LAW OF CONTRACT

[Name]

[Date]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q1: Requirement of a legally binding contract

For a contract to be legally binding under the English law, it has to be valid. Consequently, any contract that is valid is enforceable. A contract is valid if it contains four key elements: offer, acceptance, consideration and intention.

(i)                 Offer

An offer is simply a promise to do or not to do something. According to Guthing v Lynn, the offer must be communicated in sufficiently clear terms. In this case, the court held that a statement that was communicated in ambiguous terms did not amount to an offer. For these reason, Simon must communicate to boy band No Direction his intention to contract them to perform their latest single live on stage for which he will pay each band member £250, 000. His communication must be clear and certain that he wishes to do business with the band. The English law holds that there is difference between an offer and an invitation to treat. An invitation to treat is simply a representation to invite any other person to make an offer or enter into a bargain. For this reason, in Pharmaceutical Society of GB v Boots Cash Chemist, the court held that goods displayed on shelves with their prices attached could not amount to an offer.  Like in Havey v Facey, the offer must be clear that it is an intention to conclude a business deal. For Simon case, therefore, the offer of £250, 000 makes a clear statement that if the accepts the offer, Simon intend to conclude a binding contract.

(ii)               Acceptance

The other requirement is acceptance. If the boy band No Direction accepts the offer with the terms stated, and the other elements are all present, the contract will be formed and will be binding. The test of acceptance is an objective one. For the court to find acceptance, the band must accept the offer in absolute and unqualified terms (Branco v Corbarro). This is what the court in Jones v Daniel refers to as mirror image.  An acceptance that makes a counter offer does not mirror the image. At the same time, the band must communicate back to Simon that indeed it has accepted the offer (Powell v Lee) or demonstrate the acceptance by performing the offer. In this case, the band must communicate to Simon that it has agreed to perform during the respective date and accepted his offer of £250, 000 for each member.

(iii)              Consideration

The English law considers the element of consideration. This element means that a valid contract should have a value representation.  In this case, the consideration is that Simon is prepared to pay (£250, 000 for each band member) in exchange of services (performance). The consideration, as established in Thomas v Thomas must have value in the eyes of the law. Thus it can be quantified. In this case, the value of the exchange is quantifiable: after paying for the performance, Simon intends to make profit from the advertisements attracted by the popularity of the band.  Nonetheless, though the consideration need to be sufficient, it is not necessary for it to be adequate. In this case, the court will treat the £250, 000 paid to the band members as sufficient but it will not go into confirming the adequacy of the exchange.

The English law also holds that consideration must move from the promise. If any other person other than the promise is to provide consideration, the contract is invalid. As such, the consideration has to be between Simon and the band, for Simon to be in a position to enforce the contract. According to court, past consideration is not valid (Re McArdle). This means that if Simon had a prior consideration with the band, such consideration cannot be imported into the present agreement. Other requirement of consideration is that consideration should not be something that either party is dutifully bound to do.

(iv)             Intention to create legal relations

The fourth requirement is the intention to create legal relations. The general presumption is that parties entering into a commercial contract intend to be bound by it. However, it is presumed that those entering into a social domestic contract do not intend it to be binding unless otherwise proved. The contract that Simon intends to enter with the band is basically commercial and it is therefore expected that if the band enter into it, it will be presumably binding. The contract has commercial terms.

Q2: Breach of the contract

If either party fails to perform a valid contract, the law treat it as a breach. The aggrieved party has the right to move to court to either seek damages, Rescission, specific performance or injunction. In this case therefore, if Payn decided to leave the band without performing contrary to the agreement, Simon will be entitled to seek damages. It is important to note that Simon will only be able to enforce the contract if the contract meets the above discussed elements, that is, if the contract is valid.  From the nature of the agreement, the right remedy would be to seek for damages. This remedy will enable Simon to be in the financial position that he would have been if the Payn performed. In awarding this remedy, the court looks at the loss the claimant incurred due to the breach and seeks to restore the claimant to the financial position that he could have attained if the contract was performed as agreed. It is expected that Payn failure to perform brought down the viewing figures that Simon had expected to raise advertising revenue. In this case, the damages sought will be in form of the revenue lost as a result of under advertisement.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

List of References

Branco v Corbarro [1947] 2 All ER 101

Guthing v Lynn (1831) 2B & AD 232

Harvey v Facey, [1893] AC 552

Jones v Daniel [1894] 2 Ch 332

Pharmaceutical Society of Great Britain v Boots Cash Chemists, [1953] 1 All ER 482

Powell v Lee, [1908] 99 LT 284

Re McArdle (1951) Ch 669

Thomas v Thomas, [1842] 2 QB 851

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