Business Law: Contractual Business Obligation Essay

Question:

Describe about the Business Law for Contractual Business Obligation.

Answer:

1. In this case involving Wendy, Dave and Bill what primarily requires to be analyzed is whether all the necessary elements of a valid contract have been fulfilled in the parties entering into the contract. Is there a valid contract between Dave and Wendy and secondly whether there is a contractual obligation between Wendy and Bill. What needs to be analyzed is whether all the contractual obligations have been fulfilled between Wendy and Dave in the first instance. Whether stating of ‘thank you’ shows that a person is willing to accept the offer made? Whether Bill by making a pre-condition had actually made an offer to contract or whether they were based on ambiguous terms? In this case since all the parties had entered into a verbal contract, are all the necessary factors fulfilled by making oral offer and acceptance.

Wendy by accepting the offer made by Dave, has entered into a contract as all the six elements namely, offer, acceptance, consideration, intention to enter into a legal contract, capacity to contract and free consent are fulfilled. (Ewan McKendrick, 2015) The parties to the contract were in the right state of mind and entered into the contract on good faith without being subject to duress or coercion. There was meeting of minds and an intention to create a legal relation when the parties entered into the contract. Hence, it is a valid one. (Kenneth W. Clarkson, 2015) Coming to the question whether the oral promise creates a contractual obligations, has been answered affirmatively in a number of cases. (Mulcahy, 2010) Similarly, Wendy by saying ‘thank you’ is deemed to have accepted the offer made by Dave. It has been held that any communication suggesting to the ‘offeree’, including his silence that the ‘offeror’ has accepted the offer made. Since both Wendy and Dave were clear on their contractual obligations, verbal communication creates a valid contract. Coming to the second perspective as to Wendy fulfilling the contract, it can be held that one needs to look at it from an equitable perspective. Although Dave had suggested that she had to run for one hour, Wendy ran for 58 minutes, and completed the race.

In the second instance however, it can be observed that the contract was not created since the elements of contract did not exist. There was neither a definite offer, nor consideration or communication. Wendy by remaining silent did not communicate her acceptance of the contract. There was however, an intention to create a contractual obligation, but on very ambiguous terms. The elements of contract are not fulfilled as neither had Bill clearly that he would pay for her attire, nor did she acknowledge his offer. This negates all the three elements namely, offer, acceptance and communication. Bill had not stated the amount which he is willing to pay; hence, there is absence of consideration as well.

A mere intention to create legal obligation by people capable of entering into the contract does not create a valid contract. A contract to be enforceable has to be based on certain and definite terms and conditions. A contract based on arbitrary and ambiguous terms, as in this case is not enforceable in law or on facts. (Martorana, 2014)This aspect has been upheld in the case, (GMG Capital Investments, LLC v.Athenian Venture Partners, 2010), where the court held that where the terms of the contract are ambiguous it is susceptible to different interpretation, having different meanings.

However, in the case of Wendy and Bill the parties had not arrived at a consensus by means of a clear and concrete intention to enter into a contract. When Bill mentioned to Wendy that he would be interested in sponsoring attire, it was with a pre-condition that Wendy makes up her mind to participate in the event. Although intention to contract is relevant to a contract, it is not determinative of the existence of a contract.

Hence, going by the above circumstances, we can infer that since there was a valid contract between Wendy and Dave, and that she had fulfilled all her contractual obligations. She is entitled to $ 3,000 as promised by Dave. She can seek legal remedy by bringing a suit for claiming damages for breach of contract. Wendy can initiate an action for specific performance in order to claim her money from Dave. Alternatively, she may enter into mediation or conciliation as laid down under law. Since, there was an absence of valid contract with Bill; there can be no redressal that she is entitled to.

