Legal Analysis Of Contract Discharge And Frustration In Business Scenarios Essay.

Scenario 1: Abandoned Trip to Exhibition

1. Peter, the Managing Director of CompuMac Limited, was planning a company trip for the staff. The staff wanted to go to Kuala Lumpur to visit the inaugural “Global 3-D Printing” exhibition that boasts of 3-D printing technology experts participating from all around the world. They wanted to talk to the experts about CompuMac’s patented 3-D technology and to seek alliances with such experts on research and development projects. Peter booked a 25-seater coach from BestCoach, at a price of S$2,000 for a return trip from Singapore to Kuala Lumpur. Peter, on behalf of CompuMac, paid a deposit of S$500 to BestCoach five days before departure date. Analyse the following scenarios. For each scenario, advise Peter as to whether contract between CompuMac and BestCoach can be discharged and if yes, identify the appropriate grounds for such discharge. In your analysis, examine whether CompuMac is entitled to a refund of the deposit or alternatively, is required to pay the balance amount to BestCoach.

(a) Scenario 1 - There was heavy monsoon rain in Johor Bahru. The roads in Johor Bahru were flooded and no longer accessible. BestCoach refused to proceed with the coach journey on the departure date, although the roads after Johor Bahru and leading into Kuala Lumpur were clear and accessible.

(b) Scenario 2 - There was heavy flooding in Kuala Lumpur. BestCoach offered to provide a slow drive to Kuala Lumpur so that by the time that the coach reached the borders of Kuala Lumpur on the eve of the exhibition, the floods would likely have abated and the coach could then drive into Kuala Lumpur.

Peter refused to proceed with the journey on the departure date. In your answers, you are required to cite the relevant statutory provisions and case law to support your views as well as demonstrate well-developed written proficiency in the flow and content of your analysis.

2.  Cherlyn is 17 years old and had been unemployed. Three months ago, she accepted a job at CallNow Private Limited, a company providing 24/7 hotline support services to users of various types of software.

Her employment agreement stated that:

• her working hours were from 8.00am to 10.00pm daily, from Monday to Saturday; and
• she was permitted only 30-minute breaks for her lunches and dinners.

Her monthly salary was S$1,000 and she was entitled to 5 days of annual leave. During the interview, the Human Resource Manager of CallNow told her that the company would provide her with free 3-month intensive training so that she would become “extremely proficient” at handling support services calls. If she did not quit her job within 12 months of completing the training, the training fee of S$6,000 payable by Cherlyn would be waived. After completion of her training, she would be assigned a “mentor” who would guide her on the job.

Cherlyn also rented a room as she wanted to stay near her new workplace. The rental agreement was for three (3) years, with a monthly rental of S$350.

After a few weeks, she began having second thoughts about the job and wanted to resign. She did not want to pay the training fee and asked you if the employment agreement was valid and enforceable.

Scenario 2: Resignation and Rental Agreement Termination

At the same time, she wanted to nullify her rental agreement and to also obtain a refund of rental amounts that she had paid for the past few weeks.

She has come to you for advice. Explain to Cherlyn whether:

(a) her employment agreement is valid and enforceable (and whether she is required to pay the training fee); and

(b) her rental agreement is valid and enforceable (and whether she is entitled to obtain a refund of the past rental amounts that she had paid). You should identify and cite the relevant statutory provision(s) and case law to support your views.

3. Consider a specific job in your organisation (or one that you are familiar with) and relate how the employee performing this job is an agent of that organisation. You may preserve confidentiality by disguising the name of the organisation. Remember to state the relevant legal principles and cite relevant case law to support your analysis. (a) For context, you should describe the business of this organisation and some of the key functions of the identified job that are relevant to the agency relationship between the organisation and the individual. (4 marks) (b) Discuss and analyse how the individual in that job is an agent of the organisation. In your answer, explain how the agency relationship was created as well as two (2) types of authority which the agent would possess. Provide specific examples to support your answer. 

1. a)

It is to be noted that the fact given in the case study relates to Acts i.e. “The Law of Contract” and “Frustrated Contracts Act”.

It is very clear from the given case that both the company Compu Mac Limited  & Best Cprach  have intention to c enter in legal relationship  and such intension is required as per section 4 (Section 4 of The Law of Contract). As per section 2 to make a contract valid the requirement of an offer and acceptance must be fulfilled ad also as per section 5 rights and obligation of the both party should be clear and definite. We assume that all above requirement are fulfilled to make contract valid (.Lee Pey Woan, Pearlie Koh, Tham Chee Ho, 2009,)

Issue

The Johan Bahru was located in north Singapore where there was heavy flood. The issue is whether ComuMec is entitled to refund in such situation?

