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Law of Contract (T2) - Coggle Diagram

- - - - Liquated damages
        
        Section 75
        
        When a contract has been broken,if a sum is named in the contract the amount to be paid in case of such breach or if the contract contain any other stipulation by way of the penalty,the party complaining of such breach is entitled,whether or not actual damage or loss is to prove to have been cause thereby to receive from the party who has broken the contract reasonable compensation,not exceeding money so named or the case may be penalty stipulated
        
        Section 76
        
        A person who rightfully rescinds a contract is entitled to the compensation for any damage which he has sustained through the non-fulfillment of the contract
        
        Damages mean losses or costs incurred due to anothers wrongful act. Damages are granted to a party as compensation for the damage, loss or injury he or she has suffered through a breach of contract. The language of a contract will usually call for a specific penalty if the contract terms are not completed on an agreed-upon date. Both of the contract and tort law damages are the courts calculation of what it would cost to put the plaintiff back into the position he or she would have been in but for the fraud. This amount of value that has been lost is due to the breach of the contract in any of the contracts. Tort law damages are much more difficult to evaluate but generally are taken to represent the monetary value of what the plaintiff has lost in terms of damages of property, personal injuries, and quality of life. For example, a building contractor has agreed to complete the theme park beside Hard Rock hotel, penalties may be built into the contract itself if the job is not completed on time. The contractor may have offered the penalty option as an incentive to win the contract. Liquidated damages refer to these penalty payments. When a contract is breached, the liquidated damages could be imposed
        
        Cases
        
        Smith, Hogg & Co v Black Sea Insurance (1940)
        
        A shipowner was held liable to a charterer in damages for loss of a cargo which had been caused by a combination of perils of the sea and the unseaworthiness of the ship. The latter was sufficient to carry a claim for damages
        
        Weld-Blundell v Stephens (1920)
        
        The plaintiff employed an accountant, the defendant, to investigate the affairs of a company he had invested in. The defendant’s partner negligently dropped a letter from the plaintiff in the office of the company’s manager, which the manager picked up and showed to his directors, who sued the plaintiff in libel and won. The plaintiff sued the defendant for breach of contract to recover the damages he paid out in the libel action. The court declared that the claim must be dismissed since (1) the plaintiff’s liability for libel existed apart from the contract, and (2) the loss was not caused by breach of contract, but by the act of the company’s manager showing the letter to the directors. This was an act the defendant could not have foreseen..
        
        Simpson v L&N Railway (1876)
        
        The defendant contracted to carry the plaintiff’s samples of cattle food from an agricultural show at Bedford to another at Newcastle. He delivered certain goods to an agent of the defendant at Bedford showground. The goods were marked ‘must be at Newcastle by Monday certain’. No express reference was made in the contract of carriage to the Newcastle show. The samples arrived at Newcastle after the show was over. The defendant was held to be liable for loss of profits which the plaintiff would have made had the samples reached Newcastle on time. The plaintiff’s purpose and intention could readily be inferred from the circumstances, which clearly indicated that the contract was one to carry samples to the Newcastle show and not simply to Newcastle
      - Compensatory Damages
        
        Compensatory damages are paid directly to the claimant to compensate for loss and injury when the defendant is proven to be liable for breach of duty or committing wrongful acts. In cases where the claimant has suffered ascertainable costs, it is easy to determine the amount of compensatory damages. In other cases where the liability results from the defendant failing to perform a service, it is necessary to calculate compensatory damages by inquiring how much it would cost for a third party to provide the same service. However, the court takes into account when the non-breaching party makes savings or profits because he or she is involuntarily relieved from the responsibilities specified in a broken contract. If the non-breaching party makes gains from alternative arrangements, compensatory damages are equivalent to his or her loss subtracted by the gains made from the substitution.
  - - - Cases
        
        Nutbrown v Thornton (1804) 10 Ves 159
        
        Section 21,Specific Relief Act 1950
        
        The court has a discretion to refuse specific performance where the granting of it would cause undue hardship to the defendant.
        
