Question

Leyton and Dustin run a service station in a country town, the service station sells petrol and a number of other goods, which are displayed near the cash register and outside the office. Leyton and Dustin are partners in the business, though they have an old written agreement that states that neither will order goods or services over the value of $3,000 unless the contract contains signatures from both partners.

Leyton has been approached by a supplier of magazines who offers the business the delivery of 100 copies of a particular publication each month. Leyton convinced that the magazine is popular and will make some money, signs a contract with a promise to pay $5,000 in instalments for the delivery of the magazines.

The magazines arrive and Dustin is very upset, first because the magazine is quite unsuitable for display in the business and may result in a loss of customers if they see this publication, but he is also upset that Leyton has made an agreement without consulting him. There is an argument between the partners and Leyton takes sick leave and stays at home to recover from the stress of the argument. In the meantime, Dustin communicates with the supplier of the magazines and declares that the agreement to supply the publication is invalid due to a breach of the partnership agreement, and that the magazines will be returned and no payments will be forthcoming from the business.

Explain, with reference to partnership law:

1. Whether Dustin can cancel the contract with supplier of the magazines?         

[Answer here]

2. Whether Dustin can be liable for the actions of Leyton?                  

[Answer here]

Answer 1

Q1. Whether Dustin can cancel the contract with supplier of the magazines?

A1. Leyton and Dustin are partners in the business, though they have an old written agreement that states that neither will order goods or services over the value of $3,000 unless the contract contains signatures from both partners. However, Leyton has been approached by a supplier of magazines who offers the business the delivery of 100 copies of a particular publication each month. Leyton convinced that the magazine is popular and will make some money, signs a contract with a promise to pay $5,000 in instalments for the delivery of the magazines and that without even consulting or taking Distin's signature for accepting the order.

"Breach of contract" is a legal cause of action and a type of civil wrong, in which a binding agreement or bargained-for exchange is not honored by one or more of the parties to the contract by non-performance or interference with the other party's performance. Breach occurs when a party to a contract fails to fulfill its obligation(s), whether partially or wholly, as described in the contract, or communicates an intent to fail the obligation or otherwise appears not to be able to perform its obligation under the contract. Where there is breach of contract, the resulting damages will have to be paid by the party breaching the contract to the aggrieved party.

In contract law, a breach of contract gives rise to a cause of action where the innocent party has: a right to monetary compensation, that is, damages for failures to perform the contract. if it's serious enough, the right to terminate the contract.

Hence, Dustin can cancel the contract with supplier of the magazines.

Q2. Whether Dustin can be liable for the actions of Leyton?

A1. Dustin is not liable for any damages as Leyton is in default, any claim arises due to breach of contract shall be paid by Leyton.

In case of breach of contract, damages are to be paid by the defaulting party to its counterpart. ... Section 73 of the contract act is based on the rule laid down in Hadley v.

Supplier of magazines can claim his loss from firm and that loss and any other loass will be claimed from Leyton.