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Describe the Applied Contract Law For Strong and Extrinsic Evidence.

Formation of the contract

According to the case study, Cuthbert and Jason have formed a contract for delivering solar panels, which will be priced per panel $90. The panel will be packaged in boxes of 25 panels per box.  While the formation of the contract, there are several terms has applied between Jason and Cuthbert.  On 7the August after receiving the purchase order, he sends a supply order to Cuthbert, which includes he term where it has been mentioned about:

  • Panels cost $90 x $25,000.00 = $2,250,000.00
  • Panels are packaged in boxes of 20 panels per box
  • Payment terms are 30 days from completion of manufacturing
  • The buyer must return the Supply Order, signed, before production of panels commences

Now it is needed to mention that Cuthbert has placed the order with Jason on 6the August where he has used a purchase order, which mentioned:

  • Panels are to be packaged in boxes of 25 panels per box.
  • Payment is to be made on 1 November 2017
  • These terms prevail over any subsequent terms.

However, there are several differences can be identified between the purchase orders which are send by Cuthbert and Jason. While Cuthbert has formed the contract, he mentioned about the packaging 25 panels per box but when Jason has send the purchase order it mentioned about the packaged of 20 panels per box. On the date of 6th August Cuthbert has send the purchase order it mentioned about the date of payment which is to be made on 1st November while on 7th August Jason sends Cuthbert a Supply Order, he mentioned about the payment terms are 30 days from completion of manufacturing.  However, on 8th August Cuthbert signs the Supply Order without reading it and sends it back to Jason. On 20 September, Jason informs Cuthbert that the panels have all been made, are in 20- panel boxes, are ready for him to pick up and that payment is required by 20 October 2017. However Jason confirm the production according to the supply order he has send to Cuthbert. s per the terms of the contract, it has formed between two parties where one party has make the proposal and other one has accepted the terms by signing it. The intension of legally binding contract has found. The consideration and certainty also established while the formation of the contract (Stone and Devenney 2014).

However, Cuthbert is furious about the delivery, but he has signed the contract, which Jason has sent to him. Therefore, he has made the consideration, which is enough to establish to set the terms of the contract.  As Cuthbert has signed the contract of the Supply order which has been send by Jason therefore he has accepted the terms and condition of the contract. However, he has not read the contract but it will grant the term to the formation of the contract. A valid contract has been formed when n 8th August Cuthbert as signed the Supply order. Therefore terms has been applied to the order with Jason. 

Role of express and implied terms

According to the above written facts, the contract has not formed according to the implied forms. The terms of the contract must be two types, which are express terms that laid down by the parties themselves and the implied terms, which are considered by the court according to the nature of the agreement or the parties apparent intentions while the formation of the contract or on the basis of law on certain types of contract. The contract can be formed orally or written or party oral and partly written. Bannerman V White (1861) is one of the significant case where oral statement has provided at the time of negotiations while the formation of contract. Routledge v Mckay [1954] is another case of contract where the registration document, which was showed by the defendant to the claimant, was not prima facie evidence of a contractual term (Stone and Devenney 2014). 

Under the express terms, the Parol evidence rule is another part of the contract, which is applicable when parties may able to introduce the court evidence of a prior or able to modify the supplement the contract. Therefore, the parol evidence rule is applicable after signing the contract by the parties, which is a completely integrated written contract, evidence of antecedent negotiations, and the implied agreement that contradicts what is written in the contract.  If a contract is in writing and final to at least one term the, parol or extrinsic evidence will generally be excluded from the terms. Therefore, when the terms of signed agreemen5 make any disputes or contradicts with the facts then the parol evidence rule will set the terms to testify alleged conditions which has forming the contradict with the written contract's terms. It is only effective when the contract is integrated in writing or according to the final judgment is given by the court. A final agreement is either a partial or a complete integration provided that it has an agreement on its face indicating its finality (Knapp, Crystal and Prince 2016).

In the case of Gordon v Macgregor (1909) of High Court of Australia, the plaintiff has sued the defendant due to failure to deliver according to the specifications of dark red cedar logs and claimed damages. The plaintiff has claimed that the contract did not comply with the Statute of Frauds because it has failed t satisfy the terms of the contract. When it is a written contract then the parties are bound to follow the terms of it.

Parol evidence rule

The implied terms is defined which are chosen by the parties themselves. It is mandatory to setting down the terms where the parties must effective the terms for the purpose of business, to achieve fairness between the parties or to relieve hardship. The terns, which are court, intend to include in the contract. There are only limited terms where the court can imply a term in the contract according to the common law. Shell UK v Lostock Garage Limited [1976] is a significant case where the Court of Appeal has applied the implied terms. The court has stated the importance to imply the terms because the term may be a reasonable one to include it lacked sufficient certainty (Knapp, Crystal and Prince 2016).

Therefore, according to the4 fact of the case it can be stated that the terms are not implied. According to the parol evidence rule, the contract that was signed by Cuthbert only applicable as a contract. The written contract has signed therefore, the consideration has  been made by Cuthbert and he cannot negotiate the terms or deny the contract. A valid contract is formed where the both parties are bound to follow the terms of the contract. Therefore the terms of contract has forming contradiction with the express terms and according to the parol evidence rule, the on 8th August Cuthbert has signed the contract and from that moment the contract has been formed (Knapp, Crystal and Prince 2016). 

