Contract Law Essay: Possible Contract Breaches of United Kingdom
Anne and Victor Marshall (the Marshalls) live at number 3 Barnes Wallace Close and also own numbers 1 and 2, which they rent out (the rental properties). The Marshalls spend six months each year overseas and, worried about long periods away and the increasing range of legislation they need to comply with as landlords, would like an agency to provide a full management service for their rental properties.
They will be starting their next trip in four months. Victor Marshall knows the Managing Director (David Heinkel) of a lettings company - Airside Lettings Management Ltd (ALML) – and has informally agreed to AML providing services in relation to the bungalows for a one-off ‘flat’ fee of £1,500, followed by monthly payments of 10% of the monthly rental income. The £1,500 fee was due on confirmation of a letter of intent to contract but has already been paid and ALML have started marketing the properties. However, no written contract has been exchanged. Accordingly, there is no agreement about what ‘10% of the rental income’ means or of the precise service being provided, and no agreement on timelines. Five weeks after the first letter was issued, no progress has been made in agreement or in letting of the properties. A heated argument between Anne Marshall and Carmel Sopwith of ALML has resulted in a terse communication from ALML ending the relationship. As a result, Victor Marshall has asked you, as the surveyor, to advise about whether they can sue ALML for breach of contract and on any grounds ALML has to demand payment.
Task: You are required to write a contract law essay providing advice to Mr and Mrs Marshall, using your current knowledge of contract law, about:
a) Whether they can sue ALML for breach of contract;
b) Whether ALML has grounds to demand payment.
Contract law in the UK or commonly referred to as the English Contract Law represents a set of regulations revolving around contracts made under the laws of England and Wales. Placing high values on the contracts regulating the involved parties, the governing laws stand as guides to human rights. The present assignment highlights a case of possible contract breach based on the contract laws of the UK. Implementing the IRAC method, the following discussion will portray the related issues and solutions for the same.
The issue highlights the case of Marshalls and Airside Lettings Management Ltd. (ALML). Based on the provided scenario, Victor and Anne Marshall are seen to own three properties, 1, 2 and 3 Barnes Wallace Close. Misconduct between the mentioned agency and the couple regarding the lease of two properties out of the three concludes an issue of a possible breach of contract between the two parties.
The UK contract law projects three major steps; agreement; contractual intention; and consideration.This states, an agreement can be reached with an offer made by one party and accepted by another. However, the contract law for the UK defines the need for a written contract to be exchanged within both parties under the law of Property Act 1989, s 2(English-contract-law-at-a-glance, 2021). Further, the expiration of a contract can be reached in case of an agreed term or date by both parties within the agreement or based upon the right of one party's termination in case of a breach by another. Breach of contract in relation to the UK contractual law is committed in case of a refused or failed performance without a lawfully accepted issue for either involved party under a legal contract.
The Marshalls have been seen to intend an agreement with the ALML agency for leasing 1 and 2 Barnes Wallace Close. To confirm the intention, Victor Marshall is also seen to have sent an email making a proper offer upon the agreed terms along with the initiation fees. The term is being a flat fee of £1500 as an initiation by the couple for the agency to proceed with the work of finding tenants; starting the work within 5 days after receiving the email in expectation of its completion within a period of around a month (Real Estate 2021 | England & Wales | ICLG, 2021). However, no formal contract has been seen in this case, confirming the first clause of the contract law under the property act of 1989 s2. Receiving a payment without providing any results as agreed in the informal agreement can also be taken under consideration in this case. Further, upon a general inquiry about the work assigned to the agency by Anne Marshall; the end of the agreement with an additional demand of performance cost; along with previous invoices demanding monthly 10% on rental income can be considered as a breach of contract adding to the case of the Marshalls.
The above case can be considered as a breach of contract, allowing the Marshalls to put a case against the ALML agency. Based on the evidence of the emails exchanged between the two parties along with the conversation list within Anne Marshall and Carmel Sopwith, the Marshalls can also charge ALML. For a missing contract or fake agreement, acceptance of the contract fees without any results can also be considered as a waste of precious time of the couple. In conclusion, the Marshalls can be seen to possess complete rights to charge the mentioned agency for a breach of contract based on the informal agreement between Victor Marshall and David Heinkel, managing director of Airside Lettings Management Ltd. (ALML).
