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As a winner of the T.V. show, ‘You are hired’ Simon has appointed as the CEO of the TV production company but he has faced poor quality appointments and also low viewing figures. To improve the quality of applications, Simon has decided to appoint celebrity sisters Kim, Kourtney and Khloe and contracted to pay £1,000,000 each and it shall also raise the quality of applications. But the agreement is to be enforced in the English courts and thus, the insertion of a clause in this respect is required. Hence, Simon needs to know the legal requirements of a valid and binding contract under English law. Thus, the presented submission is a memorandum of advice that shall outline the legal requirements of a valid contract under English law and also the consequences if the celebrity sisters do not attend the finale show.
Requirements of a binding contract under English law
Under English law, an agreement is termed as a contract only when it becomes legally enforceable in the court. For an agreement to be legally binding in the court of law, it is important that the agreement is being done fulfilling all the essentials of a valid contract. The essentials are as follows:
1. Offer: An offer is a proposal put forward by one party of the agreement before the other party. In this case, the offer is the proposal put forward by Simon before the celebrity sisters to attend the finale show so that the show can get quality applicants. This offer in this case can be given in person or through electronic mode like telephone or via post. But it is important to note that an offer is different from an invitation to treat. An invitation to treat is an invitation to make offers at a different price and the last one accepted is referred to as an offer. The difference between an offer and invitation to treat was opined in the case of Harvey v. Facey [1893] where the court held that merely bargaining for the purchase of anything is not making an offer, rather it is an invitation to treat which is an invitation to call for offers to be made (Austen-Baker, 2017).
2. Acceptance: An offer once accepted leads to the formation of the agreement. Thus, acceptance is another essential for a binding contract under English law. In this case, the offer is made by Simon and is accepted by the three celebrity sisters. Once the offer is accepted, there is the formation of the agreement. But under the English law of contract, acceptance is to be communicated to the offeror (the person making the offer). The acceptance can also be communicated either in person or via electronic means or post. But it is worth examining that when an acceptance is enforceable and is legally binding. Under the English law of contract, it has been provided that an acceptance is accepted against the offeree (the person accepting) when the acceptance is put into transit, and against the offeror when it is communicated to him.
3. Consideration: The third essential of a valid and binding contract is the consideration for the contract. Consideration is something that is given in return by one party of the contract to the other party. It may be in any form like money, goods, service or it may be any right or waiving of any right or a promise to act or omit to do something. In this case, the consideration is the amount of £1,000,000 which Simon has promised to pay to the celebrity sisters. Consideration is not merely in love or affection but it is the price for which the promise has been bought. Reference of the case Williams v. Roffey Bros & Nicholls (Contractors) [1989] EWCA Civ 5, can be taken where it was held by the court that a promise made by one party of the contract to pay additionally to the other party to complete the work on time shall also amount to consideration and denial for that payment shall be a breach of contract (Kötz, 2017).
4. Certainty: The fourth requirement for a binding contract under English law is a certainty which means that the contract must have been done for the performance of a legal act and should not be an unlawful purpose or the performance of any illegal activity. The agreements which have been done for an unlawful purpose is not legally binding in the court of law. But it is important to note that not every time such contracts become unenforceable. If there has been a previous agreement between the parties or there is any custom for such transaction, the court shall refer to the same and held the contract to be enforceable. Reference of the case, Hillas & Co Ltd v. Arcos [1932] can be taken where it was held by the court that in case of uncertainties in the agreement, the court shall take into consideration the previous agreement and its terms between the parties and based on the previous agreement, the court shall determine the terms of the agreement in question (Rowan, 2017). Thus, it can be concluded that in the case of Simon and the three celebrities the agreement has fulfilled all the essentials of a valid contract that is there is offer being made, the acceptance to the offer, the consideration of an amount of £1,000,000 and certainty in the terms of the agreement. Hence, the contract can be legally enforced in the English court and the parties to the contract shall be bound to abide by the terms of the contract. Any party breaching any term of the contract shall be liable for liquidated damages as provided in the contract for breach (Smits, 2017).
