Promise in Breach of Contract

In the view of the traditional, performance of an existing duty should not constitute consideration. Sometime, one person makes a promise for another to exchange for other person promise or something that the person is obligated to do. In other word to explain it, one person make a promise to exchange for another’s promise, in that time they already have “pre-existing duty.”

Occasionally, however, litigation results from the failure of one of the parties to abide the modification or settlement. In such cases court have often declined to grant relief for breach of contract if the party being sued for breach had made and then declined to perform a promise given in exchange for the performance of a pre-existing duty. They have held, instead, that the performance of, or promise to perform, a pre-existing duty cannot be consideration for the promise breached.

2.0 Constitutes as a consideration

Consideration is an element in performance of an existing duty. Therefore consideration must be:

Consideration must be valuable

Consideration is the purpose of the transaction parties to the contract; it means the money or other valuable thing to exchange commitments or behaviour of others. For example, I promise not to smoke, you have to give me RM100 a month, and the RM100 is called consideration.

Consideration must be legal

This means that it must be a legal value, if not, it may be considered insufficient and no consideration at all. For example, if you marry me, I will help you to rob the bank, where it is illegal to rob a bank, so it can not serve as consideration

Consideration must be possible of performance

Consideration is not allowed to be done, for example, you promised to marry me, I’ll pick the stars, where the stars pick said to be consideration, and then this is impossible, it can not form a contract.

Consideration must be referable with other party’s promise

A consideration must be linked to the other party’s commitment. For example, you marry me, I’ll give you RM10 million, but if you do not marry me, I still give you RM10 million. It shows that the 10 million not you marry my consideration, that is, RM10 million complete and you marry I have no connection.

3.0 The performance of an existing duty rule in consideration

In commercial cases or public cases

In the case Stilk v Myrick [1809] EWHC KB J58, Stilk was signed a contract with Myrick. In the contract, Myrick promise to pay £5 a month for Stilk working in his ship; Stilk also promise Myrick that he will do anything in the emergencies of voyage regardless. When the ship was stop at Cronstadt, two seamen deserted but there still have nine seamen working. They could not to find other people to replace their work. Therefore captain promised other seamen that if their can fulfilled their own duty and replacement the vacancy, they could get extra money by the two missing seamen wages. After arrive their home port, the captain refused to pay what he promised to the seamen the money. Stilk sue to recover his extra wages.

The court help that the seamen need to do anything when the time is emergencies in the ship, because it is their responsibility and performance of an existing duty. Therefore Stilk could not sue Myrick for extra wages.

But contrast to Hartley v Ponsonby [1857] 7 EB 872 this case. Hartley is a seaman on this ship and he gets £3 per month for his wages. This ship has 36 crew left England together and sailing to Bombay. At the course of the voyage, there have 17 of the crew are desertions; it was reduced to only 19 crew in this ship. Ponsonby promised them if they could help him sailing the ship until the voyage end, he would pay them £40 and he written down what he promised to them. Ponsonby refused to pay what he promised to them. Therefore Hartley sued for money.

The court help that Ponsonby need to paid back the £40 to Hartley, because it already become a new considerations for performance for an existing duty.

4.0 Constitutes as an Intention to create legal relations in performance of an existing duty

In the case of domestic or social cases, there are relationships between intention to create legal relation and performance of an existing duty.

4.1 The performance of an existing duty in an Intention to create legal relations

In domestic or social cases

In the case Balfour v Balfour (1919) 2 KB 571, a husband return to Ceylon, because he had employment at there. But his wife could not follow him, for medical reasons. The husband promised her that to pay 30 per month to her, until she could join him in Ceylon. Later they was separated and divorced. The wives used it and sue for money. For the judge help, the wife could not sue her husband, because they are not contracts, the parties would not intend that legal consequences should follow. In other words, there are not new considerations for performance for an existing duty.

But contrast to Merritt v Merritt (1970) 1 WLR 1211 this cases. Husband and wife, they make a met to arrangements to discuss about the future, after they separated. After discuss the wife need to pay the mortgage for the house, and the husband agreed to pay £40 per month and written an agreement that if his wife paying off the house mortgage on their jointly- owned house, he would transfer to her ownership. When his wife was paid off the mortgage, he refused to transfer the house to his wife.

For the judge help, the wife already fulfil what she need to do in their agreement, therefore husband need to keep his promises transfer the house to the wife.

5.0 Analyze the case of consideration and intention to create legal relations in performance of an existing duty

In case of consideration

In the case of consideration in performance of an existing duty, Stilk v Myrick [1809] EWHC KB J58 and Hartley v Ponsonby [1857] 7 EB 872, is the best example at here.

When we compare this case, we could find that they are brother and sister. it is because they happen the crew deserted, the captain ask other remainder crew to cover the missing crew duty, and promised would pay them money to become they working extra fee, after arrived, the two captain refused to pay what their promised before, then the crew sued for their extra wages. They are almost having a same situation, why in the case Stilk v Myrick [1809] EWHC KB J58 the crew could not sue for the extra wages but in Hartley v Ponsonby [1857] 7 EB 872 this case the crew could sue for their extra wages?

