Corporations and Contract Law: Research Assignment

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Corporations and Contract Law
Assignment 2: Research assignment
02-May-18
(Student Details: )

Corporations and Contract Law
Issue
The main issue of this case resolves around the possibility of a breach of contract being claimed
by Andrew and Margaret against the travel agent. There is also the issue of remedies which
Andrew and Margaret would be able to claim successfully against this travel agent owing to the
ensuing breach of contract. The issue is also to analyse the possibility of the contract being
discharged through performance, in place of having been breached.
Law
A contract, once it is formed, becomes binding on the parties to the contract. This means that the
terms mentioned in the contract, have to be followed properly; where this is not done, the
aggrieved party has the right of applying to the court for getting remedies awarded to them,
owing to a breach of contract1. Before going into the discussion of breach of contract, there is a
need to note that a contract can not only be discharged as a result of a breach of contract, but can
also be discharged as a result of performance of stated terms of the contract2.
Where the contracting parties fulfil the obligations covered under the contract, the contract is
deemed to be discharged through performance. In Cutter v Powell3, the court held that payment
for work done by the husband of widow could be payable only if he had performed his part of
the contract4. Even though this rule is harsh, it has been since mitigated by various exceptions
being created5. One of such is partial performance of contract. If a party decides to accept the
1 Jane Swanston, ‘Discharge of Contracts for Breach’ (1981) 13(1) Melbourne University Law Review 69.
2 John W. Carter, Contract Law in Australia (LexisNexis Butterworths, 2013)
3 [1795] EWHC KB J13
4 M Dockray, ‘Cutter v Powell: A Trip Outside the Text’ (2001) 117 Law Quarterly Review 664.
5 C Kidd, ‘Partial Performance of Lump Sum Contracts: Proposals for Reform’ (1985) 59 Australian Law Journal
96.
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Corporations and Contract Law
partial performance, then they have to pay the sum for the work which has been completed6. In
Sumpter v Hedges7, the court denied the acceptance of partial performance by the defendant as
they were forced to accept this partial performance since the defendant had left the half
completed house on the land of the defendant. Another important element regarding discharge of
contract through performance is related to performance being prevented by the promise. In
Planche v Colburn8, the claimant was allowed to recover money for partial performance due to
the fact that he had been prevented by the defendant from completing the performance of entire
contract.
Misrepresentation is a vitiating factor under contract law, which has the capacity of rendering a
contract as voidable/void. One of such factors is misrepresentation. Misrepresentation basically
denotes a false statement of fact or law being made by one party, to another party, so that the
other party gets into the contract9. Bisset v Wilkinson10 is a leading matter in this context which
provides that the false statement needs to be one covering law or fact. If it is one of opinion or
advice, a claim of misrepresentation would not be successful. However, where the opinion giving
party, was in a position to know the truth being the false statement being made, owing to the
position or knowledge held by them, then the person making such false statement, even when it
is related to an advice or opinion, would be liable, based on Smith v Land & House Property
Corp11. The remedies of misrepresentation include rescission and/or damages. Through
rescission, the parties are put back in their pre contractual position. Through damages, monetary
6 G L Williams, ‘Partial Performance of Entire Contracts’ (1941) 57 Law Quarterly Review 373.
7 (1898) 1 QB 673
8 [1831] EWHC KB J56
9 James Marson and Katy Ferris, Business Law Concentrate: Law Revision and Study Guide (Oxford University
Press, 3rd ed, 2016)
10 [1927] AC 177
11 (1884) 28 Ch D 7
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Corporations and Contract Law
compensation is awarded to the aggrieved party, for dealing with the loss which they had to bear
as a result of misrepresentation being present.
The key mode which results in the discharge of contract, apart from its performance is its breach.
When the parties to the contract, fail in fulfilling their obligations, as have been covered under
the contract, a breach of contract takes place12. So, where a promise made under the contract,
even if it is a part of such contract, is not performed, a claim of breach of contract can be raised
by the aggrieved party. Under the common law, there are different types of remedies which can
be cited for the breach of contract. These remedies include damages, rescission, repudiation,
injunctions and specific performance13.
Damages under the common law of contract are the monetary compensation which is awarded to
the aggrieved party, for compensating them for the loss. Addis v Gramophone14 clarified the
purpose of awarding damages. Damages are awarded as remedy for breach of contract in order to
put the injured party in such place which they would have been at upon the contract being
properly performed. The damages are awarded subject to rules of causation, remoteness and duty
of mitigating loss being applied. In Monarch Steamship Co Ltd v Karlshamns Oljefabriker
(A/B)15, outbreak of war was not seen as chain of causation being broken as this was deemed as
foreseeable by the court.
A key part of damages being awarded relates to rules of remoteness. A claimant is allowed to
recover the losses only which are reasonably a result of breach of contract in a natural manner, or
are such which are supposed to be in contemplation of parties at the time of formation of
12 Neil Andrews, Contract Law (Cambridge University Press, 2nd ed, 2015)
13 Jill Poole, Casebook on Contract Law (Oxford University Press, 2016)
14 [1909] AC 488
15 [1949] AC 196
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