The primary purpose of the law of contract is to oversee that people keep the promises that they make to each other. The law recognizes that when two persons enter into an agreement, the have an implied duty to act in good faith. The failure of one party to perform its obligation will resort to damages on the side of the other party. And since neither the court nor the law forces people to create agreements, the law must come when any of the parties invites it for two reasons. It either comes to force the breaching party to fulfill its promises or to make the other party compensate the innocent party the losses it underwent due to the breach. This paper will be an examination of the application of contract law using a case between of Hopwood Investments Ltd and GastroFood Ltd.
Case Study: Hopwood Investments Ltd and GastroFood Ltd
In the first place, this paper would To start, the law of contract requires that a valid agreement to have an offer to coming from the offeror. From that point, it also requires that the offeree respond with acceptance. An offer establishes three components. The common law directs that the offeror should confirm its full intention to making an agreement. Additionally, the offeror must communicate the offer to the offeree, plus the offer should maintain lawful consideration. In simple, the offeror has to exert a degree of earnest and sensible purpose to a legitimate offer.
The main method of determining the intention to whether the offeror had the intention to create an offer is basing the situation in a reasonable man's perspective, given all the ground that the offeror would have. For this reason, the offeror would create an invalid offer when acting on his/her anger, excitement or duress while creating the offer. For example, the alleged offer "I'll pay them a $1 million" was not an offer but a statement of excitement that the defendant said. In this case, the defendant was an attorney in a capital murder trial. In a heated interview, the defendant (lawyer) stated that he would give $1 million to anyone who can challenge him by providing the facts that his client accused was the one who had committed the murder. The plaintiff took the challenge and decided to claim the $1 million from the defendant.
Another rule for an offer is that it should have a lawful consideration. Consideration was explained as; “Some right, interest, profit, or benefit accruing to the one party, or some forbearance, detriment, loss, or responsibility, given, suffered or undertaken by the other. " Another explanation of consideration is the "price that one to a contract pays for the promise or the performance of the other party." In analyzing the case for Hopwood Investments Ltd and GastroFood Ltd, it’s well clear that the statement "Can offer latest 'Speedy Rice Cookers' at $100 each" was a valid offer with both intention and consideration.
After an offeror presents its offer to the offeree, the offeree should reply with an acceptance to create a valid agreement. Like an offer, a valid acceptance requires some elements. These are the willingness to accept, and it should be unconditional. In addition, the law of contract states that acceptance must be definite or unequivocal. Plus, the offeree needs to communicate its assent to the offeror. If the offeree replies with a condition, the condition terminates the offer through a counter-offer. The effects of a counter-offer were explained as;
“At common law, the mirror image rule requires that the offeree’s acceptance match the offeror’s offer exactly. In other words, the terms of the acceptance must “mirror” those of the offer. If the acceptance materially changes or adds to the terms of the original offer, it will be considered not an acceptance but a counteroffer— which, of course, need not be accepted. The original offeror can, however, accept the terms of the counteroffer and create a valid contract.”
Following this explanation, Hopwood Investments Ltd terminated the offer through a counter offer by stating that, "Will have fifty. Need delivery by November 1, 2015." On the other hand, this came back to GastroFood Ltd as an offer which it could choose to accept or reject. Like explained above, the reply form GastroFood saying "thank you for your email which is receiving our attention" was a reply from Hopwood Investments Ltd terminated the offer counter offer "Will have fifty. Need delivery by November 1, 2015." This construes that GastroFood accepted the offer, and this resulted to a conclusion of their agreement. Now, it was upon each party to perform its obligation in good faith. GastroFood was to deliver by the stated date, and Hopwood was to pay $50 on delivery.
However, before the date of delivery, Hopwood decided to forfeit its obligation. It’s a good point to know that parties are not allowed to back from the deal after making a contract. In simple terms, the execution expected of the parties acting under contract os sales involves the obligations that each party owes under their terms as asserted in the contract.” This means that both companies were supposed to carry out their obligation. However, Hopwood called GastroFoods and clearly communicated that it was not willing to perform its part. When one party backs from the sale of goods deal, it leads to an anticipatory breach of repudiation. An anticipatory repudiation is the cancellation of one party's performance just sometimes before the actual performance occurs. It may occur expressly when that party communicates of the annulment to the innocent party informing it that it's impossible to perform as per the agreement. If this anticipatory repudiation causes the innocent party some damages, that party can elect the following actions. For one, it can choose to wait and hope that the breaching party may change its mind and execute the performance. Secondly, it may opt to end the contract and claim for damages.”
This explanation clarifies the fact that GastroFood can end the contract and Sue for anticipatory damages. To clarify, a mirror case to GastroFood’s situation was ruled in Hochster v De la Tour. In this case, the defendant had an agreement with the claimant for a service of a courierThe claimant was to begin work on June 1st, 1852. After the contract, the respondent wrote to the plaintiff on May 11th asserting that he didn't require the assistance of the plaintiff. Also, he refused to repay the compensation. Subsequently, the claimant obtained another contract, but he could not start working until the July 4th of that year. Appropriately, the plaintiff filed a suit against the defendant on May 22nd for a breach of their contract. On the other hand, the defendant refused breach claiming that it was just 22nd May and yet the contract was commencing June 1st. However, the court ruled that the claimant need not wait since the defendant had already communicated that he wouldn't perform. Similarly, Gastrofood can decide to take action against Hopwood for a breach of contract.
Notably, Gastro cannot ask the court to force Hopwood to accept the rice cooker. That would be an equitable remedy for specific performance. This remedy is not available when damages are an adequate remedy.
The law of contract enforceable people’s agreement to make sure that they perform as they had agreed. When one party fails, the law will always come in either to enforce the agreement, or to issue damages for the breach. Therefore, it is paramount that people should enter into the agreements that they are sure they would perform. This paper was a study for formation of agreement and their breach.
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