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ML - israrhere - 09-03-2007
a)A borrowed Rs 50000 from B by giving a promissory note in his indivdual capacity.He used the proceeds of the note in the partnership business.While A had gone abroad for medical reasons ,B sued the partnership as the promissory note became overdue.
Explain whether the firm is liable to pay the amount.
Would it make any difference if A had informed B that the borrowing was being made for the purpose of the firm?
b)A made a coat from the fur of a Bengal tiger which he had hunted when there was no restriction under the law on such hunting.The law in place currently, restricts such hunting activities.B,a freind of A,saw this coat at a's house and offered to buy it for 500000.A agreed to sell it.Later A backed out of his promise.What is the course of action available to B?
Please suggest ur answers.
- Muhammad Amir - 09-04-2007
<b>Answer of (a)-</b>
<b>Implied Authority-</b>
Implied Authority has neither given in writing nor in verbal it is implied because of the nature of job or task...
Simply What is expected from the person of his position for example, If a person is involved in general administration tasks of a company his implied authority is to make contracts for all administrative nature of tasks see Panorama Development Case where a secretary of company âAâ contracted to other company âBâ to get cars on rent to pick the customers of company âAâ he then used cars for his own benefits. Later Company âBâ claimed the amount from company âAâ and company âAâ refused to pay for it on the grounds that He (the Secretary) has no authority to make such contracts on companyâs behalf then court of law held that <b> He the secretary of Company âAâ has implied authority to make such contracts on behalf of company âAâ because administrative nature tasks are usually come under the authority of companyâs secretary </b>..
Implied Authority can be classified as
<b>Implied Customary Authority-</b>
What is implied by the custom of particular trade or business
<b>Implied Usual Authority-</b>
What is expected from the person of his position and knowledge. Simply what come under his usual authority
Regarding your query that A has borrowed Rs 50000 from B by giving a promissory note in his indivdual capacity has two options 1)The loan has been taken in course of business of agency. 2)The loan has not been taken in course of business of agency. If it has taken in course of business of agency then Aâs firm will be liable to it and if it has not been taken in course of business of agency then the firm would not be liable for it, but if âBâ knows that âAâ is a partner in a firm and âBâ also knows that âAâ has usual authority to make such contracts on behalf of Partnership then âBâ can recover amount from the companyâ¦
<b>Answer of (b)-</b>
The Government banned on hunting not on Coat that are prepared from previous huntings and therefor 'B' has enforceable rights and
'B' can sue to recover coat from 'A' as it was simple offer and acceptance not Invitation and Offer...
Regards,
Muhammad Amir
- israrhere - 09-05-2007
Dear Amir thanks for your reply.So in first question we should explain it by giving both the options,am I right?
In second question I was confused about the bane on huting its now clear but I think he only agrees to sell so can recover only damages....right?
Here is another question.
X offered the post of accountant to Y.He allowed Y to discss the matter with his parents and convey his decision to X by the end of the week.At the end of the week,Y resigned from his present job and went to X to signfy his acceptance of the offer but was told that the post has been given to another person.What remedy(if any)is available to Y?
In this case Is it offer or an invitation to treat because usually in such cases further negotiation is necessary.
If it is offer then what remedy he has because if he sue him on specific performance would'nt it suffer rights of 3rd party as the job is given to another person.
Looking for your valuable reply.
- Muhammad Amir - 09-05-2007
<blockquote id="quote"><font size="1" face="Verdana, Tahoma, Arial" id="quote">quote<hr height="1" noshade id="quote">X offered the post of accountant to Y.He allowed Y to discss the matter with his parents and convey his decision to X by the end of the week.At the end of the week,Y resigned from his present job and went to X to signfy his acceptance of the offer but was told that the post has been given to another person.What remedy(if any)is available to Y?<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
First Of all Jobs are usually floated in newspaper and in such cases jobs are invitation to treat not an offer that can be accepted...
But If a person(Offeror)met with another person(Offeree) and offered him a job personally and then Offeree asked him to give him atleast one week to decide and he gave him one week during this week offeree left his previous job and decided to join offeror in the meanwhile offeror has given particular job to another person then this is breach of contract on the part of offeror.
In general there are four kinds of remedies
1)Damages
2)Injunction
---a)Prohibitary Injunction
---b)Mandatory Injuction
3)Specific Performance
4)Quantum Meruit
<i>
Breach of a contract occurs where one of the parties to the agreement fails to comply, either completely or satisfactorily, with their obligations under it. A breach of contract may occur in three ways
(i) where a party, prior to the time of performance, states that they will not fulfil their contractual obligation;
(ii) where a party fails to perform their contractual obligation;
(iii) where a party performs their obligation in a defective manner.
