The Case Study of Knarles: Contract Research Paper

Facts

Barkley was a minor and acted as an agent of Charles, the father. This is because he was allowed to transact for the business on the father’s behalf. He entered into negotiations with Chetum about repair and maintenance and later he signed a contract on the same. Previously, Charles, the father assigned Barkley a duty of renewing licenses. Chem who is a new customer to the business entered into a contract with Barkley on the belief that he is in the position of authority. Barkley signs an agreement with Chetum and accepts a cheque from the customer. Barkley sends the plumper who is one employee to Chetum to perform part of the contract. The plumper discovers the problem and decides that it’s impossible to continue but Barkley gives him a directive to continue with the task after consulting Chetum. An injury occurs to the tenants of Chetum. Later Knarnels discovers from his son that there is a contract with Chetum to maintain his buildings and which has been partly performed. Charles decides to terminate the contract. Chem sues for a breach of contract.

Legal Issues Involved

Can Chetum successfully sue for a breach of contract? Can he successfully sue for torts of negligence against the plumber? Which is the preferred way of terminating the contract? What damages will Chetum recover for breach of contract?

Definition of legal terms

• Contract: A contract is an agreement between two or more persons who have the intention of creating legally binding obligations. For a contract to be valid it must consist of an offer and acceptance, the party to it must have a contractual capacity, there must be a consideration, a genuine consent, an intention to create legal relation, and lastly must be lawful. In law, it’s presumed that every person is competent to enter a contract except a given class of people either because of their age, status, or mental instability (Redfern, 2004). A contract becomes void, voidable, or unenforceable if one or both parties to the contract lack contractual capacity. Therefore for a person to claim exemption from liability on the ground of incapacity must prove this fact, otherwise, in the absence of this proof, he will be liable on the contract (Brillinger, 2006).
• An infant or minor: These are persons who have not attained the legally required age to enter into a contract. The infants’ contracts are governed by the Infants Relief Act and the legal contractual capacity is 18 years. This Act was purposely meant to protect the infants from being taken advantage of by corrupt traders or money lenders. Trading contracts are not binding to an infant even if they are beneficial to him. According to the Infant Relief Act which governs infant or minor contracts, provides that the following contracts are void: Any agreement for repayment of money lent or to be lent, any agreement for the goods supplied or to be supplied other than necessaries, all accounts stated with infants for example statements of acknowledgment of debts (Kelly, Holmes and Hayward, 2005).
• Agent: This is a person employed either expressly or implicitly to do any act for another, or to represent another in dealing with the third party. The person being represented is called the principal and the representative is the agent. Their relationship is what is called agency. Where an agent acts within the scope of his authority binds his principal. Once an agent has brought his principal into contractual relations with another, he drops out and his principal is sued or sued under the contract. The capacity of an agent is immaterial to an agency relationship. Therefore an infant can be appointed as an agent, and can effectively bind his principal.
• Contributory negligence: This is where the law takes into consideration any act or conduct of the party injured which may have contributed to the injuries he received. Under Law, the provisions of the Act states that a plaintiff now may recover damages even though he had partly contributed to the accident. The damages however to be recovered are to be reduced to such an extent as the court may think just and equitable, having regard to the plaintiff share in the responsibility for damage (Brillinger, 2006).
• Vicarious liability: Under vicarious liability, one person is liable for the torts committed by another. Therefore where there is a relationship between a master and servant, then the master is always liable for torts committed by the servant in the scope of his duties. This arose in the decided case of; STOREY v ASHTON, 1869, where the driver of the defendant, drove the car on a detour and negligently knocked down the plaintiff and injured him. It was held that the defendant was not liable. The exception to the above rule is where the relationship is master and independent contractor. In this case, the master is not liable for the torts committed by an independent contractor (Sealy, 2000). An independent contractor undertakes to produce a given result without being in any way controlled as to the method by which he performs the duty. However, the master under certain circumstances can be held liable for the torts of an independent contractor (Brillinger, 2006). These are;

1. Where the employer retains his control over the contract and personally interferes and makes himself apart from the act which causes the damage.
2. Where the thing contracted is itself a tort
3. Where the thing contracted to be done is likely, in the ordinary course of events, to do damage to other peoples’ property, or prove a nuisance, there is a legal duty on the part of the employer to take reasonable care against such a danger (Slorach and Ellis, 2006).
4. Where the liability is independent of negligence. This was decided in the case of RYLANDS V FLETCHER,1868; In this case

‘Rylands had employed an independent contractor to construct a reservoir on his land adjoining that of Fletcher Due to the contractors’ negligence, old mine shafts leading from Rylands’ land to Fletcher’s were not blocked. When the reservoir was filled, the water escaped through the shafts and flooded the plaintiff’s mine. Rylands was held liable in damages’ (Kelly et al, 2005).