In both cases, the only difference is the different number of missing crew. But the different number of missing crew is the factor to decision the case could sue or not. In Stilk v Myrick [1809] EWHC KB J58 they only two crew out of eleven, the ship still have other nine crew at there. Therefore other crew needs to cover the two missing crew duty, because it is their responsibility to help in during in the emergencies of voyage regardless. In Hartley v Ponsonby [1857] 7 EB 872 is different, they are thirty-six crew reduced to nineteenth crew in the ship. Therefore other crews were not in law obliged to cover the seventeenth missing crew duty to sail with the ship. If only two or three missing crew in the ship other crew have the responsibility to cover the two missing crew duty. But seventeenth missing crew is a big amount; they have not the responsibility to cover the seventeenth miss crew duty. There already become new considerations.

In case of Intention to create legal relations

In the case of intention to create legal relations in existing duty, we can compare Balfour v Balfour (1919) 2 KB 571 and Merritt v Merritt (1970) 1 WLR 1211.

In the case Balfour v Balfour (1919) 2 KB 571 the husband promised his wife that he would pay her £30 until her can join him in Ceylon. Therefore when the agreement was made, the husband and wife have not separated; therefore it does not intend the agreement to be binding as a contract.

It the case Merritt v Merritt (1970) 1 WLR 1211, the that when the agreement was made, the husband and wife were no longer living together and they separated; therefore they must have intended the agreement to be binding, as they would base their future actions on it. This intention was evidenced by the writing and therefore the husband had to transfer the house to the wife.

6.0 Conclusion

In the conclusion, I agree that the performance of an existing duty should not constitute consideration in the orthodox.

It is because they only do what their need to do. This is their responsibility. But under the different situation have different affect in the judgment in the court. If it is no to over, they should taken their responsibility to do.

7.0 Introduction Q2

7.1 What is contract?

Contract is a credentials, it is used to prove the sale, mortgage, lease and transfer. In any transaction, both sides need to sign a contract to make a legally binding agreement or commitment form.

Therefore of contract is referring to between the parties in order to establish a specific contractual relationship, meaning that through the interaction of intention to reach agreement on the formation of a desired process. This process normally takes two stages though the offer and acceptance just can become a contract.

We should know that, every contract must have four important conditions, offer or invitation to treat, acceptance, consideration and intention to create legal relations;

Intention to create legal relations

Consideration

+

Acceptance

By agreement & contract

Offer

Or invitation to treat

8.0 The important condition in contract

8.1 Offer and invitation to treat

Offer

An offer is an expression for a offeror willing to contract on certain terms. In contract, an offer is necessary formation. We should that, the person who given an offer is call offeror; if the person who accept the offer is call offeree.

Therefore, in section 2(a) of the contract act 1950 provides that it is meaning that offer is a offeror give to the offeree or a class of parties to whom it accept it. Then it just will become binding like a contract. There are two different types of offer, which is bilateral offer and unilateral offer.

Bilateral offer is refer that the offeror makes a conditional offer to a individual or a group. But unilateral offer is different with bilateral offer, it offer can being to makes conditional offer to a whole world.

Invitation to treat

An invitation to treat has “invited bidders to do business”, “consultation invitation”, “ invitation to offer” and “asked people to bid” this kind of meaning. An invitation is not a valid offer. An “invitation to treat” just to lure other parties to make an offer, invite people do not bear legal responsibility. For example, published in newspapers of general advertising, mailing of bidding, auction notices, and send the price list or catalo, all of this are not an offer.

8.2 Comparison of cases

Cases of offer

In Carlill v Carbolic Smoke Ball Co.Ltd [1893] 1 QB 256 this cases. “Carbolic Smoke Ball Co. Ltd. Advertised to anyone who after using a certain remedy for a period still have succumbed to influenza, then they would offer £ 1000 the person. When Carlill follow to use it, she still has influenza. Therefore Carlill sued it of money. ”

In the end, judge said that the company is giving an offer to whole world who used their product still can not clear the influenza. Therefore the plaintiff was entitled to ask Carbolic Smoke Ball Co Ltd the £100 as she had accepted the offer made to world at large.

Cases of invitation to treat

In Fisher v Bell (1960) 2 ALL ER 731 DC this cases. The defendant was accused of selling limitation of offensive weapons – flick knife. The plaintiff claimed that the knife is placed a price tag of the window. The court held, in a similar way to Partridge v Crittenden (1968), that this was an invitation to treat, rather than an offer, and hence the defendant was not guilty.

8.3 Intention to create legal relations (I.T.L.R)

In the contract act 1950 on the intention to create legal relations as one of the requirement of a valid contract, case-law clearly dictates the necessity of this requirement. Therefore intend to create a legal relations is the first element for a contract. In the law, intend to create a relations is used to determine at the nature of the agreement. If the agreement is from social or domestic nature, the law need to create a presumption that it agreement have an intention to create legal relations or not. At domestic agreement, for example those made between husbands and wives or parents and children, it is no intention to create legal relations and no intention.