Any breach will result in the innocent party being able to sue for an appropriate remedy. In addition, however, some breaches will
permit the innocent party to treat the contract as discharged. In this situation they can refuse either to perform their part of the
contract, or to accept further performance from the party in breach.
The principal remedies for breach of contract are
Damages
Every failure to perform a primary obligation is a breach of contract. The secondary obligation on the part of the contract-breaker,by implication of the common law, is to pay monetary compensation to the other party for the loss sustained by him in consequence of the breach (Photo Productions Ltd v Securicor Transport Ltd (1980)).
Such monetary compensation for breach of contract is damages. There are two issues to consider remoteness and measure.
(i) Remoteness of damage
This involves deciding how far down a chain of events a defendant is liable. The rule in Hadley v Baxendale (1845) states that damages will only be awarded in respect of losses which arise naturally, i.e. in the natural course of things; or which both parties may reasonably be supposed to have contemplated, when the contract was made, as a probable result of its breach.
The effect of the first part of the rule in Hadley v Baxendale is that the party in breach is deemed to expect the normal
consequences of the breach, whether they actually expected them or not.
Under the second part of the rule, however, the party in breach can only be held liable for abnormal consequences where they have actual knowledge that the abnormal consequences might follow. Thus in Victoria Laundry Ltd v Newham Industries Ltd (1949) the plaintiff was able to claim for damages with respect to the normal profits, but could not claim abnormal profits which would have resulted from an especially lucrative contract, which the defendant knew nothing about.
(ii) Measure of damages
Damages in contract are intended to compensate an injured party for any financial loss sustained as a consequence of another partyâs breach. The object is not to punish the party in breach, so the amount of damages awarded can never be greater than the actual loss suffered. The aim is to put the injured party in the same position they would have been in had the contract been properly performed.
Even damages of a non-financial nature can be recovered (Jarvis v Swan Tours Ltd (1973)).
It is possible, and common in business contracts, for the parties to an agreement to make provisions for possible breach by stating in advance the amount of damages that will have to be paid in the event of any breach occurring. Damages under such a provision are known as liquidated damages. They will only be recognised by the court if they represent a genuine preestimate of loss, and are not intended to operate as a penalty against the party in breach (Dunlop v New Garage & Motor Co (1915)).
Quantum meruit
Quantum meruit means that a party should be awarded âas much as he had earnedâ, and such an award can be either contractual or quasi-contractual in nature. If the parties enter into a contractual agreement without determining the reward that is to be provided for performance, then in the event of any dispute, the court will award a reasonable sum.
Payment may also be claimed on the basis of quantum meruit, where a party has carried out work in respect of a void contract(Craven-Ellis v Canons Ltd (1936)).
Specific performance An order for specific performance requires the party in breach to complete their part of the contract. The following rules govern the award of such a remedy.
(i) specific performance will only be granted in cases where the common law remedy of damages is inadequate. It is most commonly granted in cases involving the sale of land, where the subject matter of the contract is unique.
(ii) specific performance will not be granted where the court cannot supervise its enforcement. For this reason it will not be available in respect of contracts of employment or personal service (Ryan v Mutual Tontine Westminster Chambers Association (1893)).
(iii) specific performance, as an equitable remedy, will not be granted where the plaintiffs themselves have not acted properly.
Injunction
This is also an equitable order of the court, which directs a person not to break their contract. An injunction will only be granted
to enforce negative covenants within the agreement, and cannot be used to enforce positive obligations (Whitwood Chemical Co v Hardman (1891)). However, it can have the effect of indirectly enforcing contracts for personal service (Warner Bros v Nelson (1937)).
Quasi-contractual remedies are based on the assumption that a person should not receive any undue advantage from the fact that there is no contractual remedy to force them to account. An important quasi-contractual remedy is an action for money paid and received. If no contract comes into existence for reason of a total failure of consideration, then under this action, any goods or money received will have to be returned to the party who supplied them.
</i>
Damages will always be a primary remedy in every case and if it is immposible to compensate innocent party with primary remedy then court of law will decide how to compansate innocent party usually by other remedies...
however in case of contracts of personal performance court will never gave remedy of specific performance this type of breaches usually compensated by Damages...
Regards,
Muhammad Amir