Legal Analysis Of Kalpana And Rafia Contract

1.Is the oral assurance, given by Kalpana to Rafia, a term of the contract or not?

2.If the oral assurance can be regarded as a term, is a court likely to regard it a condition or warranty?

3.What remedies are open to USC given the facts?

Whether the oral assurance which has been provided by kalpana is a term or a mere representation in relation to the contract with Rafia

In order to decide the issue that a statement is to be considered as a representation or a term of the contract the courts take into consideration a few factors including the parole evidence rule, the time between the statement and contract formation, relative expertise of the parties and importance of the statement.

According to McKendrick (2014) the parole evidence rule signifies that when the agreement between the parties gave been written down than the terms which have been made a party of the writing only are to be considered as a term or the contract and a verbal statement which was present becomes a representation

However there is a exception to this rule which had discussed in the case of Van den Esschert v Chappell [1960] WAR 114. In this case it was stated by the court that when the party has relied on a statement to get into the contract that it may be considered as a term even if it not mentioned in the written contract.

In the case of Oscar Chess v Williams [1957] 1 WLR 370 the court came to a conclusion that in case where the person who is making the representation has more information and knowledge as compared to the person who receives the representation than such statement is to be regarded as a term of the contract. On the other hand if it is the person who receives the representation has more information and knowledge than the statement is held to be a representation.

These provisions had also been discussed by the court on the case of Dick Bentley v Harold Smith Motors [1965] 1 WLR 62. In this case the plaintiff knew the defendant who was a car trader and specialized in prestige market. The defendant had been asked to look for a nicely vetted Bentley. A Bentley had been obtained and had been recommended to the plaintiff. The defendant stated that the car has done only 20000 miles after its engines have been replaced. However the plaintiff discovered that the car had been driven 100000 miles after the refit. The court had to decided the statement was a representation or term of the contract. The court held that the statement is to be regarded as a term as the defendant had more expertise in relation to the car in context.

Relevant Rule

Where the importance of the statement has been indicated by the representee to the person making the representation the statement or expression  is to be regarded as a term of the agreement as discussed by the court in the case of Bannerman v White (1861) 10 CBNS 844. In this case there was an agreement between the plaintiff and the defendant for the purchase of some hops which were to be used for the purpose of making the beer. He had inquired from the seller that the hops have been with sulphur or not as he would not buy them if they have been treated in such a way as he would not be able to make beer using them. It was assured to him that sulphur had not been used to treat the hops. However the hops in reality were treated with sulphur. The court in this case held that the hops being not treated with sulphur was a term of the contract and not a representation as the importance of the term had been communicated to the defendant and the plaintiff actually relied upon such term to get into the agreement.

The same issue had been discussed in the case of Ecay v Godfrey [1947] 80 Lloyds Rep 286. In this case the defendant was the seller of a boat to the plaintiff. It has been stated by the defendant that to the best of his knowledge the boat was sound and free of defect. The boat however turned out to be defective. The court stated that as the defendant’s statement was not a term and a mere representation as there was no reliance put upon such term to get into the contract.

Timing is also on important factor to determine the expression is a term or representation. These provisions had been discussed through the case of Routledge v Mckay [1954] 1 WLR 615. In this case the plaintiff had got a motor cycle and a side car by paying $30 and exchanging another motorcycle. It was stated in the registration document that the transaction is a 142 model but it actually tuned out to be a 1936 model. After using it for a few days the claimant wanted to return the motorcycle. The court stated that this was a representation and not a term of the contract.

In this case it has been provided that there has been a contract between Rafia and Kalpana for the purpose of organizing “traditional Indian dance” at an event. Before the formation of the contract between the parties Rafia had notified Kalpana about the importance of the dance being traditional in nature as if it is no she would not be able to get a deal between USC and the Indian university and would have not gone into the contract with Kalpana. In the given situation if the principles of the case of Bannerman v White are applied in the situation than it can be stated that this would be a term of the contract. This is because where the importance of the statement has been indicated by the representee to the person making the representation the statement or expression is to be regarded as a term of the agreement. Here the representee is Rafia and representor is Kalpana.

Parole evidence rule

Further it has been provided through the scenario that Rafia is an event organizer. In addition it has been provided that Kalpana is the principal of a dance academy. In this situation it can be stated that a reasonable person would think that the expertise of Kalpana in mush more that Rafia in relation to dancing. Where the principles of the Oscar Chess v Williams case are applied in the given situation it can be stated that the statement which had been made by Kalpana n relation to the dance being traditional is a term of the contract. This is because where the person who is making the representation has more information and knowledge as compared to the person who receives the representation than such statement is to be regarded as a term of the contract. Here Kalpana being the representor has more knowledge than Rafia.

In addition where the principles of the Routledge v Mckay case is applied in the situation it can be stated that the statement was term of the contract rather than a representation. This is because not much time has elapsed since the correspondences between the parties and the formation of the contract.

However it has been provide through the scenario that the contract has been in written form and does not have a mention about the type of dance to be formed. As per the parole evidence rule this would not be regarded as a term because it has not been written down.  On the other had of the provisions of the case of Van den Esschert v Chappell is applied it can be stated in these circumstances the parole evidence rule can be excluded because Rafia had relied on such terms to get into the contract.

Conclusion

Therefore form the application of various legal tests it can be stated that the “traditional dance” to be performed was term of the contract between Rafia and Kalpana rather than a representation.

Where it is concluded that “the traditional dance” was a term of the contract whether such term was a condition or warranty

Rule

Conditions of a contract are the fundamental r major terms of the contract and when such term is breached it goes into the heart of the subject and where there is a failure to perform such term it will render the remaining part of the contract as different for which it has been formed. These provisions had been stated by Blackburn J in the case of Bettini v Gye (1876) 1 QBD 183. Where there is a breach of condition the other party would be entitled to make a claim for damages as well as repudiate the contract with the party breaching the terms.

