Breach of Contractual Relationships and Remedies

This report discusses breach of contractual relationships and the remedies available to the parties involved. It also covers topics such as counter offers and promissory estoppel in business law.

Breach of Contractual
Relationships and
Remedies

Table of Contents
INTRODUCTION ..........................................................................................................................3
MAIN BODY...................................................................................................................................3
CONCLUSION ...............................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Business law is popularly known as commercial law which deals with the laws related to
trade and commerce. It is that branch of law which is dealt when doing business, which deals
with the regulation of sales and purchase of products and services. This law includes sales of
goods act, banking laws and bills of exchange, insurance law, insolvency laws, etc. there are
many acts and laws which are part of business laws and along with those laws there are always
remedies given in case of breach of duty or obligation by one party with the other (Ferrante,
2016). This report consist of the remedies available to the parties in breach of contract and also
explains about the counter offer and promissory estoppel.
MAIN BODY
Contract law comes under the ambit of commercial law and deals with the contractual
relationships between the persons who are party to the contract. When parties enter into contract
they are bound by the obligations that are imposed on the parties. This obligation rises only when
the parties enter into an agreement which is legal or is recognised by the law. An agreement is
reached between the parties only when one party makes an offer and the other party accepts it.
Merle making an offer is not termed as agreement. For an agreement to be complete the
acceptance of the offer is important to be conveyed to the one making the offer (Martinek, 2016).
Agreement is not enough for parties to be in a contractual relationship. There are three essential
given under the law which are to be fulfilled to make the agreement a valid contract between the
parties. Firstly, presence of agreement is important and the first step in the formation of
contractual relationship, this includes offer an acceptance. Secondly, there must exist an
intention to create contractual relations with the other party. The intension should be clear and
not influenced illegally. Lastly and third main essential is consideration. Consideration is very
important in the whole relationship as without it the contract is incomplete. Consideration
basically means something which is of value and given to the other party for the fulfilment of the
contract. It is not always that the contracts do not end. There are many ways in which the
contractual relationship between the parties end. There are four ways in which the contract can
come to an end. They are: expiration, termination, vitiation and frustration.
Expiration of contract is when the contract comes to end due to the expiry of the date of
contract (Miller and Gold, 2016). Termination is when there is breach of contract by either

parties i.e. a party failed or refused to perform the obligatory duty mentioned in the contract.
Vitiation is when the parties question the facts in the contracts to which they can not come to the
conclusion . It can be due to the misrepresentation of the facts or mistakes made in the facts. This
leads to the end of the contractual relationship between the parties. The last way in which the
contract comes to an end is by way of frustration. It arises when a party do not fulfil the
obligations or duties of the contract to which he is legally bound (Poncibò, 2016). In case when
the contract is ended, the innocent party to the contract can sue the other and claim damages
from them. Also if there is breach of legal obligation then there are various remedies available to
the innocent party against the wrong doer, like damages, specific performance or injunction.
From the given case scenario, it is understood that the Raymond was a part time worker
in the taxation department of an accountant firm. Side by side he was also running a small scale
consultancy business that related to the personal advice on taxes in which he is a sole proprietor.
Raymond entered into a contract with Samantha to prepare a draft of business accounts for her
for which she has to pay £800. Raymond completed the assigned work and later Samantha told
him that she can afford to pay only £200 to him. They had bitter argument but later that he
agreed to get the offered amount by Samantha via cheque and ended the deal. Few months
later when Raymond was reading newspaper he noticed that Samantha's painting are selling at
a high prices now and recently she earned £20,000. Later he decided to claim the remaining
£600 from Samantha.
For a contract to be valid and legally binding it is important that certain obligations are
being fulfilled by the parties. In case of Raymond and Samantha, the offer was made which was
accepted by the other party. There was intention to create a legal relationship and the amount of
consideration was also decided by the parties. This forms the contract a valid contract as it was
formed following all the basic essentials of a valid contract.
There are various remedies which are available to the innocent parties in case they
suffered or dealt with the breach of contractual terms and conditions. Remedies include: specific
performance, damages and injunction. These remedies can be claimed by the parties in case
they are cheated or wrong is being done to them. They can seek legal help in such matters.
Damages are the compensation amount which is paid to the innocent party in case he has
suffered any loss due to the breach of contract (Salehijam, 2020). To claim it, the party have to
show the actual loss caused, type of loss and also prove that the loss is not that remote. The
other remedy is of Specific Performance. In this the court may make order and compel the
parties to fulfil the contracts terms and condition. The court may also refuse specific

