Business Law Corporations and Associations

Question: Discuss about theBusiness Lawfor Corporations and Associations. Answer: Introduction In the present case, a contract has been created between Darryl and Jonathan according to which, Jonathan was going to provide guards and specially trained drug detection dogs for patrolling the nightclub of Darryl. The contract was for six months and the total fee decided by the parties was $600,000. It was also mentioned in the contract that if appropriately trained sniffer dogs were not provided by Jonathan at whatever time for the duration of the contract, Darryl has a right to finish the contract after giving a written notice of one week. Under the circumstances, after two months of the contract, one of the sniffer dogs of Jonathan fell ill. During this time, Jonathan substituted the sniffer dog with an ordinary guard dog for one week. Darryl was very upset when she came to know about it because in the past one month, there has been increased police patrolling and most of the nightclubs. Therefore, Darryl immediately paid Jonathan for the last nine services and told Jonathan tha t she did not want to see him or his dogs again. As a result, the contract was terminated by Jonathan. In this case, the issue is to determine the rights and obligations of Darryl and Jonathan under the law of contract. Classifications of terms: The contractual terms fall under the categories of conditions, warranties and innominate terms. Conditions can be described as the most significant terms of a particular contract (Baxt, Fletcher and Fridman, 2008). There are serious consequences for the parties if a condition of the contract has been breached. In such a case, the law allows the innocent party to terminate the contract and likewise, damages can also be claimed by such party (Poussard v Spiers, 1876). Warrantees in contrast, are the less imperative terms of a contract. Therefore, serious consequences do not arise in case of a breach of warranty. In such a case, the law of contract provides that damages can be claimed by the innocent party however such party is not conferred the right to end the contract (Bettini v Gye, 1876). There is also the category of innominate terms. This area was created in Hong Kong Fir Shipping v Kawasaki Kisen Kaisha (1962). Instead of classifying the terms of the contract as conditions are warrantees, under the innominate terms approach, the effect of the breach of the term is considered. Therefore if the innocent party is deprived of nearly all the advantage under the contract, such party is allowed to consider that the contract has finished. Discharge of contract: It means that the obligations of both the parties under the contract are finished. The reason is that when the body is surrendering to the original contract, the rights and obligations of the parties as the contractual obligations were established. Similarly when these rights and duties are put out, it is said that the contract has been discharged (Harris, Hargovan and Adams, 2013). Once a contract has been discharged, the parties to the contract are not liable even if the obligations under the contract have not been fulfilled. A contract can be discharged in several different ways:- Discharge of contract by a subsequent e-mail between the parties; Discharge of contract by performance; Discharge of contract by impossibility of performance; Discharge by operation of law; Discharge due to lapse of time; Discharge by satisfaction of contract; and Discharge of contract by breach of contract. The failure to complete the contractual obligations called the breach of contract. The law of contract provides that the discharge of contract may take place in case of the breach of contract. A breach of contract can be real breach and anticipatory breach. The anticipatory breach of contract takes place when a party to the contract reveals its intention than it does not going to perform its obligations prescribed by the contract. In such a case, the law of contract does not provide that the innocent party should wait that the breach of contract may actually take place before such party can initiate action for such breach (Hochster v De la Tour, 1853). In this way, in case of anticipatory breach, the innocent party has can either immediately sue the other party or to carry on with the contract on its part and wait until the actual breach of contract takes place. Remedies for breach of contract: When it has been established that there has been a breach of contract on the part of one party, there are several remedies that are available to the innocent party. These remedies include damages, the recession of contract, the remedy of specific performance and the modification of contract. The remedy of damages is available to the innocent party for a breach. In case of damages, the court awards at sum of the money for the purpose of compensating the innocent party. Under the law of contract, the main purpose of providing damages is to place the injured party in the same position in which it would have been if the other party would have performed the contract according to its terms. Generally when a party to the contract has to deal with a breach by the other party, such party can claim damages. In this context, damages can be described as monetary damages. Damages can be compensatory damages (expectation damages and consequential damages), liquidation damages, punitive damages, nominal damages and restitution. Expectation damages are intended to cover what was expected by the injured party under the contract. Usually, straightforward calculations are made, on the basis of the contract itself or the market values. Another remedy that may be available to the innocent party is the recession of contract. However it needs to be mentioned that the recession of contract is an equitable remedy before it is the discretion of the court to avoid this remedy (Sweeney, OReilly and Coleman, 2013). In case of the recession of contract, it is tried that the parties to the contract are placed in the pre-contractual position and in this way, the recession of contract amounts to the unraveling of the contract (Long v Lloyd, 1958). In the present case, there has been a breach of contract by Jonathan when he failed to provide the sniffer dog and instead, sent an ordinary guard dog. At the same time, this breach of contract can be described as a significant breach. The reason is that it can be described as a condition of the contract between Darryl and Jonathan that sniffer dogs will be provided by Jonathan so that nobody can smuggle illegal drugs in Darryl's club. Hence this failure on part of Jonathan can be considered as a breach of contract between Jonathan and Darryl. This provides a right to Darryl to terminate the contract even if she had not provided the mandatory one weeks notice to Jonathan before terminating the contract. On the other hand, it can be claimed by Jonathan that there has been a breach of contract on part of Darryl and as a result, he had terminated the contract. Jonathan may want to claim damages for the breach of contract by Darryl. However, in view of the provisions of the law of contract that have been discussed above and the relevant case law, it can be said that in this case, a condition of the contract has been breached by Jonathan. Therefore the remedies provided by the law, for the breach of contract, are available to Darryl. References Baxt, R, Fletcher, K Fridman, S 2008, Corporations and associations: cases and materials, 10th edn, LexisNexis, Butterworths, Sydney, New South Wales Harris, J, Hargovan, A Adams, M, 2013, Australian corporate law, 4thedn, LexisNexis Butterworths, Chatswood, New South Wales Sweeney, B, OReilly, J Coleman, A, 2013, Law in Commerce, 6thedn.2015, Australian Corporations Legislation, LexisNexis Butterworths/CCH (Vol 1) Case Law Bettini v Gye 1876 QBD 183 Hochster v De la Tour (1853) 2 E B 678 Hong Kong Fir Shipping v Kawasaki Kisen Kaisha [1962] 2 QB 26 Long v Lloyd [1958] 1 WLR 753 Poussard v Spiers (1876) 1 QBD 410