Question

Amritha Singh is a middle manager with Coaster Plus Ltd (Coasters), a company that designs and manufactures roller coasters for amusement parks across North America. She has been appointed one of the project managers for the design and delivery of a special roller coaster for the Ultimate Park Ltd, an American customer. A major component of the project is the steel tracking, and one possible source is Trackers Canada Ltd (Trackers). Amritha’s supervisor has asked her to negotiate the necessary contract. Amritha began negotiations with Jason Hughes. Jason is a representative of Trackers, the steel tracking manufacturer willing to supply tracking to Coasters, Amritha’s employer. Amritha provided Jason with the plans and specifications for the roller coaster, and they negotiated a number of points, including price, delivery dates, and tracking quality. A short time later, Jason offered to sell Coasters a total of 900 metres of track in accordance with the plans and specifications provided. Jason’s offer contained, among other matter, the purchase price ($1.5 million), delivery date, terms of payment, insurance obligations concerning the track, and a series of warranties related to the quality and performance of the tracking to be supplied. There was also a clause, inserted at Amritha’s express request, which required Trackers to pay $5000 to Coasters for every day it was late in delivering the tracking.

After renewing the offer several days, Amritha for several days, Amritha contacted Jason and said, “You drive a hard bargain, and there are aspects of your offer that I’m not entirely happy with. However, I accept your offer on behalf of my company. I’m looking forward to doing business with you.”

Within a month, Trackers faced a 20% increase in manufacturing costs owing to an unexpected shortage in steel. Jason contacted Amritha to explain this development and worried aloud that without an agreement from Coasters to pay 20% more for the tracking, Trackers would be unable to make its delivery date. Amritha received instructions from her supervisor to agree to the increased purchase price in order to ensure timely delivery. Amritha communicated this news to Jason, who thanked her profusely for being so cooperative and understanding.

Jason kept his word and the tracking was delivered on time. However, Coasters has now determined that its profit margin on the American deal is lower than expected, and it is looking for ways to cut costs Amritha is told by her boss to let Jason know that Coasters will not be paying the 20% price increase and will remit payment only in the amount set out in the contract. Jason and Trackers are stunned by this development.

Applying the relevant principle(s) of contract law discuss the following questions:

a) Whether the negotiations between Jason and Amritha have legal consequences. (3 marks)

b) Discuss specific applicable ways by which each party mentioned above could have avoided the contract and as well as the implications of each way identified. (4 marks)

c) Discuss the consequences of the instruction of Amritha’s boss to the effect that Coasters will not be paying the 20% price increase and will remit payment only in the amount set out in the contract. (4 marks)

Answer 1

As per the mention case ,

This case is about contract between coasters and trackers held after the negotiations between Jason and Amritha.

[a] Yes, the negotiations between Jason and Amritha have legal consequences as any of the term seems unfulfilled will make the contract void and awards penallty to the defaulter party as mentioned.

[b] They can avoid in certain ways:

On behalf of Jason it can be voided on the grounds of delivery date as production can be up or down in process timing, another is jason can disagree over the series of warranty, price strategy, and also on the insurance policy.

Where as Amritha can avoid it on the grounds of product price, insurance policy, warranty terms, terms of product etc.

[c] the instruction of Amritha’s boss to the effect that Coasters will not be paying the 20% price increase and will remit payment only in the amount set out in the contract will give the consequences that in these situation contract is breech and enalty would be applied on the coaster as terms were communicated by Amritha to Jason and after the work completition they are taken back which is unethical and against the contract law so, in such case Jason can sue the coaster and demands for compensation.