2. In this case, Dani had entered into a valid contract with Vintage upholsters by fulfilling all the elements required for a contract. All the six elements of contract have been fulfilled by both the parties desirous of entering into the contract. Vintage on the other hand, had accepted the contract with a promise that they were qualified to deliver their service and take every care to restore the car in its original condition. The agreement was therefore entered into by the parties in good faith without any undue coercion, duress by the parties capable of entering into the contract. Dani, on her part had taken due care and caution to ensure that that she chose the right vendor to get her car repaired. She signed the agreement, principally accepting the terms and conditions mentioned in it. The question arises whether, she can impose legal remedy against the defendants for deficiency in service by taking a defense that she had not read the exclusion clause, which stated that Vintage “cannot accept responsibility for any damage to the goods or defect in work completed”. The second question which arises here is also whether the defendants had committed a breach due to deficiency of services, as Dani found that the quality of services rendered did not match her expectation.


The law regarding exclusion and Disclaimers is contained under Contract law which states that if a plaintiff signs a document containing an exclusion clause; it will, by default, automatically form a part of the contract, and may operate such that he/she has incorporated the terms into a written contract. (Kenneth W. Clarkson, 2015) Regardless of the fact whether the plaintiff has read the terms or not, read, or could see or not does not give them a defense against the plaintiff for breach of conditions of contract. In the case where, Estrangge, a caf? owner, had bought a vending machine from Graucrob. She signs an agreement where the exclusion clause clearly stipulated “any express or implied condition, statement, or warranty statutory or otherwise not stated herein is hereby excluded”. After taking the delivery of the machine, when it failed to work well, she brought an action against Graucob for breach of contract. The court held that the defendants, by including an exclusion clause in the contract had excluded their liability and therefore not liable to pay damages to the plaintiff. (Richard Stone, 2012)

By applying the principles to the present case, the defendants have defined their obligations to the plaintiff, in which the exclusion clause was well incorporated in the agreement as a part of their terms and conditions of service delivery. The exclusion term was incorporated not only in the agreement but also in the conspicuous part of the office. Hence, the defendants, in the first instance had acted in good faith without any misrepresentation of facts and actions, while also specifying the terms of the contract clearly enough to be understood to a man of ordinary prudence.

The question further arises whether there has been breach of contract due to deficiency in services. Here, one has to analyze this aspect in concurrence with the first question. Going by the principles of equity and common law, while the nature of care is subjective, it suggests that the parties have to exercise “reasonable care and skill” in fulfilling their contractual obligations. (Dixon, 2012). The same aspect has been upheld in the case of Aleyn v Belcheir, where the court has held that a person having the power must execute it in good faith and act bona fide towards the end, failing which the contract can be void. (Kuehne, 2014) It is evident from the facts here that Vintage had taken due care to complete the work, since Carl had personally supervised the work during the commencement till a considerable amount of time, till half complete. This suggests that Vintage had taken reasonable care and caution in taking care of the fact that the work is being executed and delivered to the best of their efforts and abilities. In order to achieve this end, Carl had personally supervised the work for a considerable amount of time.

After the analysis of the facts of the case, it can be inferred that Dani is left with little or no legal remedy that she can claim. In the absence of which, the best option available to her is to seek mediation and arbitration in the matter and arrive at an equitable solution that is acceptable to both the parties.

References:

Dixon, W. M. (2012). An Examination of the Common Law obligation of good faith in the performance and enforcement of laws in Australia. Queensland.

Ewan McKendrick, Q. L. (2015). Contract Law: Australian Edition. London: Palgrave Macmillan.

GMG Capital Investments, LLC v.Athenian Venture Partners, 514 (Supreme Court of Delaware. 2010).

Kenneth W. Clarkson, R. L. (2015). Business Law: Text and Cases. Stamford: Cengage Learning.

Kuehne, G. (2014). Implied Obligations of Good Faith and Reasonableness in the Performance of Contracts: Old Wine in New Bottles? UWAL REV , 107.

Martorana, V. R. (2014). A guide to Contractual interpretation. Pittsburg: Reed Smith LLP.

Mulcahy, L. (2010). Contract Law in perspective. Rouledge Cavendish.

Richard Stone, J. D. (2012). Text, Cases and Materials on Contract Law (III ed.). Oxon: Routledge.

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