Question 1
A contract can simply be defined as a legally enforceable agreement between two or more parties or entities. It is an agreement which places different obligations on the various parties to the contract. The breach of the obligations created by the contract would amount to a violation of the contract and the aggrieved party would be entitled to the various remedies that as per the terms contained in the contract . For an agreement to be considered as a contract and thus enforceable in law, it must have some certain characteristics. These are referred to as the elements of a contract. The elements of a contract are a central pillar on which valid contracts are anchored as absence of such elements may lead to the contract being declared invalid and thus not a legally enforceable agreement. There are various elements of a contract and these include; offer, acceptance, consideration, capacity to contract, lawful objective and legal enforceability. While there are many elements to a contract, this submission contends that the essential elements of a contract include offer, acceptance, consideration and legal enforceability.
For a contract to be valid there need be an explicitly stated offer to do something by one of the parties to the contract. One party to the contract makes the offer and as soon as the party agrees to the offer made, the agreement between the two amounts to a valid contract. There are various rules governing the making of an offer. In Carlill v Carbolic Smoke Ball Company, it was held that it is possible to make an offer to an individual as well as to the entire world. In addition, it was further held that the offeror must have shown intention to be bound for his proposal to amount to an offer . This rule was also enumerated in Harvey v Facey. An offer does not include goods on display. These are considered as an invitation to treat. The distinction between the two was laid out in the Fisher v Bell as well as in Pharmaceutical Society of Great Britain v Boots where the court distinguished what amounted to a valid offer from what constituted an invitation to treat.
The second essential element of a contract is acceptance. Indeed, a binding contract can only be created after there has been a valid acceptance an offer. Acceptance of an offer must be communicated to the offeror to make the contract valid as was illustrated in the case of Entores v Miles Far East. It was further stated in Felthouse v Bindley that silence does not constitute acceptance of an offer to . In Hyde v Wrench, the court held that for there to be a valid contract, the terms of acceptance of the must correspond to the terms of the offer.
A contract can only be valid if it comprises of a valuable consideration. One party to the contract makes the promise or promises while the other party provides the consideration for such promises made. Consideration need not be money but can be anything which has value. This was highlighted in Williams v Roffey Brolls & Nicholls (Contractors) Ltd where the court stated that partial performance of an existing contractual duty was sufficient consideration.
A contract must also be legally enforceable. Put differently, the parties to the contract must intend to be legally bound the contract. Consequently, an agreement where the parties concerned do not intend to create legal relationship between themselves does not amount to a contract but is a mere agreement . In Balfour v Balfour, the court held that a husband’s promise to pay his wife a certain amount of money per week during the time he was away was unenforceable as it was a domestic agreement and not a valid contract which would give rise to contractual obligations. In addition, it is also essential that the parties to a contract should have the capacity to contract. Contractual capacity denotes being of the appropriate age to contract as per the laws of a given country. Capacity also denotes being in the correct state of mind to enter into a contract. Consequently, minors and persons of unsound mind generally lack contractual capacity even though there are a few exceptions in the case of minors.
Once the parties have entered into a valid contract which contains all the requisite elements, they are bound by the terms of the contract. The import of this is that the parties in the contract have a duty to fulfill their obligations under the contract fully not unless there arises external circumstances that are beyond the control of either of the parties but which nonetheless adversely affect one party’s ability to discharge their obligation under the contract. The binding nature of a contract is also what gives rise to their enforceability in a court of law. This is because where a party fails to fulfill his obligations as required by the contract, the aggrieved party can go to court to seek to enforce the contract by asking the court to compel the party at fault to meet his end of the bargain. Thus, provided a contract is still in existence, the parties to the contract are bound by its terms. Additionally, the contract can be enforced by a court of law where one party fails to discharge his duties under the contract.
There are various factors which may make a contract void or voidable depending on the circumstances. Such factors are also known as vitiating factors. One of the vitiating factors of a contract is a duress which arises where one party to the contract claims that he was forced to enter into the contract . In Barton v Armstrong, the court held that the effect of duress was to make a contract voidable at the option of the aggrieved party. Similarly, the court held in Allcard v Skinner that undue influence had the effect of making a contract voidable at the option of the aggrieved party. Other factors which make a contract void or voidable include mistake and misrepresentation. A mistake refers to an incorrect belief held by one or both parties to a contract with regard to the facts as at the material time when the contract was made. The effect of a mistake is to make a contract void or voidable as was enumerated in the case of Coutirier v Hastie. On the other hand, misrepresentation refers to a situation where one of the parties to the contract seeks to be discharged from his obligations under the contract as the contract was based on a fraud or an untrue assertion made by the other party but which was of material significance to the contract. In Edgington v Fitzmaurice, it was held that the effect of misrepresentation would be to entitle the aggrieved party to rescind the contract on account of the misrepresentation.
There are various contractual remedies available to parties in a contract.
