Contract Law: A Case Study of Breach and Negligence

This report examines the principles of contract law through a real-world scenario involving Kate and Jones & Sons Ltd. Kate, a jewelry business owner, contracted with Jones & Sons Ltd. for the renovation of her premises. However, the renovation was not completed on time, causing Kate significant financial losses and emotional distress. The report analyzes the legal issues involved, including breach of contract, negligence, and the potential for compensation. It explores the relevant legal principles, case law, and statutory provisions to determine the legal rights and remedies available to Kate.

Contract Law
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Table of Contents
Introduction......................................................................................................................................3
The scenario of the case...................................................................................................................4
1). Demonstrate detailed knowledge and understanding of the rules that govern contractual
relationships.................................................................................................................................5
2). Apply the law of contract through a series of problem based scenarios................................8
3). Demonstrate an ability to effectively critically analyse and critically evaluate the legal
issues within the law of contract................................................................................................11
Conclusion.....................................................................................................................................12
Reference:......................................................................................................................................13
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Introduction
Contract law is essential for regulating the operations or the activities related to the contractual
relationship between two or more parties. This law is applicable on individual as well as
organisations i.e. parties having contractual capacity to enter into a contract. This report contains
the significance of the contract law and its impact on the parties to contract. Norms and laws
specified under the contract law and common law are part of this report. It demonstrates the
duties or responsibilities of the parties towards each other and for the performance of the
contract. It also provides an insight of the contract rights and remedies available with the parties
in case of default on the part of any party to contract. Under this report, a scenario related to the
contract law is given and based on such law; provisions are explained along with suggestions and
recommendations.
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The scenario of the case
This case of includes the contract between an individual and an organisation i.e. Kate and Jones
& Sons Ltd. A precarious premise was purchased by Kate for establishing a jewellery business.
As the place was in poor condition, she contracted with Jones & Sons Ltd. for renovating the
place for her office. However, the work of renovation was not completed on time due to which
Kate has suffered loss. All in all, Kate was not satisfied with the work done by the Jones & Sons
and due to this she is suffering from stress & anxiety. Now Kate seeks advices that what are the
rights available with her for the damages and breach of contract.
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1). Demonstrate detailed knowledge and understanding of the rules that govern contractual
relationships.
In accordance with the given scenario, the applicable laws are:
Contract Law
This law plays a significant role in regulating the contracts and agreement in the business
environment. Contract can be defined as agreement between two or more parties for a lawful
objective along with some legal consideration. There are certain elements which are required for
a contract to be valid which are as follows:
 Offer and Acceptance: This is the first and foremost element for a valid contract. An
offer must be made by one party to another party regarding a lawful purpose. No contract
will be formed, if there is no offer. This element ensures the validity and legal acceptance
of an offer. Offer is followed by the acceptance i.e. when an offer is made, it must be
accepted by one party. Such acceptance must be made in clear terms i.e. it must not be
influenced by any threat, undue influence or coercion, etc. It is also mentioned in the law
that there must be no negotiation involved at this stage as due to negotiation, originality
of the offer is affected and such agreement will be void1.
 Lawful Objective: It is specified that a contract must only be made for lawful purposes
i.e. such purpose which is not considered as an offence in the eyes of the law. A contract
made for the illegal purpose will not be considered as a valid contract and is void in
nature.2
 Intention to formulae legal relationship: It is an essential element for a contract to be
valid. There must be intention to create legal relationship between the parties otherwise
such contract will be subject to case of law. This helps in legal enforceability of the
contract. Creation of lawful relationship is necessary as at the time of any dispute or
issues, aggrieved party won’t be able to legally enforce the contract and claim for the
1 Mckendrick, Ewan. Contract Laws: Text, Cases, and Materials. (6th Edition, 2014).
2 Kötz, Hein. European Contract Law. (2nd Edition, 2017).
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damages. This also regulates the seriousness of the parties towards the obligation which
are specified in the contract.
 Lawful Consideration: It is essential that there must some consideration involved for the
performance of contract. Contract without consideration will be held as gift.
 Contractual Capacity: For a contract to be valid, both the parties to contract must
qualify to enter into a contract. A person of sound mind and must not be a minor to enter
into a contract3.
Discharge of contract
A contract is considered completed when each party have fulfilled their promises or the duties.
