Law 1510 : Contract Laws Assessment Answers

Assessment Information

This assignment is designed to assess learning outcomes:

1. ) Demonstrate knowledge and understanding of the range and scope of legal and professional responsibilities within the business sector
2. ) Identify and understand the key concepts of contract and how they relate to business organisations and professional behaviour
3.) Demonstrate an ability to use legal authority appropriately and apply relevant law to a range of business scenarios

This assignment requires you to write an individual 2000 word original advice to the following scenario.

For the last 5 years Simon has produced “You’re Hired” a business based TV talent show based in the UK where professional applicants compete for the role of CEO of his TV Production Company. Last season’s show saw increased viewing figures and higher advertising revenue due to the popularity of the head judge Taylor who is a well-known celebrity and business woman and Simon wants to secure Taylors exclusive participation in the show, preventing her from being able to participate in any other TV show airing at the same time for another season.
Simon is aware that Taylors friend Kim was recently the victim of a robbery in France and as part of the negotiation promises to provide Taylor with a personal bodyguard 24 hours a day whilst the show is in production at a personal cost to him of £10,000 a day and this is stated in the contract which is written in accordance with English Law.

As Simons legal advisor advise him:-

1) Of the requirements of a legally binding contract with Taylor under English Law

2) Of the legal consequences if Taylor breaches the exclusivity clause in the contract by taking on other TV work whilst appearing on “You’re Hired”

Answer:

To,

Mr. Simon

 Subject: Legal advice to the client.

Sir,

In the present case Mr. Simon produced the T.V. show which is named as “you’re Hired” which is the based business based talent show, and this show is aired in UK in which competition is held between the professional participants for the purpose of winning the role of the CEO. Simon wants to appoint Taylor as the judge because last season of this show was hosted by the Taylor and because of her this show earns high profit revenue. Simon seeks to secure exclusive participation of the Taylor in the show so that he can prevent her from participating in any other T.V. show which is aired at the same time. Simon signs the contract with the Taylor, and Simon also provide full time bodyguard to the Taylor. The main issue in this case is stated below:

• Whether there is any legally binding agreement between the Simon and Taylor?
• Legal consequences if exclusivity clause stated in the contract is breached by the Taylor by working on another T.V. show at the same time while appearing on the show of Simon?

Contract is the agreement which is executed between two or more person, and any agreement which is legally binding on the parties. In other words, any voluntary agreement which is conducted between two or more parties and enforceable by law is considered as valid contract. Contract law is considered as the body of law which mainly determine the rights and obligations of the parties under the contract law. It regulates the relationship and validity of the agreement between the two or more parties in context of goods sale, services, etc. (Burrows, 2016). It must be noted that there are different types of the contract and some of these types are stated below:

• Bilateral contract is the contract in which both the parties of the contract get involved in the promise to carry out particular things.
• Unilateral contract is the contract in which one party to the contract demand performance from the other party to the contract.
• Express contract are considered as those contracts in which terms related to the contract are stated either verbally, orally, or in writing.
• Implied contracts are those contracts which are either implied by law or implied by fact (A4ID, 2016).

Contract with Minor:

For the purpose of valid contract, parties to the contract must have contractual capacities. Minors are not considered as the contractual capable for the purpose of signing the valid contract by both common law as well as statute law. As stated by the general rule under common law, any contract made by the person who is under the age 18 years is voidable in nature. However, some exceptions related to this rule are stated below:

• Any contract made by the minor is binding on both the parties if such contract is made for necessities. For the purpose of determining the necessities, Court determines the existing life style of the minor and any such thing which is important to maintain that lifestyle. This can be understood through case law Nash v Inman, [1908] 2 KB 1.
• Any contract which is made by the minor for employment is binding in nature if it provides benefits to the minor. However, minor has right to repudiate such contract after attaining majority.

It must be noted that, those contract which are not falling under above stated exceptions are voidable in nature. Voidable contracts are considered those contracts which can be legally terminated. This can be understood through example, minor has right to enter into the contract but he also possess the right to make the contract void on attaining the majority. However, in case after attaining the majority, if minor approves the contract then such contract is legally binding on the parties (Felgenträger, 2004).

Elements of contract:

The first and most important requirement of the valid contract is the agreement, which generally includes offer, acceptance, consideration, and intention of the parties. Whether parties had intention to create the contract is determined objectively.