The remedies will vary depending on the nature of the breach of the contract. Contractual remedies can broadly be classified into two categories namely equitable remedies and legal remedies. Legal remedies are those which are found within the law and are usually stipulated in the contract. The most prominent legal remedy in contracts is damages. On the other hand, equitable remedies are those remedies which are only available at the discretion of the court. They include rescission, specific performance and quantum meruit. Rescission involves setting aside the contract and restoring the parties to their pre-contractual position. Specific performance is an order by the court to compel the party at fault to discharge his obligation under the contract while quantam meruit refers to an order of the court compelling one of the parties to the contract to compensate the other party for the amount of work the other party had already done as at the time the breach of contract occurred.
Question 2
The lease agreement between Tom and Lee raises a number of issues which will inform the standing of each party as far as the law is concerned. The first issue that arises is on the terms of a contract. The general rule in contract law is that breach of a term of the contract entitles the aggrieved party to a repudiation of the contract. Lee’s assertion that he needed to sleep in the restaurant and the fact that he would not have entered into the contract is that condition was not met was a fundamental term of the contract. Consequently, the fact that it later emerged that the restaurant could not be used for sleeping purposes amounts to a breach of the contract. Therefore, Lee can repudiate the contract on account of breach of a fundamental term of the contract. He can also sue for damages for breach of contract. In Bannerman v White, the court held that the buyer’s inquisition as to whether Sulphur had been used in the cultivation hops he intended to purchase was such fundamental term of the contract that entitled him to repudiate the contract when he discovered that Sulphur had indeed been used in the cultivation of the hops. Similarly, in Schawel v Reade, the court held that the statement made by the defendant that a horse which was the subject of the contract was ‘perfectly sound’ was a term of the contract. From the illustrations given above, Lee is entitled to repudiate the contract. The repudiation will have the effect of discharging him from any further obligations under the contract. Additionally, he can sue Tom for damages for breach of contract .
The second issue raised by the lease agreement between Lee and Tom is on misrepresentation. The general rule is that misrepresentation has the effect of making the contract void or voidable at the option of the aggrieved party. Tom’s assertion that Lee could sleep in the restaurant despite knowing that the sleeping in restaurants was forbidden amounted to a fraudulent misrepresentation which makes the contract void. The statement was of such material significance as had it not been made, Lee would not have entered into the lease agreement. Consequently, Lee can seek an order of the court to rescind the contract and restore him to his pre-contractual position. In Nottingham Brick and Tile Company v Butler, the court stated that a solicitor’s assertion to a buyer of land that he did not know if there were any restrictive covenants on the land while there were actually some restrictive covenants in effect amounted to a misrepresentation which entitled the buyer to rescind the contract. In addition, the fact that Lee’s case was neither an innocent nor negligent misrepresentation but that it was a fraudulent misrepresentation makes the contract void rather than voidable.
The central tenets of a contract are an offer and acceptance. As it was stated in the case of Hyde v Wrench, the acceptance must correspond to the specifics of the offer. A juxtaposition of the facts in Lee’s case and in the case of Hyde v Wrench would shed more light with regard to Lee’s legal standing. While the lease agreement contained a statement titled ‘Additional Contract Terms for This Lease’, the document containing the additional contract terms was not contained in the lease agreement. Lee exercised due diligence and asked for the document but Tom did not provide it and stated that he did not have a copy at the time. Consequently, Lee’s decision to enter into the lease agreement was solely based on the contents of the lease agreement which he had seen. In other words, his acceptance was only to the specific contents of the offer as enumerated in the lease agreement. Lee there has no obligation whatsoever to fulfill any other obligations apart from those which he had seen and assented to. In this regard, this submission contends that Lee is not contractually bound to wash Tom’s car as this was not part of the contract he signed.
In conclusion, Lee should sue Tom for breach of contract. Lee exercised due diligence, made the necessary inquiries and clearly explained to Tom that he needed to sleep in the restaurant. In addition, he fulfilled his contractual obligation of making any payments as per the lease agreement. On the other hand, Tom engaged in fraud and did not provide the requisite documents when required to only to come later and make claims which were not part of the contract. This article thus submits that Tom is the party at fault and that Lee is entitled to sue for breach of contract.
References
Andrews, N. (2011). Contract Law. Cambridge: Cambridge University Press.
Bix, B., & Bix, B. H. (2012). Contract Law: Rules, Theory and Context. Cambridge: Cambridge University Press.
Fisher, M. J., & Greenwood, D. G. (2011). Contract Law in Hong Kong. Hong Kong: Hong Kong University Press.
Halson, R. (2012). Contract Law. New Jersey: Pearson Education Limited.
Mckendrick, E. (2012). Contract Law: Text, Cases and Materials. Oxford: Oxford University Press.
Monahan, G. (2011). Essential Contract Law. London: Routledge.
Stone, R. (2011). The Modern Law of Contract. Oxford: Taylor & Francis.
Young, M. (2009). Understanding Contract Law. London: Routledge.
