CML 101 Introduction To Business Law Summer Semester 2015-20

1cml 101 Introduction To Business Lawsummer Semester 20152016assess

Analyze the provided business law case scenarios using pertinent legal principles to determine whether contractual obligations exist and if remedies are applicable. Specifically, evaluate:

• The existence and enforceability of a contract between Rob and Jim regarding the memorabilia sale, considering offer, acceptance, and implied commitments.
• Whether Tommy breached the contract with Megan by failing to deliver high-definition images as promised, and if Megan can recover damages or remedies.
• The potential for Sam to recover compensation from Kenny for profits lost due to delayed repair and delivery of the shark cage, including whether damages for lost Tour profits and the cancellation of a corporate event are recoverable.

Use relevant legal principles related to contract formation, breach, and damages in your discussion.

Paper For Above instruction

Introduction

Business law fundamentally governs contractual relationships, emphasizing the importance of offer, acceptance, consideration, and intention to create legal relations. Analyzing the given scenarios requires applying these principles to determine the existence of contracts and remedies for breach. This paper discusses three core issues: the memorabilia sale between Rob and Jim, Megan’s website contract with Tommy, and Sam's claim for damages against Kenny.

Contract Formation in Rob and Jim’s Memorabilia Deal

Rob's interaction with Jim demonstrates a classic offer and acceptance scenario, but complexities arise from the advertisement, email communications, and subsequent negotiations. Jim's email referring to "Hot Offer" and the statement "$10,000 or nearest offer" could be viewed as an invitation to treat rather than a firm offer. In contract law, advertisements are generally treated as invitations to treat, meaning they do not constitute offers but invitations for customers to make offers (Carlill v Carbolic Smoke Ball Co, 1893). Rob’s phone call expressing interest and offering $8,000 may constitute an offer, which Jim appears to reject by stating the minimum price is $9,000. The exchange where Jim refuses Rob’s proposed payment plan and promises to hold the memorabilia for 2 days further complicates the issue. Jim's statement, "Can you hold the memorabilia for 2 days?" and his agreement to "hold" the items might create an implied obligation, potentially giving rise to a binding contract if Rob relied on it.

However, the critical point is whether a valid contract was formed before Bernard purchased the memorabilia. Since Jim responded to Rob's offer with a counter-offer of $9,000, which Rob accepted, an agreement might be formed if Jim's actions implied acceptance and consideration. Nonetheless, the fact that Jim sold the memorabilia to Bernard for a higher price after promising to hold it suggests the absence of a binding contract with Rob, especially if Jim could demonstrate he was authorized to sell to third parties without binding Rob.

Legal Principles and Court Perspective

Under the law of offer and acceptance, the conduct and communications between Rob and Jim suggest negotiations rather than definitive acceptance. If Jim's statement about selling for $9,000 and his refusal to hold the memorabilia unless the full amount was confirmed can be construed as a termination of negotiations or an invitation to finalize a binding contract only upon formal agreement, then no enforceable contract exists. The 'holding' promise was a mere license or temporary arrangement, not a binding contract, unless supported by consideration or reliance.

In summary, since Jim sold the memorabilia to Bernard after promising to hold it, and there was no clear acceptance of a firm, final offer from Rob, it is unlikely that a court would find a binding contract. Rob's reliance on Jim's promise to hold the memorabilia for 2 days does not amount to contractual consideration but perhaps a gratuitous promise.

Tommy’s Breach and Megan’s Remedies

The second scenario revolves around Tommy’s Web Design and Megan’s expectations of a website with high-definition images. According to principles of contract law, the formation involves offer, acceptance, and consideration. Tommy's promise to build a website that provides 'rapid access' and 'high definition' images constitutes a contractual promise, especially since Megan signed the order form, which likely constitutes acceptance.

In assessing breach, the critical issue is whether Tommy failed to deliver as promised. Megan’s discovery that the images load slowly and are not in high definition suggests a breach of contractual terms. The small print clause stating, "Tommy’s Web Design is not liable for any breach of contract" could be considered a limitation of liability clause. However, to be enforceable, such clauses must be fair, clear, and incorporated into the contract, which Megan did not read, raising issues of incorporation and notice.

Legal principles such as the Unfair Contract Terms Act 1977 (UK actuated law, analogous principles in other jurisdictions) dictate that exclusion clauses must be reasonable and clearly incorporated. Since Megan did not read the clause, and if the promises made by Tommy are deemed representations rather than contractual terms, it is possible Megan may assert breach of contractual obligation. The failure to provide the promised high-definition images and rapid access constitutes a breach.

Remedies available include damages for breach of contract to compensate Megan for her financial loss. Given the breach involved the quality and speed of the deliverables, consequential damages for disappointment and loss of business opportunity could also be claimed, subject to proof and court discretion.

Sam’s Claims Against Kenny

In the third scenario, Sam seeks compensation for lost profits due to Kenny’s delayed repairs, which caused the cancellation of pre-booked tours and a lucrative corporate event. Under contract law, damages for breach aim to put the injured party in the position they would have been if the breach had not occurred (Hadley v Baxendale, 1854). In this case, the delay resulted in direct financial losses and loss of profit from the tours.

Sam can argue that Kenny breached his contractual obligation to deliver the repaired cage in the agreed time, and that the delay was foreseeable as a probable consequence of the breach. This foreseeability supports a claim for damages. The specific losses from the tour cancellations, over $20,000, can be claimed as direct damages attributable to the breach.

Regarding the damages for the corporate event, which involved a 5-day tour with international clients, the principle of foreseeability also applies. If Kenny knew or should have known that the delay might cause such significant contractual obligations to be affected, damages for these losses may be recoverable. Courts typically require that damages be reasonably foreseeable at the time of contract formation to be recoverable, and here, Kenny’s knowledge about the importance of timely repairs aligns with foreseeability.

However, Kenny might argue that events beyond his control or exceptional circumstances caused the delay. If Kenny can demonstrate that the delay was due to unforeseen circumstances, procedural faults, or acts of God, the claim might fail. In the absence of such evidence, Sam’s claim for damages for lost profits seems supported by the principles of breach of contract and foreseeability of damages.

Conclusion

Overall, the legal analysis indicates that the existence of binding contracts depends on clear offer, acceptance, and consideration, which are absent in Rob and Jim’s negotiations after Bernard’s purchase, likely precluding a binding agreement. For Megan and Tommy, breach of express promises related to image quality and website speed are evident, and Megan may seek damages despite the exclusion clause, depending on contractual incorporation and fairness. Lastly, Sam’s claim against Kenny for damages resulting from delayed repairs aligns with contract breach principles, allowing recovery for direct and foreseeable losses. These scenarios exemplify core principles in business law relating to offer, acceptance, breach, and damages, emphasizing the importance of clear contractual communications and obligations.

References

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• Australian Competition and Consumer Commission. (2020). Consumer Law and Contract Law Principles.
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• Faber, H. (2020). Contract Law in Common Law Countries. Cambridge University Press.