The issue in this case is associated with the fact that whether the oral assurance on the part of Kalpana can be considered as a valid contract.
Law:
It is noteworthy to mention here that, for the purpose of making a valid contract, there must be an agreement. Such agreement can be oral or written. The concept of oral assurance was first observed in the landmark case of Goss V Lord Nugent (1833) 5 B & Ad 58 (at 64-65)110 ER 713 (at 716). In this context, mention can be made of the Parole Evidence Rule with the help of which the subject-matter of oral assurance can be emphasized. Similarly, in Sydney V Taylor (1891) 12 LR (NSW) 252 (at 262) [2], it was held that a written contract acts as a proof of between the parties involved however; a oral contract do not provide such assurance. It is worthwhile to refer here that, the abovementioned landmark cases efficiently emphasized the terms of a valid contract in regard to oral or verbal contract. In such cases, the Courts are at the authority to assume that the terms and conditions depicted in the contract has been planned by the parties however; did not intend to perform the terms and conditions as a result of certain circumstances.
It is worth mentioning, that there may be an existence of unreliable evidence in a contract. From the beginning, the Parole Evidence Rule has laid emphasis on the presence of unreliable evidence in a contract. In some cases, it has been observed that sometimes the terms and conditions of an oral agreement or a written agreement have not brought to the notice of the parties. It is worth mentioning that, for the purpose of providing appropriate solution to the parties in dispute, the principles of Parole Evidence Rule has been followed by the Courts and applied according.
Therefore, in this regard, it is noteworthy to mention here that by applying the Parole Evidence Rule there lays an authority on the part of the Courts to proceed towards a final decision regarding matters involving certainty of rights and duties of the parties to the contract in order to prevent them from deceptive claims. The Parole Evidence Rule emphasizes on the fact that in order to discharge the terms and conditions of a written contract, the consequences of a oral contract cannot be relied upon neither it can be claimed or modified. In this regard, the exceptions of the Parole Evidence Rule can be emphasized. The exceptions are-
The condition of oral assurance is only allowed by the Courts on the ground that the terms and conditions of the written contract are not intended to form part of the main agreement. It is worthwhile to mention here that, there may be an existence or oral agreement or assurance in a written contract due to the reason that the terms and conditions written in the contract are not intended to form a part of the whole contract. Therefore, in some cases, it may occur that, unfair disadvantage can be taken by one of the parties to the contract which was observed in the case Van den Esschert v Chappell [1960] WAR 114. In this case, there was an existence of oral assurance in the contract.
It was observed that prior to the signing of the sale agreement, the purchaser was guaranteed by the seller by way of oral assurance regarding the fact that there is no presence of white ants in the house. After buying the house, the purchaser noticed that white ants were present in the house from the beginning and as a result of it the timbers were all destroyed by them. Therefore, the purchaser sued the seller for breach of oral contract and was compensated for the damage caused. In this case, the Court was of the opinion that, the oral assurance on the part of the seller regarding the fact that there were no white ants in the house can be considered as an essential term of the contract however; it was not written in the contract in order to escape liability. In Nemeth v Bayswater Road Pty Ltd [1988] 2 Qd R 406, it was observed that there was a presence of additional charges in the contract which was depicted in the written agreement. However, the defendant by way of oral assurance assured the plaintiff that no additional charges are hidden in the contract. Later on, after identifying the additional hidden charges the plaintiff sued the defendant for breach of oral contract.
Application:
In the present scenario, Kalpana orally assured to Rafia that the form of the dance will be in the form of traditional, classical dance. Therefore, the cases Goss V Lord Nugent (1833) 5 B & Ad 58 (at 64-65)110 ER 713 (at 716) and Sydney V Taylor (1891) 12 LR (NSW) 252 (at 262) [2] can be referred because the Parole Evidence rule can be applied here. It is evident that Kalpana did not intend to perform the terms and conditions of the contract. The form of dance and the oral assurance given by Kalpana was not mentioned in the written contract signed between her and Rafia. However, the oral assurance given by Kalpana formed an essential part of the whole contract. In this regard, it is worthwhile to apply the cases of Van den Esschert v Chappell [1960] WAR 114 and Nemeth v Bayswater Road Pty Ltd [1988] 2 Qd R 406.