Contract is traditionally analyzed on the basis of the offer and acceptance. Offer is the stage in which one party makes the offer to do or not do something to another party. Party who makes the offer is known as offeror and party to whom offer is made is known as offeree. There is no certain way through which offer can be made. It must be noted that there is difference between the offer and invitation to deal, and as per this difference offer leads to binding agreement and invitation to offer leads to the further negotiation Pharmaceutical Society V Boots Cash Chemists [1953] 1 All Er 482, in which Court stated, contract between the parties is not completed till the time shopkeeper and any person on behalf of shopkeeper accepts that offer. Following are essential factors for making the valid offer:

• It must be noted that for making the valid offer, it is necessary that offer must contain the valid terms, which means terms must not be vague in nature. This can be understood with the help of case law Gunthing v Lynn (1831) 2 B7 Ad 232.In this case, Court held that payment of extra $5 if horse was lucky was vague in nature, and because of this there was no valid contract between the parties. 
• For the purpose of making a valid offer, it is necessary for the offeror to show that they had intention to be bound. This can be understood through case law Harvey v Facey [1893] UKPC 1.In this case, court held that there was no contract concluded between the parties because there was no intention on the part of the offeror. 
• It must be noted that, offer must be communicated to the offeree, and this can be understood through case law Bloom v American Swiss watch CO (1915),in which Court stated there was no contract exist between the parties because offer is not communicated to the plaintiff before giving the information.

Acceptance is the clear statement through offeree accepts the offer, and once a valid acceptance takes place, a binding contract is made between the parties. it is necessary to understand the elements through which valid acceptance is formed for the purpose of determining the valid contract between the parties. There are three basic rules related to the acceptance:

• Acceptance given by the offeree must be transferred to the person who directed the offer.
• Terms on which acceptance is given must be similar to the term on which offer is given, which means acceptance with the changing terms is considered as counter offer and not acceptance (Rule of mirror image). This can be understood through case law Jones v Daniel [1894], in which Court stated that there was no contract between the parties.
• Agreement must be of certain nature, which there is no particular form for the agreement. In case law Branca V Cobarro [1947] 2 All Er 101, in which Court held that there is no particular form.  
• It is the general rule that silence cannot considered as the acceptance, and for valid acceptance, it is necessary that acceptance must be communicated to the offeror (Beatson& Burrows, 2016). In other words, acceptance must be communicated to the offeree. In case law Powell V Lee (1908) 99 Lt 284, court held that there was no valid acceptance.

Most important element of the valid contract is the consideration which is considered as the price paid for promise. Following are the important elements of the consideration:

• It is necessary that, in the eyes of   law consideration must be of some value and this is stated by Court in case law Thomas v Thomas (1842) 2 QB 851.However, consideration does not include the promise related to the love and affection, gaming, etc. Any promise which is made by one party and such promise do not involve consideration, then it is considered as gift.
• Consideration must not be a past consideration, which means consideration is considered as the valid consideration if is given for the present promise and not for the past. In Re McArdle (1951) Ch 669 Court of Appeal, past consideration is not considered as the valid consideration.
• Consideration must be move from the promise to the promisor, and this means that consideration must be given by promisee and not any other person.
• An existing public duty of the person is not considered as the valid consideration (Collins v Godefrey (1831) 1 B & Ad 950).
• Consideration must be of legal nature.

Intention to create legal relations is another important element for the existence of the valid contract, and as per general rule, presence of consideration will provide evidence for this. It must be noted that not each and every agreement results in the binding contract, which is enforceable by law.

For the purpose of determining which agreement are legally binding in nature and carry the intention to create legal relations, law distinguish between the social and domestic agreements and agreements made in a commercial context.

In context of social agreement, it is presumed by law that parties to the contract does not intend to create legal relations with each other. In case law, BUCKPITT v OATES [1968] 1 All ER 1145, Court held that there was no agreement between the friends, because parties does not intend to create legal relations with each other. 

In context of commercial agreement, then parties related to the agreement automatically intend to create legal relations with each other. In these parties who want to set aside the contract on the ground of intention, needs to prove the fact. It must be noted that test of intention between the parties is objective in nature, in which if parties related to the contract does not intend to be legally binding incorporate Honour clause in their agreement which clearly reflects that liabilities of parties is arise in honour only and not otherwise (CILEX, 2016). This can be understood with the help of case law Rose and Frank & Co v Crompton, [1923] 2 KB 261.