The evidential letters, in this case, have shown the payment amount of £1500 as initiation fees been paid by Victor Marshall. In addition, an amount of £1650 monthly for each property has also been promised as a result of 10% rental income added to the flat fee of £1500. The issue, in this case, highlights the probability or grounds of Airside Lettings Management Ltd. (ALML) to demand payment from the Marshalls on the basis of the agreement.
The UK Contract law discusses the clause of damage to the party suffering a loss based on a legal breach of contract. Compensating the loss suffering party based on concrete evidence of a recognizable claim, the contract law can decide a party’s grounds of payment demands.
The demand of the agency for additional payments on the claims of their efforts based on the agreement can be compared with legal cases in history in order to gain a better perspective. Balfour vs Balfour 1919 can be chosen as the first example in this scenario (Landmark Case - Balfour vs. Balfour, 2021). Working as a civil engineer in the land of Ceylon, Mr Balfour came back to England on vacation on a particular year with Mrs Balfour. However, the husband was suggested to return without the wife due to a medical condition restricting Mrs Balfour to England. An oral promise of sending £30 monthly was made by the husband while leaving. However, within a few years, the couple seemed to grow apart and as a result, the husband stopped sending the agreed amount. Upon being charged in the court of law by the wife, the court projected the need for a legally binding agreement for the judgement to commence; in absence of which it can be regarded as an informal argument between spouses. Hadley and Bexendale 1854 is another case that can provide additional insight (Hadley v. Baxendale - Case Summary and Case Brief, 2021). Hadley has been seen to own a mill. The breaking of a crankshaft while operating in the mill made Hadley enter a contract of delivering the broken shaft to an engineering enterprise on a date agreed upon by both parties. However, Hadley committed the mistake of providing no information regarding the inability of the mill to operate until the shaft replacement. Baxendale on the other end has been seen to fail in abiding by the date to deliver the shaft based on negligence, resulting in a lawsuit claiming special damages as lost profits due to an inoperable mill. However, the mistake of a failed communication of the special circumstances by Hadley to Baxendale considered the claim null and void.
Considering the above scenario of Balfour vs Balfour, a missing written contract can be held incompetent in supporting a claim of additional payment from ALML as the agency. This reduces any possible grounds for the mentioned agency to demand any payment regardless of the amount of work done by the party. Further, the case of Hadley and Baxendale, shows the requirement of a party initiating an agreement to inform the other about the special circumstances if any. The couple has been seen to inform Carmel Sopwith of ALML about their special circumstances of expecting tenants in their properties to be leased before their next travel. In addition, the email sent by Victor Marshall also highlights the timeline for an approximate month to commence with the agreed services and results. This not only allows the Marshall to have a better opportunity in legal terms over ALML but also provides them with the right to demand special damages based on lost payment of £1500 and an additional wastage of time.
The conclusion to the above discussion has provided evidence of the effectiveness of contract law under the legislation of the UK. Supporting the Marshalls as the suffering party in both the issues, the discussion has provided previous case scenarios as evidence. The connection of the cases to the present picture has allowed the essay to incorporate detailed information, providing an enriched study.
A4id.org. (2021).Retrieved 15 April 2021, from http://www.a4id.org/wp-content/uploads/2016/10/A4ID-english-contract-law-at-a-glance.pdf.
Group, G. (2021). Real Estate 2021 | England & Wales | ICLG. International Comparative Legal Guides International Business Reports.Retrieved 15 April 2021, from https://iclg.com/practice-areas/real-estate-laws-and-regulations/england-and-wales.
Landmark Case - Balfour vs. Balfour.Lawyered.in. (2021).Retrieved 15 April 2021, from https://www.lawyered.in/legal-disrupt/articles/landmark-case-balfour-vs-balfour/. Team, C. (2021). Hadley v. Baxendale - Case Summary and Case Brief.Legal Dictionary.Retrieved 15 April 2021, from https://legaldictionary.net/hadley-v-baxendale/.