The first contract
The first contract is entered between Alfred and Barbara whereby it is agreed that Alfred should drill 600 feet deep well for Barbara. The well should be 600 feet deep and the price to be paid is $10 per foot with a payment of $3,500 as a deposit for the service to be offered. The well should also be completed by June 1st.
Having agreed to the above terms, the next thing is to determine if the terms amounted to a valid binding, and an enforceable contract. Offer, acceptance, consideration, intention to be bound, capacity to contract, and the legality of the contract. All the above elements are manifested in the agreement between Alfred and Barbara, and there is no doubt that their agreement is validly created and hence enforceable.
Upon examining the facts presented, it is evident that a valid and enforceable contract was formed between the two parties. The offer was unequivocal, ensuring that both parties were fully apprised of the obligations to which they were binding themselves. In line with the principle established in Guthing v Lynn (1831) 2 B & Ad 232, an offer must possess sufficient clarity to give rise to a legally enforceable agreement. Here, Barbara extended a clear and definite offer, which Alfred duly accepted. Both parties possessed the requisite capacity to contract, and the subject matter was lawful, thereby satisfying the foundational elements of a valid agreement.
Furthermore, the element of consideration is manifestly present. Consideration, the price for which the promise of the other is bought, as elucidated in Dunlop Pneumatic Tyre Co Ltd v New Garage & Motor Co Ltd [1914] UKHL 1, is a sine qua non of contract formation. Barbara’s consideration lay in the payment for the drilling services, while Alfred’s consideration was the act of drilling the well.
Having established the existence of a binding contract, it follows that any deviation from the agreed terms constitutes a breach, entitling the aggrieved party to seek legal redress. In the instant case, Alfred demonstrably failed to fulfil his contractual obligations. The parties had crystallised specific terms regarding the depth of the well and the timeline for completion. Alfred’s failure to drill a 600-foot well by the stipulated deadline of June 1st amounts to a breach of a fundamental term of the agreement.
Accordingly, Barbara is well within her rights to initiate legal proceedings against Alfred for breach of contract, seeking appropriate remedies for the non-performance of critical obligations.
Seeing that Barbara had paid some consideration worth $3,500 to Alfred, non-adherence to the terms of the contract as agreed would cause her a loss worth that much. The practice is that for an aggrieved party to have a remedy in law, he/she must prove that the breach caused him/her loss and damages. It is for the aggrieved party to demonstrate that they would not have suffered a loss if the breach never occurred. In Hadley v Baxendale [1854] EWHC J70 the loss or damages caused to the aggrieved party must not be too remote. The breach must give rise to substantial loss that can be remedied in a court of law.
In the circumstances of the present case, Barbara is entitled to seek damages amounting to $3,500, representing the direct and foreseeable loss suffered as a result of Alfred’s breach of contract. Nonetheless, any ancillary losses not directly attributable to Alfred’s failure to perform would not be recoverable.
It is pertinent to note that Alfred’s inability to drill to the agreed depth of 600 feet arose due to what he contends were unavoidable circumstances. Consequently, Alfred may seek to rely upon the doctrine of impossibility or impracticability as a defence to mitigate or extinguish his liability. As established in Taylor v Caldwell [1863] EWHC QB J1, the court recognised that where an unforeseen event renders contractual performance impossible, the defaulting party may be excused from strict compliance with their obligations.
In this instance, the drilling operation was thwarted by an unexpected obstruction — the drill rig striking solid rock — rendering further drilling impossible. This unforeseen development could furnish Alfred with a legitimate basis to invoke the defence of impossibility, thereby potentially absolving him from liability for non-performance under the contract.
After Alfred’s drill broke down he made a counteroffer to Barbara to start drilling another well without charging any extra fees to Barbara notwithstanding that he had incurred losses as a result of the process. Unfortunately, Barbara contracts another party in another different contact to offer the same services. The contract is entered between her and Carl. They reached an agreement that the well should be 350 feet deep and payment would be $4,500 which is paid upfront. Again, the contract between Barbara and Carl is valid since all the elements of a valid contract are manifest. There is no breach on the part of Carl since there was no agreement as to time. Carl was therefore at liberty to start drilling within a reasonable time.
Since Barbara incurs other additional losses due to the wells not being ready in good time, he blames Alfred for all the losses including those caused by drying of his apple crops ($15,000 worth of losses) and $4,500 as the cost of the well drilled by Carl. This paper opines that it would be difficult for Barbara to recover losses beyond those caused by Alfred’s breach. Thus, going by the doctrine of privity of contract, only parties to a contract are around to claim rights created by a contractual relationship. Consequently, a party cannot be liable for losses caused by breaches other than those emanating from a contract that they are privy to. Blaming him for subsequent losses would, however, be possible if it is shown that the breach would have been avoided which is not the case. Thus, Barbara cannot claim that Alfred’s breach resulted in other losses independent from those occasioned by the breach of their initial contract. Additionally, as the paper has previously identified, the defense of impossibility would absolve him from the liability.