There are different ways of discharging a contract which are:
 Performance
Performance here means act which to be done for the enforceability of the contract. The
performance of the contract discharges the person from the liability under a contract. It is
necessary for the completion of the contract that both the parties must perform their part
with effectiveness. It is required that such contract is to be completed as per the terms
which are discussed between the parties and are mentioned in the contract enforced in
this regards. If it is not performed as per terms and resulted in loss to other party, it is
considered as breach of contract. Each party to the contract is under an obligation by their
promise to contract to perform as per decided terms and conditions. Such terms of the
contract must be lawful and possible to perform by other party to the contract. Time is
considered as an essence of the contract as it is required that a contract must be
performed within stipulated time period. Violation of such terms will result in breach of
contract. 4
 Breach of Contract
This means when a party is unable to do the task which was agreed between the parties at
the time of entering into the contract and due to which other party have sustained loss or
damages. There various provisions based on the significance of the violation of the
3Law Teacher. Main Elements constituting A Valid Contract <https://www.lawteacher.net/free-law-essays/contract-
law/main-elements-constituting-a-valid-contract-contract-law-essay.php> Accessed 17.04.2018
4 Poole, Jill. Textbook on Contract Law. (13th Edition, 2016).
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contract i.e. in case, the violation is significant, then the aggrieved party have the option
to terminate the contract or claim compensation for the damages whereas in case
violation is not significant, then aggrieved party will only have the option to claim
compensation for the damages or losses. The aggrieved party also have the option to
continue the contract with the faulty party.
 Agreement
A contract can be discharge by entering into an agreement between the same parties
which were involved in the contract. Such agreement for discharging the contract must
also involve consideration. However, it is dependent on the status of the contract i.e.
whether such contract is wholly completed or partly completed. In case partly
completion, it will involve new consideration and in wholly completion of the contract,
consideration of main contract is to be paid along with surrendering the contractual
rights.
Sale of Goods and Services Act, 1982
This act deals with the contract between two parties related to providing products and services.
This act provides safeguard to the buyer of the products and services against the illicit practices
which are adopted by the seller to gain from the contract and deceive the buyer.
Service Contract: There various provisions which provide the norms or laws for the contract
related to services. As per section 13 of the Sale Goods and Services Act, 1982, it is stated that
there are some implied terms according to which services to the buyer is to be provided with
proper skills and care.5
As per section 14(1) of the Act, it is stated that services is to be provided within specified time
span.
As per section 15 (1) of the Act, payment for the services is to be paid by the buyer, also if there
is no price is specified in the contract.
5 Geraint Howells, Stephen Weatherill. Consumer Protection Law. (2017).
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Common Law
It is well established that the legal system of the UK is based on Common Law. Most of the
decisions under the legal system are made in accordance with the provisions of this law. This
gives rise to the provision of act of negligence. Negligence means such act which causes damage
or injury to the one party because of carelessness of another party to the contracts. In the law,
such act is referred to as “Civil Wrong”. Under such act, there are certain requirements which are
to be fulfilled to claim that an act as negligence i.e. one of the party must owe a duty towards
another party, there must be a negligent act and another party have sustained damages. It is
necessary that both the parties take care of each other so that no damages are sustained by any of
the party.6
The act of negligence results in violation of the duty to take care of another party. However, the
burden of proof lies on the aggrieved party to prove that the damages or the losses are sustained
due to the negligence of another party. If proved, it will be considered as an offence and
aggrieved party have the right to receive compensation.7
2). Apply the law of contract through a series of problem based scenarios.
In the given scenario, there is a contract between Kate and Jones & Sons Ltd. for renovation of a
place for establishing Kate’s business. At the time of getting into the contract, it was informed to
organisation that such renovation is to be completed before 23rd October, 2018. However, the
work of renovation was completed on 31st October, 2018 due to which Kate have suffered loss as
on 29th October, 2018, an order is to be received from a big client amounting £30,000. Moreover,
in the early November, Kate was expecting that it will also attract the customers who will be
there to attend the Annual art and craft Festival. This affected the opening of business, the order
which was to be received by her due to the new line of jewelleries from a big retailer of the
nation and was unable to attract the people participating in the festivals.
6 Cees van Dam. European Tort Law. (2nd Edition, 2013)
7 Luntz, Harold, Hambly, David, Burns, Kylie, Dietrich, Joachim, Foster, Neil, Grant, Genevieve and Harder,
Sirko Torts: cases and commentary (8th edition, 2017)
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The main issue of this case is how Kate would be able to recover the compensation for the
damages for the violation of terms of contract. Apart from this, there are various issues involved
in the given case scenarios which are as follows:
 Will Jones & Sons Ltd will be responsible for the breach of contract.
 Does it result in negligence on the end of the Jones & Sons Ltd.
Whether the organisation will held liable for the loss incurred in regards with the order
amounting £ 30,000 and the cost of making repairs amounting £5,000.
As per the provided scenario, various laws are applicable on the same which are:
Contract Law:
Performance of the contract: Under the provided case, Jones & Sons Ltd. were unable to
complete the renovation as per the specified time which resulted in loss to Kate. As per the
provision of the contract law, it is required that both the parties to contract must perform their
obligation as they are bound by the terms of contract. Performance of contract on time is
necessary as time is the essence of the contract. This can be understood with the help of a case
i.e. Cutter v Powell. In this case, a ship sailed from Jamaica to Liverpool but before the voyage
was complete the sailor died. It was held by the court that it doesn’t meet with the obligation of
the contract. 8
Breach of Contract: Under this case, Jones & Sons Ltd. was not able to meet the terms of the
contract i.e. to complete the renovation on time. It is stated in the provision of contract law that
when any of the party to contract is unable to meet its obligation and another party to contract
incur any losses due to this, it results in breach of contract.
