Monday 25 March 2024
Dear Subscriber,
I hope you had a great weekend. Please see below for the question, the answer to the previous question and associated resources. This is the web version of this newsletter.
Question: Alice and Bob enter into a written contract for Bob to deliver 100 boxes of goods to Alice’s warehouse by a specified date in exchange for £10,000. After signing the contract, Alice realizes that she actually needs 150 boxes of goods to fulfil her customer orders. Alice contacts Bob and asks if he would be willing to deliver an additional 50 boxes of goods for an extra £2,000. Bob agrees in writing to Alice’s request. However, after delivering the additional 50 boxes of goods, Bob demands an extra £3,000 from Alice, claiming that the increased workload was more burdensome than anticipated. Alice refuses to pay the additional amount, arguing that they already agreed on the price of £2,000 for the additional boxes. What legal principle governs the modification of the contract in this situation?
- The parol evidence rule, which prohibits parties from introducing oral evidence to modify the terms of a written contract.
- The doctrine of consideration, which requires parties to exchange something of value to modify an existing contract.
- The doctrine of promissory estoppel, which prevents parties from going back on their promises when the other party relies on the promise.
- The rule against penalties, which invalidates contractual provisions that impose excessive or unconscionable penalties for breach of contract.
- The Statute of Frauds, which requires certain types of contracts to be in writing and signed by the parties to be enforceable.
Top Tip: Want to know all about formation of contract in 1 hour? Watch this dedicated podcast.
Relevant Reading: For a quick text relevant to this week’s question see here.
Answer and feedback to last week’s question: Emma enters into a contract with David to sell her antique clock for £500. The contract specifies that Emma will deliver the clock to David’s address on a specified date, and David will pay the agreed price upon delivery. However, on the specified date, Emma fails to deliver the clock to David as agreed. David waits for several days but does not receive the clock. He then purchases a similar antique clock from another seller for £600. What legal principle applies to David’s rights in this situation?
- David is entitled to specific performance of the contract, requiring Emma to deliver the clock to him.
- The contract between Emma and David is voidable at David’s option due to Emma’s failure to perform her obligations.
- David is entitled to claim damages for breach of contract equal to the difference in price between the clock Emma agreed to sell and the clock he purchased from another seller.
- Emma is entitled to rescind the contract due to impossibility of performance.
- David’s rights are extinguished since Emma’s failure to deliver the clock voids the contract.
Correct Answer: 3. David is entitled to claim damages for breach of contract equal to the difference in price between the clock Emma agreed to sell and the clock he purchased from another seller. In this scenario, Emma’s failure to deliver the clock to David as agreed constitutes a breach of contract. David is entitled to claim damages for the breach, which are calculated based on the loss he suffered as a result of Emma’s failure to perform her obligations. The measure of damages is the difference between the contract price (£500) and the price David had to pay to purchase a similar clock from another seller (£600). Therefore, David is entitled to claim damages equal to £100 for breach of contract, subject to the rules on mitigation.
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All the best
Dr Ioannis Glinavos
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