Contract Breach Essay Example

  • Category:
    Business
  • Document type:
    Essay
  • Level:
    Undergraduate
  • Page:
    3
  • Words:
    1561

Contract Law

Lecturer

  1. (a) Buyer’s potential claims against Seller

Breach of contract commonly occur and must be deal with according to specific circumstances and situations. The failure for one party to perform are justified or held through the terms on the contract, party’s intentions or other lawful excuses. A breach can occur when one party refuses to complete a portion of a contract, does something prohibited by contract law or prevent the other party from satisfying obligation of finishing the set contract (MMMMM). In this case, the main element of the contract is an offer of van sale with a consideration of $25,000. Acceptance is the second element that makes a contract enforceable as it shows the ‘meeting of minds’ having considered each party’s position and interests. The first potential claim will be that the seller broke the agreement by setting counteroffer after the first one was agreed on.

Secondly, the seller can potentially claim on adhesion contract where he is bided to pay the new prices that are hiked since the seller has all bargaining power considering his case with the investors and the need for van. The seller is trying to change the contract terms primarily to his advantage based on his bargaining power. The contract has reached to a point of ‘take it or leave it’ and the buyer does not have realistic opportunity to negotiate for better terms to benefit his interest. The wrong thing about an adhesion contract is that the buyer will have to conclude it as he does not have to wait due to his contract of supply with investors.

Thirdly, the buyer can potentially raise a claim of unconscionable as the new terms are unfair to him as a weaker party so that the court may refuse the seller to enforce such new terms. There is actually no meeting of minds in the second contract that was entered following new terms. The terms are extremely unjust and one-sided to favor the seller due to superior bargaining power. The later circumstances have to be demonstrated as causing extremely irrelevant.

Fourthly, the buyer can claim that the seller did not inform him in advance even having awareness that the buyer was entering into an agreement with investors. In turn, the contract was set to serve a certain mission and any changes could not have time to be addressed or simply would not be tolerated. The ramifications could be severe and major problems would arise which would increase the liabilities to buyer if the contract is not performed in time. Anticipatory breaches are seen in the case and will raise potential claim as it is evident that the seller would not execute his end of contract within the agreed time. In Airloom Holdings Pty Ltd v Thales Australia Ltd case, it concerned the defendant who terminated the plaintiff’s services contract without informing him and Airloom sues against Thales actions and altering the initial agreed costs for the services on the basis of finding another cheaper service provider.

Briefly, contractors can sue after contract is terminated by articulating some basic elements that are required make the claim a right. Any wrongful termination is not acceptable at any cost and the party that terminates must be clear. In addition, they must have all contemporaneous reasons available to support the claim to be acceptable and get the applicable rights. Airloom Holdings Pty Ltd v Thales Australia Ltd [2011] NSWSC 1513 demonstrates most aspects of reasons for against breach of a contract.

(b). Seller’s potential defences

The seller can raise defenses following the dispute that faces him. There are a number of elements that he can aggressively use to protect his interests in the sales of a van and also respond to arguments to defend the position he took. Affirmative defenses are available where common defense regarding this case can be raised to affect the overall case result. The seller can potentially claim that the contract between him and the buyer was not properly memorialized by setting it in writing. Eventually, he would have considered that the first agreement were not enforceable since they were not formalized. He can also defend that there was term set between them to resist the seller from performing or setting new terms or wishing to establish a contract with another party.

c). who will likely prevail in the event this case goes to court

This is a fundamental breach and the violation will promote the buyer to sue for damages. Since the terms were explicit between the two parties, the court would require the seller to act under the original agreement. There are a number of elements of a contract that proves that a contract exists and a contract was broken, the buyer suffered/is about to suffer loss and the seller or the defendant is responsible.

  1. The damages the Buyer is likely to receive from the court

There is a remedy where a right is established. No matter the kind of contract breach that is experienced, one has to be aware of the types of remedies that are available to them. In this case, the buyer may seek money that would in turn allow him to make up for the broken contract. However, that is less likely to happen in this case. The contract that exist, with consideration of the purpose for the van an investors’ relationship that is established would require something more than money to be involved following the breach of the contract. The options for remedy are always expressly or implied in the contract. Before considering the right legal action to take following the breach of such a contract, it would be wise to carefully review all the initial circumstances and contract terms. In turn, limitations can be identified as well as see the requirements to avoid waiving contract remedies. This case has a number of remedies including:

Specific performance might be one of most likely course of action where the court will order the seller to follow through the initial agreement. That would mean the enforcement of the terms established as the contract was made by considering the offer, consideration and acceptance. Both sellers and buyer show that they intended to have legal obligations that would lead to consequences in case one party failed to follow after the terms. Breach of contract in this case can potentially impact on aspect of buyer as a business party. Specific performance will account for the fact that, no time can be recovered in order for the buyer to be put into an initial state he would have been if the contract is finalized. This was what the judges concluded on a case involving Commonwealth of Australia v Amann Aviation Pty Ltd (1991) 174 CLR 64. The innocent party in the contract was put in a similar position as it would have in if the contracted was performed. Failure to enforce the contract would increase the buyer’s liabilities as the money for the van was borrowed from investors which establish another contract that would have dire consequences if not performed on time. It would also affect the benefits that the buyer calculated. Specific performance will highly be considered as rescission would not be possible. If at all there was no immediate need for a van as it is now, rescission; which would have involved the canceling of a contract, return of any money and dropping the matter as if it had not happened is impossible. In fact rescission would have been a consideration were the buyer unwilling to sue the seller if the van was not a necessity to him.

Secondly, a reformation can possibly be applied where due to some facts; like lack of formal contract since it was entered orally, the contract can be rewritten in order to better suit an actual intention with essential requirements that suits each parties interests and shows a better point of bargain and agreement. Reformation may involve the parties deciding on what can be added on top of $25,000 and the reduced amount payable per month and the duration to remit such payments.

Thirdly, there are possibility consequential damages as well as incidental damages. This kind of damages is offered as a remedy if the parties were aware of potential losses that might occur in case a breach occurred when a contract was accepted or signed. In this case, it is confirmed that the seller was notified that the buyer was to woo investors who would in turn respond by offering a contract and paying for the van based on established favorable contract that would see a new contractor meet the required courier services. In case, there was a delay or due to the money demanded the buyer was unable to meet the investors’ requirements, the seller would be required to pay for such damages.

References

Airloom Holdings Pty Ltd v Thales Australia Ltd [2011] NSWSC 1513

Australai v Amann Aviation Pty Ltd (1991) 174 CLR 64

Lee, P. W. (2009). Inducing Breach of Contract, Conversion and Contract as Property. Oxford Journal of Legal Studies29(3), 511-533.

Mahoney, P. G. (2011). 9 Contract remedies: general. Contract Law and Economics6, 155.

Shavell, S. (2009). Why Breach of Contract May Not Be Immoral Given the Incompleteness of Contracts. Michigan Law Review, 1569-1581.

Wilkinson‐Ryan, T., & Baron, J. (2009). Moral judgment and moral heuristics in breach of contract. Journal of Empirical Legal Studies6(2), 405-423.