Conclusion:
In the conclusion, it can be stated that the oral assurance on the part of Kalpana can be considered as a valid contract.
Answer 2:
Issue:
The issue is concerned with the fact that whether the Courts are at the authority to treat oral assurance as a condition or warranty.
Law:
Conditions are important part of a contract and failure to perform the conditions may result into breach. On the other hand, warranty is the statement provided by one of the parties to the contract for the purpose of providing oral assurance to the parties about the existence of certain factual details in the contract. In Poussard v Spiers (1875) L.R. 1 QBD 410, there was a breach of both condition and warranty. Similarly, in Bettini v Gye (1875) L.R. 1 QBD 183, it was observed that warranty forms an essential part of a written contract which assures the parties about the nature of the contract.
In De Lassalle v Guildford (1901) 2 KB 215, it was held by the Court that a verbal agreement must act in accordance with a written agreement. In this regard, it is worth mentioning the concept of collateral contract. A collateral contract acts consistently with the main contract. It is noteworthy to mention here in collateral contracts, the parties may intend to involve an oral assurance along with the written agreement. A warranty is a oral assurance on the part of the seller to the buyer before a contract is signed between them for the purpose of assuring the buyer about the quality and performance of the product in concern. It is worth noting that when a contract is formed, each and every statements made by the parties in relation to it must be taken into account which was held in Heilbut, Symons and Co. v Buckleton [1913] AC 30.
In Royal Bank of Scotland plc v Carlyle [2013] CSIH 75, it was held by the Court that, oral assurances and collateral warranties form an important part of written contract. In this case, it was observed that the employee provided collateral warranty in order to provide oral assurance to the plaintiff. The Court, in this case held that collateral warranties are always associated with oral assurance or promise which needs to be taken into consideration while identifying the validity of the contract. However, in case of breach of oral assurance the defendant shall be held liable.
In this case, the Court laid much emphasis on the fact that whether the telephonic communication between the plaintiff and the defendant can be considered as a warranty. However, during that point of time confusion was created on the part of the Court regarding the fact that whether collateral warranty is an important term of contract which acts alongside the main contract or whether it can be considered as a verbal assurance which forms a significant part of the main contract. In this regard, the Court finally held that, warranty can be treated as a oral assurance which forms a significant part of the contract. However, the nature of the warranty must be such as it can be declared to be contractual which was held in British Workman’s and General Assurance Co v Wilkinson (1900) 8 SLT.
Application:
In the present scenario, it is evident that Kalpana orally assured Rafia regarding the nature of the dance form. Therefore, such oral assurance can be considered as a warranty. In this regard, the cases Bettini v Gye (1875) L.R. 1 QBD 183 and Poussard v Spiers (1875) L.R. 1 QBD 410 can be referred. It is worthwhile to apply the case of De Lassalle v Guildford (1901) 2 KB 215 because the oral assurance on the part of Kalpana acted consistently alongside the written agreement with Rafia. It was orally assured by Kalpana that the dance form would be traditional and classical which was not mentioned in the written agreement however; the oral assurance provided by Kalpana formed a collateral warranty which in consistent with the written contract. Therefore, the case of Royal Bank of Scotland plc v Carlyle [2013] CSIH 75 can also be applied because according to this case collateral warranty exists alongside the main contract.
The case of Heilbut, Symons and Co. v Buckleton [1913] AC 30 can be efficiently applied in the scenario because each and every statement made by Kalpana during the course of contract has to be taken into account which includes her oral assurance as well. It is worth mentioning that the collateral warranty by way of oral assurance that existed between Kalpana and Rafia was contractual in nature therefore, the case of British Workman’s and General Assurance Co v Wilkinson (1900) 8 SLT can be applied to it.
It can be concluded that oral assurance is considered as a warranty by the Courts.
Answer 3:
Issue:
The issue is concerned with the remedies which are available to the USC.