        Cohen v Roche [1927] 1 KB 169
        
        ( Specific performance was ordered of a contract to supply machinery which could not be readily obtained elsewhere.)
        
        ( The claimant owned a furniture shop and entered an agreement to purchase a quantity of Hepplewhite chairs to sell in his shop. The defendant, in breach of contract, refused to deliver the chairs. The claimant sued for breach of contract and sought specific performance for delivery of the chairs).
  - - - Specific Relief Act 1950
        
        Section 50 - Discretionary power of the court to grant injunction
        
        Section 52 - Details concerning granting of injunction
        
        Section 51 - Interim Injunction
      - Cases
        
        Huawei Technologies Co. Ltd v ZTE Corp, ZTE Deutschland GmbH
        
        U&M Mining Zambia Ltd v Konkola Copper Mines plc
        
        Cartier International AG v BSkyB
  - - - The specific performance is a discretionary order granted by the courts directing a person to carry out their obligations under the contract.In considering whether to grant specific performance the courts look to whether damages would be an adequate remedy, the type of contract and whether equity requires such an order.
- - - - Acceptance must be absolute and unqualified to show
        a complete consensus.
    - - The offeror may specified the method of acceptance and the offeree must
        communicate his acceptance through the specified method
- - - - Once an offer and acceptance are considered valid, an agreement is formed. Certainty Is the next requirement to make the agreement legally enforceable. If an agreement is not considered certain and thereby lacks this requirement, then it will not be enforceable - Gunthing v Lynn (1831) 2 B7 Ad 232.
      - Every case involved with a dispute as to whether a contract lacks certainty is heavily fact based and individual. As such, it is always important to pay close attention to the facts surrounding the agreement, and any clauses or wording relating to said agreement.
      - The two areas that need to be considered when reviewing whether an agreement is certain can be broadly placed into two categories: (a) vagueness of the agreement and (b) whether it is incomplete.
    - - Methods on How to Solve Vagueness
        
        Reasonableness: Where a contract would fail through virtue of an uncertainty the Court will apply an objective standard to the agreement to fix the issue. A great case example to illustrate this fact, would be Hillas & Co v Arcos Ltd (1932) 147 LT 503. In this case, a contract was made for the supply of goods described as “fair”. As “fair” in terms of goods is not an adequate description, the Court applied an objective assessment and determined that “fair” in the context of the agreement could be adequately defined.
        
        Use of business customs and trade usages: In the interest of contractual and commercial certainty, a Court will often give effect to vague agreements by filling their gaps in with business, customs and trade usages - Courtney v Fairbairn Ltd v Tolaini Bros (Hotels) Ltd [1975] 1 All ER 453. If a party however is not used to any such business, customs and trade usages the Court may not find it appropriate to use this method of curing vagueness - Hollingworth v Southern Ferries [1977] 2 Lloyd’s Rep 70.
        
        Doctrine of severability: If a clause is irreconcilable with the agreement due to how vague it is the Court may completely strike it from the agreement so the rest of said agreement can be legally enforced. In Nicolene Ltd v Simmonds [1953] 1 QB 543, an agreement was subject to “usual conditions of acceptance”, as the Court considered this phrase meaningless they excluded them from the agreement. Similarly, if a phrase contradicts itself then the Court may remove it from the agreement - ERJ Lovelock v Exportles [1968] 1 Lloyd’s Rep 163.
        
