This discussion focuses on a difficult area of contract law: verbal contracts and agreements. Verbal contracts and agreements are notoriously difficult because they do not rely on anything written: they are entirely the product of spoken interactions, and thus, they are subject to the memory of the individual parties (Beale et al. 2010). In this hypothetical, Simon offers to pay each band member £250,000; ostensibly, this payment is not the issue that is contentious, as each band member did indeed receive this money after completing the concert. Although the case study is not clear, it seems that this payment was under written contract.
However, there is also a secondary issue associated with this particular case, and that issue centers on the week-long trip to the Maldives that Simon offered to Payn. Because of Payn’s poor performance during the concert, Simon gave the trip to another band member; because Payne was already disgruntled, it seems likely that this slight will make him angry. This discussion will look at the legal aspects of verbal contracts and will attempt to determine whether Simon has created a viable contract with Payne in this case—if there is a viable, enforceable contract, then it will be important for Simon to honor that contract (Crasswell 2000). If the contract is viable and enforceable, and Simon fails to honor it, Payn might be able to begin legal action against Simon—something that Simon and “You’re Hired” collectively want to avoid.
First and foremost, it is important to understand that in UK law, verbal contracts can indeed be legal and enforceable in court. Just because there was no written agreement between these two individuals does not mean that no contract was made—it just means that nothing was written down, making it harder to understand the terms of the contract (E-lawresources.co.uk 2016). Under UK law, verbal contracts are indeed binding contracts, and they should be treated with care—as soon as the participants agree on the fundamental terms of the contract, the other circumstances and terms are extraneous and do not nullify the contract as a whole (E-lawresources.co.uk 2016; Inbrief.co.uk 2016; Normington 2016). Simon has the potential for a very difficult and interesting legal battle in this situation if the issue cannot be resolved.
When Payn agreed to do the concert, it was because of the payment-- £250,000, which he received—and the deal for the week-long trip in the Maldives. This was his expectation, and the fact that he did not receive it could very well constitute a breach of contract (MacMillan and Stone 2012).
Simon’s proposed solution of giving the trip to the Maldives to another band member is also particularly interesting, but also fraught with complications. Because the contract regarding the trip was verbal, Simon might be able to claim that there were terms regarding performance quality that governed who would receive the trip; however, the trip was offered to Payn as payment for his participation in the concert, and does not seem to be offered with any expectation that he would perform exceptionally well. An argument could be made that Payn did not fulfill his end of the contract because of his performance, and thus could not possibly be eligible to receive the trip, although he still received his payment for his performance (McKendrick 2014).
This is a very gray legal area, and Simon has made a number of mistakes in dealing with this particular client: first, verbal contracts are indeed binding, which is why it is always better to have a written record of some kind governing the contract and exchange of goods or services (MacMillan and Stone 2012). Payn has the ability to make this contract a legal issue, so there are a number of things that Simon can do to potentially offset the likelihood of this happening. The first, and perhaps the easiest solution to the problem is to void the contract and not offer the trip to any members of the band. Contracts that are verbal are voidable—although they are binding, if any party fails to uphold the terms, the contract can be voided (MacMillan and Stone 2012). This would have the benefit of not angering Payn further, and perhaps even making it less likely that he would bring Simon to court in a legal battle over the contract.
The second option is to give Payn the trip; legally, Simon could probably avoid giving Payn the trip even if Payn went to court. However, if Simon wants to avoid court entirely, giving Payn the trip even though his performance was poor would be the best course of action for Simon and “You’re Hired.” The third alternative is to give the trip to another band member, framing the trip as a gift given by the organization to the member who performed well during the show. Because the trip has been framed as a gift all along, once again, Simon would probably prevail in court if the issue came before an adjudicator. However, if Simon does not want to enter the court system, the only viable option for avoiding it altogether is to give Payne the trip. Ideally, giving the trip to some other band member is the best course of action for Simon and “You’re Hired,” however.
References
Beale, H., Tallon, D., Vogenauer, S., Rutgers, J.W. and Fauvarque-Cosson, B., 2010. Cases, materials and text on contract law. Hart.
Craswell, R., 2000. Contract law: General theories. Encyclopedia of law and economics, 3, pp.1-24.
E-lawresources.co.uk. 2016. Contract Law. [online] Available at: http://e-lawresources.co.uk/Contract.php [Accessed 22 Jun. 2016].
Inbrief.co.uk. (2016). Contracts and law: What you should know. [online] Available at: http://www.inbrief.co.uk/contract-law/contracts/ [Accessed 22 Jun. 2016].
MacMillan, C. and Stone, R., 2012. Elements of the law of contract. University of London.
McKendrick, E., 2014. Contract law: text, cases, and materials. Oxford University Press (UK).
Normington, J.. 2016. 10 key facts about English contract law | SEQ Legal. [online] Available at: http://www.seqlegal.com/blog/10-key-facts-about-english-contract-law [Accessed 22 Jun. 2016].
