Business Law Case Part #1
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Feb 20, 2024
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QUESTIONS FOR ANALYSIS PART ONE (TOTAL 40 MARKS) 1.
Is there a valid contract between Compact and International Tire Inc.? Explain fully with specific reference to the key elements. (6 marks) Answer: 1. First, before saying if it is a valid contract or not, we must understand what a contract is and its legal ingredients. Therefore, a contract is that "deliberate and complete agreement between two or more competent persons" (Canadian Business and the Law,
2022, paras.12). In addition, the contract could be "a written or spoken agreement" (Government of Canada, 2022, para 1). Therefore, there legal ingredients are:
- First, the offer must exist, where initially it is a proposal by one of the parties to do something, for example, business. Likewise, the offer has no legal effect if there is still no acceptance by the other party. Subsequently, the promise is made that both parties can enter a contract; generally, within the contract, all those parties or clauses that the offer contains are named, for example, sums of money, responsibilities, agreements, because in case these terms are not evident uncertainty can occur (Canadian Business and the Law, 2022, paras.14).
- After the offer, the next step is acceptance; this happens when both parties accept terms and conditions of their own free will on the offer and proceeds to form the contract. The parties are clear about "their rights and obligations agreed upon in the contract" (Canadian Business and the Law, 2022, paras.13).
- Consequently, there is the consideration where the parties must have a profit on the contract, that is, where both parties contribute something to the agreement; they can be goods or services.
- Finally, there is the intention, that is, one of the parties can enforce the promise of the other, which "would be enforceable by a court of law" (Canadian Business and the Law, 2022, paras.120).
This contract is valid now, focusing on the contract between Compact and International Tire Inc. The offer of reduced service charges and fast responses was made, and all the
repair services for their computers were carried out. International Tire accepts Compact's offer and proceeds to form the contract. Subsequently, within the written contract in its clauses, they affirmed and agreed that Compact would repair all the computers of International Tire Inc. on time and International Tire Inc. would send all the
repairs of its computers to Compact for three years. Another of its clauses was that Compact would collect, repair and return the computers within an "average time of approximately four business days." Finally, this contract was signed by the president of
International Tire on behalf of the International Tire Inc. company and by Compact, signed by Sidney Greenwood.
2. ASSUMING THAT THERE IS A VALID CONTRACT, was the contract breached? Which party (or parties) breached the contract? How specifically was the contract
breached? At what point in time could legal action be started by each party that you have identified as breaching the contract? (8 marks)
Answer:
A breach is defined as a party’s failure to perform in accordance with the terms of the agreement, this can include negligence of contact terms or non – performance of actions required in the contract. In this case, Compact Business Solutions signed a 3-year contract with International Tire Inc and the terms in the contract required Compact to repair all International Tire’s computers in a timely manner while International Tire would send all its computers repairs to Compact during the 3-year period. Another term in the contract required Compact to pick up, repair and return the computers within an average time of approximately 4 business days. Compact solutions had breached a condition of the contract which stated the average time for repairs is 4 business days however it was breached when Compact’s average time to repair computers slipped from 4 business days to 7 or 8 days. When there is a breach of condition, the innocent party has the right to both terminate the contract and claim damages. Given this circumstance, International Tire has the right to take legal action immediately as it is actionable. They are also entitled to potential damages/losses that affected their business and have the right to treat the contract as terminated. 3. How would the court approach the question of damages relating to the Compact and International Tire Inc. contract? What factors would be considered?
(8 marks)
Answer: In order to resolve the question of damages, the court must have to look for the conditions of the breach, i.e.., whether
·
Compact Tire and International Tire Inc. had an agreement. “On June 1, 2011, Compact Business Systems signed a three-year agreement with International Tire Inc”. ·
There is a breach of contract: "By early November, the average time Compact took to repair a computer had slipped from 4 business days to 7 or 8 business days".
·
Either of the parties is entitled to a remedy. In this case, a "fundamental breach" occurred, which refers to a situation where the contract's foundation, or terms and conditions, were not adequately fulfilled. "By early November, the average time Compact took to repair a computer had slipped from 4 business days to 7 or 8 business days". In this situation, the court can determine the damages by using either the "expectation damages" clause or claimed amount already mentioned in the contract. In this case, the
latter is not mentioned; hence, they can move further with the expectation damages clause. It refers to the expected monetary value of the loss suffered by the innocent party. Hence, the court can dig deeper into the case and examine the amount of loss International Tire Inc. had to suffer due to the non-performance of conditions by Compact.
4. Is there a valid contract between Compact and American Tire Corporation? Will
Compact be able to successfully bill American Tire Corporation for $100,000 per year? What arguments can Compact bring forward? Will it be successful? (6 marks)
Answer:
"Completeness" is one of the less well-known elements of a contract, but it's just as
crucial for its ability to be upheld in court as offer acceptance or consideration. A price
or care must be included in a contract to be deemed legal. As a result, the warranty is
invalidated by any misunderstanding, ambiguity, or mistake regarding the basis of the
agreement. If both parties had consented to such vague or insufficient conditions of
consideration or stayed silent despite realizing the ambiguity, the deal would have been
deemed valid, notwithstanding the irregularity and ambiguity.
