|Type of paper:
|Contract Court system Judicial system
Tim and Racheal who form the Kontract Flaw band entered into a contract with Bert to record their album in his studio. However, they later realize that their solicitor is earning a huge chunk of royalties from their album compared to what other producers charge in the pop industry. The band’s reluctance to record their album with Bert may result in a breach of contract. According to the English contract law, material non-compliance with the provisions or terms a legally binding contract results in a breach of contract (Solène). Noticeably, enforcement of contracts is essential for legally binding agreements since each party anticipates to receive benefits from the agreed deal. In a scenario where one party fails to receive the benefits of the agreement due to the other party, the innocent side has a legal right to sue their partner for compensation in terms of damages (Solène). Notably, the band can explore other avenues such as termination of an agreement or undertake a contract addendum to rectify the original covenant. Given that Bert offers them other legal services for free, it would be advisable for the team to mitigate the challenge through dialogue to rectify the contract.
A contract amendment allows the addition of an addendum after signing of a contract to modify its provisions leaving the rest of the elements intact. In the business arena, contract addendums are considered an immediate option for parties to avoid frustrating the entire agreement, which might result in far-reaching damages. Notably, a contract addendum outlines the parts, terms, and clauses that require modifications, and parties might agree and sign off. The changes are then attached to the original contract. Therefore, on one hand, the Kontract Band can discuss with their producer on fairer terms based on what other recording labels are charging in the market. On the other hand, for the contract addendum to be legally enforceable, Bert must agree to the modifications. Noticeably, the band needs to approach their producer and explain how the royalty division rates disadvantage them against other artists, justifying their change of hearts. In this case, the band might require a new solicitor to oversee the changes to avoid creating loopholes in their contract, which might financially harm them in the future.
Secondly, the band can seek to form a new contract with Bert’s recording studio. In this case, the two parties can mutually agree to terminate the original contract and form a new one. Notably, the variation of contract must have fresh considerations for it to be legally binding. In this scenario, since both parties have performance obligations under their original contract, they can enter into a covenant to discharge each other form further performance in writing. However, this scenario is unlikely to occur since Bert may be using the royalties to cover his foregone cost of providing free legal services to the band.
In an unlucky situation where the two parties fail to reach a consensus whether to amend or form a new contract and the band refuses to record their album with Bert’s studio, an anticipatory or a repudiatory breach of agreement will occur. An anticipatory breach of agreement occurs when the defaulter reveals to the innocent party vividly that they intend not to honor the part of the bargain at all. Additionally, a repudiatory breach occurs when the non-performance goes to the root of the contract in such a way that it deprives the innocent party of the whole benefits. A breach of contract offers grounds for contract termination and compensatory damages. In this case, the innocent party may file a lawsuit seeking legal compensation for the damages caused by nonperformance of the contract. Notably, the common remedy for breach of contract is compensatory damages in which the law seeks to put the innocent party in the same financial position as they would have been if the contract was honored. However, the damages are limited to the damages that the innocent parties would experience because of the breach.
In the scenario that the Kontract Flaw Band behaves in a manner that implies they will not record their album with Bert recoding label, Bert may terminate the contract and seek damages. However, for a court of law to grant termination of the contract, there must be serious proof that the defaulting party threatens not to perform their part of the obligation. If Tim and Rachael had not issued a specific timeline to when they will record their album with Bert; therefore, Bert may not be in a position to terminate the contract. However, if the band communicates to Bert that the royalty sharing formula is unfair and they do not feel confident in recording their album with him, he would gain a legal background to terminate the contract and seek damages on the bases of repudiatory anticipation. Moreover, if the band chooses a new label to record their album, Bert may appeal to a repudiatory breach seeking termination and compensation of the damages.
Unfortunately, the band would compensate Bert for the royalties that he would have gained for their album for the specific amount of time specified in the contract. The situation would be frustrating for the new band given that they would compensate Bert for work not done, which is overcharged. Bert can also decide to claim more damages not limited to royalties since he depends on the band’s activities to sell his legal brand. In this case, the team may seek the court to enforce the remoteness of damages, which seeks to limit the compensation to the foreseeable events such as in the case of Hadley v Baxendale.
