Law of Contract Management

Question: Explain Law of Contract? Answer: Issues: The issues that arise in the present matter are underlined as under: Whether martin is under a legal obligation to pay jim the extra 20 per hour in order to keep him under employment? Whether there is any possibility on part of lee to recover the 500 from martin? Rules: The relevant legal rules that apply in this case are provided as under: A contract is said to be a valid one if there exist certain basic requirements namely offer, acceptance, consideration, intention to enter into a legal obligation etc (neyers, bronaugh and pitel, 2009). The requirement in this question is that of consideration as far as the first issue is concerned. We shall take an illustration to understand the matter in clear terms: A appoints b to clean his windows and promises that he would pay him $5 for cleaning them. The payment here qualifies to be a consideration. Now, b complains that he would not clean the windows because of a bad weather. Hence, a promises that he would pay him $2 extra if he does that, to which b agrees. After the completion of the cleaning, b demands his payment of $7 but a pays him only $5 and claims that that was the agreement. In this illustration, only the first contract exists as the second promise was not qualifying to be a valid consideration because b was already obliged to do his cleaning task. Hence, the second contract does not exist. In the case of dick bentley productions limited v harold smith (motors) limited (dick bentley productions limited v harold smith (motors) limited, [1965]), it was ruled by lord denning that the requirement under consideration states that the recipient of the promise on the first go cannot envisage any other contract to override his obligation under the present contract. Any such increase in consideration amounts to qualify as a contract entered into under coercion and thus becomes void (hillman, 1997). Further, in the case of carlyle v royal bank of scotland (carlyle v royal bank of scotland, [2013]), it has been ruled by lord neuberger that a consideration in case of a continuing contract remains valid till the entire length of the contract and any revisions to the same cannot be entertained in it at any point of time (hillman, 1997). We shall now move to our discussion on the legal points concerned with the second issue which is a matter of part payment of debts. It is a general rule in law that if a person owes a sum of money to another person and he agrees to pay a part of this debt as a full settlement to realize his debt, then, as per the pinnels case (pinnel's case, [1602]), the rule at common law provides that such a part- payment of a debt does not evade the penalty that arises at a later stage (richards, 2006). In this case, it was held by the lordships that generally a part payment of a debt does not qualify to evade the liabilities of the whole debt. However, three exceptional circumstances were provided which qualified the requirement that a part payment can be considered as a full settlement (morgan, 2012). These situations are: When the part payment is made on an earlier date than the date on which it is due (like it happened in the case itself) and the creditor earns a benefit out of it; When a chattel is paid instead of money which may prove to be more beneficial than the money itself; When the payments in part are paid in a different place from that originally specified. Also, in the case of ferguson v davies (ferguson v davies, [1996]), it was provided by the court that when the part payments are realized by the creditors as a settlement in full, then, such requirement of part payment qualifies to settle the entire debt (morgan, 2012). Application: We shall now apply the above discussed legal rules in the present case. As far as the first issue with jim is concerned, it is very clear from the basic factual backdrop that martin and jim had entered into a valid contract with the terms specifically maintained. Jim had undertaken to lay the bricks and martin had promised to pay him $30/hour for the task. This happens to be a binding contract and both the parties are under an obligation to fulfill their respective parts. If jim at a later point of time threatens to breach his obligation in lieu of extra payment, then, that happens to be an invalid contract and it cannot be enforced. He is already bound by the first contract and he has to finish his work on time by the initial agreed consideration amount. Thus, the promise made by martin to pay him extra $20/hour does not amount to be an enforceable option and hence cannot be evoked. Applying the similar legal points in the second issue with lee, we can say that it should also be decided on similar grounds. But certain points of fact which are worth noting here are that owing to the recession that the nation was struck in along with the early payment made by martin qualifies to be a settlement of debts. In fact lee himself makes the offer that the loan that is due in march if paid in january shall entitle him to a discount of $500. Martin simply agreed to this term and hence if we apply the ratio of pinnel in the present matter, the entire loan was settled as and when the amount of $1500 was repaid in january for the benefit of both the parties. Thus, lee cannot compel martin to pay him anything now once the loan has settled. Conclusion: The problem given in the situation can be concluded on the following two propositions: That martin is under no legal obligation to pay jim the extra $20 per hour to keep him bound under employment. Rather jim is obligated to fulfill his promise under the previous contract of $30 per hour; That there is no possibility on part of lee to recover the $500 from martin as he has himself agreed to the early settlement in full of the loan. References Carlyle v royal bank of scotland[2013]csih p.75. Dick bentley productions limited v harold smith (motors) limited[1965]wlr 1, p.623. Ferguson v davies[1996]bplr p.535. Hillman, r. (1997).The richness of contract law. Dordrecht: kluwer academic publishers. Morgan, j. (2012).Great debates in contract law. Basingstoke: palgrave macmillan. Neyers, j., bronaugh, r. And pitel, s. (2009).Exploring contract law. Oxford: hart pub. Pinnel's case[1602]co rep 5 (court of appeal), p.117. Richards, p. (2006).Law of contract. Harlow, england: pearson longman.