Monday 8 April 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, a small business owner, enters into a contract with Bob to purchase inventory for her shop. Bob realizes that Alice is in urgent need of the inventory to fulfil existing client orders and threatens to withhold the delivery of the inventory unless Alice agrees to pay a significantly higher price than originally negotiated. Feeling pressured and fearing the consequences of not receiving the inventory on time, Alice reluctantly agrees to Bob’s demands and signs the contract. Can Alice subsequently rescind the contract with Bob?
- Yes, Alice can rescind the contract with Bob on the grounds of economic duress since a threat to breach a contract is considered illegitimate.
- No, Alice cannot rescind the contract with Bob on the grounds of economic duress since she ultimately agreed to the terms of the contract in writing.
- Yes, Alice can rescind the contract with Bob on the grounds of economic duress since the price demanded by Bob was significantly higher than the market value of the inventory.
- No, Alice cannot rescind the contract with Bob on the grounds of duress since Bob did not engage in physical threats or violence.
- No, Alice cannot rescind the contract with Bob as a threat to breach a contractual obligation is not illegal.
Top Tip: Need help in picking an SQE prep school? Watch this video for advice on how to approach SQE1 providers.
Relevant Reading: For a quick text relevant* to this week’s question see here.
Answer and feedback to last week’s question: Alice hires Bob, a professional painter, to paint her house for £3,000. They agree that the painting will be completed within two weeks. However, Bob fails to start the work on the agreed-upon date and does not communicate with Alice for several days. Alice becomes concerned about the delay and hires another painter, Carol, to complete the job for £3,500. When Alice informs Bob of her decision, he apologizes but insists that he can still complete the work. Alice refuses Bob’s offer and proceeds with the contract with Carol. Was Alice correct to terminate the contract with Bob?
- Yes, Alice can terminate the contract with Bob for fundamental breach since he failed to perform all his obligations.
- No, Alice cannot terminate the contract with Bob for fundamental breach since he offered to proceed with the work.
- Yes, Alice can terminate the contract with Bob for fundamental breach since she incurred additional expenses by hiring another painter.
- No, Alice cannot terminate the contract with Bob for fundamental breach since he did not explicitly repudiate the contract.
- Alice can only terminate the contract with Bob for fundamental breach if the timing for commencing the work was of the essence.
Correct Answer: 5. Alice can only terminate the contract with Bob for fundamental breach if the timing for commencing the work was of the essence. Feedback: In this scenario, Bob’s failure to start the painting work on the agreed-upon date will constitute a breach of contract, but the breach will only be fundamental if the term breached is of the essence (a condition of the contract). If Bob’s delay in commencing the work within the agreed-upon time frame is a material breach that goes to the root of the contract, Alice has the right to terminate the contract for fundamental breach and seek damages for any losses she incurred as a result of Bob’s failure to perform his obligations within a reasonable time.
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You will hear from me again soon.
All the best
Dr Ioannis Glinavos
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