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Business

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by

Henry Chun

on 25 November 2014

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Transcript of Business

Business
LAW
Members:
Ling Ka Wai
Elyse
Cheung Wing Chin
Iglesha

Pang Ching Hei
Trevor
Chun Sai Hon
Henry
Discharge Of Contract
Hang Seng Management College
ACC2021-L828
Lecturer:
Linsey
Chen
CONTENT
I. Definition of Discharging a Contract
II. Introduction of the Case
III. Case Analysis
Possible Ways of Discharging the Contract
1. Frustration
2. Breach
IV.
CONCLUSION

V.
Possible Solution
Definition:
Discharging
a Contract
The
termination
of a contract.
Several ways to end:

P
erformance
F
rustration

A
greement
B
reach
CASE INTRODUCTION
Linda saw a
pink
bag on display of Company A’s window and walked in to order
60 bags
for the shop she runs. Linda’s shop, however, was going to move to Ma on shan because the rent in Tsuen Wan area went up significantly in 2012.

Thus Linda asked Company A to deliver the bags in
two months’ time
, after she moved her shop to Ma on shan, and Company A agreed.

Unfortunately, before those bags were delivered, an employee of Company A
stole five of the bags
.


Company A contacted Linda saying they’re rather frustrated by the fact but they could only deliver the rest of 55 bags.
Advise Linda.
Timeline
L
ordered
60 bags

from
A
and asked A for delivery within
2 months
and
A
agreed
before the delivery,
5 of them
were stolen by an employee.
A

informed
L
that A could only deliver
55 bags
.
Possible Ways of
Discharging
the Contract
Frustration?
Breach?
Factors needed to be
fulfilled
:
I. contract being
impossible
to perform

II. unknown and uncontrollable

III. Neither party is
at fault

IV. The event was
unforeseen
&
no provision
for
such events made in the contract
Factor I: Contract being impossible to perform
The case:

Linda ordered 60 bags.She requested the bags should be delivered in 2 month’s time after she moved to Ma On Shan.

Company A agreed.
However,
Company
A
fails to fulfill one of the term since one of her employees had stolen
5 of the bags
.

55 =/= 60, Company A
violates
the contract

Contract cannot be performed.
Factor I
fulfilled
.
Factor II: Unknown & Uncontrollable
The
theft
committed by the employee of Company
A


→ not expected + known by the company
→ individual’s decision & action

The person who stole the bags was a staff member from Company A

→ Company A should be responsible for the theft, of the loose security upon the goods

→ obligated to supervise its staff

Hence, it is actually
CONTROLLABLE
.
Factor II
Not
Fulfilled.
Factor III: Neither party is at fault
Linda
Innocent party
the
Theft
is unanticipated
did not assume Sb will steal the bags
Company
A
Responsible party
Failure
to comply with the
Imply terms
→ liable to secure goods from being stolen
Party
Responsibility



Company A is regarded as
Guilty.
Fact IV: The event was unforeseen &
No provision for such events made in the contract
The
theft
was not known & predicted by both Company
A
&
Linda
. →
No
plans & additional terms

were discussed in the contract considering the theft. Company A also stated that they were frustrated by the accident.
UNFORESEEN
No PROVISION were made
Case : Caldwell (
D
) v Taylor (
P
) (1863)
Caldwell (
D
) contracted to permit Taylor (
P
) the use of the Musical Hall at Newington.
D
was to retain possession of the hall and
P
merely had the use of it for
four days
to present four concerts in exchange for
100 pounds per day
.

The contract stated that the Hall must be fit for a concert but there was no express stipulation regarding disasters.

The Hall was
destroyed by fire
before the first concert was to be held and neither party was at fault. The concerts could not be performed at any other location and
P
sued for breach and sought reimbursement for costs in preparing for the concerts.
D
permitted
P
to use the
Musical hall
in exchange of
100 pounds per day
.

The hall was
destroyed by fire
.
No alternative venue for
P
to continue the concert.
P
thus sued
D
.
Comparing & Contrasting the 2 Cases
Product/Service

Outcome
Similarities
L
ordered 60 bags from
A

Failure of acquiring
60 bags
L
v
A
P
booked the venue of
D
for 4 days

Failure of
4 days performance
D
v
P
Difference

Reason
L
v
A

5 bags
stolen by
A's employee
D
v
P

Venue
destroyed by fire
Failure of performing in
three
ways:

I. Anticipatory breach

II. Causing the contract to be impossible to perform

III. Failing to perform the contract in the agreed manner

1st Way: Anticipatory Breach
Definition:
any breach that takes place before the time of performance has arrived

unable to perform the contract intentionally or by own will

by statement

Concerning the case -

Company A
:
NOT
intended to
violate
the contract

(as the theft was not expected)
Inevitably Breached the Contract.
Yet,
2nd Way: Causing the contract to be impossible to perform
Assumed Performance Final Possible Performance
60 bags
55 Bags
Delivery of bags within 2 months
Impossible to perform as the original quantity of the product

only able to provide 55 bags for Linda.


Consequently
,

the
theft
of one of the employees causes the contract being I
mpossible
to perform.

2nd Way
Matched
.
3rd Way: Failing to perform in the Agreed manner
Agreed Manner
: Behaviour Compromised when operating the contract.
carrying imply terms within the contract:

ensure the goods should be delivered
without defect
guarantee
good quality
of the delivered goods
Nevertheless, it does not match.
As
, failure of providing 60 bags(original quantity of the bag) leads to matching the 2nd way.
Case: Huntington Beach School District (
P
) v. Continental(
D
)
Huntington Beach School District
(
P
) sought to purchase a computer and sent out a notice to bid.

Continental Information Systems Corp.
(
D
)made an offer to
P
to deliver a computer by the end of July and
P
accepted.
D
did not obtain a satisfactory computer and failed to deliver.

Another bidder had made an offer to sell to
P
that was held open until July 12th.
P
let the other offer lapse because
D
had not yet formally refused to perform and
D
was still trying to obtain a suitable computer from a third party.

P
sued for breach of contract when
D
failed to deliver a satisfactory computer by the end of July
.

TIMELINE
P
wanted to buy a computer
D
made an offer for
P
of a delivery of the computer by the end of july.
P
refused another offer as continue the contract with
D
.
D
failed to deliver the desirable computer for
P
.
P
sued
D
.
Compare &
Contrast
Parties

Performance
of the contract

unexpected incident

Outcome
Huntington Beach School District(
P
)
Continental(
D
)

Computors

Unable to find the satisfactory computer

Failure of performing
Linda(
P
)
Company A (
D
)

60 bags

5 of them were stolen

Failure of performing
Possible solutions
I. Put the contract as at an
END
, sue Company
A
immediately for breach
Acceptance for
partial
performance
→ creation of a new contract
→ Pay on a quantum meruit for the remaining 55 bags
Conclusion
Company
A
caused the contract to be Impossible to perform
as the employee of company
A
stole 5 bags

The responsibility goes to Company
A
(
Discharge by breach
)

However, the accident (
theft
) is controllable as it is the security problem
of Company
A
.
Therefore, it is not discharge by Frustration, but Breach.
Conclusion
Discharg of Co tract.
one.
E
N
D
Q&A........................
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Full transcript