Terms of the Contract: Terms defines the rights and obligations of the parties in the contract, and there are two types of terms that are express terms and implied terms. Express terms are those terms which are sated in the contract, and implied terms are those terms which are imposed by the law on the parties.

Conditions are considered as the major terms of the contract, and breach of conditions are deemed as serious offense. In case conditions of the contract are breached then it is considered party has right to claim for damages or end the contract.

On the other hand, warranties are considered as less serious terms, and breach of warranty only provide the right to claim for damages.

Exemption clauses are those clauses which exempt the liability of one party for any breach or negligence, and following are the essential elements of the valid exemption clause:

• Incorporated in contract
• Valid in nature
• Must not exempt any statutory obligations.

In the present case, both the parties enter into the contract and such contract is valid in nature, because all the essential elements of the valid contract are present in this case. Therefore, it can be said that contract between the Simon and Taylor is the legally binding contract which is enforceable by law.

Exclusivity Clause:

Exclusivity clause is considered as the part of the legal document which big in nature and put restriction on the party from purchasing, vending, and endorsing any goods or services of any person or company other than the company which is associated with that contract. This means that company or person works with the contract issuer on exclusive basis. (Gov.UK, 2015).

Contract is discharged by number of ways such as performance, breach, etc. It must be noted that contract can be discharged by breach also which means parties to the contract fail to fulfill their obligations under the contract. Following are the remedies available in case of breach of contract:

• Damages are considered as the most common remedy which puts the non-breaching party in the previous financial position as if the contract were performed by the other party.
• Rescission means cancellation of the contract. This remedy can be used by the party in case other party breach the terms of the contract, repudiates the contract, breach is serious in nature.
• Specific performance includes the order against the breaching party to perform the contract.
•  

In the present case, Exclusivity clause is incorporated by the Simon in the clause and for this purpose Simon takes all necessary steps such as provide full time bodyguard to the Taylor. In this case, there is valid exclusivity clause and if such clause is breached by the Taylor, then she face severe legal consequences such as cancellation of contract, penalty and fines. In this, contract is breached by the Taylor by working on another T.V. show at the same time while appearing on the show of Simon. Therefore, Simon has right to cancel the contract and claim for compensation for the damages occurred to him.

References:

A4ID, (2016). Basic principles of english contract law. Available at: https://www.a4id.org/wp-content/uploads/2016/10/A4ID-english-contract-law-at-a-glance.pdf. Accessed on 17^th June 2018.

Beatson, J., Burrows, J. (2016). Cartwright Anson’s law of contract. Oxford: Oxford University Press, 30th edition.

Bloom v American Swiss watch CO (1915)

Branca V Cobarro [1947] 2 All Er 101

BUCKPITT v OATES [1968] 1 All ER 1145

Burrows, A. (2016). A casebook on contract. Oxford: Hart Publishing, fifth edition.

Carlill v Carbolic Smoke Ball Co, Court of Appeal [1893] 1 QB 256; [1892] EWCA Civ 1.

CILEX, (2016). Contract Law. available at: https://www.cilex.org.uk/pdf/L6%20U2%20Contract%20Law%202016%20Final.pdf. Accessed on 17^th June 2018.

Collins v Godefrey (1831) 1 B & Ad 950).

Entorres v Miles Far East [1955] 2 QB 327.  

Errington v Errington Woods [1952] 1 KB 290.

Felgenträger, F. (2004). English contract Law. Available at: https://www.jurawelt.com/sunrise/media/mediafiles/14237/english-contract-law.pdf. Accessed on 17^th June 2018.

Gov.UK, (2015). Zero hours employment contracts: exclusivity clause ban avoidance. Available at: https://www.gov.uk/government/consultations/zero-hours-employment-contracts-exclusivity-clause-ban-avoidance. Accessed on 17^th June 2018.

Gunthing v Lynn (1831) 2 B7 Ad 232.

Harvey v Facey [1893] UKPC 1.

Jones v Daniel [1894],

Jones v Padavatton [1969] 1 WLR 328 Court of Appeal.

Nash v Inman, [1908] 2 KB 1.

Pharmaceutical Society V Boots Cash Chemists [1953] 1 All Er 482

Powell V Lee (1908) 99 Lt 284

Re McArdle (1951) Ch 669 Court of Appeal

Rose and Frank & Co v Crompton, [1923] 2 KB 261.

Thomas v Thomas (1842) 2 QB 851.