A contract between American Tire Co. and Compact is void. The parties' first agreement
was verbal in which they agreed that Compact Business System would get $100,000
yearly for four years. Nathan later found out that the deal paperwork called for payment
to Compact of $100,000, not $10,000 a year. American Tire Co. erred in reality by
stating $1,000 annually rather than the $100,000 negotiated with Impact in this shoddy
and ambiguous contract. The agreement between the parties needs to be revised as a
result. Nathan said nothing, even when he noticed the altered consideration amount in
the agreement agreements. This would suggest that Compact did not object to the
ambiguous deal within a reasonable time, as it should have. Therefore, Compact would
only be able to charge American Tire Co. $100,000 a year if it wanted to launch a
lawsuit asserting its rights. Compact may assert that American Tire Co. deceived it,
faked the contract agreement paper, and fraudulently closed the deal with it. The
company might claim that spending $10,000 annually to fix 1300 PCs would cause a
considerable loss. It may request that the court calculate its anticipated damages and
provide compensation under its judgment.
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5. Does Shawna have any action that she can take against Compact? What steps can she take (assuming her parents let her out of the house)? Will she be successful? In a court action, who would be the plaintiff and who would be the defendant? (8 marks)
Answer: For a contract to be made, there must be an offer, acceptance, consent and intention, but it is also necessary to highlight that the parties must have the legal capacity to participate with consent. It will be of a contract since some people with disabilities or children ("refers to a person under 18 years of age") (Skelly, 2017, para. 2) cannot give their genuine consent. Therefore, the government will provide them with the "benefit of special legal protection" (Canadian Business and the Law, 2022, para. 14).
In this case, Shawna, 17 years old (a minor), would not have the legal capacity to enter into a contract. However, minors can enforce the contracts with the other party (Morasiewicz, 2019, para. 4). On the other hand, are contracts that are allowed to be carried out by a minor, such as those of necessity and for benefit, although the word "need is summarized as food, water, housing, health and safety" (Morasiewicz, 2019, para. 6) can be interpreted in different ways, even so, it will be a matter for the court to confirm what type of needs the minor would have in his life to consider this situation as feasible to make the contract valid or verify if the benefit that the minor acquires through
the contract is relevant and appropriate.
Since Shawna purchased to fix her computer for a value of $750.00, a very high and exaggerated price according to her mother's inquiries, in which the repair of the computer should only cost $200.00. Shawna could take legal action as a lawsuit against
Compact because, although the computer may mean a need for Shawna in which she can take charge of that responsibility and be part of the contract, Compact should have asked Shawna for the accompaniment of one of her parents for the amount of the computer repair.
What is recommended for Shawna is that she go to a lawyer to file a lawsuit against Compact. Stating that Compact took advantage of the minor by charging her for the repair of the computer at an exaggerated value, which, being a child, caused her economic damages, he could also request the court to annul the contract and refund the
money, leaving Shawna's request in her lawsuit to disagree.
Finally, in the case of the lawsuit, Shawna's parents would be the guardians responsible
for her daughter, making them the plaintiffs in the case and Compact, the defendant.
6. Can Shady successfully sue Compact in court for the return of his money based on the fact that the software did not work? Why, or why not? (4 marks)
Answer:
o
As per the case, Shady could not file a case against or sue the Compact in court because her actions were illegal, and the Compact does not have to pay any amount to them.
o
There is no agreement between both because Shady just gave her computer to Compact to install software which will be free of cost, and which shows there is no contract.
o
Moreover, they need a contract between them to perform a legal activity and in that case, if the application does not work then she will be able to sue Compact. But now she is preferring to install free software for music and movies to download then she does not have any right to sue if the application does not work.
o
However, she was also performing illegal activity by getting free software without any payment which will lead her to cause problems in future as per the rules and regulations of software.
References
DuPlessis, D. O’Byrne, S. King, P. Adams, L. Enman, S. (2022). Canadian business & the law Title. VI. Textbooks. 2. Textbooks. Canadian Business and the Law, Seventh Edition. https://app.tophat.com/e/360932/assigned/content/546311::05aa5166-17a7-
4b75-9c42-dcaed3638fc2
Government of Canada. (2022). Contracts. Innovation, Science and Economic Development Canada. Government of Canada. https://ised-isde.canada.ca/site/office-
consumer-affairs/en/modern-marketplace/contracts
Morasiewicz, R. (06 August, 2019). Minors- The Special Case Of Liability Waivers. Mondaq. https://www.mondaq.com/canada/insurance-laws-and-products/833398/minors--the-
special-case-of-liability-waivers#:~:text=Since%20minors%20lack%20the
%20legal,enforceable%20against%20a%20minor%20(J
. Skelly, T. (03 November 2017). Contract with Minors- Why Age is So Important. Act Legal. https://www.lawinoshawa.com/contracts-with-minors