According to the fact of the case, Cuthbert has no right to withdraw his tender. When Thomas provides the details of the tender, he has mentioned some requirement for the solar panels. However, Cuthbert wants to make some profit from the tender and ask for the a good deal with Jason. Later as per the terms of the contract between Jason and Cuthbert, it has formed conflict with the terms of the written contract (Stone and Devenney 2014). Thomas told Cuthbert that Tenders are to be submitted to the Department of Education any time between 1 August 2017 and 31 August 2017.  In consideration for the department assessing the tenders, tenderers agree that once submitted, tenders are to be valid until 30 September 2017 and cannot be withdrawn before that date.  On 30 September 2017, the department will notify the successful tenderer although it reserves the right to reject all tenders. Panels are to be delivered to the department’s warehouse in Welshpool by 31 October and payment for panels will be made on delivery.

Conclusion

While the formation of the contract, Cuthbert has mentioned about the payment which is made on 1st November. After receiving the purchase order, Jason has sent the Supply order where the payment terms are 30 days from completion of manufacturing. The supply order has been signed on 8th August by Cuthbert. Here, Jason has informed on 20th September that the panels have all been made, are in 20- panel boxes, are ready for him to pick up and that payment is required by 20 October 2017. Here, the conflict arises between both of them while delivery of the goods. Now as per the terms of the contract, it must satisfy all the elements, which includes the proposal and acceptance consideration, legally binding of the contract, certainty and capacity. Therefore, as per the contract terms, both parties have agreed with the consequences of the contract.  In the contract they considers the terms, which are part of the express terms. Both of the parties are legally binding to the contract where they had intension to form a legal contract. According to the contract terms, both of the parties have the capacity to enter in to the contract.  Now as per the given scenario, it can be stated that a contract has established when Cuthbert signed the Supply Order on 8th August (Knapp, Crystal and Prince 2016).

According to the terms of parol evidence, when a finally written agreement is formed between the parties then it is not possible to negotiate with the terms of the contract. Therefore, all the parties have agreed with the contract terms and if the writing will contain all of the terms as to which the parties agreed, then it would be a complete integration. The parties intend to complete the integration the contract terms, which proves that one contract is formed. According to the Four Corners Rule, the parol evidence will be established if the terms represent strong which helps to establish strong and extrinsic evidence. Under the Four Corners Rule, the court never accept the terms of parol rules if he parties has intention to continue on full and completely integrated agreement. It is only applicable in court if the contractual terms are wholly ambiguous. These terms are applicable only for the parol evidence rule for the prevention of the contractual terms from lying or doubtful veracity as per the interest for the judicial efficiency (Stone and Devenney 2014).

Therefore as per the case study, Cuthbert has no rights to withdraw his tender because while the application of the parol rules defines that the agreement has signed already by him, which will take as consideration and acceptance of the contractual terms. It forms a valid contract between Cuthbert and Jason (Stone and Devenney 2014). 

According to the case facts, the Thomas and Cuthbert have made the conversation about the delivery of solar panel. Thomas told him that if Cuthbert can supply the panels at just under $100 per panel, he would win the tender. In consideration for the department assessing the tenders, tenderers agree that once submitted tenders are to be valid until 30 September 2017 and cannot be withdrawn before that date. On 30 September 2017, the department will notify the successful tenderer although it reserves the right to reject all tenders. Panels are to be delivered to the department’s warehouse in Welshpool by 31 October and payment for panels will be made on delivery (Knapp, Crystal and Prince 2016).

Therefore, the delivery should process between 1 August 2017 and 31 August 2017. Jason has stated that the payment is required by 20 October 2017 for the boxes of 20 panels. However, the Cuthbert has told to Jason about the packaging of 25 panel boxes but he has signed the contract of packaging of 20 panel boxes. Now the packaging of 25 panel boxes has stated general conversation but the final agreement has been set up through written contract. Therefore, it may take more time to manufacture another 5 panel boxes and cost more than previous costs. Therefore, it may affect the whole deal with the university.  Now if Cuthbert want to withdraw the tender before 30 September 2017 as Jason should easily sell the panels to other customers.  Now the Department of Education may cancel the deal that will affect Thomas to win the tender (Stone and Devenney 2014).  

Reference 

Appleman, J.A., Appleman, J. and Holmes, E.M., 2016. Contract Concerns: Reinsurance Contract Formation, Validity, And Judicial Construction (Vol. 14). Appleman on Insurance Law and Practice.

Bannerman V White (1861) 10 CB NS 844

Dressler, J., 2015. Problem in the Contract Law Bundle PAC.

Gordon v Macgregor (1909) 8 CLR 316

Knapp, C.L., Crystal, N.M. and Prince, H.G., 2016. Problems in Contract Law: cases and materials. Wolters Kluwer Law & Business.

McKendrick, E., 2014. Contract law: text, cases, and materials. Oxford University Press (UK).

Routledge v Mckay [1954] 1 WLR 615

Shell UK v Lostock Garage Limited [1976] 1 WLR 1187

Stone, R. and Devenney, J., 2014. Text, cases and materials on contract law. Routledge.

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My Assignment Help. 'Applied Contract Law Essay: Strong Evidence For Extrinsic Proof.' (My Assignment Help, 2021) <https://myassignmenthelp.com/free-samples/blw15-applied-contract-law/parol-evidence.html> accessed 27 February 2024.

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