Breach Of Contract: A Case Study And Analysis

Legal Aspects of Contracts

Issue 

As per the case study, is there any contract have been formed between Josie and Sam?

Rule 

A contract can be form as written or verbal.  As per the Australian Contract Law, it is stated that a promise that is formed between two or more than two parties for establishing a legal relationship. It is a common law, which is a base upon the English contract law. There are several elements to form a legal contract.

• A valid agreement must be made in a legal contract. No unilateral contract treated as a valid contract. There must be two or more than two parties can form a legal contract. The first party made an offer towards the second party and the second party accepts the offer. The moment second party accepts the offer a contract had been made.
• There must be consideration between the parties. The promise is made between the two parties always made if there is a valid consideration. Consideration can be take anything like the money or any property, which will be provided into the parties. It is the important part of a contract where a promise has been established.  
• The capacity of the contract is another important element to form a valid contract. the parties must be sound mind and have capacity to keeping and fulfill the promise as per the contract. There must be particular promise should made between the parties.
• There must be a legal intention of the parties to make a valid contract. Wrong intension can make any contract void as per the Australian Contract Law. Both of the parties have a legal intension at the time of produce the contract.
• The certainty should be present in the contract. When the contract agreement formed, from that moment the agreement must fulfill both parties legal rights and obligation. The certainty is important because sometimes the parties failed to perform as per the contract. The promise are stated in the agreement must affect the both parties.

Revelations Perfume and Cosmetics Inc. v. Prince Rogers Nelson is a famous case of breach of contract where in 2008 the famous company of Revelations Perfume and Cosmetics made some allegation against one of the famous musician Prince for damaging $100,000. He promised to promote their new launch perfumes by using his new song album. However, when the company told him to give interviews for promoting the project he denied giving it and breaching the contract. The court found that it is a breach of contract case where the aggrieved party failed to perform as per the agreement and cause damage to the innocent party. The contract has been breached but the court did not found any evidence against Prince but he was acted with harmful activities towards the innocent party so the court ordered to give fine about $4 Million to the cosmetics company for paying the company is out of pocket expenses.

A breach has taken the place as per Revelations Perfume and Cosmetics Inc. v. Prince Rogers Nelson. In this given study one party failed to perform as per the agreement breached that.  Macy’s v. Martha Stewart Living is another famous case of actual breach of contract. In this case, Macy’s is a department store who sues Martha Stewart living Omnimedia for breaching a contract. They alleged the Martha Stewart living Omnimedia because they make an agreement with Macy’s that they allowed a mini retailer to sell goods from the shop. The Macy’s argued that they have rights to sell the products as per the signed contract in 2006. However later the court found Macy’s guilty for the offence and ordered to pay the punitive damage to Martha Stewart living Omnimedia. Legal fees pay the damage remedies. It is another case of actual breach.

1. According the case study,

• Josie who is a painter made a written contract agreement with Sam that he will sell one of his sunflower paintings in $800 to Sam which validity will be last Tuesday 21^st When an art enthusiast arrives In Josie’s studio and asked to buy the same sunflower painting in $900 in cash, Josie sell that to her. When Josie signed that form, that moment a contract had been made.
• When Josie sells the sunflower painting Wendy at $900, he breached the contract with Sam. As per the contract law, Josie failed to satisfied all the terms of a contract. Therefore, the contract has breached.
• Sam can take legal actions against Josie for breach the contract that he has promised to give him at $800 as per the signed form. Though Josie had send message to Sam about the sunflower painting but due to some machinery fault, Sam did not receive any call.
• When Sam made an offer with Josie that he is interested to buy the sunflower painting at $700, Josie negotiate the offer and told Sam that she will not accept more than $800 Sam who is the buyer accept the offer.
• He also mentioned to Josie that he will take his wife’s concern before buying it. When Josie accept the offer he made a form where it is mentioned that he will sell his sunflower painting to Sam and that offer will expire till 21^st  
• The agreement is made when both the parties have mutual consent and legal intension have stated.
• They had a common mutual understanding to form the agreement where lawful objects also included.
• At the time when Josie had sold the contract to Wendy, he breaches the contract with Sam. He failed to satisfy all the elements of the contract.
• After he sells his sunflower painting to Wendy, he tried to give information to Sam but that was not enough to pleased Sam. Josie must need to wait until 21 February. As per the breach of contract, Sam can ask for the remedies from Josie.
• When Josie sells the sunflower painting to Wendy and next day he denied the call from Sam, the contract has been terminated and Josie became liable for the breach.
• When the damage has been declared in any contract then there are some remedies also as per the Contract Law.
• The remedies can be accepted as liquid money. When the damages are claimed, the innocent party must clear the are the damages in the contract. As per the case study, it is a case of actual breach of contract where the involved parties failed to perform the as per the time of contract. It is the most common breach of contract in Australian Contract Law.  