Sales of Goods and Services Act, 1982: As per this law, there are certain terms which are
assumed while entering into the contract. It is essential that while getting into a contract in
relation with providing services to another party; it must be done with skills and care and must
not result in damage or loss to another party. Under this case, losses are incurred by Kate due to
the non-completion of renovation work on time. In the case of Shirlaw v Southern Foundaries
8 Cutter v Powell (1795) 101 ER 573
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Ltd (1939), it was stated that there are certain terms which are implied on the contract without
even mentioning it.9
Common Law:
This law discusses that violation of duty by the Jones & Sons Ltd. to take care of the Kate in
regards with the performance of contract as per decided terms. Moreover, the glasses of the
display cases were no fitted properly and CCTV Cameras were not properly installed and were
not working. The modification of the glasses and installing the cameras properly will attract the
cost of £5,000.
This gives rise to the provision of Negligence Law. As mentioned above, work was not done as
per the standards required for the contract. In accordance with this case, such act is considered as
professional negligence on the part of organisation responsible for the renovation. Under this, it
is stated that when a professional provides services or advices in its professional capacity and
due to such service or advices other party or clients sustain any loss, this is called professional
negligence. It is the duty of the professional to take care of his client.10
Law for taking care was established in the case of Donoghue v Stevenson. In this case, producer
of the drink was found guilty of act of negligence as the drink contained the remains of snail. 11
Moreover, Kate is suffering from anxiety and stress and this is the impact of professional
negligence as it resulted in psychiatric injury. This was held in the case of Vernon v Bosley that
such injury will also be included while considering injuries due to negligence. 12
9 Shirlaw v Southern Foundries (1926) Ltd [1939] 2 KB 206
10 Hopcarft. What is the definition of negligence?
<https://www.wrighthassall.co.uk/knowledge/legal-articles/2015/04/23/what-definition-negligence/> Accessed:
17.04.2018
11 Donoghue v Stevenson [1932] UKHL 100 (26 May 1932)
12 (Vernon v Bosley (No. 1) [1997] 1 All ER 577)
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3). Demonstrate an ability to effectively critically analyse and critically evaluate the legal
issues within the law of contract.
There are various issues involved in the given case scenario which attracts different laws and
regulate the activities under it.
As the Jones & Sons Ltd was unable to perform the work of renovation in accordance with the
terms of the contract as it was stated by Kate that such work is to be completed before 23rd
October, 2018 but the work was completed on 31st October, 2018. This attracts the provision of
compensation to Kate. This will improves the performance of Jones & Sons Ltd. for future times
as company will be paying compensation. This will provide learning to the organisation about
the significance of laws and norms in the business. However, this will impact the image and
goodwill of the company in the market. Moreover, this will encourage more individuals to take
advantage of this loophole in the law. In the act of negligence, the organisation will learn that it
bound by the duty to take care of another party to contract and will provide services with utmost
carefulness.
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Conclusion
In this report, the significance of the law is explained. As various laws are applicable on the
given scenario, it is necessary for the parties to contract to meet the obligations specified in the
contract. Moreover, parties are bound by the law to perform their duties in accordance with the
applicable law. It is concluded with the analysis of contract law and common law that as per
given scenario, Jones & Sons Ltd. will be held responsible for the damages or the losses suffered
by Kate and the aggrieved party have the right to file against such organisation to claim
compensation for the losses and injuries.
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Reference:
Other Sources:
 Hopcarft, S., 2015. What is the definition of negligence? Wright Hassall. Available at:
https://www.wrighthassall.co.uk/knowledge/legal-articles/2015/04/23/what-definition-
negligence/. [Accessed: 17.04.2018].
 Law Teacher, 2018. Main Elements constituting A Valid Contract. Available at:
https://www.lawteacher.net/free-law-essays/contract-law/main-elements-constituting-a-
valid-contract-contract-law-essay.php. [Accessed: 17.04.2018].
Books:
 Howells, G. and Weatherill, S., 2017. Consumer protection law. Routledge.
 Kötz, H., 2017. European contract law. Oxford University Press.
 Luntz, H., Hambly, D., Burns, K., Dietrich, J., Foster, N., Grant, G. and Harder, S.,
2017. Torts: cases and commentary. LexisNexis Butterworths
 McKendrick, E., 2014. Contract law: text, cases, and materials. Oxford University Press
(UK).
 Poole, J., 2016. Textbook on contract law. Oxford University Press.
Cases:
 Shirlaw v Southern Foundries (1926) Ltd [1939] 2 KB 206
 Van Dam, C., 2013. European tort law. OUP Oxford
 Cutter v Powell (1795) 101 ER 573
 Donoghue v Stevenson [1932] UKHL 100 (26 May 1932)
 (Vernon v Bosley (No. 1) [1997] 1 All ER 577)
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