Question

 

Kawhi wanted to buy t-shirts that he could customize and sell for a profit. Steph manufactured plain white t-shirts that seemed to be of high quality. Steph ordinarily sold the t-shirts for $5 each, but he told Kawhi that he would give him a deal if he ordered a large volume. Kawhi said he thought that would work for him, and he looked forward to doing business with Steph.

Three days later Kawhi emailed Steph an order for 1,000 t-shirts stating that he would pay $3 a t-shirt. Kawhi had just agreed to sell customized shirts to Pascal and Kyle Sporting Goods (“PKSG”) for $5 each, and to deliver the order in 2 weeks’ time. A few days later Steph replied to the email, stating that he would need three weeks to fill the order and that he would have to charge $4 per t-shirt. Kawhi doesn’t know what he is going to do. He could not possibly meet his obligations to PKSG.

a. Is there a valid contract between Kawhi and Steph, or Kawhi and PKSG? Explain your analysis, considering the six elements of a valid contract.

b. Are both contracts enforceable? Explain your analysis.

c. What is going to happen to Kawhi now? What should he do?

d. What should Kawhi have done to avoid the situation that he is in?

Answer 1

Answer : A

The contract Between Kawhi and steph is invalid as it is missing one of the essential element of valid contract acceptance . Kawhi mailed steph that prices and timing of delivery had no acceptance of steph confirmation hence contract not valid .But Between Kawhi and SPSG Contract is valid as it has all elements of making it contract as below given requisite elements present there .

A contract has six important elements so that it will be valid which is offer, acceptance, consideration, intention to create legal relation, certainty and capacity .

Answer : B

The contract of Kawhi and Steph : Not enfrceable a it is invalid one as it has no acceptance of steph as to the price and terms , timing of delivery as is essential requiisite of valid contract .

The contract of Kawhi and SPSG : This can be enforceable as it is valid contract entered .

Answer :C

Now SPSG Will enforce contract and seek Legal remdedy As per law .Kawhi should compensate SPSG For Unablity to Perform Contract within Two weeks and put it in position as contract was performed By paying it as compensation difference amount of Market price over contracted price to make SPSG Loss good and bring it in same position as if contract was performed .

Answer : D

Kawhi had to ensure the Acceptance of his email by steph as to the terms and conditions , timing and price of dispatch before entering into the contract with SPSG . By doing so he could have avoided the situation of entering valid contract with SPSG of fullfilling contract within two weeks .

Detailed Explaination to D : -

As of now, you see Kawhi Contract entered with PKSG is a valid one having all essentials to make it a valid contract. Legally The the contract has existence in the eye of law and is enforceable . He has to perform the promise Made to the PKSG as a legal obligation arising out of contract .

As per Legal Provisions, if party does not perform a Valid contract it amounts to Breach of contracts and is Liable to give remedy to other party .

1. Expectation Damage :-This remedy States the one who has suffered a loss (SPSG in this problem) to be put in the position as if the contract's obligations had been performed .Kawhi will have to compensate PKSG by the excess amount over the contract price at which product is available in the market . Example :- Same product Available in market for $ 7 then kawhi will perform contract by compensating PKSG by the difference amount $7 - $ 5 = $ 2

2. Specific performance:- If article is of such nature which generally not available in market and has special value for SPSG then court will Give specific performance of same contract to Kawhi on PKSG Request with compensation for delay .

Kawhi to avoid such situation of BREACH OF CONTRACT with PKSG had to ensure at the time of entering contract that the contract with Steph on the basis of which he entered contract with PKSG is valid contract and has acceptance by steph of delivery within two weeks alongwith other terms conditions .

Since Steph has no acceptance of Kawhi email and hence no contract with steph before that had entered contract with PKSG and now he will not be able to ask Steph delivery within two weeks which will amounts to breach of contracts entered with PKSG and he needs to give remedies as per law applicable to other party as above .