Business Law - The Legal Environment of Business: A Managerial Approach: Theory
ID: 458859 • Letter: B
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Business Law - The Legal Environment of Business: A Managerial Approach: Theory to Practice- Melvin and Katz, 2e, Contract Performance: Conditions, Breach THEORY TO PRACTICE After a 30-year career as a shipping logistics execu tive, Ishmael retired and began to offer his services as a logistics consultant. Ishmael entered into a consulting contract with the general manager at ExportCo to pro- vide logistical advice to the company for 12 months The parties agreed in the contract that Export will pay Ishmael S5,000 per month on the last day of each month. Ishmael promised to devote "100 percent of his professional time" to Export for a period of at least so Ishmael begins to cut down his hours so that he is spending only 80 percent of his professional time at Export. If Export sues Ishmael for breach of contract, are there any circumstances under which Ishmael may use the doctrine of substantial per- formance to complete his performance obligation? Why or why not? 2. Two months after the Ishmael-Export contract, Export loses a large client. The company sends Ish- mael a letter explaining that the financial emergency has caused it to consider rescinding Ishmael's con tract under the theory that Export was discharged from the remaining months of the contract based on the doctrine of impracticability. Will a court support Export's theory? eight consecutive weeks. 1. After one week on the worksite, Ishmael finds that he is devoting more time than he initially believed was necessary to Export, so he attempts to convince Export to pay him $6,000 per month for his consult- ing services. Export does not agree to any change, CHAPTER EIGHT Contract Performance: Conditions, Breach, and Remedies 225 Mc Graw Hill A- 225 /829 PracticeExplanation / Answer
Ans 1 – Ishmael would not be able to use the doctrine of substantial performance. For using the doctrine of substantial performance it is necessary for Ishmael to show a good faith effort to complete the terms of contract. As Ishmael didn’t attempt or made an effort of completing the work he would not be able to use the doctrine of substantial performance to defend himself against the breach of contract by Export.
Ans 2 - A court will support Export’s theory. This is because the situation meets the following criteria: there was an occurrence of a condition, the occurrence made the performance extremely difficult or expensive, and the difficulty was not anticipated by the parties to contract.
Ans 3 - Ishmael does not have to wait until the data performance is actually due to sue. The doctrine Ishmael may want to use is frustration of purpose (it seems the more suitable of the two).
Ans 4 - Ishmael’s primary remedy would be money damages. Certainly compensatory damages would be the best way to compensate Ishmael for Export Co.’s breach. If Ishmael suffered any indirect damages, he would also be eligible for consequential damages (unlikely in this instance). If the parties agreed upon a liquidated damages clause in the contract, then Ishmael would also be entitled to liquidate damages. Equitable remedies, such as specific performance, are not very likely in this case since money damages can be used to make the non-breaching party whole. Specific performance would not be suitable for this case because Export was merely providing financial compensation for the services. There is no other performance required on the part of Export other than paying Ishmaels consulting fees.
Ans 5 - Despite the fact that an anti-assignment clause is lacking from the contract, the court will most likely require Ishmael to perform the terms of the contract himself. Consulting working is highly dependent on the skills and personality of the individual thus cannot be delegated with comparable performance. The legal doctrine that applies to this situation is the doctrine of delegation. Under most situations, the performance of a contract can be delegated to third parties without consent required. For example, a homebuilder may contract the plumbing work to a subcontractor. However, when it comes to specialized skills like consulting, artistry, public speaking, and so on, delegation can be considered a breach of contract.
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