Contract Law Problem Question Essay

1771 words - 8 pages




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Subject:Law of Contract……………………… Coursework Number: Two

Date of Submission: 6th January, 2013

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Tech Ltd hired extra electricians and worked longer hours to complete the installation as agreed on 20th December.

Keith also entered into a contract with Office Ltd who agreed to supply twenty flipcharts for the conference. The contract price was £1,000 and the flipcharts were delivered on 21st December.

On 22nd December, one of Keith's employees fell ill and was unable to hand out welcome packs to the delegates. Keith approached his friend Simon, who often helped out at conferences, and asked whether he would step in and hand out the welcome packs. Simon agreed and handed out the materials. The next day Keith promised to pay Simon £50 for his trouble.

The Christmas conference period was not as lucrative as Keith had anticipated and as a result was unable to pay Office Ltd the full £1,000. Office Ltd, who were also in financial difficulties, agreed to accept payment of £750 in full settlement.
Office Ltd are now seeking to recover the outstanding £250 owed by Keith.

Keith is also refusing to pay the extra £2,000 promised to Tech Ltd and Simon is also seeking to recover the £50 promised by Keith.

Advise Keith.

Although all connected by the e-learning conference, the contracts made by Keith with Tech Ltd and with Office Ltd, and the agreement he made with Simon should legally be seen as three distinct and separate issues. For that reason, I will consider them here in turn.

Keith v Tech Ltd
The issue here is whether Keith should have to pay Tech Ltd the additional £2000. Keith offered the £2000 and by completing the work, Tech Ltd demonstrated acceptance and so clearly an agreement was formed. For that agreement to be legally enforceable, consideration also needs to be shown. Generally, performance of an existing duty will be insufficient as consideration. This general rule was established in the case of Stilk v Myrick [1]. In this case the captain of a ship promised extra payment if a smaller crew than intended sailed the ship back; the court held that the promise of extra payment was not enforceable as the crew had provided no consideration to support the promise and simply carried out their existing obligation. While this established the basic principal more recent cases have challenged this rule. In Williams v Roffey Bros [2], additional payment was promised if refurbishment of a set of flats were completed on time. The Court of Appeal held that the plaintiffs were entitled to their additional payment as the defendants avoided a disbenefit of a penalty clause for late completion, and this in itself provided consideration. Glidewell L.J. set out a set of criteria to clarify the application of the principal as follows:
i) If A has entered into a contract with B to do work for, or to supply good or services to, B in return for payment by B; and
ii) at some stage before A has completely performed his obligations under the contract B has reason to doubt whether A will, or will be able to, complete his side of the...

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