        The contract itself: The contract itself may also be able to resolve any ambiguity in the work. In Foley v Classique Coaches Ltd [1934] 2 KB 1, all disputes concerning the potential vagueness of the contract were to be resolved by an arbitrator.
      - If an agreement is considered too vague or abstract, and without altering the agreements’ terms, or without adding new terms it could not be reconciled, no effect will be given to the agreement
    - - When interpreting a contract, understanding should be relative to a reasonable man who has all the background facts.
      - Words should all be utilized in their ordinary and natural meaning.
      - One party's subjective understanding of the contract or any evidence of previous negotiations is unacceptable proof of what the contract means.
    - - An agreement does not require every minute detail to be addressed for it to be capable of legal enforceability. Every vital/essential piece of information however is required
      - The degree to which a term is considered vital/essential within an agreement varies depending of the facts surrounding the agreement. Where in one case a period of a lease and the property being conveyed are essential terms within the agreement (Harvey v Pratt [1965] 1 WLR 1025) in another the price of goods being sold may not actually be considered important (Bushwall Properties v Vortex Properties [1976] 1 WLR 591).
      - It is always prudent then to pay direct attention to the facts when making a conclusion based on potential incompleteness of a contract, the key thing to consider is the extent to which a term is in fact vital to the agreement. The other important things to consider are the other methods in which a contracts’ potential incompleteness can be resolved.
      - Methods to Resolve Incompletenesss
        
        Determination by a contracting party: If a term within a contract is missing e.g. price of goods to be sold, there may be a clause in the contract that permits a particular party to resolve the issue - Bulk Trading Co v Zenziper Grains and Feedstuffs [2001] 1 Lloyd’s Rep 357.
        
        Determination by a third party of mechanism: If a situation arises where a contact is incomplete through a lack of terms due to a third party requirement or mechanism needing to be activated, such as an independent valuation. The Court themselves may ensure that this term is given effect in order to ensure the contract is provided with its missing terms - Sudbrook Trading Estate v Eggleton [1983] 1 AC 444. This however can be contrasted by cases where the third party assistance or mechanism is itself essential to the agreement, such as a very specific third party needing to value a particular thing. The Court in these situations is unable to give effect to the agreement themselves - Gillatt v Sky Television, [2001] 1 All ER 461.
  - - - The general presumption of the law is that all people have a capacity to contract. A person who is trying to avoid a contract would have to plead his or her lack of capacity to contract against the party who is trying to enforce the contract.
      - The capacity of natural and juridical persons (legal persons), in general, determines whether they may make binding amendments to their rights, duties, and obligations, such as getting married or merging, entering into contracts, making gifts, or writing a valid will. Capacity is an aspect of status, and both are defined by a person's personal law
      - Refers to the ability of the parties to a contract to fully understand its terms and obligations
    - - (a) Contracts Signed By Minor
        As a general rule, anyone under the age of 18 is said to lack capacity to enter into contracts. From a business standpoint, however, there are a number of important exceptions to the law prohibiting minors from having capacity.
      - (b) Inability to Understand the Contract-
        Mental incapacitation is a legal term that refers to individuals who cannot enter into contracts because of psychological disabilities. In the majority of jurisdictions, mental capacity is defined as the ability to understand the full meaning and effects of the contract. If the person is not able to cognitively delineate all of her rights and responsibilities under the contract, then she is not of legal capacity to enter the contract
      - (c) Persons Under the Influence -
        Individuals who are under the influence of alcohol or drugs are normally not considered to have the capacity to enter contracts. In some cases, however, the courts force those who have voluntarily intoxicated themselves to uphold the obligations they've made while under the influence.
      - (d) Lack of Capacity May Void the Contract -
        if an agreement is made with someone who does not have the legal capacity to enter a contract, that agreement or contract is said to be voidable. This means that the person who lacks legal capacity is said to have misrepresented herself, even if unintentionally. The other party to whom the misrepresentation was made may void the contract and all of its terms and conditions. This is called rescinding the contract. The courts may also rescind or void a contract if legal capacity is not met. Once the contract is voided, it is no longer binding, and the court will attempt to restore the parties to the position they were in before the agreement was made. This means returning money and property where at all possible
    - - Nash v Inman- (Contract for necessity for minor enforceable)
        
        A tailor supplied 13 waistcoats and other things of that kind to a undergraduate student when latter was a minor. Student refused to pay for the goods supplied and tailor brought this suit against him for recovery of price of those goods.
      - Hart v O'Connor- (Contract of mental capacity
        Jack O'Connor sold a farm to Hart. Jack was 83 and of unsound mind, but Hart did not know this and was fair in his negotiations with Jack's solicitors. Hart occupied and improved the land. When one of the Jack's brothers (Joseph O'Connor, the respondent) took over as trustee of the estate he sought to set aside the contract. O'Connor was successful at trial, which Hart appealed.
      - Scott v Coulson (1903)
        
