Law
Discharge of Contracts: Dryden Construction Company vs. the Ontario Hydro Electric Power Commission
Understanding when a contract is formed and how it is formed is a paramount aspect of a business organization. However, it is also important that one gets to know how a contract for business can come to an end.
There are several ways in which a contract can be discharged or terminated. This may be by the performance of the obligations of the contract, operation of law voluntary agreement between the parties, impossibility of the performance or by one party privy to the contract accepting that there has been a breach.
In order for Dryden Construction to have a legitimate argument they would have to prove a fundamental mistake of facts to claim that the contract had been discharged. Suffice it to say that the condition of the area of which the road was to be built must have been an essential and fundamental aspect of the contract such that had it not been as described, it would greatly influence the extent of the work and the contract as whole would become frustrated. It could be said that the heavy snow during the time of entering into the contract, and the excessive muskeg than had previously been indicated could amount to grounds for the frustration.
As a matter of fact therefore, for Dryden Construction to claim that the subsequent circumstances and the frustration therefore discharged the initial contract, they would have to use the grounds under the impossibility of the performance of the contract. When the act provided for in a contract becomes impossible to perform the law usually presumes the contract to be discharged on that basis, but only under certain circumstances, such as new laws making the contract illegal, destruction of the subject matter, an act by the other contracting party or death or incapacitation of the other party. All these cannot be adduced to have happened in this circumstance.
The fact that a contract has become impossible to perform, must be practical and the mere fact that it is more difficult than had been anticipated does not discharge it. Therefore, given that Dryden Construction had the opportunity to inspect the site for the road construction and agreed to the condition “that he is fully informed regarding all of the conditions affecting work to be done and labour and materials to be furnished for the completion of the contract and that this information was secured by personal investigation and research and not from the Commission or its estimates and that he will make no claim against the Commission to an entirely different contract” he could not later be heard to rescind on the contract merely because it look harder to perform and would ultimately cost more.
Effects of a breach of contract: Shaw vs. Universal Travel Services
In order to analyse the breach of a contract, there is a sequence of events that must be considered in law. All these must be proven to exist in order for Shaw to claim any remedies that may arise after proof of breach or otherwise. These are that she must prove that the Universal Travel Services owed her a duty for a complete tour as advertised, that this duty was breached and what in her opinion amounted to the breach and finally that she suffered damage from the said breach and is therefore liable to be compensated for those damages.
Given that she probably contracted Universal Travel Services purposely for the advertised three week tour though western Canada which also included 5 days at Banff and a stop at Castle Mountain, it would be presumed that Universal Travel Services had an obligation and responsibility to see their contract through. In addition, given that she is a paying customer, she deserved the true value for what she paid for.
She is however taken, together with other patrons to Mount Assiniboine, about two kilometers away from what was advertised. This arguable does not amount to a very fundamental aspect of the breach as the peaks being 2 kilometers apart would not offer a spectacularly different intention. In essence, this part of the contract, though arguable may be considered fulfilled if all other conditions of the contract were satisfactorily met.
However, in an instance where in addition to this change, Universal Travel Services books the patrons in a small hotel in Calgary this would fundamentally change the contract that they had entered into and would be a fundamental breach of the tour contract. Such a situation goes beyond an advertising bluff as it totally provides a different product to what the parties agreed to and the reason for the contract in the first place.
In order for compensation to be awarded, Shaw will have to prove sustainably that she suffered financial loss whose proximity is not far from the cause of events that led to her loss as a result of the breach. After proving her case, she could be awarded compensatory damages for her loss. Alternatively, it would be fair and just to offer her restitution if as a whole, the contract that she did enter into was totally different from what she had anticipated.
In order to determine what form of remedy would be best for her, it would be important to determine any financial risk she may have suffered or loss incurred as a result of the breach of the contract. Her subsequent conduct would also determine if she accepted the breach because had she protested, it would indicate that she did not acquiesce to the new state of affairs. Finally, it would be considered if returning her costs would sufficiently make good the loss she suffered as a result of Universal Travel Services not meeting their end of the bargain.
Remedies: Martin Floor Covering & Tile Company vs. Jones
As initially stated and discussed, before a person can claim remedies for a breach of contract, she must prove damage as a result of the said breach. The law provides for both equitable remedies, these are specific performance and injunctions on one hand; and remedies at a common law on the other.
In practice, however, the most common sought after remedy has always been damages. The claim for damages raises two very important questions: for what kind should a plaintiff be compensated and its proximity to the damage or loss suffered; secondly what monetary compensation she should receive in respect thereof.
In order for the claim by Martin Floor Covering to stand, they would have to prove that whatever they did was not going to amount to a fundamental breach. It is true that they had to make the workers attend to an “emergency” work. However it should be noted that Jones entered into the contract on the basis that “never pull anyone off a job until it is finished”. This fact notwithstanding, Martin Floor Covering mitigated the loss by continuing the work, without any resistance from Jones, whom they could argue had by then impliedly acquiesced to them completing the work they had been contracted to do.
Jones on the other hand could have argued breach of the contract when the workers were pulled to work in an “emergency job.” However, her lack of action therefore amounts to acquiescence and acts as an approval of the breach. Furthermore, the dental costs that she claims in addition are too remote that it can be said to have “fairly and reasonably be considered either as arising naturally to the usual course of things from the breach itself, or such as may reasonably be supposed to have been in the contemplation of both parties at the time they made the contract, as the probable result of the breach.”
Given the above considerations, the court may grant a specific performance in favour of the plaintiff Martin Floor Covering for the work they did. Jones may also be awarded restitution for the costs of eating in the restaurant and taxi fares because this directly and naturally arise from the fact that the plaintiffs pulled their workmen and as such the work could not be completed in the completed time.
