Law of Contractual Obligation Paper Example

Introduction

Whenever two or more people enter into a well-grounded contract with one another, they are entitled to contractual rights. These contractual rights involve business affairs, which include but not limited to the provision of goods and services (Agreement, 2015). The most common contractual rights include rights to purchase a particular product or service, rights to sell products or services, rights to refund or repair sold products, rights to deliver products and services and receive timely payment among other reasons depending on specific objectives of each party. The case in this particular assignment is a contract between Carlo and Angelo. The two parties engage in lengthy negotiations for the acquisition of cable television rights to the 2018 World Cup Soccer. In this contract, they sign a memorandum of association, a document that records the completion of negotiations of the heads of the agreement by virtue, indicating that they agree to execute a formal contract (Agreement, 2015). By entering into this contract, both parties know their contractual rights, and they understand that they are entitled to them throughout the business process.

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The primary purpose of briefing this case is to reduce the information provided in the case into a more straightforward format that will ease reference in class as well as for future review. Most importantly, briefing this case will help me lay hold of the problem faced by the court when executing the case, the rule of law used by the court to solve this problem and ways in which the court applied the said rule of law to the facts provided and the outcome of the reported case. Briefing this case will help me to understand the contractual rights that both parties were entitled to, thus making it easier to discuss and judge whether either party is right or wrong in the way they handled the situation.

Facts

After the lengthy negotiations between Carlo and Angelo, Carlo agrees to acquire television rights to air the 2018 World Cup Soccer from Bruce and Angelo agrees to grant Carlo the exclusive rights to exploit her license to air the World Cup. Besides, by agreeing to these contractual terms, Carlo understand that she is supposed to air all events at the 2018 World Cup Soccer as well as provide sufficient amenities to enable suitable oversees telecasts. By agreeing to these terms, Carlo also accords to pay a total of three million dollars on signing the contract because according to Angelo, that is the sufficient amount following the revenue obtained from all the approved sponsors and telecasters from overseas. Also, the two parties agreed to act in good faith and a cooperative spirit concerning the event relating to the agreement. However, Carlo finally decides that the stated price is too high and she refuses to comment on a draft of the formal contract prepared by Bruce's solicitors. It is true that the draft prepared by the solicitors contained additional terms that both parties were not acquainted with before including an obligation requiring Carlo to spend at least two million dollars in promoting the telecast and obtaining the sponsors.

Issues

The issue, in this case, relates to whether Angelo has any contractual rights against Carlo. It is important to understand that besides the contractual rights that are openly stated in the contract, there are other implied contractual rights that both parties are entitled. These implied rights exist based on fixed laws and policies governing contracts; thus they do not need to be written regarding an agreement, although sometimes they may be printed (O'hara, 2017). For instance, in this case, the right to good faith and fair dealings is an implied contractual right, and it is stated in the contract between Carlo and Angelo. Others include the right to be free from constraint where both parties must agree out of their own free will. Therefore, should any party be forced to sign a contract, it is nullified because he/she signs it under duress.

Additionally, both parties have a right to be free from contract fraud, which includes misinterpretation of information (O'hara, 2017). Following these rights either party may file a legal claim if they believe that their contract rights have been violated in whichever way. In this case, Angelo thinks that his contractual rights have been violated because Carlo refuses to comment on the draft prepared by Bruce's solicitors. Given this, Angelo should go through the specific provisions related to the rights he believes have been violated. Other documents, as well as witness statements, can also add weight to his claim.

The main issue, in this case, is that the contract involves a third party. The law of contracts has a provision of special rules to solve multiparty problems (O'hara, 2017). However, pluralistic issues arise in different ways and contexts. For instance, deciding whether immediate parties in a contract agreement can discuss rights of a third party is a significant problem in contract agreements. The reason because this could be because the structure of contract law was formed by a highly opinionated system that favored a two-party situation. Also, the contract for the interest of third parties was not highly valued until the emergence of new contractual developments as seen in life insurance among others.

In this case, Bruce is a third party in the contract agreement between Carlo and Angelo. The emerging issue is due to the lack of knowledge by the two parties on the circumstances in which a third party is allowed to control the underlying contract. The original parties already agreed, but now the third party has his terms and conditions that are indicated in the draft. Therefore, Carlo refuses to comment because maybe she is not sure if a third party has the right to include new specifications in a formal contract. On the other hand, Angelo feels that Carlo should comment on the draft because they had already agreed following the terms and conditions of the agreement.