As per the given case study, the contract between Josie and Sam has been made as per the binding contract where they have mutual consent and legal intension to create the contract and failed to complete the contract.

Related Cases of Breach of Contract

Here, as per the Revelations Perfume and Cosmetics Inc. v. Prince Rogers Nelson and Macy’s v. Martha Stewart Living the information establishes that the both of the case of actual binding contract. The both of the aggrieved parties had breaches the contract with the innocent parties. In addition, in both cases the court found the offences of breach and fined with the damages. The remedies are take place. They have made a valid contract but later they failed to perform as per the contract and terminate the contract that becomes the cause of contract.

As per the issue of the case, Sam who is the innocent party in the agreement had suffered the damage. He has the right to sue Josie for denied to perform as per the agreement and cause breach.

Conclusion

As per the case study, the issues of the case are briefly concluded that it is a case of breach of contract. Josie needs to wait till 21^st Feb before he sale his sunflower painting. For own benefit and profit he sells to another party who is not in the contract. He also promised to Sam that he will wait for her wife’s consideration made the form and signed that. However, he failed. In Revelations Perfume and Cosmetics Inc. v. Prince Rogers Nelson and Macy’s v. Martha Stewart Living, cases are the example of breach of the contract, which can relate with the given case study. The contracts are the actual contract and they breach the contract for failing to perform as per the agreements.

A contract can be formed and if any of the party breach the contract then the remedies also available. As per the given case of breach of the contract between Josie and Sam, though Sam not sued Josie for breached but he may take legal actions against Josie. When Josie sells the sunflower painting Wendy at $900, he breached the contract with Sam. As per the contract law, Josie failed to satisfy all the terms of a contract. Therefore, the contract has breached. Josie failed to perform as per the elements of legal contract, consideration, capacity, legal intention and certainty.

As per the case study when Sam made an offer with Josie that he is interested to buy the sunflower painting at $700, Josie negotiate the offer and told Sam that she will not accept more than $800 Sam who is the buyer accept the offer. However, he also mentioned to Josie that he will take his wife’s concern before buying it. When Josie accept the offer he made a form where it is mentioned that he will sell his sunflower painting to Sam and that offer will expire till 21^st February.  Before 21^st, Josie sells the sunflower painting to another art enthusiast on 20 Feb in $900. Though Josie got a great deal with Wendy, he should wait for Sam first because already he forms a contract with him. Josie messaged the information to Sam but due to the machinery problem, he did not get the message. Josie breaches the contract with Sam. When the contract had been formed Josie and Sam became parties who have entered into a valid contract. The agreement is made when both the parties have mutual consent and legal intension have stated. They had a common mutual understanding to form the agreement where lawful objects also included. At the time when Josie had sold the contract to Wendy, he breaches the contract with Sam. He failed to satisfy all the elements of the contract.

Concept of Part Performance

In the cases of Revelations Perfume and Cosmetics Inc. v. Prince Rogers Nelson and Macy’s v. Martha Stewart Living also described that how parties can breach the contracts. In these both cases, the court ordered the aggrieved party to give the remedies to the innocent or suffered parties. They made the contract in mutual consent but then failed to perform as per the contract. As per the Australian Contract Law, a contract is breached when the contract failed to act as per the condition and the parties breach the warranties for performing the contract. When the damage has been declared in any contract then there are some remedies also as per the Contract Law. The remedies can be accepted as liquid money. When the damages are claimed, the innocent party must clear they are the damages in the contract. As per the case study, it is a case of actual breach of contract where the involved parties failed to perform the as per the time of contract. It is the most common breach of contract in Australian Contract Law.

Discussion 

Pinnel’s case [1602] 5 Co. Rep. 117a was a famous case of English Contract Law which also known as Penny vs. Cole where the concept of the doctrine of part performance was described briefly. This case is related to the part payment of any debt, which is not for a good consideration but promise to get back the balance. Pinnel who sued Cole who failed to fulfill the promise for the sum of $8 10s which was debt upon a bond. However, Cole was argued that he tendered $5 2s as per the Pinnel’s request before the due of debts which was accepted by the plaintiff in full satisfaction for the debt.

