BUS503 Principles of Commercial Law Assignment Sample
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CASE TITLE: USC v Kalpana
Introduction
In the given case, there is a breach of contract by Kalpana as a defendant whereas Rafia as plantiff is innocent party in the contract. The contract was made to perform traditional and Indian classic dance but bollywood dance was performed causing dissonance among the viewers and patrons that damaged the reputation of the University. USC has lost thousands of dollars in advertising and refunded tickets and refuses to pay Kalpana’s fee. Now, the question is to decide whether there is any breach of contract or the warranty and determine the remedies in the condition of contract breach.
Question 1
Is the oral assurance, given by Kalpana to Rafia, a term of the contract or not?
Issue:
In the University of Sunshine Coast, Rafia is an event manager. She decided to make a contract with Kalpana, the principle of Shastriya Nritya with the purpose of organizing a traditional Indian classical dance to make an impression on the representatives of SavitribaiPhule Pune University of Pune, India. It is because Kalpana was impressed with the pictures on the website. Rafia and Kalpan were assured that this performance will play an important role in the contract between USC and Indian University. Rafia discussed that on the completion of the contract, she will promote the performance with the name and Indian traditional dancers for selling tickets and impressing Indian visitors. Regarding this, Kalpana orally assured that good dance performances will be presented. So issue is that the oral assurance given by Kalpana to Rafia is a term of the contract or not?
Rule:
The Parol Evidence Rule:
The Parol Evidence is the rule where the parties make a written contract and bound to it. All the terms of contract are provided in the written agreement (Chen-Wishart, 2012). The record of the transaction is embodied in the written contract document. Mercantile Bank of Sydney v Taylor [1891]
Collateral Contract:
Parol evidence is not applicable to vary and add to the terms of a written contract. It may be possible to present that the parties are allowed to make two contracts including written and oral or collateral contract. If the contents are not mentioned in the statement, then this type of contract is called as collateral contract. In such case, the court will consider the written contract valid (Hillman, 2012). At the same time, the verbal representation includes the key contents and without these contents, the contract is not applicable. In the case of Hoyts Pty Ltd v Spencer [1919], the defendant (Spencer) gave premises to the plaintiff (Hoyts) on lease. A registered memorandum of lease was used to lease the premises. The contract included a clause that enabled Spencer to terminate lease at any time after giving a 4 week notice in writing to Hoyts. Later on, Spencer terminated the contract by giving the due notice. However, Hoyts claimed that Spencer promised him not to terminate the agreement during the term. In this case, the collateral contract prohibited to Spencer to terminate the agreement (Knapp et al., 2016). For this, the court declared that this separate collateral contract was binding as Spencer was in breach and cannot terminate the agreement.
Terms:
The term of contract is the provision that gives rise to a contractual obligation. Its breach can cause litigation. It ensures the obligations and liabilities of someone with his/her agreeableness. Terms of contract may be implicit and expressed. Expressed terms are mentioned in the contract while implicit contract terms form a provision of the contract (McKendrick, 2014). In order to decide the term, it is essential to fulfill these following requirements:
- Statement made and agreeableness of the statement Duffy & Ors v. Newcastle United Football Co. Ltd. [2000]
- Intention of parties to contractually bind the statements Chapleton v. Barry Urban District Council [1940].
- Importance of statement Bannerman v. White [1861].
- Remedy on breach of contract
Representations:
A representation is collateral statement by writing or parol that should be conveyed to underwriter to determine the risk. In the case of Dietrich v The Queen [1992], the court decided that Dietrich had the right to a fair trial due to lack of legal representation. It means this was not a fair original trial.
Difference between term and representation can be provided as below:
- If one party has more knowledge of the mater, then it will be considered as term, otherwise it will be representation. Oscar Chess v. Williams [1957].