Another issue that is evident in this case is that Bruce is the only one who drafted the formal contract. In most cases, people have unrealistic expectations, and this is what causes many disputes in businesses (O'hara, 2017). In this case, Carlo did not find a lawyer to draft the contract, but Bruce developed a formal agreement for Angelo. Therefore, whether Bruce added the additional terms to the contract as well as the extra cost intentionally or as a mere misunderstanding, Carlo's ability to deliver her part of the deal was compromised. Finding out whether Angelo has contractual rights against Carlo will help to determine whether Bruce's solicitors were justified to prepare a draft that had inclusions or not. It will also help determine whether Angelo is warranted to sue Carlo or not.

Rule/ relevant law

Each party in a contract agreement is obligated to specific legal duties and responsibilities. In every contract agreement, every party must exchange something valuable for the other party whether it is a product or a service among other things. Therefore, this means that each party has legal obligations towards the other party to make it a legal contract agreement. There are three principal elements in creating a contract in common law. They include an understanding, contractual intention, and consideration (Feldman, 2017). The first step of a deal is an agreement between the parties, which is reached when one party makes an offer, and the other party accepts the offer. However, if one party is not pleased by the terms of a contract, they can make a counteroffer to change the original proposal. Acceptance refers to the unconditional acceptance of all the terms and conditions of an agreement. After approval, the offered has to make a promise and enforce it with consideration because according to common law, "a promise is not a general rule binding a contract unless a consideration supports it" (Fried, 2015)

Moreover, an agreement is not binding as a contract even if a consideration supports it if it is made without the right intentions. Therefore, both parties must agree to bind their contract agreement legally. Both parties must also express terms in the contract, and they are objectively interpreted for both parties to understand. Also, an arrangement may contain implied terms which are not stated in the deal either because the law dictates that or because the parties intended this (Hughes, Champion & Murdoch, 2015). It is important to note that the offered may withdraw from a contract before acceptance if ever they change their mind and this is referred to as revocation. However, once an offer is accepted, it cannot be revoked

Additionally, when one party fails or refuses to honor their end of the deal without a lawful excuse or if he/she performs ineffectively or under any circumstances makes himself unfit to act as per the terms of the contract, a breach of contract is committed (Crook, 2005). Also, if one party promises to do one thing and does the complete opposite, he/she breaches the contract. For instance, if one party defects regarding quantity, time or even quality, it amounts to a breach of contract.

Application

Angelo is obligated to transfer his broadcasting license to Carlo so that she can be able to air the 2018 World Cup Soccer. On the other hand, Carlo is compelled to pay for this service, and the terms of the contract are clear on the conditions in which this transfer is to be made. Also, the contract terms regulate the amount of payment, place and time of delivery of the service. Should any party fail to perform their contractual obligation based on the terms of the contract, it results in a breach of contract and finally damaging the reimbursement towards the non- breaching party (Mindy, LOKE & Burton, 2016). In this case, the two parties agreed that Angelo was to transfer his broadcasting license to Carlo, who was supposed to broadcast all events of the 2018 world cup soccer even to other telecasts oversees. They both agreed that this transfer was to cost Carla 3 million dollars, but Bruce's draft indicated some changes. Angelo was supposed to liaise with Bruce before accepting with Carlo to avoid unnecessary misunderstandings. The draft prepared by Bruce contained additional terms, which were not there in the prior formal agreement so this could be termed as a breach of contract.

Moreover, the draft stated that Carlo was supposed to pay at least 2 million dollars to advertise the telecast and obtain sponsors. Initially, Angelo considered 3 million dollars a sufficient amount considering the revenue acquired from oversees telecasts and approved sponsors thus Carlo is not supposed to pay any extra costs for the two services. Consequently, Angelo agreed to pass over his license to Carlo at an agreed price but Bruce did the complete opposite in his draft contract. Following this, it means that he promised Carlo one thing and did the complete opposite thus breaching the contract.

Conclusion

Angelo does not have any contractual rights over Carlo because he was supposed to liaise with Bruce before agreeing with Carlo to avoid unnecessary misunderstandings. The draft prepared by Bruce contained additional terms, which were not there in the prior formal agreement so this could be termed as a breach of contract. Carlo refused to honor her end of the deal because she felt that the price indicated in the draft contract by Bruce was so high and it differed from the prior cost. Usually, Angelo would have contractual rights over Carlo, but she failed to deliver because Angelo had already breached the contract.

References

Agreement, C. (2015). Memorandum of Understanding. ARS, 11(251), 58.

Crook, J. R. (2005). Contemporary Practice of the United States Relating to International Law. American Journal of International Law, 99(1), 253-254....