Introduction
Uber Technoloies is a company that deals with software technology organized under the Delaware Law. The technology company has a global presence but its major operation point is in San Francisco, California. The tech company provides a smartphone application that connects its drivers with potential riders who need a ride to various destinations in cities. Users are able to schedule transportation with the third parties contracted by Uber (Bloomberg, 2017). TSI is equally a Delaware company with its major business in Dallas, Texas. Its main business is to contract with individuals and other businesses to schedule, book, and manage hotels, airlines and other forms of travel. Uber requested for proposals from travel agencies who could offer travel services to its employees and TSI was consequently given the offer. The contention came about after Uber alleged that TSI had misrepresented some facts about their scale and size of operations (Justia). After awarding the contract to TSI, Uber further agreed to pay TSI some amount of cash that would enable them to come up with a program that could manage international travel services. The two parties went further as to execute two contracts; a Service Agreement and a Statement of Work for Uber Global Travel Management Services between them on 24 th November in 2014 to honor this arrangement.
Later, TSI filed a lawsuit alleging that after they received the agreement, Uber terminated the two-year agreement pre-maturely and refused to pay TSI money owed. On their part, TSI argues that they employed personnel and deployed resources to create the international travel service program that would suit Uber’s specifications. They also alleged that after terminating the agreement between the two companies, Uber further directed its new chosen vendor to take some of TSI’s employees which amounted to breach of employee contracts. Uber, on the other hand, defended the pre-mature contract termination saying that TSI is a small company and that they had committed a fraud in representing themselves as a Delaware company. Uber further allege that TSI committed a misrepresentation that they could provide some services that they did not have, nor did the company have the capacity to execute such an agreement. The plaintiff seeks for compensation as they had invested resources in preparation to honor this agreement. Uber Technologies, Inc. should be compelled to compensate TSI USA, for capital, personnel and time put towards building an international travel service program as defined by their Services Agreement and Statement of Work ( Cornell University Law School, 2011).
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Causes of Action.
TSI can bring various causes of action against Uber for the loss they suffered after the contract termination. One legal cause of action against Uber is a contract breach.
Breach of Contract.
A contract breach is a cause of action whereby one or more parties to the contract in question fails to honor a binding agreement by not performing their end of the bargain or interferes with the other party’s performance. In this case, Uber breached a contract by pre-maturely terminating a two-year agreement they had reached with TSI and TSI was right in bringing this cause of action against Uber. A breach of contract cause of action attracts some remedies either restitution, specific performance or monetary damages. The plaintiff (TSI) had already invested money and hired personnel who could develop the program Uber had contracted them for and by terminating this agreement, the plaintiff suffered monetary losses and is entitled to monetary compensation. Monetary compensation may include liquidated damages. In addition to other damages for breach of contract, the person responsible for breach will be liable to the United States government to pay $10 a day for individuals under 16 years or incarceration for that who was knowingly employed to perform that contract ( Cornell University Law School, 2011).
A breach of contract further attracts compensatory damages. Compensatory damages cover the losses that the non-breaching party suffered due to the contract breach. This amount is meant to replace the loss caused by the breach (University of New Mexico). There are, however, defenses provided for under the law which Uber can use to defend its pre-mature termination of the contract that leads to a breach. The defenses include; the purpose of the contract being frustrated or becomes impossible to perform, mutual or unilateral mistake, the contract being illegal, duress, undue influence, lack of capacity of either of the parties to contract, misrepresentation, and fraud (University of New Mexico). In Uber’s case, there was misrepresentation by the TSI Company which had convinced them that they had the employees, capacity, and ability to meet the contact needs and create a Programme that Uber wanted. It is this misrepresentation that Uber relied upon and awarded them the contract. Uber can further argue that TSI defrauded them by concealing a material fact which is that they lacked the capacity to perform the contract and that they were not a Delaware company but a Limited Liability Company. This representation is what persuaded Uber to agree to the contract between them and on the realization that it was a misrepresentation, they pre-maturely terminated the contract. Uber has had it’s fair share of misrepresentation claims against them. In XYZ Two Way Radio Service, Inc. and Elite Limousine Plus, Inc. v. Uber Technologies and Others, the plaintiffs alleged that Uber misrepresented the fact that they normally vet their drivers’ .thoroughly and that the Uber drivers meet the company’s standards whereas Uber had argued in court before that do not directly train or supervise drivers (Izzi, 2016)
Unjust Enrichment/Quantum Meruit.
