UNIT VI FINAL CONTRACT ANALYSIS: 2020
Contract analysis scenario 1 – damages determination
According to Tam (2014), damages are described as those rewards paid to an individual to compensate for any kind of injury/loss incurred. Most damages rewards are in monetary form and are based on the type of jurisdiction and claim presented. Whenever there is a breach of contract and an individual suffers losses, the individual needs to take quick action of filling a suit to help reclaim back or get compensation for the damages.
According to this scenario, Barbara suit against Alfred is about contract breach that made her incur a number of losses. The breach of contract occurred when Alfred did not follow the he made with Barbara; he did not perform the required job hence rendered Barbara to incur time and money losses. When Barbara entered into a contract with Alfred, Barbara expected a drilled well to supply better-tasting drinking water; this was the results she wanted. The contract agreement was for Alfred to drill the well to a maximum depth of 600 feet, be paid $10 per foot and complete the drilling job by 1stJune and Barbara to pay Alfred an advance of $3,500. These were considered the conditions of this contract.
Although Alfred agreed to finish the drilling, he had never drilled a well at all for hire. The fact is he agreed to take such responsibility but forgot that such work come with a number of challenges; anything can happen during the drilling process. Therefore, if accidents happen, it is the responsibility of Alfred to solve them and resume work. By performing the service he had never done before for hire definitely makes us understand that Alfred did not conduct any research on the positives and negatives that he could encounter during the well drilling process. Therefore, when the accident occurred [when his drill struck rock, broke and plugged the hole], he was caught unprepared and without knowledge of what to do.
If Alfred was prepared to face any challenges, he would know of options of solving the problem very quickly and resuming the service before the agreed date of completing the drilling of the well. This way Alfred could have met Barbara’s deadline.
It is a fact that Alfred broke the conditions of the agreement by abandoning already drilled well that was 200 feet and suggesting starting a new drilling job by the side. His action made Barbara unhappy and instead chose to find another contractor [Carl] to drill the well which was completed but later in October 30th.
Contract conditions must be taken seriously because the law is very tough on contract terms; therefore, Barbara had all the rights to file a suit against Alfred and reclaimed to be compensated for the damages she incurred. In addition, Barbara wanted a recovery of $3,500 paid to Alfred as advance, $4,500 she paid to the new contractor Carl to help finish drilling the remaining part of the well and $15,000 amount for the lost apple crop. These are the damages in monetary form that Barbara incurred.
Barbara may be able to recover the $3,500 advance paid to Alfred and a refund of $4,500 paid to Carl, but the calculated amount of about $15,000 for damaged apples will not be awarded to her because it is not directly connected to the initial contract terms and conditions that both parties agreed upon.
Tam, J.(2014). Types of damages available for breach of contract. Retrieved from http://www.legalmatch.com/law-library/article/types-of-damages-available-for-breach-of-contract.html
Scenario 2- Remedies determination
Was Mundo obligated to sell the presses to Extra for $2.4 million?
Remedies determination helps determine whose rights are violated. Based on this scenario, a contract analysis is the first step to take to help establish Mundo’s obligations. According to US Legal Inc (2016), printing presses are manufactured goods and their transactions are normally controlled by a set of legal laws that manages business transactions and these laws are called Uniform Commercial Code (UCC).
Based on the scenario, Mundo is a manufacturer of printing presses therefore it is a business entity and qualifies to transact business. Also, another business entity that qualifies to trade is Extra, the publisher of a local newspaper; Extra is a commercial consumer of printing presses as well its accessories.
Now, the formation of a contract comprises a number of elements which also makes the contract valid hence making parties liable to one another. These elements are; offer, existence of acceptance and consideration (Fitzroy Legal Service Inc, 2015).
According to the scenario, an initial meeting between Rep [Mundo’s sales representative] and Bos [Extra’s president] did not satisfy any of the contract elements as mentioned above because neither did the two parties make any specific offer.
Now, in December 1st, Mundo’s sales man namely Seller wrote a letter to Boss; the letter was an offer to sell and deliver the presses for 2.4 million dollars. Therefore, this letter qualifies as an offer under the current common law and UCC meaning Boss’s acceptance made the letter valid hence both Extra and Mundo business entities were bound by the contract. Boss accepted the offer hence called Seller’s office and left a message to Seller.
Boss’s message can be interpreted as an acceptance message meaning a valid contract is established between Mundo and Extra unless otherwise. The moment the message was left, the acceptance became effective. There is no evidence implying that the message was not received by Seller and even if Seller did not directly receive the message or even read it personally or hear the message, till after the December 5th effort to withdraw the offer, Mundo would be accountable as far as the contract agreement terms are concerned and under the common law and UCC.
According to the contract element called consideration, Extra will pay 2.4 million dollars for the required number of printing presses.
In addition, the foreseeable reliance by Extra will not allow Mundo to disprove the contract’s existence because of these two acts; Rep’s plans were used by Boss to start renovation of the pressroom and new electrical installations contract was signed and this happened in December between dates 1 and 4 before even Mundo attempted to drop its offer on Deceember 5th. The act of withdrawing the offer was a bad idea because the offer was effective and in fact accepted on December 1st by letter acceptance followed by a phone call. Therefore, Mundo’s email on 5th of December is considered ineffective and in fact a breach of contract move. Mundo could have been responsible by following the terms of the contract but not dropping the deal just because it wants to make extra profit by taking advantage of the U.S.A president’s order of banning foreign imports of heavy computerized equipment.
To wind up, it is true to say that a valid contract was established on 1 December thus Mundo business entity is obligated to sell the presses to Extra for $2.4 million.
2. Assume Mundo was so obligated. What are extra’s rights and remedies against Mundo?
In this scenario, Extra’s remedy is specific performance with the facts that communications were initiated in 1 December which established a valid contract. Therefore, Extra is ready to perform and has not breached whatsoever the contract created on December 1. Now, if the case is handled in court, the court will have no issues in putting into effect an equitable remedy meaning Mundo will have to sell the printing presses for 2.4 million dollars.
Mundo breached a valid contract in an attempt to make an extra profit of half a million dollars making Mundo not to have valid defenses. Therefore, it is noticeable that Extra will win the specific performance and Mundo will be forced to sell the printing presses for 2.4 million dollars according to the contract agreement.
US Legal, Inc. (2016).Uniform Commercial Code. Retrieved from https://uniformcommercialcode.uslegal.com/
Fitzroy Legal Service Inc. (2015). Elements of a contract. Retrieved from http://www.lawhandbook.org.au/07_01_02_elements_of_a_contract/