Business law Essay Example

Business law

Question 1

The issue is whether there was an enforceable contract formed between Office Supply and CompHelp.

A contract is an agreement which is enforceable at law. In order for an enforceable contract to be held to exist between parties, there must be an offer and acceptance, consideration, capacity of the parties and the intention to be bound. (Treitel, 2003)

Application

For an enforceable contract to be held to exist between Office Supply and CompHelp, all the elements of a contract must exist. In this case, John contacts Sophie, the salesperson in CompHelp to make an enquiry as to the services offered by the company. To that point, John can be considered as seeking or requesting for information from Sophie in regard to the services they offer. In the process of seeking the information and at the end of the conversation, Sophie sends John a copy of their standard contact for him to review. This standard contract was sent as part of the information that John had sought in order to know more about the company.

Once John had read the terms of the contract and found them to be favorable he signed the contract that had been sent to him and sent it to Sophie through email. Sophie received the contract but did not print or sign it. At this point it becomes important to determine where an offer, if any, was made and whether or not the offer was accepted. An offer is a promise to do something or not to do something, accompanies by the intention to be contractually bound once the other party has accepted the offer. In this case, when Sophie, acting on behalf of CompHelp decided to send the standard contract to John, she was not making an offer but rather showing John their services and the terms at which they operate. This, it would seem, was an invitation to treat. The sending of the standard contract acted in the same capacity as display of goods. Consequently, as was held in Pharmaceutical Society of Great Britain v Bootscash Chemists Ltd [1953] 1 QB 401, such conduct constituted an invitation to treat. (McKendrick, 2014)

Once John decided to sign the contract, he was making an offer to CompHelp such that once the contract was signed by Sophie or an officer in the company, an acceptance would have been made and hence an agreement would be held to exist. However, in this case, Sophie did not sign the document and neither was it signed by anybody else at the company. An acceptance is defined as an unqualified assent to the terms contained in the offer. To be effective, the acceptance must be communicated and must be in the same terms as the offer. The fact that Sophie did not sign the contract that John signed means that CompHelp did not accept Office Supply’s offer. Consequently, no agreement was made between the two parties.

Since John had already made a contract to CompHelp that was not accepted, no agreement was made. However, later, Sophie sent John a new contract with a note stating that the previous contract had an error and therefore he should sign it. Further, he was supposed to pay $200 for the help granted by one of CompHelp’s computer technicians. Since John had already made an offer to CompHelp which was not accepted, the subsequent contract sent to John by Sophie was a counter-offer. In Hyde v Wrench [1840] 49 ER 132 the court stated that the effect of a counter-offer is to extinguish the previous offer. Once Sophie sent the amended contract for John to sign, the other offer made by John to the company was extinguished. (Carter et al., 1996)

In this case, a contract would only have been made once John signed the second contract sent to him by Sophie and returning it to Sophie. John, however, refused to sign the agreement and instead sent an angry email expressing his frustration that CompHelp was not honoring the deal they had allegedly made.Since he had failed to sign the contract, there is no agreement that was entered into and therefore no enforceable contract between the parties.

For a contract to be made, the parties must have had the intention to be bound. In this case, CompHelp did not intend to be bound by the contract that had an error. John on the other hand did not want to sign the correct contract. As such, it is right to conclude that the parties had no intention to be bound. Further, an intention to be bound isin most cases demonstrated through consideration. Consideration is the price paid by the promise for the promisor’s promise. In this case, there was no consideration paid hence this element of a contract has not been satisfied. (Hunter, 2014)

Conclusion

For a contract to be said to exist between parties, all the elements of a contract must be fulfilled. In this case, since the offer made by John was not accepted by CompHelp, no agreement arose. In the same way, John failed to sign the second contract sent by Sophie which means that no agreement was made.

Office Supply and CompHelp did not enter into an enforceable contract.Office Supply will most likely not win the lawsuit.

Question 2

CompHelp can use the defence of mutual mistake against the breach of contract claim brought by Office Supply. Mutual mistake applies where each party in a contract is mistaken as to the other party’s intention and neither of the parties realizes that their promises have been misunderstood. In this case, once Sophie had sent the standard contract to John for him to review, John assumed that Sophia was making an offer. Since the terms were favorable based on the error in the contract, John signed and assumed that they were in a contract with CompHelp. Sophia on the other hand, assuming that John was interested in entering into a contract, sent John a correct contract for him to sign so that a contract would arise between them. Both parties in this case had made a mutual mistake in regard to each other’s intention. (Eisenberg, 2003)

In Raffles v Wichelhaus [1864] EWHC Exch. J19 the court stated that the effect of a mutual mistake in a contract is that there is no meeting of the minds of the parties and hence no contract between them. CompHelp can, therefore, use mutual mistake as a defence against the breach of contract claim.

Question 3

Once a breach of contract claim has been proved, the court will normally provide certain remedies to the innocent party.In this case, if Office Supply was able to prove breach of contract one of the possible remedies that would be available is damages. The purpose of issuing damages as a remedy to breach of contract is to compensate the claimant for any loss that they may have incurred as a result of the breach. In Farley v Skinner [2001] UKHL 49 the court held that the purpose for the issuing of damages is to put the claimant in the position he would have been if the contractual obligations had been performed by the other party. However, compensation must be for loss that is not too remote. In Hadley v Baxtendale [1854]EWHC Exch. J70 it was held that damages can only be recovered where the loss is considered to arise naturally from the breach of the contract. (Hunter, 2014)

John expected that with the special promotion, he would be able to save thousands of dollars for his business. He, therefore, decided to use the money he expected to save in buying new computers for the business. However, due to thebreach of the contract by CompHelp, he would have to look for money to pay for technical support since he had already used that money to buy new computers. Damages would in this case be used to compensate John for the loss that would result from the failure of technical support as he had expected under the contract. In this case, such loss is closely connected to the breach of the contract.

In regard to the measure of damages to be paid to John, it would be dependent upon the amount that was lost as a result of the breach of the contract. He would be able to recover the actual loss and be returned to the position he would be had the contract been performed.

Another remedy that would be available for John is specific performance. Specific performance is an order by the court requiring the party who has breached the contract to perform the obligations that arise from the contract. In this case, CompHelp would be ordered by the court to perform it duties under the contract with Office Supply. Such an order would require CompHelp to offer technical support assistance to Office Supply as required under the contract. (Hunter, 2014)

Rescission would also be a possible remedy. However, it would not be applicable in this case since it is meant to restore the parties to the position they would have been had they not entered into the contract. Since John had already incurred loss, rescission cannot be possible without damages to compensate John.

Conclusion’

The most effective remedies for Office Supply in this case would be damages and specific performance.

References

Treitel, G. H. (2003). The law of contract. Sweet & Maxwell.

McKendrick, E. (2014). Contract law: text, cases, and materials. Oxford University Press.

Hunter, H. O. (2014). Modern Law of Contracts. Thomson Reuters.

Harris, D., Campbell, D., & Halson, R. (2002). Remedies in contract and tort. Cambridge University Press.

Carter, J. W., Harland, D. J., & Lindgren, K. E. (1996). Contract law in Australia. Michie.

Eisenberg, M. A. (2003). Mistake in Contract Law. California Law Review, 1573-1643.