Consequences of breach of contract
Under English contract law, the non-fulfilment of contractual obligation is termed as a breach of contract. Breach of a contract is the failure to perform the material term what the parties have already agreed for. Each party in the contract expects to get benefit from the deal it has agreed upon with the other party and one party not fulfilling the terms causes loss to the other party. If the party fails or refuses to perform his part, the other party has a legal right to get compensated by damages (Hesselink, 2021). Every contract enforced under the English contract law contains the clause of liquidated damages which means that the party not fulfilling the contractual obligation shall be liable to pay prescribed damages to the aggrieved party. In this case, there has been a contract between Simon and the celebrity sisters to attend and judge the TV show and Simon has contracted to pay them £1,000,000 each for the finale night. In case, the sisters refuse to attend the show, they shall be in breach of contract and shall be liable to pay damages as mentioned in the contract for breach (Griffiths, 2020). Hence, it has been observed that under the English contract law, the consequence of the breach of contract is the payment of liquidated damage by the breaching party to the aggrieved party. Apart from payment of liquidated damage, there is also a consequence of the termination of the contract by the aggrieved party. The party which is not at default is entitled to terminate the contract if the other party has breached the contract. The aggrieved party may treat the contract to be at an end and a common example of this treatment is a breach of condition. If any part of the contract breaches a material condition of the contract, the innocent party may treat the contract to be at an end. It is also important to note that a breach of warranty does not have the consequence of the termination of the contract, rather it has the consequence of damages. If any party to the contract breaches a warranty, the innocent party shall be entitled to get damages only and shall not be able to terminate the contract (Beale, et. al., 2019). Another notion attracted, in this case, is the anticipatory breach where the party by words or conduct indicate that it shall not perform its contractual obligation. At this stage, if the apprehension is that the party shall breach a condition of the contract, the innocent party can immediately terminate the contract without waiting for the actual breach to happen. Hence, this is also a consequence in cases of an anticipatory breach that the party may immediately bring the contract to an end based on apprehension. Thus, in this case, if the celebrity sisters by words or conduct give an apprehension that they shall not attend the finale night as a judge, Simon shall be entitled to bring the contract to an end and he shall also claim damages from them. It is also important to note that breach of contract also brings the requirement of causation where the innocent party has to prove that the breach of the contract has directly caused loss to the claiming party. It is required to be proved before the court in claims that the breach is an effective one and it is the dominant cause of the loss sustained by the innocent party (Siliquini-Cinelli and Hutchison, 2017). Thus, breach of contract brings consequences for both the parties the breaching party and the innocent party. The breaching party gets liable to pay for the damages and also the contract stands terminated and the innocent party has the burden of prove that the breach is the direct cause of the loss suffered by the party. Another consequence of the breach of contract by the celebrity sisters towards Simon is the demand of specific performance of the contract by Simon where he could claim the performance of the part by Kim, Kourtney and Khloe so that Simon could get good quality applicants. In this case, Simon may approach the court to demand specific performance of the court by the celebrity sisters and make them fulfil their part of the contract. Also, there is a consequence of issuing an injunction by the court to stop the breaching party from the further breach. Hence, in this case, if the breaching party that is Kim, Kourtney and Khloe give an apprehension to Simon that they might refuse to come at the final night, Simon may get an injunction from the court to stop them from breaching and may demand performance of the contract. The purpose to order specific performance of the contract is that the court aims at putting the person in the position he would have been in had the contract been performed. Hence, the aim of the court for granting specific performance is the protection of the innocent party who is fulfilling the contractual obligation (Graziano, 2019).
Recommendation -
Hence, it is recommended to Simon that, while agreeing with the celebrity sisters, he shall meet with all the essentials of a valid contract under English law and shall include all the relevant terms and conditions of a valid contract. Simon shall abide by the inclusion of proper clauses in the agreement so that it could be legally binding. Further, it is recommended that Simon should also perform his part on time and should pay a small amount in advance to Kim, Kourtney and Khloe so that they could not refuse for judging on the finale night. The part payment of the consideration shall make the sisters liable for non-fulfilment of their obligation. Moreover, it is also recommended that in case Simon has an apprehension that Kim, Kourtney and Khloe could refuse to attend the final night, Simon can immediately bring the contract to an end and shall demand compensation in form of liquidated damages as may be prescribed in the contract (De Elizalde, 2018). Simon can also approach the court for specific performance of the contract and may demand injunction for future breaches. This shall ensure security for Simon and also protect his legal rights under the contract. References Austen-Baker, R., 2017. Implied terms in English contract law. Edward Elgar Publishing. Beale, H., Fauvarque-Cosson, B., Rutgers, J. and Vogenauer, S., 2019. Cases, materials and text on contract law. Bloomsbury Publishing. De Elizalde, F. ed., 2018. Uniform Rules for European Contract Law: A Critical Assessment. Bloomsbury Publishing. Graziano, T.K., 2019. Comparative contract law: cases, materials and exercises. Edward Elgar Publishing. Griffiths, C., 2020. The honest cheat: a timely history of cheating and fraud following Ivey v Genting Casinos (UK) Ltd t/a Crockfords [2017] UKSC 67. Legal Studies, 40(2), pp.252-268. Hesselink, M.W., 2021. Justifying contract in Europe: political philosophies of European contract law. Oxford University Press. Kötz, H., 2017. European contract law. Oxford University Press. Rowan, S., 2017. The new French law of contract. International & Comparative Law Quarterly, 66(4), pp.805-831. Siliquini-Cinelli, L. and Hutchison, A. eds., 2017. The constitutional dimension of contract law: A comparative perspective. Springer. Smits, J.M. ed., 2017. Contract law: a comparative introduction. Edward Elgar