- If the reliance is present in the contract means if one party tells what it wants to enter into the contract, then it will more likely to be a term. Ross T Smyth & Co Ltd v Bailey Son & Co [1940]
- Strong strength of the statement is more likely to be a term. Schawel v. Reade [1913]
- Immediately preceding statement to make contract is also likely to be a term of the contract. Routledge v. McKay [1954]
Application
Based on the given case, it is identified that Kalpana and Rafia were under collateral contract as explained in Hoyts Pty Ltd v Spencer [1919]. In addition, Kalpana guaranteed to do good dance performances. All the conditions for deciding terms show that both parties were agreed and both had intention to contractually bind same as Chapleton v. Barry Urban District Council [1940]. In addition, statement made by Kalpana had importance and strength because performance was a determining factor in enhancing reputation of the university. Moreover, both parties provided particular remedies of contract breach. It means oral assurance given by Kalpana to Rafia was a term of the contract.
Conclusion
It can be declared that terms may be expressed and implied and the oral assurance made by Kalpana can be considered as term of contract.
Question 2
If the oral assurance can be regarded as a term, is a court likely to regard it a condition or warranty?
Issue:
On the basis of this case, it is defined that Rafia and Kalpana have a contract for Indian classical dance performance but it will be decided by the court that if the contract is breached by any party that this breach is a warranty or condition. The court will decide on the basis of their influence on university, visitors or other people who are linked with this like, Rafia and Kalpana.
Rule:
Test of Essentiality- It is assumed that a term is a statement between two or more parties that can be an expressed or implied statement or it is also based on the kind of next issue. It can be said that come terms are extremely clear for the court where it is clear to take action. This type of terms is very serious and there is a need to taking action against the breach. At the same time, if there are some terms in the contract that affects a little bit to the contract. In this situation, if there is a breach of context then the court will positively support the innocent party and the party can claim but not much high.
This concept can also be understood by Trollope and Colls Ltd. V. North West Regional Hospital Board (1973).
Condition–
A condition is a term of a contract that includes several important operations to be an effective contract. It is necessary to fulfill the requirement of the contract under the condition otherwise the innocent party can take action against not fulfillment of conditions that are mentioned in the contract (Chen-Wishart, 2012). After this, the innocent party can terminate the contract and sue for damages. For example, there is a vacant possession of the property and buyer and seller has contracted for this proper. But at the same time, the seller is not able to deliver vacant possession to the buyer then it will in breach of the condition. Furthermore, the buyer may have the right to sue for damage and treatment of the contract. Thus, it can be said that the seller has to provide another location to the buyer or provide damage for breach of the contract.
Warranties–
A warranty is a term for the purpose of the contract that is less important than a condition. The warranty is usually written as a promise and as an assurance that provides security of potential damage (). Moreover, it can also be said that a warranty is a minor term in the contract where the innocent party can sue for the damages in case of a breach. It is because the terms are included in the contract was not major as well as the contract may also be performed. In concern to breach the warranty in a contract, an innocent party can claim for damages or compensation but it is not allowed rights regarding cease or delay settlement. For example, in the same case of property, if the seller breaches the warranty contract then the seller will provide a proper settlement of the property or provide damage to the buyer.
Application:
Test of Essentiality- On the basis of given case, it is defined that there is a term of condition between the contract of Rafia and Kalpana. It is because the contract contains the essential operations and the breach of contact affects the parties and other people with a high level. At the same time, the reach of contract can create several issues for the parties, such as:
- Traditional and classical Indian dance is the name of advertisement that contains an image of USC
- The potential contract between USC and Indian university will be affected
- The tickets for the dance performance show has been sold out
- In order to give admission to international students, USC wants to impress the Indian university.
All the above points are the main issues that can affect the parties if the there is a breach of the contract. Moreover, it can also be said that term of the contract is a condition, not a warranty. On the other hand, it is declared in the website of Kalpana’s dance classes that Kalpana is a Shastriya Nritya and Indian classical dance trainer. It shows that Kalpana will organize Indian classical dance, not a Bollywood dance. Furthermore, Rafia also conversed with Kalpana in a phone call that how their performance is impotent for USC and Rafia. Therefore, according to the contract of the condition, Rafia can sue for damage and rescind the contract.
