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(Please note: the entering of your registration number on this page will be taken as your signature confirming that you have read and complied with the above rules. ) Registration Number: 090170579 Date: 11-12-09 I have been asked to provide legal advice for Hard-Up Construction Ltd as to their contractual position regarding the events which took place during the time period between 2006 and 2007 with the University of South Yorkshire and Ms Barbara Ella. The University of South Yorkshire has accepted a building tender from Hard-Up Construction Ltd for 1,000,000, it became clear later on that this wasn't enough to complete the work and asked for a further 600,000 on top of the original price.
The University reluctantly agreed, but then declined to give the 600,000. The issue is surrounding the context of the second 'agreement'; for Hard-Up Construction Ltd there has to have been a breach of the contract by the University for the courts to enforce this agreement. The next issue is that Ms Barbara Ella has promised to pay Hard-Up Construction Ltd 50,000 if they finished the work by March 2007; she is now refusing to pay.
Again, Hard-Up Construction Ltd will have to prove a breach of contractual obligations has arisen. The area of law which both problems concern is the law of contract, it is probably best to deal with each issue separately. With regards to contractual obligation, a contract is a voluntary choice/consent to create obligation from the other party. The courts have generally adopted an objective approach to establish whether there has been a meeting of minds, this attaches significance to external appearances rather than what was subjectively or internally intended.
The authority for this case is The Hannah Blumenthal1, where the Law Lords thought it was necessary to abandon a subjective approach. The first issue to be addressed is the establishment of a bi-lateral contract, this is where A is bound to do X and B is bound to do Y in return for the promise made by A. Another type of contract is that of a uni-lateral contract. This is where A makes an offer and assumes an obligation such as a promise to perform a certain act but B is under no obligation.
This is where the contract has become one-sided; it does not mean that there is only one party involved. From the facts given in the scenario, a uni-lateral contract can be disregarded in this respect as there has been an obvious bi-lateral contract formed between the two disputing parties as Hard-Up Construction Ltd has promised to complete the building work on time in return for being paid the sum of money by the University of South Yorkshire. To make the agreement enforceable it must be established whether it is an agreement or a contractual agreement.
The minds of the two parties concerned must be consensus ad idem, which means they need to meet on the matters which are the subject of the agreement. Offer and acceptance has to be established. There tends to be two approaches taken to establish this. The courts can adopt a liberal approach where they look at all the circumstances and see if the parties appear, objectively to have reached agreement, or they can apply a more traditional approach, looking at the evidence as a whole to see if there has been a concluded agreement, therefore establishing offer and acceptance to see if there has been a contract made.
It is clear from the facts that there has been an offer and acceptance made in the first agreement, in the form of a tender from Hard-Up Construction Ltd to the University of South Yorkshire, the University have accepted this offer, which has formed a contractual obligation between the parties. With regards to the second 'agreement' it appears that an agreement has been made between the two parties for the extra 600,000, from Hard-Up Construction Ltd asking for the additional payment and the University agreeing. However an element of reluctance has been noted in the scenario.
It would need to be established whether contractual terms were expressed or implied during this second agreement or whether it was just a conversation with no legal sufficiency behind it. The courts will take great care in establishing exactly what was communicated between both parties in order to find contractual relations. It is this second 'agreement' which is causing contention between the two parties; intention to create legal relations is another aspect to be considered when trying to enforce a contract during a legal dispute. Without that intention to create legal relations within the agreement, the case will not stand in court.
An uncertain agreement is no agreement at all, which can be seen in the case of Scammell (G) & Nephew Ltd v HC & JG Ouston2. It is often the case that the offer and agreement are present and correct, but when it comes to finding the intention to create a legally binding contract, many issues can rear their ugly head. For it to be enforceable by the Courts, the conversation on the agreement to pay the 600,000 needs to be analysed thoroughly to establish the intentions of both parties when coming to an agreement over the additional payment of the money.
If Hard-Up Construction can prove that they definitely perceived the intention of the University to be a legally binding promise, then intention to create legal relations can be found within this second agreement. With the leading authority on Hillas & Co. v Arcos Ltd3, it is more likely that an executed agreement will be far more workable and followed up than an executory agreement, where neither side of the parties concerned have carried out their obligations yet. Hard-Up Construction Ltd is in a stronger position in this sense due to the fact they have begun to carry out their building work which is their side of the contract.