Summary
The law of contracts deals with keep of promises; when agreements between two or more people form a contract that is legally enforceable. The parties to a contract have the rules to the contract (Dawson, 2011). Each party is expected to fulfill part of the contract, when not might cause damages to the other party. It is not always that promises are honored; the situation of the case determines whether the injured party is to be compensated for the damages or not (Sweeney, O’Reilly & Coleman, 2010). This paper analyzes different aspects of contract law using John and Chen’s case study outlined in the appendixes.
The Case Analyzed
John agrees to build an extension to Chen’s house. At the time they enter the agreement, the price of building materials is increased week by week. John is reluctant to set a price for the work until he knows how much it is going to cost. Chen agrees in the contract that he will pay John “the purchase price of materials as at the date of completion plus $6000 for labor”. The parties also agree that the work must be completed by the end of June, as Chen’s family is coming to visit him at that time. Before the work begins, there is an unexpected increase in labor costs and an equally unexpected drop in the price of building materials. John tells Chen that he will need to increase the labor component to $10,000 or not do the job at all. Chen is anxious that the work be completed by the end of June so reluctantly agrees to the change. John builds the extension but does not finish it until the middle of July. Because of this, Chen had to pay for his family to stay in a hotel for three weeks at a total cost of $1500. Chen is now refusing to pay John more than the price of materials plus $6000 for labor. In addition, he wants John to compensate him for the money he had to pay for the hotel.:
What Arguments Could Chen Use to Support His Refusal to Pay John More Than the Original Agreed Price?
For contact to be enforceable in court, the parties to the contract should accept to the term and requirements of the contact with no external influence from the other person. The promises to the contract and the considerations that the parties had considered when making the contract are important aspects to determine the way forward on a contract. Looking at the way and point of view that Chen accepted the $10,000 increase in labor cost, some undue influence from John can be seen. In the first, the time for the completion of the work had started coming to reach. On the second, John had threatened not to do the work if the cost was not increased. Looking at the two situations, Chen was under undue pressure (indirect) from John to accept the increase in labor cost. Although the conditions of the market were evident that labor costs had increased, John is likely to have used the weapon of knowing that Chen’s family was nearing arrival thus used the force to force Chen to increase the prices (Carvan, 2005). Note the statement “Chen is anxious that the work be completed by the end of June so reluctantly agrees to the change,” the statement shows that Chen accepted the contract not at free will but from the influence of John and the situation (Sieg, 2011).
When signing the contract, Chen was thinking that his family was using the house when they visit Chen, this is called consideration that made Chen not like to accept the increase in the labor cost. The fact that he accepted an increase in the price dismissed the original contract where the labor cost was $6000 to now of $10,000. For contact to be enforceable, each party must fulfill their part according to the requirements of the contract this is the reason for thinking if it was done. In this case, John failed to fulfill his share of the contact thus Chen has this as a basis of not paying the high labor cost, the case says “John builds the extension but does not finish it until the middle of July,” looking at the considerations of the contract, Chen was keen on the timing of the extension and had made John aware of the same. With this in mind, Chen has the ability to refuse to pay for the extra labor cost (Tang, 2010).
Looking at the matter from a different perspective or to thinking another way, the reason why Chen accepted the increase in labor is in consideration of his family coming to visit him and probably the happiness they will get from the facility. This was however not fulfilled because of the negligence that John made. Under the duty of good faith, John would have considered the situation and ensured that the home is completed by end of June as they had agreed with Chen, this never happened (Whittaker, 2011).
Depending on the agreement for the $10,000, Chen can have an arguing point if the new contract was not written there or here; in the contracting law, a written contract cannot be nullified by a contact made by the word of mouth. If the parties never signed a new contract document, then Chen can still rely on the old document and enforce the costs that are documented therein (Deeksha, Elsje & Minette, 2009).
