14 Wholesome Foods Ltd decided to build an
extension to its Newtown bakery to cope with
increased demand for its wholemeal bread.
The contract is awarded to Bettabuilders Co Ltd,
which agrees to complete the work by 1 May.
On the strength of the planned increased capacity
at the bakery, Wholesome Foods Ltd concludes
an extremely profitable contract with the Newtown
Council to supply all the bread to local schools
from 4 May. Owing to extreme bad weather in
February and March, Bettabuilders Co Ltd
completes the extension 10 weeks late.
Wholesome Foods Ltd estimates its losses as:
■£100 a week for the profits it would have made
on the expected general increase in bread sales:
and
■£400 a week for the profits it would have made
on the schools contract.
What damages will Wholesome Foods Ltd
recover?
How would your answer differ if Bettabuilders Co
Ltd had agreed to pay £50 for every week of delay
in completing the extension?15 Wreckless Eric, a rock concert promoter, pulls off
one of the sensations of the rock world by getting
the American rock star, Tex Toucan, to come to
Britain to give a six-concert tour to coincide with
the release of his latest album. Tex agrees to give
his exclusive services to Eric and promises that he
‘will not sing, perform as a musician or act as an
entertainer’ for anyone else during the period of his
stay. After completing the first sell-out concert in
Dagenham, Tex is approached by Crispin Green,
a rival promoter, who persuades Tex to break his
contract with Eric and appear instead at alternative
venues arranged by Crispin.
Eric, who has made a considerable investment in
this tour, wants to know what remedies are
available to him.Part 3Business transactions
264
1 Explain the circumstances in which the courts will
refuse to enforce agreements as contracts because
of a lack of intention to create a legal relationship.
2 On 11 May Andrew wrote to Ben offering to sell him
200 bags of potatoes at £10 per bag. On 13 May,
Ben posted a reply accepting Andrew’s offer but
adding that if he did not hear from Andrew, he would
assume that the price included delivery to his (Ben’s)
house. The following morning, before Ben’s letter
arrived, Andrew heard a rumour that the price of
potatoes was about to slump dramatically. Andrew
immediately sent a fax to Ben, stating that ‘the price
includes delivery’.
Ben received Andrew’s fax at 10 am on 14 May,
whereupon he immediately posted a letter confirming
his acceptance of Andrew’s terms. Over lunch,
however, Ben also heard the news about a slump
in the price of potatoes, whereupon he sent Andrew
a text message stating: ‘decline yr offr of pots’.
The price of potatoes has now fallen to £7 per bag
and Ben refuses to accept delivery of Andrew’s
pricey potatoes.
Advise Andrew.
3 Caroline’s house was badly damaged by storms in
March. She engaged David, a builder, to repair the
damage. David told Caroline that the work would cost
£10,000 and would be finished by 1 June. Caroline
accepted David’s terms because she wanted to be
able to put the house up for sale in June.
David started work on the repairs to Caroline’s
house in April, but further storms delayed the work.
Four weeks later David approached Caroline asking
her to increase the contract price to £15,000 due to
increased overtime costs David would face to meet
the deadline of 1 June. Reluctantly Caroline agreed.
David completed the repair before the end of
May and sent Caroline a bill for £15,000. However,
Caroline informed David that she could only afford to
pay £10,000 because she was in financial difficulties.
David, fearing that he would otherwise receive no
payment at all, reluctantly accepted £10,000 in full
settlement.
David has now discovered that Caroline has made
a substantial profit on the sale of her house and is
about to depart on a round-the-world holiday.
Advise David on whether he can recover the rest
of the money.Specimen examination questions