts and the Law

The basic contract is formed when two separate parties enter into an agreement and obliges to perform their duties responsibly. With the term party, it can refer to any organization, person or a corporation which enters into an agreement. The agreement is legally enforceable. The main laws which govern the contract law are:

The Common Law :

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