Commercial Law Case Study

a)

Maya Stork is managing Kallessi McTavish’s hotel. As a manager of the hotel, Maya had been given the authority by the owner to order supplies of various kinds for the hotel with a condition that any individual order that exceed 150 Pounds, need to be approved by the owner before she made the order. Other than that, the condition in the contract have stated that she is not permitted to order expensive shampoo and shower gels. Each and every regular suppliers to the hotel are aware of these restriction but in the past few weeks, Maya has made five orders to a new supplier. All of the order that she had made were worth more than 150 Pounds and there are several boxes of shampoo and shower gels in the final orders. Once Kalessi receive the supplier’s invoices, he only paid for the first two order and he refuse to pay the other three orders.

Contract can only be made if there are more than two parties involved. In this case, Maya and her employer, Kallessi are the parties, and it is a common sense that before Maya had been picked to be the manager of the hotel, there will be some explanation about the terms and condition in the contract and Maya have the right to choose whether to accept the contract or not, and she has accept all the conditions in the contract. In these case, Maya have breached the contract by ordering four of items that exceed 150 Pounds without Kallessi’s approval and one several boxes of very expensive shampoo and shower gels. Thus, Maya need to be responsible for the items that she had ordered including the expensive shampoo and shower gels.

According to W. Green “contract is an agreement which is created or intended to be create, a legal obligation between the parties to it”. Before a contract is form, an offer is need to be given to the offeree so that it is clearly indicates that the offerer is trying to make a legal bound and in the offer should include all the condition that need to followed after a contract is made. The contract between the parties involved can only be created when they have accepted the offer. Fail to obey the contract condition will lead to the breach of contract, breach of the contract happen when the contract has been form and a party or both party have trespassing the rules stated in the contract. One of the types of contract breaching is material or non-material breach, material breach could lead to the termination of the contract and the innocent party can claim damages. On the other hand, the non-material breach could not end the contract but can only sue the other party for damages. The damages amount can only be claimed for the losses that caused only by the breached and the innocent party need to take a reasonable step to minimise the loss. This is because, the damages are not to punish the party in breach but to compensate the innocent party.

Agent is a person that had been assigned by the principal to act by bringing a third party into a legal relationship and this makes the agents are the person that have the authority to communicate with the third party for any reason according to the task that had been given by the principal. Before making a contract with the third party an agent need to identify themselves that they are agents. W. Green said that “duty of an agent to his principal is called fiduciary duty and fiduciary duty is a duty to act in a good faith in the best interest of the principal”. On the other hand, the agent must perform the task without disobey the condition that the principal have assign them to and without obtaining any profit from the third party. If these happen the principal have the right to claim the profits and claim the loss from the third party or the agent. The third party also have the rights to know who is the agent works for and the third party will not be responsible if the agent has breached the contract of his or her principal if the third party are not aware of the restriction.

Maya and Kallesi are both employee and employer. Thus, Maya have been told about the conditions of her job by Kallesi she has accept the terms. Otherwise, she would not be liable for the orders that she had made. Based on the case of Wolf & Wolf v Forfar Potato Co 1984 SLT 100 where Forfar telexed Wolf & Wolf offering to sell potatoes and the offer will remained open until 5.00 pm the next day. Then, Wolf & Wolf replied the telex stating that they are accepting the offer but adding some extra terms. Forfar then called Wolf & Wolf telling that the extra terms are not acceptable. After a while later, Wolf & Wolf sent another telex said that they are accepting the Forfar’s original offer and Forfar did not replied the telex. Later, Forfar has been sued for damages by Wolf & Wolf for not supply the potatoes. The case has been held and there was no contract between them because the counter offer have killed off the original offer. Maya have

accepted the offer and then she has breached the contract by making orders without his principal’s approval. She has violated the contract and making a material breach. Thus, Kallesi have the rights to cancel the contract. If it is a non-material