Commercial Law Case Study: Rights and Liabilities of James (ABC)

This assignment is a case study in commercial law, analyzing a scenario involving James (owner of All Bright Consumables - ABC), Brenda (ABC's manager), and XYZ Ltd, a competitor. Brenda, hired to manage ABC, enters a secret agreement with XYZ, violating her contract and causing ABC financial and reputational damage due to the sale of low-quality products. The assignment explores the formation and breach of contract, the relationship between a principal (James/ABC) and an agent (Brenda), and the legal rights and liabilities of each party. It examines James's rights to sue Brenda for breach of contract and seek compensation, as well as his liabilities towards customers who received faulty products. The solution references legal principles and relevant case laws to support its analysis, providing a comprehensive overview of the legal issues involved in the given scenario.

Commercial Law

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Given Case Scenario...............................................................................................................1
Advise James as to any rights, and liabilities, he may have in relation to both Brenda and
XYZ........................................................................................................................................2
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Commercial law is defined as the law which deals in the sector of commerce and trade.
The alternate name of commercial law is trade law. There are most of the situation under which
most of the cases are solved through the proceeding of civil law1. This law is necessary because
it tells that how any of the business activities is required to be conducted whether it is at national
level or even at international platform. Some of the laws which are required to be considered
while conducting any of the business activities are taxation law, company law, contract law, sale
of goods act and many more. In this respective project, the given case study will be solved which
will be formation of contract, breach of contract and what are the legal remedies of breaching
any of the legal contract.
MAIN BODY
Given Case Scenario
The given case is related with James Allbright, Brenda, ABC Ltd an XYZ Ltd. Here,
James own the business name as All Bright Consumables (ABC). ABC deals in the goods of
electricians and traders. As James want to enhance his working capabilities, he wants to expand
his business and because of that it is not possible for James to manage the business activities of
ABC. By considering this, James have appointed Brenda to manage every single things within
the premisses of Company. Brenda has been hired for next 3 years where she will be paid on
commission basis of 7% on total sales which is made by the business organisation. There was the
additional term and condition which was agreed by Brenda that she will not be allowed to deal
with XYZ as it is the biggest rivalries of ABC.
In starting, it was working well and all of the parties were happy with the product and
services of the company an after that it was not easy as recession period started due to which the
sales of a was reduces significantly. This has also effected the commission pay of Brenda's but
James was not ready to increase the percentage of commission. By looking at this Brenda's
approaches XYZ as they were offering the high percentage of commission for selling their
electric shower. They both agreed that James will never know about this matter as it will be kept
as a secret. The rate of commission will be 30% of total sale which is around four times more
then of ABC.
1 Hunter, Howard. "Modern Law of Contracts." (2017).
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After some days, James came to know that their company is selling the products of XYZ
and they are of low quality due to which company has started to get bad reviews. Now, James
immediately challenges Brenda about the truth of this situation which she confirms. Brenda also
says that she has had several customers return the showers as being of very poor quality and
wanting a refund as they purchased them from the ABC store. Further, XYZ are refusing to
accept any returns.
Advise James as to any rights, and liabilities, he may have in relation to both Brenda and XYZ.
Contract: It is defined as the situation where two or more then two person or organisation
comes together to perform their business activities. It is necessary because it tells that how any of
the work is needed to be done2. The main thing which needed to be focus is that it doesn't allow
to break the terms and condition and if in case any of the person fails to perform their work then
legal actions can be taken. Whenever contract is being prepared, it is necessary that there must be
offer and acceptance to make it valid. This are legal binding in nature due to which it is said that
once entered into the valid contract cannot be revoked and if case any of the person tries to do
that then innocent party have the option that they can take the legal action against that individual
person. There are basically seven elements which is required to form a legal contact and they are
explained below. Offer: It is the initial stage of any of the contract where any one of the party must need to
purpose the contract in which every terms must be defined in a systematic manner.
Whenever offer is being shown it is necessary that it must be valid i.e., illegal offer
should not be presented. Acceptance: It is the situation in which party accept the proposal of any the person put
the offer in front of the them. The acceptance can be done in the form of writing or even
communication can also be done. Consideration: There must be consideration whenever any of the party enters into the
contract. Here, consideration means contracting to exchange something and that might or
might not be in monetary terms.
2 Parisi, Francesco, ed. The Oxford Handbook of Law and Economics: (Volume 2: Private
and Commercial Law. Oxford University Press, 2017).
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 Competence: This is the situation in which it is said that person should not have the
capacity to enter into the contract. Person must be about the age of 18 years and they
must not be of unsound mind. Mutual consent: It is necessary that there must be mutual consent of the entering party
and it is important that there should not be any kind of undue influence upon the
aggrieved parties. Legality: It is necessary that contract should be enforced by law and it must be valid.
Additionally, contracts to split lottery winnings in states where gambling is illegal have
been delayed unenforceable. Wagering agreements are legal wrong at it doesn't allow to
built legal terms and condition for this types of agreement are void ab initio in nature.
 Writing: It is not compulsory that every contract should be formed writing but contract
like statues of frauds and some of the other contract should be formed in writing (7
Required Elements of an Enforceable Contract, 2019)
In the above given case, it was found that there was the contract between ABC and
Brenda. The contract was formed legally and both of the party were totally agreed to enter into
the terms and condition of the agreement. While there was not legal contract formed between
XYZ and Brenda. While doing the business with XYZ, Brenda breaches the contract.
Breach of Contract: It is said that breach of contract is the situation in which any of the
aggrieved person fails to accomplish the target which were required to be done in specified
manner. When this form of situation then there is the option that legal actions can be taken. The
role of legal panel is huge as they are the one who will take the responsibilities to sort out the
problem by clearing the legal remedies3. Here, Brenda has breached the contract which she has
signed with ABC. In addition, it is important to check that what are those situation due to which
contract have been breached because if is found that terms and condition of contract was
changed in between the project and after that any one of the involved party denies to complete it
then legal action cannot be taken as it will be counted as voidable contract.
Relation of Principle and Agent: The most important relation is always of principle and
agent in which person appoints the third party who will work in their behalf. Here, some limits
and boundaries are mentioned which must not be crossed. If any of the decision which is taken
by agent on behalf of agent then indirect liability will always be upon principle as they are acting
3 Hawkins, Jim. "Female Perspectives in Commercial and Consumer Law." (Colum. J.
Gender & L. 34 2016): 1.
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their behalf. As per the above case, it can be easily justified that James/ ABC is the principle
where as Brenda is agent. If in case any of the decision will be taken by Brenda will be assumed
that it has been taken by James and final liability of him only. It is very important concept for
any of the organisation whenever they wants to expand their business activities. This sort of
activities helps business organisation perform their task easily.
Rights Available with James
Right to Sue: It is the situation in which person get the right to sue the party which have
breached the contract. As it is against the law that person is not allowed to do any of those work
create problem for the prepared contract4. In context of the given case scenario, it can be easily
understood that James have the legal right to sue Brenda because the term and condition of the
deed was very clear that Brenda will not be allowed to enter into any of the contract with XYZ as
it is the biggest rivalry company. But still she tries to enter into the contract with XYZ. This was
one of the reason that ABC has to suffer in the market and even their goodwill has been also
reduced. The faith among the customer which was developed by James is no more and even they
are not willing to deal any more with ABC. So, James has the right to sue Brenda for breaching
the terms and condition of agreement deed.
Right to seek compensate: As Brenda was the one who breaches the contract for her
personal benefit so it is necessary that she must compensate ABC. They are planning to earn
secret profit with the help of market share of ABC which is unethical and unlawful. In addition,
Brenda will be liable to disclose about all of the hidden profit she has earned and even penalties
will also be imposed because she is the one due to which goodwill has been affected. In addition,
it can be seen from the below case study that who breaches the contract must compensate the
innocent party as they were unknown about the facts.
Here, it will be the choice of Brenda that she want to sue to XYZ for breaching the
contract with her. But intention of Brenda and XYZ was not fair as they both want to earn profit
in the name of ABC.
4 Nash, Maddy. "Making the Law More Accessible? The Contract and Commercial Law
Act 2017." (Victoria University of Wellington Legal Research Paper, Student/Alumni Paper 31
2018).
4