Tim and Ex-girlfriend
In the case of Tim and his ex-girlfriend, Pamela, there are no legal grounds to terminate the contract for Tim to get his half-share of the house back, unless he appeals to undue influence or coercion. The contract biding the sale of the house for one euro is legally binding and gives Pamela the same rights of ownership as Tim unless stated otherwise in their cohabiting agreement. Alternatively, Tim can decide to seek termination by claiming that he was under undue influence when signing the ownership agreement, which may prompt the court to render the contract void. Under English law, his case would fall under Class 2A of presumed undue influence that involves an individual being in a predefined bona fide relationship with another. For instance, in the Allcard v Skinner case, the claimant joined a religious order known as the “Protestant Sisters of the Poor” through Miss Skinner. The group observed vows of obedience and poverty, which prompted Miss Allcard to transfer all his property and stocks to Miss Skinner. She later claimed his property back after leaving the sisterhood which was granted by judge Lindley LJ who ruled that she was unduly influenced by the faith and that she would recover as much of the property as that which remained. In this case, Tim can argue that he was under the undue influence of love and transferred the half share to his ex-girlfriend for one euro since their relationship was based on trust and confidence. However, after realizing that Pamela was seeing her ex-husband behind his back, he broke up with her for dishonoring their pact, which would create grounds for the contract cancellation.
The Principle of Remoteness of Damages
The principle of the remoteness of damages causes unnecessary hardships to the claimant as it can unduly restrict their damages. I disagree with the statement since the lack of thereof can leave compensation of damages ambiguous leading to unjust enrichment of the claimant party. When the law leaves the claimant with the freedom of requesting any form of compensation, the defaulting party may be liable for more than what they would have provided by performing their agreement obligations. Therefore, the English contract law uses the remoteness of damages principle to create a fairground for compensation and avoid unjust enrichment (Ewan). According to contract law remoteness of damage is a requirement that ensures that the damage is of foreseeable type. Therefore, in negligence claims, the claimant must demonstrate beyond a reasonable doubt that the damages are not too remote.
The remoteness of the damage clause prevents people from enriching themselves unjustly from compensatory cases. In this case of its absence, claimants would exaggerate their damages, which was geared at frustrating the defaulting party. For example, in the case of Ruxley Electronics and Construction Ltd v Forsyth, the defendant agreed with Forsyth to build a swimming pool in his garden. The contract outlined the swimming pools’ measurement to have a depth of seven feet and six inches. Upon completion, the swimming pool had only six feet deep, which was a safe and reasonable diving depth. Additionally, the error was minimal to affect the value of the property or pool. Notably, the claimant, Forsyth, launched a lawsuit for breach of contract seeking compensation in damages for the cost of demolishing and rebuilding the pool, which was €21,540. Firstly, the judge rejected the cost of cure damages for being unreasonable; however, they awarded the claimant a loss of amenity for € 2500. Later, the Court of Appeal reversed the judgment claiming that the compensation was required to place Forsyth in a similar position as he would have been if the contract had been performed accordingly. Ruxley appealed the ruling to the House of Lords who upheld the remoteness of damages. The House of Lords accepted the appeal and upheld the previous judge’s ruling of an award of € 2500 in compensation for loss of amenity. The Lord Mustill ruled that the law must cater for situations where the value of the promise to the innocent party exceeds the financial enrichment of their position, which full performance of contract obligations would secure. In the above case, The House of Lords identified a consumer surplus in compensating the breach of contract in such a way that the damages caused by missing measurements were too remote to constitute rebuilding of the swimming pool. Noticeably, awarding full compensation would be unreasonable and contradict common sense; therefore, the law sought to seek the loss truly suffered by the innocent party.
Noticeably, the Hadley v Baxendale contract law case is infamous in Europe and the United States as it serves as a precedent in determining the consequential damages arising from a breach of contract based on the principle of the remoteness of damage. In this scenario, the judges ruled that a breaching party is liable for all damages that the contracting sides had foreseen but they are not liable for any losses that could not have been foreseen with the available information at the time. The claimant, Mr. Hadley, had contracted the defendants, Baxendale and Ors to transport his broken crankshaft to Greenwich for a replacement by a certain date. Unfortunately, the defendant failed to deliver the crankshaft to the factory by the given date, leading to Mr. Hadley losing business. the claimant launched a lawsuit against Baxendale for lost profits, which was awarded by the jury for € 25. Later, the defendant appealed the case in The Court of Exchequer, which overturned the ruling barring Hadley from recovering any lost profits. The judges argued that the defendant could not be liable for losses that were unforeseeable or those that he lacked knowledge thereof. In this case, if Mr. Hadley had mentioned the dire circumstances when forming the agreement, the defendant would have been liable.
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