Nelson Ltd is a publisher, specializing in producing fictional textbooks. In Jan

Question

Nelson Ltd is a publisher, specializing in producing fictional textbooks. In January 2018, they decided to produce a new edition of a particular book and commissioned Hilary and Donald to produce the work. Hilary was to provide the text and Donald was to produce the extensive diagrams and each of them was to be paid $25,000. The contract entered into between Nelson Ltd and Hilary required the text to be produced by 30th April 2017 and the terms of Donald’s contract required the diagrams to be submitted by 30th June 2017. In March 2017, Hilary informed Nelson Ltd that she would not supply the finished text on time, unless Nelson Ltd increased her payment by $5,000. Nelson Ltd agreed to the increase, but when Hilary submitted her invoice on delivering the text, Nelson Ltd refused to pay the additional amount. In May 2017, Donald informed Nelson Ltd that he was no longer willing to produce the diagrams for the book. Nelson Ltd however, can get someone else to produce the diagrams, but given the time lost, they will have to pay an additional $1,500 to produce the diagrams on time for printing the textbook as originally planned. Required: In the context of the law of contract, advise:

(a) what action Hilary can take against Nelson Ltd to enforce the additional payment; Can Nelson Ltd take any actions against Donald for his failure to produce the diagram as agreed.

Explanation / Answer

One of the prime requirement for a valid contract is the consideration of a contract. Without consideration, a contract and its term are void. When the initial contract with Hilary was signed by Nelson Ltd., the consideration of Hilary Nelson was $25,000 and the completed text respectively. However, the additional $5,000 demand by Hilary does not have any separate consideration attached to it (note that Hilary is still bound to deliver the texts by the earlier date 30th April 2017). Therefore, even when the Nelson Ltd. agreed to pay this additional $5,000, the contract becomes void and therefore, Hilary cannot enforce the payment of $5,000 by Nelson Ltd.

In the case of the contract between Nelson Ltd. and Donald, Donald is enforced by the contract law to complete the terms of the contract i.e. the diagrams for the book by the contracted date. So, an unwillingness to complete the contractual obligation will cause a breach of the contract by Donald and when the Nelson Ltd. appeal to the court, Donald may be awarded a penalty of more than $1,500 which was the loss incurred by Nelson.

Related Questions

Navigate

• Browse (All)
• Browse N
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.