Discuss about the Commercial Application of Company Law.
The facts that have been provided in this questions suggest the need for deciding the issue if in this case, a valid and enforceable contract has been created between Richard and his father. For this purpose it has to be considered it both the parties had the intention of creating a legal relationship when Richard’s father made a promise that they will pay $200 per week if Richard mowed the lawns and took care of the family property. For this purpose, Richard’s father had been giving $350 to a garden contractor. Later on he refused to pay $200 to Richard and said that as a member of the family, it is the responsibility of Richard to take care of the property.
In order to claim that a valid and enforceable contract has been formed by the parties, there are some elements that have to be present in the agreement. Among these elements, it is required that (i) offer; (ii) acceptance; and (iii) consideration should be present in the agreement. Apart from these, it is also required that it should be the intention of the parties that the promise made by them could be enforced under the law. The purpose behind the requirement of the intention of the parties to create a legal relationship has been introduced by the contract law so that the cases in which any action by the court should not be taken, can be sifted out. It is not every agreement made between the parties that can be enforced by the courts. Therefore, if it has been decided by two friends that they will meet other local pub on a Saturday night, although there is a moral duty according to which the friends should honor the agreement but this progress cannot be enforced by the law. The reason is that there is no legal duty present in this case. In case of the promises made in the routine life, there are a number of instances when it is not the intention of the parties that they will be legally bound by the promise and in this regard, the law also reflects the will of the parties (Hanrahan, 2010). The result is that for deciding if a particular agreement is enforceable under the law and in case of the agreement, if it is the intention of the parties to enter into legal relations, a difference is recognized between social/domestic agreements and commercial agreements (Khoury and Yamouni, 2010).
A famous case related with this issue is that of Jones v Padavatton (1969). By deciding the case, the court followed the decision given in Belfour v Belfour (1919) in which it was stated that even if the domestic arrangement is of a very complex nature, still a presumption is present according to which, the parties did not have the intention of entering a legal relationship unless a clear intention to the contrary has been established. For example in this case, Mrs. Jones made an offer to her daughter, Mrs. Padavatton that she will pay the daughter $200 per month if she left her job in the US and proceeded to London to study at the bar. The daughter had a very good job in Washington and therefore in the beginning she was not very enthusiastic about the offer but later on, her mother persuaded her to go to London. The mother wanted the daughter to join her as a lawyer in Trinidad after completing the study. But this arrangement would not work properly because while the daughter believed that the mother was talking about US dollars, it was the intention of the mother to pay 200 Trinidad dollars which were only half of the US dollars. In this amount, the daughter could hardly manage to rent a single room and live with her son in it. Under these circumstances, the mother agreed to purchase a house for the daughter. She purchased a large house so that the daughter can rent the rest of the rooms and use this money for her maintenance. After some time the daughter married and she also failed to complete her studies. Therefore the mother wanted to take possession of the house. The matter went before the court and the court was required to decide if the contract was legally enforceable or if it was only a family arrangement and the parties did not have the intention of creating legal relations. The court arrived that the decision that this was merely a domestic arrangement and as a result, a presumption is presented according to which the parties did not have the intention of creating legal relationship. At the same time, the court noted that evidence had not been presented to rebut this presumption.
On the basis of the legal rules mentioned above, in this case also, Richard’s father had made a promise that he will pay $200 per week if Richard mowed the lawns and took care of the gardens. For this purpose, the father had been paying $350 to the garden contractor. But after some time, Richard’s father refused to pay this amount. He also stated that as a member of the family, this work should be done by Richard for free. He also mentioned that Richard had been getting free boarding and lodging in the house. Under these circumstances, it can be said that as this was a family arrangement, a presumption is present that the father and son did not have the intention of creating legal relationship. At the same time, there is no evidence to rebut this presumption. Therefore, Richard cannot enforce the promise made by his father in a court of law.
In this question, it has to be decided if any remedies are available to Frere Bros as Joe had committed a breach of contract.
The law contract it provides that when a party to the contract has failed to keep its promise under the agreement or had not fulfilled the responsibilities that were imposed on such a party under the contract, there is a breach of contract by such a party. Such a breach of contract can take place in whole or in part. Therefore the law provides that if one party has breached the contract, the other party has been provided with certain remedies (Lambris, 2010). Some of the main remedies that can be availed by the innocent party in case of a breach of contract by the other party are the remedy of damages, specific performance and injunction.