Law:
According to the law of contract, for the purpose of making a valid contract there must be an agreement between the parties to the contract. In case, if one of the parties do not perform their contractual obligations or fails to perform according to the terms and conditions depicted in the contract, it causes breach of contract. Breach of contract under the principles of common law can be categorized into-
Damages for breach of contract can be incurred by the injured party however; damages are not meant to punish the defendant for conducting breach, it only helps the plaintiff to recover compensation. In some cases, there may be presence of a clause in the contract which contains information about a particular amount as agreed by the parties that shall be recovered on breach of contract. Such remedies are termed as liquidated damages. Specific performance is ordered by the Court in order to direct the parties in breach to perform the obligations of the contract in a specific manner.
It is worth noting that specific performance is an order on the part of the Court when it becomes reasonable to it that damages cannot provide sufficient compensation to the injured parties. In this regard, mention can be made of injunctions which is an order directed by the Court to restrain the parties to the contract from performing certain contractual obligations. It was held in Airloom Holdings Pty Ltd v Thales Australia Ltd [2011] NSWSC 1513 that the contractors can sue for damages in order to claim damages for non-performance of contract. It was held in Commonwealth of Australia v Amann Aviation Pty Ltd (1991) 174 CLR 64 that it is necessary to place the parties to breach at a position, if the terms and conditions of the contract were completely performed.
If monetary damages do not provide adequate compensation in order to fulfill the requirements of the parties to breach then, the Courts are at the authority to order specific performance. In this regard, it is noteworthy to mention here that specific performance is considered as a discretionary remedy which may or may not be imposed by the Courts if damages are available to provide sufficient remedy. Therefore, damages can be applied if losses are incurred during the course of contract as a result of breach on the part of one of the parties to the contract. In this regard, it is worth examining the fact that on breach of contract as a result of conduct on the part of the parties, liquidated damages may be imposed by the Courts accordingly.
In case of imposition of injunction by the Court, it shall be based upon the determination of the various kinds that are- mandatory, prohibitory and interlocutory. Mandatory injunctions are generally imposed by the Courts in order to direct the parties to perform a specific task regarding the matter in question. Interlocutory injunctions are imposed by the Courts in order to maintain the status quo of the present matter. Prohibitory injunction is applied by the Courts in cases, when it is required to prohibit the parties to the contract to perform certain obligations.
Application:
In the present case study, it is evident that thousands of dollars were invested while advertising the multicultural dance program on the part of USC. It is worthwhile to refer the case of Airloom Holdings Pty Ltd v Thales Australia Ltd [2011] NSWSC 1513 in this scenario because it was held that there is a right on the part of the parties to claim damages for non-performance. Therefore, in the present case study, USC can sue Kalpana for non-performance of contract and claim compensation for the same. In this regard, it is important to apply the case of Commonwealth of Australia v Amann Aviation Pty Ltd (1991) 174 CLR 64, as Kalpana can be placed in the same situation that is being faced by the USC at present, if the terms of the contract would have been performed by her. In this regard, it can be stated that Courts are at the authority to impose specific performance if monetary damages do not prove to be enough in providing adequate relief to the injured party. In the present scenario, if the damages are not adequate to provide appropriate remedy to USC, then the courts shall impose specific performance.
It can be concluded that, both the remedies of liquidated damages and specific performance are open to USC.
References:
Cases:
Airloom Holdings Pty Ltd v Thales Australia Ltd [2011] NSWSC 1513.
Bettini v Gye (1875) L.R. 1 QBD 183.
British Workman’s and General Assurance Co v Wilkinson (1900) 8 SLT.
Commonwealth of Australia v Amann Aviation Pty Ltd (1991) 174 CLR 64.
De Lassalle v Guildford (1901) 2 KB 215.
Goss V Lord Nugent (1833) 5 B & Ad 58 (at 64-65)110 ER 713 (at 716).
Heilbut, Symons and Co. v Buckleton [1913] AC 30.
Nemeth v Bayswater Road Pty Ltd [1988] 2 Qd R 406.
Poussard v Spiers (1875) L.R. 1 QBD 410.
Royal Bank of Scotland plc v Carlyle [2013] CSIH 75.
Sydney V Taylor (1891) 12 LR (NSW) 252 (at 262) [2].
Van den Esschert v Chappell [1960] WAR 114.
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