Similar case law
Case: Matt Jones v Kings Pvt Ltd.
Facts: In this particular case, Matt Jones filed the case against Kings Pvt Ltd. as they were not
able to completed the terms and condition of contract. There was the contract between both the
party that delivery of the product should be on time because Matt Jones has done contract with
third party on the basis of this contract. This thing was well known by Kings Pvt Ltd. But, they
were unable to complete the terms and condition of the contract and not Matt Jones wants the
compensation as he compensated third party just because of their carelessness.
Judgement: The judges decided in this case that company must Matt as it was written in the
deed but still they breached the terms and condition of contract.
Liabilities of James
In this particular case, it has been found that the main default was performed just because
of Brenda but still it doesn't matter because the ultimate liability in this particular case is of
James. Here, James will need to take all of the products back which their agent have sold on
behalf of ABC. If any of the customers have faced the problem of just because of ABC then even
they are required to compensate all of those customer5. It is the choice of James that whether he
want to sue Brenda or not but the ultimate thing which is needed to be consider is that ABC must
compensate all of their customers.
Similar Case law
Case: Mark Wood v Rick Martin
Facts: In this case, Mark was the owner of the company and Rick was working on his behalf as
a agent. It is was found that Rick supplied the wrong product to their customer. By looking at
this they sued Mark Wood for compensation and he did too. But, afterwords Mark filed the case
against Rick as he has done the mistake.
Judgement: the Judges of court declare that this case is invalid as principles and agent are same
because they are working on their behalf. They declared that Principle will have the ultimate
liability for any of the default.
5 Thomas, Lord. "Keeping commercial law up to date."(Essays in Memory of Professor Jill
Poole. Informa Law from Routledge, 2018) 1-13.
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CONCLUSION
From the above report, it has been concluded that commercial laws are important to
complete transactions lawfully. Dealings occur at international level also which requires
uniformity in rules and legislations so that a single code can be applied. The most important
thing is that whenever any of the person enters into the contract they are not allowed to breach its
terms and condition. If any of the person hires the person who will work on their behalf, even in
that situation final liability will be of principle as they are acting on their behalf. Innocent person
will have the right to get compensate for breach of contract.
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REFERENCES
Books & Journals
Hunter, Howard. "Modern Law of Contracts." (2017).
Parisi, Francesco, ed. The Oxford Handbook of Law and Economics: (Volume 2: Private and
Commercial Law. Oxford University Press, 2017).
Hawkins, Jim. "Female Perspectives in Commercial and Consumer Law." (Colum. J. Gender &
L. 34 2016): 1.
Nash, Maddy. "Making the Law More Accessible? The Contract and Commercial Law Act
2017." (Victoria University of Wellington Legal Research Paper, Student/Alumni Paper
31 2018).
Thomas, Lord. "Keeping commercial law up to date."(Essays in Memory of Professor Jill Poole.
Informa Law from Routledge, 2018) 1-13.
Online
7 Required Elements of an Enforceable Contract. 2019. [Online]: Available Through:
<https://www.sapling.com/11368503/7-required-elements-enforceable-contract>
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