        At the time of entering a contract for life insurance both parties believed the person whose life was to be insured was living. When in fact he was dead
      - 4.Ashbury Railway Carriage and Iron Co Ltd v Riche (1875)-(UK company cases)
        Incorporated under the Companies Act 1862, the Ashbury Railway Carriage and Iron Company Ltd’s memorandum, clause 3, stated that its objects were "to make and sell, or lend on hire, railway-carriages…" and clause 4 stated that activities beyond this needed a special resolution. But the company agreed to give Riche and his brother a loan to build a railway from Antwerp to Tournai in Belgium.[1] Later, the company repudiated the agreement. Riche sued, and the company pleaded that the action was ultra vires.
  - - - Contract By A Minor Under Age Of Majority Act 1971
        
        Marriage, Divorce, dowries and child adoption.
        
        Religion an religious practices and ceremonies of the races in Malaysia
        
        Case
        
        Rajeswary v Balakrishnan
        Court held that when defendant broke his promise of marriage with plaintiff, the defendant was according to their religious practice, in breach of his contract of marriage, even plaintiff was a minor.
      - Cases
        
        Tan Hee Juan v Teh Boon Keat
        
        Mohori Bibee v Dharmodas Ghose
        
        Govt. of Malaysia v Gurcharan Singh & Ors
        
        Scarborough v Sturzaker
      - Contract For Necessary
        
        Contract Act 1971 did not defined the service that necessary for minor's life.
        
        Common Law give us the necessary thing for minor's life: Cloth, Medical Treatment, House, Food, Education, Professional Training, Scholarship and Insurance.
- - - - auctions
      - advertise of tenders
      - catalogues
      - price lists
      - good displayed in shop window and shelves
    - - Boots v Pharmaceutical Society of Great Britain 1953
      - Fisher v Bell 1961
      - Harvey v Facey 1893
        -The P attempted to buy piece of land called Bumper Hall Pen.
        The P telegraphed the D asking “Will you sell us Bumper Hall Pen? Telegraph lowest cash price .The D replied “Lowest price from Bumper Hall Pen $900”.The P telegraphed
        again saying he accepted the “offer” but D didn’t reply.
        Held : The D’s reply was not an offer. It is a mere
        statement of minimum price.
  - - - Case
        
        Carlill v Carbolic Smoke Ball Co(1893)
- - - - Consideration may move from a person who is not the
        promisee. It may move from ‘the promisee or any other
        person’ – section 2(d)
      - The provision of consideration in the creation of a contract involves the passing of value between the contracting parties
    - - Past consideration is valid consideration.
      - English law does not recognize.
      - Agreement made without consideration is void unless it is a promise to compensate a person who voluntarily done something for promisor. (Section 26(b) CA 1950)
        
        Lampleigh v Brathwait case is excepted to this rule.
    - - If a person provides consideration other than the promisee then the promisee cannot enforce the contract.If the third party involved then problems may arise.
        