Looking at the fact of the case, Chen accepted the new deal as a consideration for the completion of the extension before his family jetted in the country. In the event that John had alerted him that the work would not be completed within the time framework, he probably would not have entered into the contract. The fact that John was a professional in construction and created an impression that despite delays in starting up the project, the project would still be completed in good time is the conduct of misrepresentation. John as a professional was at the upper hand to know that the house would not be completed within the time frame and advised Chen accordingly, however, he misguided him to sign the contract. With the basis, Chen has the legal baking not to pay the extra cost of labor (Randy, 2003).
What Arguments Could Chen Use to Support His Claim for Compensation?
The contact was to think of completing the premises so that Chen’s family can come and stay there; the idea and the reason was the one that had made the contact last until the end of June. When Chen was accepting the conditions set out in the contract, his main thinking was the fact that his family will have a place to live in when they get into the country. John failed to honor his promise of finishing the work in the allocated time; it was him that had signed and accepted the contract for monetary consideration and promised to finish the work before Chen’s family got into the country. John failed to do his promise; because of the dishonored promise, Chen had to incur some costs on hotel accommodation for his family totaling $1500 (Kendrick, 2005).
When looking at the case, had John finished the house within the allocated time as per the contract document, Chen would not have incurred the cost of hotel accommodation. It is true to say that it was because of John’s failure to honor his promise that Chen incurred the cost. Thus Chen has the legal backing of demanding compensation damages incurred from John. In the two contracts, one thing remains constant the time for completion of the building was before the end of June, John actually in the second set of contact accepted the contact with an increased amount despite having spent some time before starting the work. All along it is evident that John knew that the extension was made in anticipation of Chen’s family visit by June, however, he never made the effort of completing the work within the agreed framework (Riachards, 2005).
Another thinking that Chen can use to get payments is misrepresentation aspects of contract law; the fact that John was a professional in construction and created an impression that despite delays in starting up the project, the project would still be completed in good time is the conduct of misrepresentation (Lunenburg, 2011). John as a professional was at the upper hand to know that the house would not be completed within the time frame and advised Chen accordingly, however, he misguided him to sign the contract. It was through the misrepresentation that Chen accepted the contract that eventually lead him to suffer more damages of $!500 in hotel costs. From the start, John can be seen to have used his knowledge, professionalism and experience to misguide Chen into the contact and thus the much damage on Chen. Chen should thus seek compensation from John as the extra expense that he incurred on his family’s stay in the hotel was incidental or as a result of misrepresentation by John (McKendrick, 2005).
What Arguments Could John Use to Support His Claim to the $10,000 He Wants Chen to Pay?
John can argue that when the parties set for a price of $10,000, it was based on good faith and undertaking of the business environment of which the two parties seemed to understand well. The adjusted price nullified the previous contract that the two had thus the previous contract that called for payment of $6000 was not in existence. With the argument, the contract that the two parties were acting upon was the new $10000 labor cost contract.
John can think that the two parties accepted the changed terms thus Chen was under the obligation of honoring the new contract. The fact that Chen is refusing to pay for the agreed amount because the family got into the country before the extension was complete can be argued not to have been the main consideration that the two parties had considered when entering into the contract. John can argue that the contract was for the completion of the extension thus the fact that the completion date failed to adhere was secondary to the main consideration (Gillies, 2004).
The fact that Chen accepted the contract when fearing or shaking should not be taken as an undue influence from John, it was the situation and his timing that made him fear that the family will find the extension not completed as well. On the other hand, Chen was negligent in that if he had known that the family was coming that soon, he would have contracted for the extension early enough.
When another argument that John can use is the fact that when the second contact was made (the $10000), he had not started the work and had offered the chance to council the contract. At this point, he had not said he will do his work him to doing work but Chen accepted the increased labor cost (Fafinski & Emily, 2009).
However, as much as the house was not completed for the time of visit, the increase in the cost of labor was not to be for the fast completion; there was no matching to complete and pay. To increase the cost was because of increase in cost was from the increased labor cost thus it had no relationship with fast completion. When thinking in the other words, the amount was not to facilitate fast completion, however, it was part of the main contract which involved completion of the expansion. Chen was thus under good doing to make his promise alive and pay the increased cost.
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