In conclusion, and in consideration of all that is discussed above, Barbara has the right to sue Alfred for damages. This is because the contract is validly made and hence enforceable. She is also privy to the contract. Additionally, she enjoys the right to accept or reject any counter-offers made; a right she expressed when she rejected Alfred’s counteroffer. As to the damages, this paper opines that she can only recover general damages which would be$3,500 paid in advance as a deposit for the service to be provided. Whether she recovers $3,500 would be for the court to decide based on the acceptability of the defense of impossibility.
The second contract
As a rule of thumb, a contract must be validly created for it to be enforceable (Schubert, 2014). The fundamentals of a contract, offer, acceptance, and consideration must be shown to exist before any right and obligation can be claimed by either of the parties (Kim, 2016). The capacity to contract, the intention to form a binding contract, and the subject matter of the contract must also fall within the confines of the law (Bunni, 2015). A close examination of the facts presented in the case scenario shows that there was no valid contract between Mundo manufactures printing presses and Extra. The contract is not validly formed since there is no valid acceptance of the offer by Extra.
To begin with, there is a clear offer made by a representative of Mundo manufactures printing presses but there is no acceptance by Extra. Mundo has offered to sell the required number of presses at the cost of $2.4 million. The offer is made through a letter but acceptance seems not to have been successfully made. The facts disclose that Boss ‘decided’ to accept the offer. We are not told that he ‘accepted’ it. For the acceptance of the offer to be valid, the acceptance must be communicated to the offeror within a reasonable time (Mettling, Cusic & Stanfill, 2017). It cannot be said that the above requirements were fulfilled since Boss's attempt to communicate acceptance through a telephone failed and was forced to leave a message indicating that the details of the offer looked okay. He asked Mundo’s sales representative to call him for further details. In Felthouse v Bindley (1862) EWHC CP J 35, acceptance must be communicated clearly. In case there is silence, the same cannot be interpreted to amount to a valid acceptance (Casenotes., 2007). In the instance case, Boss only decided to accept the offer, but in the process of communicating the offer, there were challenges. It’s implied that the communication was frustrating and hence he had no other option but to leave a message welcoming Mundo’s representative to further deliberations. We are not sure if there were other communications between them about the offer. This paper opines that communication of acceptance was not validly done.
After the elimination of Mundo’s competitors following a ban on imports by the United States government, Mundo withdrew all its previous offers but introduced another new offer whose terms are that Mundo would not take delivery of presses for less than $2.9 million. This is entirely a new offer made by Mundo to Extra. The offer is however not accepted as no indication is given from the available facts to that effect.
The law of contract dictates how an offer should be withdrawn. The general rule is that an offer can only be revoked before acceptance takes place and communication of the revocation must be made to the offeree (Carper & McKinsey, 2012). In the present case, this paper finds that the offer was legally revoked since it was done before the offer was accepted. Also, the revocation of the offer was communicated when Mundo notified Extra that, "All outstanding offers are withdrawn."
The paper thus finds that there was no contract between Mundo and Extra for the reasons given above. Devoid of a binding contract, no party can claim any right and nor be compelled to perform its contractual obligations. Mundo was therefore not obligated to sell the presses to Extra for $2.4 million as no contract existed in the first place. A valid contract forms the basis for the rights and obligations of the parties to it. The absence of it leaves parties with no such rights and obligations and are not, therefore, entitled to make such claims. Such rights and obligations are only enforceable if the contract is validly made which is not the case. Thus, Mundo is not obliged to sell the presses to Extra for $2.4.
Assuming Mundo was so obligated. Extra would have the following rights and remedies against Mundo. The first right would be the right to sue Mundo to be compelled to meet his part of the bargain. Extra would be entitled to seek damages for breach of contract. The aggrieved party would be entitled to both general and special damages as compensation for any losses and damages suffered. Generally, an aggrieved party in a contractual relationship is entitled to seek legal remedies in case of a breach.
If it is proved to the court that damages would not be sufficient to remedy losses suffered by Extra as the aggrieved party, Extra would be entitled to seek specific performance (Osborne, 2007). This would compel Mundo to sell the presses to Extra for $2.4 million. This right would be supported by demonstrating to the court that it would be difficult or impossible for them to find another reliable seller.
In Hyde v Wrench (1840) 49 ER 132, the defendant had offered to sell the farm for $1,000, and instead of the claimant accepting the offer he made a counteroffer by stating that he was willing to buy the farm for $950.The defendant subsequently refused to sell the farm at the original price, and the claimant sought specific performance. The court declined to grant the prayers sought since the counteroffer made by the claimant had destroyed the original offer. Based on the above, there was no contract between the parties, and therefore the defendant was not under any obligation to sell the farm to the claimant. Similarly, Mundo would not be compelled to perform a contract in a contract that does not exist in the first place.
In conclusion, this paper states that there was no valid contract between the two parties since the offer was withdrawn before acceptance took place. The offeror (Mundo) subsequently made another offer whose acceptance did not take place. This means that there was no contractual relationship between Mundo and Extra. However, this would require a demonstration before a court of law. It is however probable that the court would hold that there is no contract existing between the parties and hence no rights and obligations arise.
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