Conclusion:
On the basis of above case, it can be concluded that this contract between Kalpana and Rafia will be termed as a condition. It is because it includes key contents in the term of contract where an innocent party can terminate the contract as well as sue for the damage.
Question 3
What remedies are open to USC given the facts?
Issue:
The main issue related to the wrong performance of dance done by Kalpana where she has been danced in Bollywood style instead of Indian classical dance. Being a condition, there was a breach of contract, where the remedies for this legal foundation to Kalpana for USC to claim.
Rule:
The rule is that the innocent party will get the damages occurred due to breach the contract. In this, the breach occurred because one or other party fails to perform as per the contract or did not fill all the obligations in the contact. There are some principles underlying an award of damages that are general damages, compensatory damages, restitution damages, expectation damages, and damages must be mitigated.
- In concern to the general damages, it occurs naturally if there is a breach of contract.
- Compensatory damages only compensate the actual loss for the damages additionally, in order to claim the appropriate compensation, the court tries to place the innocent party for the damage if the contract has been broken. The example of this damage is provided in the case: Commonwealth of Australia v Amann Aviation Pty Ltd (1991) 174 CLR 64.
- Restitution damages enforceable by law that provides gains-based recovery to the innocent party.
- Expectation damages are based on the special circumstances that are recoverable by the innocent party to breach of contract. According to the case of Victoria Laundry (Windsor) Ltd v Newman Industries Ltd [1949] 2 KB 528), it is identified that there is no liability of party until the circumstances bought during the contract.
- Damages must be mitigated– On the basis of the law of mitigation, it is identified that the burden of damages must be mitigated for the innocent party. It must be helpful for the innocent party to reduce the burden on the court and the party who breach the term of contract should pay to innocent party through the court.
APPLICATION:
In this case, due to the breach of contract, the remedies will be the damages.
- First, the contract should be enforced by law,
- There are some damages to other parties due to a breach of contract between Rafia and Kalpana,
- There are some quantitative like, refund of the ticket, spent money on advertisements, refusal of fees of Kalpana,
- Other damages are the reputation of USC in the education industry, incompletion of contract of USC and Indian university and loss to the Indian students by USC.
- At the same time, it is recommended to USC that the law can offer free trips or free tickets to the visitors for cultural events for mitigation of loss of their refunds.
CONCLUSION:
It is concluded that USC can claim to Kalpana for the damages and it can also rescind the contract. It can also conclude that this was a condition that was a breach by Kalpana and it should pay all the damages that were occurred.
References
Books
Chen-Wishart, M., 2012. Contract law. Oxford University Press.
Hillman, R.A., 2012. The richness of contract law: An analysis and critique of contemporary theories of contract law (Vol. 28). Springer Science & Business Media.
Knapp, C.L., Crystal, N.M. and Prince, H.G., 2016. Problems in Contract Law: cases and materials. Wolters Kluwer Law & Business.
McKendrick, E., 2014. Contract law: text, cases, and materials. Oxford University Press (UK).
Cases:
Mercantile Bank of Sydney v Taylor (1891) 12 LR (NSW) 252.
Hoyt’s Pty Ltd v Spencer (1919) 27 CLR 133
Duffy and others v Newcastle United Football Club Ltd.(2000) All ER (D) 892
Chapelton v Barry Urban District Council [1940] 1 KB 532
Bannerman v White (1861) 10 CBNS 844
Dietrich v The Queen [1992] HCA 57
Oscar Chess v Williams [1957] 1 WLR 370
Ross T Smyth & Co Ltd v T D Bailey Son & Co. [1940] 3 All ER 60
Schawel v Reade [1913] 2 IR 81.
Routledge v Mckay [1954] 1 WLR 615
Victoria Laundry (Windsor) Ltd v Newman Industries Ltd [1949] 2 KB 528)
Commonwealth of Australia v Amann Aviation Pty Ltd (1991) 174 CLR 64
Trollope and Colls Ltd. V. North West Regional Hospital Board (1973)
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