Contract Law and Part Performance: A Case Scenario

This report discusses a case scenario involving contract law and part performance. It explores the possibilities of claiming a debt created due to part performance and evaluates the legal maintainability of the claim. The report also examines the factors of acceptance, waiver, and estoppel in relation to the settlement of the debt. In conclusion, it is determined that the rule of promissory estoppel applies in this case, and the remaining balance cannot be claimed.

BUSINESS LAW AND
ETHICS

TABLE OF CONTENTS
.........................................................................................................................................................2
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Case scenario:..................................................................................................................................1
Part 1................................................................................................................................................1
Part 2................................................................................................................................................3
Part 3................................................................................................................................................3
Part 4................................................................................................................................................3
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
Contract law deals with the legal valid agreements which have a binding effect on the
parties. It regulate the rights, obligations, relation and conduct of the parties who have entered
into a valid contract. It is a branch of civil law. The essentials of the valid contract includes An
offer by one party, the acceptance by the other party to the offer, the consideration is present and
the parties have intention to create a legal relationship. This report shall deal with the case
scenario which involves contract law.
MAIN BODY
Case scenario:
Raymond works in a firm of accountants on part time basis and also runs a consultancy
business which specialises in taxation. He entered into a contract with Samantha for which he
agreed to draft the business accounts for the last three years. The consideration fixed between the
parties was £800. when Raymond completed the work, Samantha refused to pay £800 rather she
paid only £200 and argued that she could not afford more than this as she is a struggling artist.
Raymond reluctantly accepted it as full and final settlement. After few time, Raymond read in
the newspaper that Samantha's painty got sold in £20000 and wishes to claim the remaining
amount.
Part 1
Raymond’s issue is a peculiar problem of creditors. In general usage he hasn’t given a
debt but due to part performance by Samantha he had to give up on £ 600 which was originally
agreed upon as per the contract. Under the contract he can claim the debt so created in the name
of part performance. Though there are different positions on certain aspects of whether this claim
is legally maintainable due to the claim being stated to be settled in a full and final fashion. Here
we discuss and evaluate the possibilities of claiming the debt so created.
There is a possibility of Raymond losing his claim on the basis of the 'new agreement' or
'estoppel'. These are to be looked into through the factual matrix. Relevant facts pertain to :
 payment by cheque
 Stated to be a full and final settlement
 Raymond's reluctance and possibly cashing the cheque subsequently
1

 Future claim of Raymond and;
 The duration
All these are aspects that one needs to look into. For Raymond it is imperative to
understand and give inputs on these. It is of crucial importance to highlight that the payment was
made by way of cheque after an altercation as the same was only one-fourth of the agreed price.
The price reduction not only seems highly unfair but also goes against the contract. Here, it is
important to highlight that Raymond had little or no choice to take the cheque as offered, but it is
only his subsequent behaviour that would help us find an answer to the issue.
Aspects to be looked at involve looking for a 'no - waiver' agreement in the contract and in
its absence as here , has Raymond accepted the payment to settle. The latter is answered in
negative with the current situation but presentation of the cheque is relevant to understand his
actions. His demeanour indicates silence and inactivity in the instance, which are not to be
accepted as a valid “acceptance”. If Raymond has not cashed the cheque it is a direct sign of non
– acceptance of the offer to settle but time duration of such retention by Raymond is of
importance here.
In case the same has been cashed, Raymond still has some valid grounds to seek his debt.
In any of the above cases there is no reference to communication of the acceptance of the offer to
settle. No added consideration in form of any benefit or a guarantee was a part of their dealing in
the final stage. Therefore, it is difficult for Samantha to establish her claim of final settlement. In
the absence of any new consideration or benefit one can look for the possibilities of estoppel.
As this was a contract and an invoice must have been generated in his capacity of sole
proprietor, it is of value to see how he treated this payment. In case the same show a debt or part
performance it would be easier or Samantha can claim that there was a waiver by accord.
Raymond though has not made any clear representation, by himself, whatsoever to indicate that
such balance won’t be claimed. The only element now is to see if the time duration or other
factors make it a just claim.
Mere silence and retention might create a weak estoppel but if the claim becomes just it has
to be treated fairly at a later date. The limitation period is of 6 years and Raymond is well within
his rights on that count. Also, as Samantha now is in a financial capacity to honour the contract
2

unlike the initial situation the claim is just.
Raymond can thus claim his debt.
Part 2
The answer would have been a bit different. If the nature of this payment was only as an
advanced payment in lieu of the initial performance then the answer would remain similar. The
initial advance would not be sufficient performance of contract.
If this payment was in full and final settlement and Raymond had agreed to it in the same
sense as it was offered without any :
 Reluctance
 Presence of consent vitiating factors
 Or mistake
Along with subsequent behaviour aligned with the nature of full and final settlement such
as :
 Cashing the cheque
 Conveying duly that the payment has been made and settled for good
 Invoice and Account books reflecting the same
Then only it can be said that the answer would change to a negative for Raymond. In such
a scenario, Raymond would only be able to rely on a no-waiver clause in the contract if that
exists.
Part 3
In case Raymond had made another offer of 400 and Samantha had subsequently agreed to
it, Raymond would lose his claim to a payment of 800. Though, in case of non – acceptance of
the same by Samantha and assuming the circumstances to remain the same , Raymond’s offer to
settle for 400 would not be a hindrance in his claim of complete performance of the contract by
Samantha.
Part 4
Samantha has only a few possible options in case a written contract exists. An estoppel by
way of a clear representation would be the best suitable defence if adduced by facts or
documents. Retention for a Period that is suitably long , coupled with an absence of rejection
3

may create a strong evidence based on the delay alone. Payment by cheque was a wise move and
if the same has been presented and silence regarding the part performance has been maintained
for a suitable duration of time may serve as an argument although a weak one if Raymond can
adduce his reluctance in accepting the same. A waiver on accord would reduce possibilities of
immediate payment but the balance of “justness” tilts towards Raymond.
Samantha should honour her claim as per the contract or a possibility of damages makes
her pecuniary difficulty worse.
4

CONCLUSION
It is concluded from the above report that contract law is a branch of civil law which
regulate the relations, rights, obligation and conduct of the parties who have entered into a valid
contract. In this case scenario, Raymond cannot claim the remaining balance as the rule of
promissory estoppel applies as he has accepted 200 euros as full and final settlement and
afterwards he cannot claim the remaining balance.
5

REFERENCES
Andrews, N., 2015. Contract law. Cambridge University Press.
Anson, W.R., Beatson, J., Burrows, A.S. and Cartwright, J., 2010. Anson's law of contract.
Oxford University Press.
Beale, H., Chitty on Contracts, volume 1. Sweet & Maxwell.
Beale, H., Fauvarque-Cosson, B., Rutgers, J. and Vogenauer, S., 2019. Cases, materials and text
on contract law. Bloomsbury Publishing.
Elliott, C. and Quinn, F., 2007. Contract law. Pearson Education.
HIDZIR, N.I.B., 2014. APPLICATION OF ESTOPPEL AND WAIVER IN THE NON-
FULFILLMENT OF CONDITION PRECEDENT.
Knapp, C.L., Crystal, N.M. and Prince, H.G., 2019. Problems in contract law: Cases and
materials. Aspen Publishers.
McDermott, P.A., 2017. Contract law. Bloomsbury Publishing.
McKendrick, E., 2014. Contract law: text, cases, and materials. Oxford University Press (UK).
6