Law Involved

Section 2(2)

Section 2(3)

Section 8

As per section 8 there are number of situation where contract between the parties may be discharge which is as follow:

• Discharge of Performance
• Non – Performance of the Act
• Defective Performance
• Discharge of contract by an agreement
• Discharge of the contract by frustration

It is to be noted that failure of performance of contract due to the situation which is not in the control of performer will cover under the discharge of contract by frustration. Sometimes party to the contract may have intention to execute the contract however due to the unavoidable he may not able to execute it , such contract can be discharge by Frustration.(Lee Pey Woan, Pearlie Koh, Tham Chee Ho, 2009)

Section 2 of the Frustration Contract act says that any amount of money that is paid by the party before discharge of contract must be refunded to the other party. And if such amount is in nature of payable than other party will not be liable to pay it after discharge of the contract TO sum up any monitory transaction executed before discharge of the contract should be reverse and obligation for any future monitory transaction will be canceled. However as per section 2 (3) of the frustration Act if any party to the contract incurred expenditure in relation to the contract entered between the party, then the party who receive money before discharge of the contract can retain the amount of expenditure from the advance money given or from refund which is getting due because of discharge of the contract (ANON, 2014)

Understanding Contract Discharge and Frustration

Conclusion

As we can say that CompuMac Limited was not in position to execute contract due to unavoidable reason of heavy flood which is out of control situation. Also the representative of the company had given S$500 in advance.

After considering the above facts of the case we can conclude that:

As per section 8 the contract is eligible to be discharged by CompuMac Limited. Also as per section 2(2) and section 2(3) the deposit which was give by company of S$500 must be refunded by Best Coach after deducting expense incurred by it in relation to contract entered between the both. However it is to be noted that such expenditure must be incurred exclusively in relation to the contract entered between the parties

Here as per the information given, there were heavy floods in Kuala Lumpur.

Here the information provided is not clear with regard to weather atmosphere of Kuala Lumpur about the floods would have been abated or not. After reaching at the border of the Kuala Lumpur, two possibility could be arose

1. Flood is not abated and Coach was not able to reach at exhibition.
2. Floor is abated and Coach was able to reach at Exhibition.

In view of the above observations, we can note that if situation 1 stated above exist than:

The contract will be discharge by Frustration and also as per section 2(2) and (3) , The deposit will be refunded provided expenditure incurred by coach for discharging half contract of taking passenger till border of Kuala Lumpur. So the Refund of S$500 must be provided after deducting all expenditure incurred by Company in attempt of execution of the contract.

In view of the above observations, we can note that if situation 2 stated above exist than:

The contract is said to be executed and hence the CompuMac will not entitled to cancel the contract and he need to pay the remaining amount as per agreement which is due as payable.

Issue:

Whether Cherlyn is consider as minor as per Law of contract? Whether agreement entered by him for Employment is enforceable or valid?

Law Involved

Section 6

As per Singapore contract act any person who has not attained the age of 21 year is consider as Minor only. As minor are considering as non competent part to the contracts.

As per section 6 of the contract law any contract against minor can not enforceable as minor is consider as no competent person to enter in to contract. However any contract for goods or services in the benefit of the minor is enforceable. The facts in the given case relates to statue i.e. “The Law of Contract”. (Pey Woan, Pearlie Koh, Tham Chee Ho, 2009)

However if the minor has entered into contract which result in providing him or her necessary supplies of life than though it is not contract of law and service it is termed as enforceable only and valid only

(Pey Woan, Pearlie Koh, Tham Chee Ho, 2009)

2. a) Fact of the case

During the interview the HR manager had put a condition to continue service for 12 Month to waive the fees of training which was made compulsory to make Charley proficiently in managing support service efficiently. After he started JOB in second week he has thought of resigning job.  The age of the Charley was 17 at the time of entering into the contract.

Relevant Statutory Provisions and Case Law

Conclusion

Charleyn has entered into agreement for doing JOB from 8 to 10 P.M

In the Singapore country, a person is treated as minor if he/s A.M  with certain amount of salary. Also as per the information provide in the act he is of the age of 17 only and hence consider as minor only.