Knowledge

According to Knapp, Crystal and Prince (2016) in Australian law warranties are considered as those terms which are not considered of much importance or which are not as fundamentals as the conditions of a contract. Where a breach of warranty has occurred it does not in itself make the parties to the contract entitled to repudiate the contract or terminate while making a claim for damages otherwise.  The only entitlement of the aggrieved party in case of warranty being breached would be to recover damages as per Poussard v Spiers (1876) 1 QBD 410.

A test of essentiality had been provided by the case of Tramways Advertising Pty Ltd v Luna Park (N.S.W) Ltd (1938) (SR) (NSW) 632 to determine whether term is a warranty of a condition of a contract. In this case it had been ruled by the court that the this test is in relation to the fact that whether from the normal nature of the contract when it is wholly considered, or with reference to any specific term or terms, that the term is of such significance to the person to whom the promise is made that without that he would have not got in the contract unless it was assured to him that such term would be strictly performed and such must have been apparent to the person making the promise.

In the given situation the term related to the dance being traditional would be a condition to the contract if it was one of the primary term because of which Rafia had got into a contract and if assurance would not have been provided to Rafia about the performance of the term than she would have not got into the contract as per Bettini v Gye. The term will be considered as a warranty of it was not the primary purpose for which the contract between Rafia and Kalpana had been formed as per Poussard v Spiers

In this case it has been provided that there has been a contract between Rafia and Kalpana for the purpose of organizing “traditional Indian dance” at an event. Before the formation of the contract between the parties Rafia had notified Kalpana about the importance of the dance being traditional in nature as if it is no she would not be able to get a deal between USC and the Indian university and would have not gone into the contract with Kalpana. Through the application of the test which have been provided in the case of Tramways Advertising Pty Ltd v Luna Park it can be stated that this was a condition of the contract. This is because when the contract between Kalpana and Rafia is analyzed as a whole it can be considered that without the assurance of the promise that the dance would traditional Rafia would not have got into the contract. In addition this situation was also apparent to Kalpana. Thus it can be stated that this term is a condition rather than a warranty of the contract between Rafia and Kalpana in the light of the importance associated with the term.

Importance of the statement and reliance

Conclusion

It can be concluded for the above discussion that the “traditional dance” being performed was a term of the contract between Rafia and Kalpana.

What are the remedies which can be claimed by USC in relation to the breach of contract?

The rules in relation to remedy for the breach of contract are reliant upon the circumstances in which the breach has taken place.

The type of remedies which may be invoked in case of a breach of contract include the following

1. Rescission
2. Injunction
3. Specific performance
4. Restitutionary awards
5. Damages

The primary remedies which needs to be discussed for the purpose of addressing the issue in context is that of Damages and rescission.

It has already been discussed through the above mentioned case of Bettini v Gye that in the event of a breach of condition the innocent party is made entitled to compensatory damages and also discharge the contract.

The rules in regarding damages as a remedy of contract law have been discussed by the court in the case of Addis v Gramophone [1909] AC 488. The court has the role of positioning the innocent party in a situation in which it would be when the contract had been performed rather than breached.

Further in the case of The Monarch Steamship v Karlshamns Oljefabrika [1949] AC 196 it had been clarified by the court that damages may only result out of a situation where a breach of contractual terms is the reason why which the loss gave been caused to the innocent party. It is also the duty of the innocent party to mitigate any loss cased.

In addition as stated via Hadley v Baxendale (1854) 9 Ex Ch 341 that only those damages which are reasonably foreseeable or the damages which have been contemplated between the parties prior to getting into the contract can be claimed by the parties.

In case of rescinding the contract the innocent party will be placed in the position as if there was no contract formed as per Car & Universal Credit v Caldwell [1964] 2 WLR 600

In the given situation it has already been established that the condition of a contract has been breached by Kalpana in relation to the contract with UCS.  Thus USC have claim for damages and recession or repudiation. As per the case of Addis v Gramophone The court has the role of positioning the innocent party in a situation in which it would be when the contract had been performed rather than breached and thus the court will provide USC losses in relation to advertisement cost, and in relation to the deal with the Indian university. This can be further asserted through the application of the case of Hadley v Baxendale where the damages had already been contemplated between the parties prior to formation of the contract in relation to the importance of the traditional dance to the deal with the Indian university. Thus it can be stated that USC would be entitled to the damages as well as of the contract would not have breached there would not have any losses caused to USC and the deal would have gone through with the Indian university.

In relation to the remedy of recession USC does not have to pay Kalpana

Conclusion  

Thus in this case USC can claim Damages and recession as a remedy for contract breach

References

Addis v Gramophone [1909] AC 488

Bannerman v White (1861) 10 CBNS 844

Bettini v Gye (1876) 1 QBD 183

Car & Universal Credit v Caldwell [1964] 2 WLR 600

Dick Bentley v Harold Smith Motors [1965] 1 WLR 62

Ecay v Godfrey [1947] 80 Lloyds Rep 286

Hadley v Baxendale (1854) 9 Ex Ch 341

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).

Oscar Chess v Williams [1957] 1 WLR 370

Poussard v Spiers (1876) 1 QBD 410

Routledge v Mckay [1954] 1 WLR 615

The Monarch Steamship v Karlshamns Oljefabrika [1949] AC 196

Tramways Advertising Pty Ltd v Luna Park (N.S.W) Ltd (1938) (SR) (NSW) 632

Van den Esschert v Chappell [1960] WAR 114