Law of Contracts

By: carolyn2010 | Posted: 26th February 2010

Law of Contracts

According to the existing law a contract can be defined as a legal binding obligation created under an agreement between two or more persons that is enforceable by law. Under this case, There are several elements that make a contract to be valid and this includes the following; there must be an offer and an acceptance, there must be an intention to create legal relations, the contract must be under deed or consideration, there must be a contractual capacity, a genuine consent which must not be obtained from mistake, fraud, duress and unconscionability and lastly the contract must be lawful. Generally, for a contract to exist and to be valid more weight is directed to the intention of creating legal relationship by all parties involved in this case we find that the law of contract applies in businesses is generally presumed by the courts that the there is an intention to create legal relations unless the parties insert a clause that their agreement shall not be binding by law but shall be binding in honour only.

Contracts may also be classified in terms of their enforceability or validity under this, there is a valid contract which is an agreement that is binding and enforceable having all essentials of a contract while a voidable contract is an agreement that is binding and enforceable but lacks one or more essentials of a valid contract it may be set aside at the option of the injured party. Lastly a void contract is an agreement which is completely destitute of any legal effect such as an agreement of which the consideration or objective is lawful

So in the case of Michael entering into a contract with the Limassol which is said to have given Michael a document that have conditions which stated that Limassol is excused of any liability for injuries suffered by band members in the course of performance. This eventually shows that their agreement was legally binding in law.

Here we find that Michael accepted the offer that was granted to him by Limassol in this case we clearly find that Michael practiced acceptance whereby in law we find that an offer can only be accepted by the person to whom it is made, this can be done orally or in written and once the acceptance is made it can not be revoked although it can be revoked by an express notice before it is accepted. But acceptance can not be revoked in any circumstances, and the moment an individual expresses his acceptance of an offer that very moment the contract is concluded.

In this case Michael signed in the contract without understanding the conditions that were imposed on the agreement which said that Limassol is excused of any liability for injuries suffered by any band member. Michael should therefore understand that Limassol can sue Michael for the breach of contract since he did not put into consideration the conditions that were written on the document, in law of contracts we find that conditions are terms of major importance and it is said that they go to the root of the contract. The Limassol conditions indicated that exemption clauses existed in the contract whose purpose was to limit the liability of one of the parties to which he would otherwise be liable in law. Such a clause will be enforced by the court if the document containing it was an integral part of the contract and reasonable care was taken to bring it to the attention of the other party before the contract was made. Where a person puts his signature on a contractual document, he is bound to by any exempting clauses contained in it.

He can not rely on his ignorance of the contents of the document unless he was induced to sign the contract by fraud or misrepresentation. This is clearly expressed in the case of Thompson v L.M.S Co, 1930: where the plaintiff bought an excursion ticket from the defendant company issued subject to the conditions contained in company's time-table. Mrs. Thompson could not read. The conditions exempted the company from liability for negligence. Owing the negligence of the company's employee, the plaintiff was injured and she sued the company. It was held that the company was not liable as they had taken reasonable steps to bring the conditions of the offer to the notice of the plaintiff. The exemption clause in this case was binding on the plaintiff because the defendant had taken reasonable care to bring it to the notice of the plaintiff. Michael should therefore know that the same case applies to his contract since it is indicated that he did not take his time to read and understand the conditions that the contract had notified him on the document he was to sign the notice read that: "please ensure that you have read all the conditions attached to this document" in this case Michael should know that the conditions written on the paper were applicable and that Limassol can sue him for the breach of contract.

The law of contract provides that the parties to a contract must perform the respective obligation or pay the damages caused due to the breach of contract. The parties are free to provide in the contract that it was to terminate on its becoming impossible or on the happening of a specified event. But if the parties have not made any specific provision against the contingency in their contract, the doctrine of frustration might be brought in as a Defence by a party proving that a supervening event has occurred beyond the contemplation of the parties destroying the very foundation of the contract. This supervening impossibility will therefore discharge the contract in the circumstances; destruction of the subject matter, in this case, a party is allowed to be released from the liability because of some supervening event that is said to be rendering the performance impossible. Here we find that in contracts the performance depends upon the continued existence of a given person where a condition is always implied that the impossibility of performance arising from the perishing or the injuring of an individual shall therefore excuse the performance. The destruction of the subject matter always need not to be whole it is sufficient as long as it prevents the contract from being carried out. This clearly explained in the case of Nickoll &Knight v Ashton & Co LTD, 1901: where A sold N a cargo of cotton seeds to be shipped by a specified ship in a named month before the time for shipping arrived, the ship was so damaged by being stranded that it was unable to load by the agreed time and it was held that the contract was discharged. Michael can therefore defend himself by claiming that the destruction of the subject matter was destructed since we find that one of the performers was injured in the process of their performance and that the contract was to be discharged as a result of the subject destruction, he can therefore not be liable for the event that took place.

But Limassol can still sue Michael since he was practicing the transfer of liabilities whereby, vicarious performance it is open to the parties to have their contracts performed by another person, provided the contract does not expressly or implicitly insist on the performance of the contract by the promiser himself, in the absence of such conditions in the contract then the promisee must accept the work to be done by a third party if it has been carried out in accordance with the terms of the contract. In this case of Michael we find that Limassol should therefore not accept the work to be done buy a third party since he had warned that the he is excused from the liabilities caused by the injuries of the performers. But even in such cases the promiser remains liable under the contract because the vicarious performance in its application is similar to the law of agency.

Reference:

Emanuel, S. L. (2004): Fundamental of Business Law, 4th Edition,

Educational Publishers New York,

Gifford.K (1980) Legal Profession Law & Practice in Victoria Law Book Co, Sydney

Hudson. A. 2003. Equity & Trusts, 3rd edition Cavendish London

Jertz, A. and Miller L. R, (2004): Fundamentals of Business Law, 3rd Edition,

Macmillan Publisher, New York,

Penrose, R (2005): Road to Reality: A Complete Guide to the Laws of the Universe,

Longman Publisher, New York

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Tags: mistake, elements, objective, fraud, validity, honour, injured party, band members, duress