When a contract had been formed, the promise arose along with the acceptance of the agreements. The offer, acceptance, intension and consideration are the most important in a consideration agreement. In the Pinnel Case, the creditor had promised to pay the debt amount to the debtor without the consideration.

As per the legislations of the rule it is stated in the Pinnel Case in the consideration the payment of the debt never discharge the obligation because if the creditors make the promise without the consideration with the debtor then debtor will not liable to pay the amount in full payment (Goldberger 2015). The court had been notice in the case that the less amount of the main amount is paid before the due date and the rest of the amount must be paid on the directed date.

Understanding the Case

The court also stated that if the creditor gift to debtor a horse, hawk or any robe which will satisfy the amount and beneficial to the debtor then it fulfill the consideration of the debt amount. However, if the creditor failed to satisfy the benefits to the debtor then the consideration of the debts will not accepted in the agreement. It is also stated in the court that the payment and acceptance of less amount on the specified date, which was mentioned in the agreement of the debt where the valid consideration is, required.

Foakes v Beer (1884) 9 App Cas 605 is another case where a judgment was deliver to Mrs. Beer for a debt against Dr. Foakes who have asked the debt in time. Mrs. Beer stated that she would not take any action against the matter where Dr. Foakes need to pay her $500 in urgent and the rest amount must be paid as an installment . Moreover , the debt include the interest and in this situation the court have give order that she must be paid the amount with the interest and Dr. Foakes not satisfied her promise as per the debt of the agreement. Therefore, she must not provide any consideration to him.

As per the given case, Cole promised to pay Pinnel that was due on 11 November. Cole argued that Pinnel had requested to him to pay the $5 2s on 1^st October and which was Pinnel accepted in a mutual agreement of the debt. However, as per the case study is was stated on the mutual agreement between Pinnel and Cole that is the part payment must binding if the debtor accept the agreement as per the request of creditors.  

The consideration will provide to the creditor if he accept the terms of debtor. The terms are:

• When the part payment is paid before the due date.
• When chattel is provided in exchange of the debt money.
• When the part payment is stated in a different place rather than the original amount of money.

There are some exceptions also in the consideration of the debts. The rules that are mentioned in the Pinnel case there are some exceptions are included. When the creditors approve the agreement of accepting the amount then the consideration of the agreement must specified in proper way.

• When the part payment of the debt had to pay by a third party. When a promise was made as per the amount of the amount of the debts, which was fully paid by a third party on condition that when the debtor will have no obligations to pay the full amount of money as per the agreement. This is case of doctrine of promissory estoppels. In this matter, when a promise has been formed, the promissory estoppels can be included if the consideration was not introduced.

The basic estoppels are applied to those agreements where the included facts never extended in the future, if that extent then the consideration will not allowed. If any such issues arise then consideration will not take its place. In general estoppels the existing facts must represent the intension of the creditors. This limitation is included in the Denning J in Central London Property Trust Ltd vs. High Trees House Ltd (1947) KB 130.

When the estoppels applied to the promise of future or include any future periods then it will be treated as promissory estoppels which was followed briefly in the Foakes v Beer (1884) 9 App Cas 605. If the promissie failed to satisfy up to the promise then no damage will took the place. In Pinnel’s case, the debt without consideration will refuse the development in England where the doctrine of promissory estoppels applied as per the law and regulations (Liebenberg et al. 2014). In the promissory estoppels a person can go back as per the promise which will represents the facts of consideration. When parties enter into the agreement, they have to apply their legal intensions in the agreements. The parties are binding as per their promise to each other. In such matter, that will not allow anybody to fail to keep the promise, which have no consideration.

As per the comments of Judge Denning J, the estoppels in Central London Property Trust vs. High Trees House Ltd (1947) KB 130 are strictly followed.  The judge follows the solution in the Pinnel’s case as per the above-mentioned case solution. When the creditors are estopped from the given promise where the future intension is not included then the creditor have no right to sue the debtor for the consideration amount.  As per the brief description, the promissory estoppels are applied to various cases .

The application of promissory estoppels is applied in the case of Pinnel’s case [1602] 5 Co. Rep. 117a. Various judges criticized the judgment. The doctrine of promissory estoppels has solved the Pinnel’s case very effectively.

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