• Discharge of contract: A contract can be discharged by agreement. Since a contract is formed by mutual agreement, it may also be terminated by breach of an agreement. The parties to a contract may either under seal or supported by valuable consideration agree to repudiate their respective rights and obligations under the original agreement. Another way in which a contract can be discharged is by the waiver. Here the parties under mutual agreement for a contract which is still in executor can release one another from their rights and obligations (Macdonald and Koffman, 2007).

Application of facts to the Law

• Was there a valid contract between Charles and Chetum? The issue is to determine whether he was there was a contract in consideration of the contractual capacity of the minor involved. The father previously delegated duties to his son, how did Barkley perform his duties? Are there circumstances that allow delegation of duties to minor, whether he expressly assumed personal liability? Did he sign any negotiable instrument by his name or by trade custom?

This agency relationship was created by implication or conduct of Estoppel. In this case, the conduct of the principal is in such a manner that they make one believe that someone is his agent. Kernels had allowed him to sign the trade license for the plumber. This agency by estoppels is as effective as an agency intentionally created and it’s based on the principle of holding out and it’s not confined to contracts of employment only. Such agency arose in decided case Scarf v Jardine, 1882:- In this case, a retired partner of the defendant firm negotiated a contract with the plaintiff, who did not know at that time that the partner had retired. It was held that the firm was bound by the contract (Kelly et al, 2005).

Barkley performed his duties by himself but he delegated some of the duties because of the following circumstances; the principal has expressly permitted, the task required specific knowledge, it was necessary to complete the performance properly and unforeseen emergencies had arisen (Macdonald and Koffman, 2007).

Barkley in the scope of his authority came across some circumstances in which May lender him personally liable. These were; he expressly assumed personal liability by signing an agreement, by trade custom of their business, he signed a negotiable instrument in his name without making clear, on the face of the document that he is signing as an agent, he executed a deed in his name without making clear that he was acting on behalf of the principal.

• Did Chetum contribute to the injury suffered? The facts used to determine whether he contributed are; how was the task performed? Was there any pressure from the client?

The plumber identified the facility to be defective and notified Barkley and he is directed to go ahead to perform the task because the client wanted it.

• Was the plumber an independent contractor? The tests used to determine this are; whether the plumper hires assistants, who supply the tools and equipment to perform the task, where the task is being performed, whether the work is the normal business of the principal(Kelly et al, 2005).

The principal hires employees to assist the plumper. The tools and equipment are supplied by the plumber and the task is performed at the client’s site. The task is a normal business activity (Chandran, 2000).

Analysis of the Case

From the case given by Charles and Chetum, Chetum can sue and recover damages from Charles. This is because Barkley acts as an agent to his father. His agency relationship, in this case, is that created by estoppels because his father has implied that he is a partner even though a minor, for example by allowing him to sign the renewal of the license. Also, it is not a duty of parties dealing with a business organization to enquire about the contractual capacity of those in the position of authority. The son cannot contract but this is immaterial as he is in charge. An infant can be an agent so long as the principal and the third party have the right contractual capacity. However, Chetum can sue Barkley for a breach of contract since he violated some of the rules which made him personally liable on behalf of the principal. These cases are; one, by signing the agreement by his name, and secondly, by expressly assuming personal liability by directing the plumper to go ahead and fix the boiler, and lastly by accepting the check under his name. Chem can also sue for the torts of negligence against Charles. The plumper is liable for the torts of negligence because he owed a duty of care to the complainant and that duty was breached by fixing a defective broiler and as a result, the plaintiff suffered an injury to his property. But in this case, the plumper will not be liable for the third part as he was working under instructions from the agent. However, Charles will claim contributory negligence because Chetum participated in the injury incurred on the property. Since Chetum contributed to the injuries suffered, then he will receive the damages that the court will think are just and equitable.

Charles can repudiate the contract by agreement. This is because the contract was created by signing the agreement between Barkley and Chetum. Therefore it can be discharged also by the parties agreeing to discharge their rights and obligations under the original agreement. The contract is incomplete since Knarles was to continue maintaining the building in the agreement and the parties can waiver the rights and obligations of maintaining that building.

Chem can claim damages from a breach of contract and the damages must be ordinary or general damages.

‘This means that the measure of damages is the estimated loss directly and naturally resulting in the ordinary course of events from a breach of contract’ (Sealy, 2000).

The court will consider all circumstances of the case and decide on what to compensate the injured person.

Work Cited

Brillinger, Ray. Canadian Business Law. Toronto: Emond Montgomery Publication, 2006.

Chandran, Ravi. Introduction to Business Law in Singapore. New York: McGraw Hill, 2000.

Kelly, David, Holmes, Ann and Hayward, Ruth. Business law. Cavendish: Routledge, 2005.

Macdonald, Elizabeth, & Koffman, Laurence. The Law of Contract. Oxford: Oxford University Press, 2007.

Redfern, Alan. Law and practice of international commercial arbitration. New York: Sweet & Maxwell, 2004.

Sealy, Leonard. Jordan’s Cases and materials in Company law, London: Butterworth’s Heinemann, 2000.

Slorach, James, & Ellis, Jason. Business Law LPC Guide; Oxford: Oxford University Press, 2006.