performance if the fault was of claimant and he acted unjustly with the other party. Injunction is
when the court strop or forces the parties to the contract to do or not to do certain act (Scott,
2019). From all the above remedies discussed Raymond can use specific performance as the
remedy.
In the case scenario if Samantha had paid the amount three weeks earlier i.e. £200,
then it will be termed as counter offer. As now the Raymond will be in the situation where he
wants to accept the offer or reject it. Counter offer is when the person suppose to accept the
offer made changes the terms of the offer given and present it with new terms and condition. It
destroys the old offer like in the case of Hyde v Wrench it was held that counter offer destroys
the offer which was made originally. Now the whole decision making to accept the offer or not
depends on Raymond in the given case scenario.
In the given case, if Raymond had asked to make £400 as full and final payment of all
the work then all the past offer and counter offer will be treated as invalid and will be considered
as revoked. Initially Raymond asked for £800 then Samantha made counter offer of £200 and
again Raymond made offer to to the counter offer of Samantha for £400. this whole situation will
be considered invalid and the last and final offer will be taken into consideration. If Samantha
agree to it then there will exist a valid contract but if she denies the offer then Raymond has
right to sue Samantha for breach of contract on the basis of the agreement on the prior contract.
In the case scenario given, Raymond wishes to get back the remaining amount of £600
from Samantha after her earning good income from selling her paintings. As the offer made by
the Samantha to pay £200 was accepted by the Raymond and final settlement was reached, he
cannot claim the remaining amount from her as this will amount to promissory Estoppel. This
means that the person in the contract then it is binding on the parties. Even if there is no written
agreement or formal consideration they are still bound by the promise and can not go against it
(Terrell and Surace, 2016). In case of Central London Property Trust v High Tree House, it was
held that when there exist a promise between the parties even if the settlement was made on
the smaller amount they cannot violate the promise made by the parties and the parties are
bound by it. Therefore Samantha will not be liable to make the remaining payment of £600 as
Raymond accepted the payment earlier and now the doctrine of estoppel is also enforced on it.

CONCLUSION
It is concluded form this report that for carrying out of any business activity it is
important to follow all the rules and regulations into the business. The role of contract law is
very important to understand in any business. This helps parties to the contract knows about their
rights, duties and obligations with respect to the person with whom they are entering into
contract with. There are remedies given in the law which are helpful for the parties in case the
contract they entered into was breached by the other party.

REFERENCES
Books and Journals
Ferrante, E., 2016. Validity of Contract Terms (pp. 285-312). Nomos Verlagsgesellschaft mbH
& Co. KG.
Martinek, M., 2016. Networks of Contracts and Competition Law. In The Organizational
Contract (pp. 163-178). Routledge.
Miller, P.B. and Gold, A.S. eds., 2016. Contract, Status, and Fiduciary Law. Oxford University
Press.
Poncibò, C., 2016. The Contractualisation of Environmental Sustainability. European Review of
Contract Law, 12(4), pp.335-355.\
Salehijam, M., 2020. Mediation and Commercial Contract Law: Towards a Comprehensive
Legal Framework. Routledge.
Scott, C., 2019. Consumer Law, Enforcement and the New Deal for Consumers. European
Review of Private Law, 27(6).
Terrell, D. and Surace, N., 2016. Termination of Construction Contracts. In Construction
Contract Claims, Changes, and Dispute Resolution (pp. 387-398).