A business contract defines a set of obligations to be fulfilled by the partakers of the agreement. When one party in this context fails to abide by the terms of the agreement, it results in a contract breach. However, there are different considerations when making a contract, which is vital to bind it legally, and when cases of contract breaches arise, the legal processes will refer to these considerations to establish a verdict. That said, in the contract between Sally Star and Luxoria projects, quite some challenges in the manner of implementation and both parties can use various arguments to justify their decisions. This paper thus seeks to discuss the contractual issues found in the scenario.
First, business contracts are often simple contracts or deeds. Also, a business contract could take a bilateral form where one party promises to do something in return for the other parties’ remuneration. Conversely, business contracts can be unilateral, where one party does something in return for action from the other party ( Meiners, Ringleb, & Edwards, 2014 ). For instance, a person can promise a reward to anyone who finds their lost property. Contextually, the agreement between Sally Star and Luxoria reflects a simple bilateral business contract that can be established in the form of writing, verbally or by action. On the other hand, business deeds must be backed up with legal writing signed by both parties and a third party. Deeds are usually executed in land transfers, mortgages and conveyance ( Haapio & Siedel, 2017 ). Moreover, to establish the least requirements of a contract, a legally binding agreement should possess an offer, an acceptance, an intention to create a legal relationship, and a consideration, usually in monetary terms. From the above contemplations, the contract between Sally Star and Luxoria entails an offer, an acceptance and a consideration, but there is no indication of the intention to institute a legal relationship with both parties. Even with the past sentiments that simple business contracts can be verbal, establishing legal writing was necessary for this scenario. Particularly, Sally Star represents a brand and Luxoria is a corporate investment, which infers that the rationale of establishing any contract could not be efficient without backing up the said terms within a legal framework.
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A business contract is termed as a breach when either party fails to fulfill any obligations outlined in a contract. Depending on the specifics of the contract, a breach may arise when one party fails to deliver an obligation in time when a party performs an obligation contrary to the agreements or fails to deliver on the obligations at all. When a breach of contract occurs, it is alleged that one party wants to benefit from the breach or may want to recover lost finances through the breach. Typically, when a contract dispute arises, informal settlements may be applied to find a resolution, but when that fails, the next step is to file a lawsuit ( Gao & Singh, 2014 ). Sally could focus on remedying her situation by informally negotiating the contractual terms issue with Luxoria’s stakeholders to seek remuneration for the four rugs she delivered, but if that attempt is overshadowed, Sally should consider filing a lawsuit to seek a legal verdict for the breach. Specifically, in the United States, the amount at issue may determine the level at which the case will be addressed ( Meiners, Ringleb & Edwards, 2014 ). Typically, contract breaches of amounts between $3000 and $7500 are held within small claims courts. Nonetheless, a contract breach could take any direction in the jury’s prerogative. Remedies may be payment of damages, specific performance or cancellation and restitution. Damages are compensatory, punitive, and nominal or liquidated ("Breach of Contract and Lawsuits – FindLaw," 2018) .
While Sally Star made four rugs according to the specifications of the agreement and delivered them in time on September 13, she still did not make to deliver the fifth rug by September 20, which was the due date of the contract. However, there are different contentions to consider in this scenario. A contract breach can either be material or immaterial when establishing a remedy. A material breach occurs when the breaching party deliberately negates a specific requirement in the contract, and the breach reflects material damage on the non-breaching party. An immaterial breach would arise where a breaching party alters slightly on the delivery of an obligation, but the contract requirement was negligible to inflict damages on the non-breaching party ("Breach of Contract and Lawsuits – FindLaw," 2018) . This may mean that Sally Star breached a contract by not availing the fifth rug in time, but also the case would be immaterial because Sally had informed Luxoria of her hand injury before the contract expired. Also, Sally had offered to outsource her services to the organization before they declined on offer. Again, because Sally sent four rugs before the contract period lapsed, she is entitled to get $4,000 for the rugs submitted. Additionally, contracts are subject to revision within the period of exercise, which after the due date may be obsolete and unchangeable. Intuitively, Sally Star should have pushed for a revision of the contract when she injured her hand for an easier review of the breach. If the jury found the breach as immaterial, the verdict would imply a special performance to establish compensation for Sally’s rugs from Luxoria.
References
Breach of Contract and Lawsuits - FindLaw. (2018). Retrieved from https://smallbusiness.findlaw.com/business-contracts-forms/breach-of-contract-and-lawsuits.html
Gao, X., & Singh, M. P. (2014, May). Extracting normative relationships from business contracts. In Proceedings of the 2014 international conference on Autonomous agents and multi-agent systems (pp. 101-108). International Foundation for Autonomous Agents and Multiagent Systems.
Haapio, H., & Siedel, G. J. (2017). A short guide to contract risk . Routledge.
Meiners, R. E., Ringleb, A. H., & Edwards, F. L. (2014). The legal environment of business . Cengage Learning.