Another cause of action that can be brought against Uber by TSI is unjust enrichment and Quantum Meruit. To make an unjust enrichment claim against someone, the claimant has to prove that the other party to the contract received some benefits, the benefits they received are not justifiable by law, and that the claimant suffered some type of loss that was to the benefit of the other party. In TSI’s case, they suffered a loss after recruiting new employees and constantly having to change the program under Uber’s instructions on many occasions. All the money they spent in this process got lost but Uber benefited in that they knew exactly what the program should look like and function after doing it with TSI and pre-maturely terminating it. Uber further sent its new vender to take some employees from TSI which was to their benefit as they already knew these employees were useful in creating the program. TSI is entitled to monetary damages from Uber but Uber is entitled to make a defense against this cause of action (Izzi, 2016)
Fraud
TSI can also bring a cause of action against Uber Technologies for fraud with the purpose to deceive them. Fraud is a situation where a party intentionally misrepresents material facts to the other party knowing very well that the facts are false so as to induce the other party to rely on that information and act upon it resulting in a damage or an injury. Uber knew very well that they will not go through with this contract but made TSI start the execution process anyway. It was Uber’s job to carry out due diligence before giving out the award letter to TSI to avoid a situation where they had to terminate the contract citing misrepresentation. TSI relied on the signed agreement reached upon by both parties to hire personnel and invest resources in developing a program and carrying out a full launch of Uber's travel products and services on their platform. This acted as a free advertisement to Uber and TSI deserved to be compensated for the work they had done through payment of damages by Uber. In their defense, Uber technologies can show that they did not have the intent to defraud the plaintiff of anything. They have to prove they did not intend to deceive the plaintiff (Bloomberg, 2017).
Generally, a claim of fraud is not included together with a breach of contract lawsuit claim if they are based on same material facts. This makes the fraud claims look like a duplication of the breach of contract as it shares facts with the breach of contract claim (Izzi, 2016). However, a claim of fraud can be included to the breach of contract claim if it is derived from a different set of facts from those in the breach of contract claim. It is clear that the plaintiff suffered some loss following termination of the contract they had with the defendant. They had already started implementing the agreement when it was terminated. The plaintiff then has to bear the costs of paying all the employees it had employed to work on this project not forgetting the amount of money they had used to get the project to where it was when it was terminated. Restatement of contracts provides for remedies to protect the promisee to a contract. It provides the purpose of remedies to put the promisee to the position he would have been if the contract was performed, reimburses for losses incurred to return a party to the financial position he should have been had the contract not have been made and restitution interests (Bloomberg, 2017).
References
Justia. (n.d). TSI USA LLC v. Uber Technologies Inc, No. 3:2016cv02177 - Document 19. Retrieved from http://law.justia.com/cases/federal/district-courts/texas/txndce/3:2016cv02177/276858/19/
University of New Mexico. (n.d) Defenses to Breach of Contract; University of New Mexico Judicial Education Center. Retrieved from http://jec.unm.edu/education/online-training/contract-law-tutorial/defenses-to-breach
Cornell University Law School. (2011). Breach or Violation of Required Contract Terms. LII / Legal Information Institute . Retrieved from https://www.law.cornell.edu/uscode/text/41/6503
Bloomberg. (2017). Company Overview of Uber Technologies, Inc . Retrieved from http://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=144524848
Izzi, Matthew. (2016) Breach of Contract with Fraud Claims: Legal match . Retrieved from http://www.legalmatch.com/law-library/article/breach-of-contract-and-simultaneous-fraud-claims.html