Case of intent to create legal relations

In the case Balfour v Balfour (1919) 2 KB 571, a husband need to return to Ceylon, because he had employment at there. But his wife could not follow him, for medical reasons she must stay in England. The husband orally promised to pay 30 per month to her, until she could join him in Ceylon. Later they was separated and divorced. The wife used this reasons sue her husband for money.

For the judge help, the wife could not sue her husband, because they are not contracts, the parties would not intend that legal consequences should follow.

8.4 Acceptance

An acceptance an offer is the final and unqualified asset to the term of the offer. It is meaning that, when an offeree accepts what did offeror offer, and then it will become a binding contract. But acceptance should be made by means of notice, but according to customary business practice or offer that can be made by an act otherwise. Therefore silence or failure to act that way can not be used as acceptance.

Case for acceptance

In Felthouse V Bindley (1862) 11 Cb (NS) 869 this case. Felthouse want to buy a horse of his nephew. He wrote a letter to his nephew said that if he hears no more about him, he will consider the horse mine at £30. His nephew never replies him, because he was busy at auctions on his farm and asks Bindley do not sales the horse, but he did. Therefore Felthouse sued Bindley in the tort of conversion, because Felthouse was claiming that the horse is his property.

In the end, the judge help, Felthouse’s letter was an open offer that his nephew had not been accepted. then in law of contract, it already said that silence cannot amount to acceptance. Since there was lack of communication the contract, so it was void, therefore the plaintiff is unable to sue the defendant.

8.5 Consideration

Consideration is a contracting party bargains for and gives in exchange for the return promise or performance of the other party. It is mean that both parties must have the consideration to exchange the value, and the both parties value must be equal, however if the both parties agree the value, then it can work.

Case of consideration

In the case Roscorla v. Thomas, (1842) 3 QB 234; Roscorla purchased a horse from Thomas. Thomas then promised the horse was sound. The horse was in fact not sound and Roscorla sued for breach of contract.

The court said he had no case; the only consideration he had given was past by the time the promise was made, and the contract was merely that Thomas would deliver the horse on request.

9.0 Introduction for remedies

For breach of contract are the basic is remedy. In other words, it is a normal law remedy that can be claimed as of right by the innocent party. Sometime damages are not an adequate remedy but this is the equitable remedies.

9.1What are the remedies available for a breach of contract?

Rescission

Rescission is an equitable remedy, which allows an innocent party to cancel the contract by rescinding or, if there has been misrepresentation by the other party, raising that misrepresentation as a defence if sued for damages or specific performance by the other party. it is mean that rescission is a remedy whereby a contract is cancelled, to let the parties are restored to the original positions that they have not sign the contract in the transactions.

Restitution

Restitution is sometimes referred to as quasi-contract. it is not contractual and does not rely on the plaintiff suffering loss or damage. Its basis is unjust enrichment; that is, those situations where it would be very unfair if the defendant was to be allowed to retain the money, or the goods or services, without payment. In other words, both parties must property, money previously conveyed, or return goods.

Damages

The main purpose of damages is to enable the innocent party to receive monetary compensation from the party responsible for the breach of contract. Damages are not awarded to punish a wrongdoer, but rather to put the injured party back in the position that they would have occupied if the contract had been performed as originally intended. Therefore, damages are calculated on the basis of looking at what the position should have been if the contract had been properly performed.

Specific performance

Specific performance is a discretionary order granted by the courts directing a person to carry out their obligations under the contract. It is not generally used in breach of contract actions unless damages prove too inadequate. For example, with the sale and purchase of goods that are really obtainable elsewhere, damages would be considered an adequate remedy.

Injunction

An injunction is a discretionary court order. Unlike specific performance, this is a court order restraining a party from breaking their contract or from committing a wrongful act and will not be awarded if damages are an adequate remedy.

An injunction may be:

prohibitory, preventing the breach of a contract;

mandatory, requiring a person to perform some contractual obligation; or

Interlocutory, where it freezes the status quo between the parties until the dispute can be heard by contract.

10 Conclusions

Every contract must have four important conditions, offer or invitation to treat, acceptance, consideration and intention to create legal relations, just can budding like a contract.

Every contract must have remedies available for a breach of contract. It is because the law need to protect the parties in the contract. Human are like that, sign a contract is easy, but there are not 100% to guarantee that they will fulfill their contract. 11.0 Bibliography

ANU College Law, 2000, Contract Formation – Offer And Acceptance, Viewed on 17 October 2010, < http://law.anu.edu.au/colin/Layout/Off_Ac_h.htm>

St-patricks.ac.uk, Viewed on 20 October 2010,< http://www.st-patricks.ac.uk/index.php?option=com_content&task=view&id=43&Itemid=56>

Lee Mei PhengIvan Jeron Detta, Business Law, Viewed on 20 October 2010,

Shakespeare, William   Bate, Jonathan   Rasmussen, Eric, Henry V, Viewed on 21 October 2010,

Mitchell, Charles   Mitchell, Paul, 2008, Landmark Cases in the Law of Contract, Hart Publishing Ltd., Ebrary Olympia College