Agency and Franchising: Bright Lighting Company vs. Watts
Under the law of contract an offer is a promise that one is definitely to be bound upon and thus should not be vague. However, an offer can also be terminated and therefore the person making it would not be bound.
Revocation is ineffective until the communication to the offeree has been made. However if the revocation comes to the offeree through a third party, he is not mandated to uphold it. In this situation Curran, is a sales representative for the Bright Lighting Company and therefore under the laws of agency he is authorized to transact for the company’ behalf and he thus can create a legal relationship between any other party and Bright Light Company so long as it is made within the scope of his employment. Himself, Curran is not party to any contract he enters on the company’s behalf.
Under contract law, where the offer has been made for the performance of an act, it cannot be withdrawn once the act has commenced unless there has been a reasonable lapse of time.
The situation of contracting works both ways. There must be an acceptance for the offer that was made by the other party. It may be in writing, oral or inferred from the conduct of the person whom is authorized to accept the offer. In this case, it could be implied that when Curran started processing Watts written order, he had made an authorized, unqualified acceptance that was corresponding to the terms of the offer that Watts had made.
Like an offer, acceptance is not effective it is communicated to and received by the person who made the offer and it too must be from a person whom is authorized to make such an acceptance. Therefore, under the laws of agency this again comes in as a fundamental aspect for an authorized agent which in this case study Curran is.
This circumstance is tricky in the fact that there are situation where silence would normally not constitute acceptance and therefore cannot be imposed on the offeror. Even when the offeror has prescribed the form with which an acceptance is to be made, where the offeree adopts an equally expeditious method, it will be valid.
In this case, it is evident that an offer was made and received by the Company. However Curran’s assertion that the offer could not be revoked once the order was received is bad in law. Such an allowance would open a Pandora’s Box of litigation. Provided that Watts revoked his order and did so promptly he can therefore not be forced to see it through.
Business Associations: Kuli and Magory
Under the law, a partnership is defined as “the relation which subsists between persons carrying on a business in common with the view to profit.” This therefore means that the relationship of the partners does not therefore create a separate legal entity from them. Secondly, the partners must carry a trade, profession or vocation over a period of time, not just be co-owners of property.
Another characteristic of a partnership is that it must be carried on for the joint benefit of the person whoa are partners; and ultimately with the view of getting profit out of the relationship in the end. However, it does not mean that if they do make a loss their relationship stands dissolve.
In this case, Kuli owns the resource for the business and Magory owns the expertise. Given the circumstances, it would be difficult to present Magory as Kuli’s employee, as the terms clearly do not move towards that possibility. Moreover, it does not present an agent – principal relationship too.
Given that no formalities are usually required in order to form a partnership, lack of any description to that effect cannot also be conclusive to presume that they never intended to form a partnership.
Finally, the share of profit does not appear to favour one person over the other, given that each made his own contribution the best they could, the relationship is definitely a partnership of sorts.
Corporations: Driftwood Products Limited
The assertion that Driftwood Product Limited’s existence came to an end simply because the sole shareholders had all died is very wrong in law. From the date of registration, a corporate person comes into being, having a legal personality form that of its creators and members and subject to a wide range of legal rights and duties.
Although there are various types of companies, most of them almost always have the basic and similar characteristics that: they have a separate legal entity distinct from its members. This therefore means that they have limited liability, they can own property, they have the capacity to enter into contracts, they have transferable membership, they can borrow and most important to this case point, they have perpetual succession.
The continuity of a company is not affected by the death or incapacity of some or all if its members. However, given that a company is not a person per se, it will always need someone else to act on its behalf. This is where the Manager and the lawyer come in.
Finally, the fiduciary duties of the company manager obligate him to act in the best interest of the company. In doing this, he has the power to sue the company debtors in order to claim payment for the said debts. Given that the office manager had such authority and was acting within them, he was therefore well within his powers to sue the debtor, and even then, the debtor is obligated to pay.
This therefore means that as the trustee of the company, the manager must display the utmost good faith towards the company and in the dealings with it or on its behalf. This includes even when he acts especially without the will of the general meeting and in this case, all the shareholders are dead.
Internal Affairs of a Corporation: Forest Park Apartments Ltd
Foley believes and is convinced that by the company acquiring the property from Messrs Forrest, Moss and Pine, a wrong has been done to the company and her belief is that they as shareholders in the company have been defrauded into obtaining the property.
Normally, where a wrong is done to the company, or there is suspicion of an irregularity in the management of the said company, there arises a need to enforce the rights of the company. Being the proper plaintiff in such a situation, it is for the company to take action.
This is based on the fact that as a logical consequence of the company existing as a separate legal person, it is the victim of the wrong and it is the one supposed to seek remedy for the wrong committed. This in essence preserves the principle of the majority rule, and subsequently prevents multiple actions given that if each shareholder were permitted to sue, the company might be subjected to many lawsuits started by several plaintiffs. Finally, such a practice prevents futile actions because if the irregularity is one that the company can ratify, it would be futile to have litigation about it without the consent of the general meeting. However, this power is sometimes abused by directors who are majority shareholders.
The above principle places the majority shareholders in such a strong position that minority shareholders would be a t a serious disadvantage if the company were to act in an illegal or ultra vires manner, where the resolution is not properly passed, where the individual rights of the plaintiff as a shareholder have been infringed or where the majority are committing fraud on the minority.
If Foley can prove any of the above grounds, her course of action against the majority shareholders would succeed. However, if she cannot then she will not succeed to get what she conceives as an irregularity redressed.
References
Smyth, J. E., Soberman, A. J. and McGill, S. A. “The Law and Business Administration in Canada”. 12th Ed. Pearson Education Canada. 2009.