        Case related: Venkata Chinnaya v Verikatara Ma'ya
        Facts: A sister agreed to pay an annuity of Rs653 to her brothers who provided no consideration for the promise. But on the same day, their mother had given the sister, her estate subsequently failed to fulfill her promise to pay the annuity, her brother sued her on the promise.
        Held: She was liable on the promise on the ground that there was a valid consideration for the promise even though it did not move from the brothers.
    - - According to Section 2(d), Consideration is defined as:“When at the desire of the promisor, the promisee or any other person has done or abstained from doing, or does or abstains from doing, or promises to do or abstain from doing something, such act or abstinence is called a consideration for the promisee.” Consideration means 'something in return'.
    - - Consideration is a benefit which must be bargained for between the parties, and is the essential reason for a party entering into a contract.
  - - - a. The contract would not be enforceable, legal and binding.
      - b. The parties cannot sue each other. Without intention to create legal relations,cause the contracting parties are not being legally binding and this circumstances may cause the contract is enforceable. When the contract is enforceable, the contracting parties cannot sue each other and this will spoil their business crisis.
      - c.The contract become a mere promise and lack binding effect.Mere promises simply like a simple promise arise when there is no intention to create legal relations..
    - - Case related: Simpkins v Pays
        .
        Issue: The question arose as to whether there was an intention to create legal relations in the informal arrangement between the Parties so as to constitute a legal agreement to distribute the shares.
        In this case .the defendant, her granddaughter and the plaintiff (paying lodger) regularly took part in newspaper competition. All contributed but entered in defendant’s name. There is no set of arrangement that state payment of postage etc. When entry of the competition is successful, defendant refused to share with plaintiff. The plaintiff sued for his share. Court ruled legally binding relationship as sufficient mutuality in the arrangements between parties.
        Held: the mutual arrangement, no matter how informal, constituted a legally-binding agreement to divide the shares in thirds.
    - - Case related: Edvard v Skyways
        Issues:The issue arose as to whether there was an intention to create legal relations and obligations in the agreement between the airplane company and the Association to pay employee contributions.
        Fact: The pliantiff who was a pilot was made reduntant by the defendant. he had been informed by his pilot's association that he would be given an ex gratia payment(gift). The defendant failed to pay and pilot sued. The defendant argues that the word ex gratia implied that there was no intention to create legal relation.*
        Held: This agreement related to business matters and was presumed to be binding and the defendants had failed to rebut this presumption.
  - - - section 26(a)
        
        case:Re Tan Soh Sim v Tan Saw Keow
        
        1.It is expressed in writing
        2.It is registered (if applicable)
        3.The parties stand in a near relation to
        each other
    - - case:Venkata Chinnaya v Verikatara Ma‘ya
- - - - Relevant Section
        
        section 57(2) of Contract Act 1950
      - Relevant Case
        
        Yee Seng Plantations Sdn Bhd v Kerajaan Negeri Terengganu & Ors (2002)
        
        Court held frustration doctrine is inapplicable where there is fault on part of party pleading it. In this case, involving alienation of land, court held refusal of State Executive Council to alienate the land in question was a result of deliberate act of non-compliance of consent order by party to the 1st action. So it was not a supervening event. Self-induced frustration is no frustration. court held frustration doctrine is inapplicable where there is fault on part of party pleading it. In this case, involving alienation of land, court held refusal of State Executive Council to alienate the land in question was a result of deliberate act of non-compliance of consent order by party to the 1st action. So it was not a supervening event. Self-induced frustration is no frustration court held frustration doctrine is inapplicable where there is fault on part of party pleading it. In this case, involving alienation of land, court held refusal of State Executive Council to alienate the land in question was a result of deliberate act of non-compliance of consent order by party to the 1st action. So it was not a supervening event. Self-induced frustration is no frustration Court held frustration doctrine is inapplicable where there is fault on part of party pleading it. In this Case, involving alienation of land, court held refusal of State Execute Council to alienate the land in question was a result of deliberate act of non-compliance of consent order by party to the 1st action. So, it was not supervening event. Self-induced frustration is non frustration.
  - - - Relevant Section
        
        Section 38(1) of Contract Act 1950
        
        Section 42 of Contract Act 1950
        
        Section 51 of Contract Act 1950
        
        Section 56 of Contract Act 1950
        
        Section 48 of Contract Act 1950
        
        Section 40 of Contract Act 1950
      - Relevant Case
        
        Re Moore and Landauer (1921)
        
        Cutter v Powell (1795)
        
        Sumpter v Hedges [1898]
        
        Roberts v Havelock (1832)
        
        Christy v Row (1808)
  - - - Relevant Section
        
        Section 65 of Contract Act 1950
      - Relevant Case
        
        Taylor v Caldwell (1863)
        
        The Hut Group Limited v Nobahar-Cookson and Augean pla v Hutton (2014)