Yes if the contract is of service and in the benefit of the minor that  it can be consider as enforceable but Employment contract cannot be termed as contract of service and hence not valid under the Singapore Contract Law. And hence the .training fees of $6000 is not required to be paid by the Charley

2 b) Fact of the case

The rental agreement has been executed for three years and payment for the same is required to be dispensed monthly. Now the Charley wan to cancel the contract. The charley is of 17 when entering to the contract

Conclusion

Yes for future term for which Charley has not taken benefit, he can cancel the remaining one but for rent already paid will not be eligible for refund. The said conclusion is derived by taking the benefit of the

To sum up we can conclude that

• Employment agreement cannot be termed as valid & enforceable contract and hence he is not liable to pay any training fees , the same has been derived by taking base of section 6
  
  
• Rental agreement is valid & enforceable. Cherlyn would not be entitled to refund of the past rental amounts.(Section 6 of The Law of Contract)

There are number of definition given by law different authors and agency of law of agency. The main function that is stated by all agencies and authors are performing any specific task with prior approval of the Principal is termed as agent. However it is to be noted that the relationship of the agency can be created only if principal is eligible or competent to do any act which is assigned to agency. If we want to put it in simple word with example, one cannot delegate any power to authors when it does not have. If person himself is handicap and if he makes the labor work with other it cannot be term as handicap. Also the approvals of the agency sometimes can express or implied. Also agency created for doing illegal activity does not have status in the eyes of law and invalid in nature.

Section 2 of the agency law defined agency as   relationship between two people where by one person is doing wok ion behalf of another worker and same is with principals express or implied consent. Also the status of agent has capacity to enter into the contract on behalf of the principal; such contracts are obviously valid and enforceable. Also agent can enter into the relationship with other party for selling, purchasing and disposal of any assets with intention to create legal relationship with the company. So to sum up we can say any act which can be done by principal , agent also can enter on behalf of principal if he has such authority to do from principal.(Tan Cheng Han, 2009)

Also section 3 of the law of agency talks that there are so many relationships which represent thin line between relationships of agency. Relationship of Employer Employee, Bailer and bailee are very close to employer employee relationship but they are different from the Agency relationship. (Tan Cheng Han, 2009)

If we take simple example of the Employer employee relationship we can say that the employer of the organization may not be liable for all acts that are executed by employee during the course of an employment. Also employees are generally delegated some basic task which has very minor legal implication. For an example if accountants in any organization are responsible for maintaining and keeping up to date records only. However the major decision is not in the hand of employee which is implied in nature.

Mr. DeMac is the managing director of the BTL Limited; the company is register with Singapore stock exchange in this example. The company is doing business of giving motor vehicle on hire basis hiring. It owns number of motor vehicles, however during the pick season , sometimes company is required to purchase an additional vehicles. Now Mr. Demac has very close relationship with one of of Automobile distributor. Mr. DemMac is considered and company has employer-employee relationship as per the legal binding contract.

If we analysis the duties, Authorities delegated on Mr. DeMac, its nevertheless the relationship of  Agent an principal.

Mr.De mac is empowered with the list of authorities. Some of them are listed below:

1. To manage day to day affairs of the company.

2. To sign the legal documents on behalf of BTL Limited.

3. To enter into an agreement to sale, purchase, exchange or any other contract which has legal validity on behalf of BTL Limited.

4. To enter into an agreement to give the motor cars on hire to certain tourism hotel industry on a negotiated rate considering its long term financial implication.

Now the DHL limited is liable for any contract entered by the Mr. DeMac with legal document provided same is within the power of him.  Mr. DeMac can create legal, valid and enforceable contact between third party and the company, as he has designated with specific authority over there. It is specifying nothing but relationship of principal and agent.

For an example, if Me DeMac has entered into the contract for purchase of vehicle with one of distributor agency, same is falling within the authority of the company   and hence it can be said the third party ( agency ) has created legal binding contract with the company.

References:-

Lee Pey Woan, PearlieKoh, Tham Chee Ho, 2009, “The Law of Contract”, Accessed on 5th March, 2015, <https://www.singaporelaw.sg/sglaw/laws-of-singapore/commercial-law/chapter-8>.

Tan Cheng Han, 2009, “Law of Agency”, Accessed on 5th March 2015, <https://www.singaporelaw.sg/sglaw/laws-of-singapore/commercial-law/chapter-15>.

ANON, 2014, “Frustrated Contracts Act”, Accessed on 5thMarch, 2015, <https://statutes.agc.gov.sg/aol/search/display/view.w3p;ident=bdeda432-ac15-4e76-aad9-9144d93ac87a;page=0;query=DocId%3A59e417b5-c0a0-4c57-8463-a0d240c4dc64%20Depth%3A0%20Status%3Ainforce;rec=0>.