The remedy of damages is the most common remedy used in case of a breach of contract. According to the contract law, the damages that are awarded in such a case are the losses or the costs incurred by a party as a result of the wrongful acts of the other party. In this way, damages can be described as the payment that has to be paid for breach of contract under the common law (Addis v Gramophone, 1909). The remedy of damages has been made available to the innocent party so that financial compensation can be provided to such a party for the loss incurred by it as a result of the breach of contract. Therefore, damages are mainly awarded by the court with a view to protect the expectation interests of the promisee and at the same time, to ensure performance by the promisor. Contact the remedies can also be awarded when a breach of contract has taken place. Therefore when there is a breach of contract, the other party may have to suffer a loss. Contractual damages not awarded as a punishment to the party for the failure to perform its obligations under the contract. Similarly, the courts do not look into the paying capacity of the defendant while the issue of the amount of damages is considered by them. Therefore, the amount of damages can be based on the difference that exists between the contract price and the cost that will have to be incurred by the other party for performing the contract.
In this regard, the next remedy that is available to a party, for breach of contract is the remedy of specific performance. In some cases, the remedy of specific performance is very significant. In case of the remedy of specific performance, another is made by the court which requires the defendant to perform the act, for which it was bound to do under the contract (Nutbrown v Thornton, 1805).
Usually the remedy of specific performance is provided by a judicial order which requires that the party to the contract is required to do something or should not do something. In this way, the order of specific performance is generally made for establishing a transaction that has already been established earlier. Specific performance has proved to be most effective when it is granted for the purpose of protecting the expectation interests of the other party when a breach of contract has taken place. However, before providing an order of specific performance, it is important that the court considers if the innocent party could be provided adequate relief by way of the remedy of damages. Consequently, when adequate relief can be provided by an order of damages, the court will not grant the remedy of specific performance. Likewise, the remedy of specific performance will be refused by the court if the contractual terms are not mentioned clearly. The court will also refuse to make another of specific performance if such an order will create unusual hardships for the defendant.
In this context, the law provides a discretion of the court according to which, it may refuse to make an order of damages when such a remedy will not be able to adequately compensate the other party, for example when subject matter of the contract is unique in nature. Therefore, for dealing with this type of cases, the remedy of specific performance can be used by the courts.
Another remedy that can be granted by the coding these are for breach of contract is the remedy of an injunction. In context of a breach of contract, the injunction is in order that has been made by a court in which provides that a party to the contract is refrained from doing something. In the same way, the injunction order may also prevent the happening of something in future (Seddon and Ellinghas, 2008). There are several different types of injunctions that can be granted by the court. These include the interlocutory injunction and the mandatory injunction. The interlocutory injunction is granted by the court with a view to maintain the subject matter of the contract during the litigation. Likewise, when the mandatory injunction is granted by the court, a party to the contract is required to do something under the contract (McGlone and Stickley, 2013).
In this case, Joe has breached the term of the contract according to which he was prevented from acting in the film of any other company. But this term was breached by Joe and he decided to work in a film of another company. As a result, in this case also a breach of contract has been committed by Joe. As a result, the remedies that are available for the breach of contract by the other parties are available to Frere Bros. Moreover, in some cases, adequate relief may not be provided by the remedy of damages. Therefore in this case, the court may make an order of injunction restraining Joe from acting in the film of another party.
Hence, it can be said that in this case, the most appropriate remedy available to Frere Bros will be an injunction which restrains Joe from acting in the film being made by the other party.
References
Hanrahan, P., 2010. Commercial Application of Company Law, Australia: CCH.
Khoury, D., Yamouni, Y., 2010. Understanding Contract Law, 10th ed. Australia: LexisNexis
Lambris, M., 2010, First Principles of Business Law, Australia: CCH.
McGlone F. and Stickley A., 2013 Australian Torts Law. 3rd ed. Chatswood: LexisNexis Butterworths
Seddon. N.C. and Ellinghas, M.P., 2008. Cheshire and Fifoot’s Law of Contract (Australia) 27th ed. Butterworths
Addis v Gramophone [1909] AC 488
Balfour v Balfour [1919] 2 KB 571
Jones v Padavatton [1969] 1 WLR 328
Lumley v Wagner (1852) 42 ER 687
Nutbrown v Thornton (1805) 10 Ves 159.
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