Business Law: Text and Cases

Section 1

Whether the bid made by Brice meet the requirements of an offer is determined by the intention he had of entering into contract, the clarity of the terms of the contract and in case such terms were communicated to the offeree .The bid by Brice met the different requirements of an offer since it followed Levin seeking of the builders to make submissions of their bids. Brice showed a serious intention to build the movie theater only at a lower price than all the other bidders. For an offer to be effective, the offeror must show serious intention to carry to carry out the agreement (Miller, Roger, 240). Brice expressed her willingness to enter into contract and even communicated the intention by submitting the prices that she could charge if given the chance to contract the movie theater. It was a communication that Brice was willing on specified basis, to enter into a contract with Levin. Brice also appeared to be reasonably sure about the offer before Levin requested for the review of the quality of the material at the same price. For an offer to effective, there must be communication by the offeror to the offeree on the same (Miller, Roger, 240). In addition, the terms for the specific offer should be reasonably definite or certain in order for a court and the involved parties can be sure of the expressed terms of that contract. The seriousness of the intention is dependent on what a reasonable person in the position of an offeree would understand the words and actions by the offeror meant but not on assumptions, subjective and the beliefs of the offeror (Miller, Roger, 241). These are crucial aspects of understanding whether an offer is effective or ineffective.

For acceptance of the offer to exist, the offeree must act voluntarily in a way that shows assent to the various terms expressed in that offer. The actions of the offeree may include both conduct and words (Miller, Roger, 241). For the case in point, there was no acceptance of the offer. This is because Levin did not voluntarily act in way that indicates that he agreed to the terms of the offer issued by Brice. In any case, he request to know whether the terms of the offer could change before he could accept, in relation to higher quality of the material at the same price that was included in the terms of the offer. Another important aspect is that acceptance must be communicated by the offeree to the offeror for it to be legally binding. Communication is necessary given that acceptance is not a performance but a promise and a contact comes into effect if a promise is made rather than in performance of an act (Miller, Roger, 241). In this case, Levin did not communicate any acceptance of the offer but only requested for the review of the various terms in the offer. This does not add up to acceptance. Since the acceptance would call for a performance on the part of Brice as the offeror, acceptance would be evident. The only discussion held was the possibility of construction starting and but not that the contract was in place. There was still pending issue on the quality of the sound-proof materials to be used in the construction of the theatre, in order to meet the requirements of the contract.

In case the court rules against the existence of an agreement, Brice is likely the recovery of materials under tort law of negligence. The law involves failure of a person to uphold the duty of care which leads to loss to another person. In this tort, the person who is a tort-feasor does not wish to cause the consequences of their failure and does not believe that such losses will occur (Miller, Roger, 130). In this case, Brice may argue that the failure of Levin to communicate brought about the losses that he underwent after he shelved the plan to construct a theatre even if his intention was not for him to incur the loss. The conduct of the party brings about risk of consequences such as loss on the other party (Miller, Roger, 130). In this case, failure by Levin to communicate on whether he would proceed with the contract created the risk of the loss.

An offer can be terminated through the actions of parties involved or by law’s operation. The parties may reject an offer through rejection, revocation or counteroffer. Revocation involves an offeror withdrawing their offer even after he or she made a promise of keeping it open, as long as communication on the same is made by the offeror before the offeree accepts it(Miller, Roger,246). It can be through expressly repudiating the offer or acting in a way that is not in line with the offer and the offeree is aware of such acts. A counter offer involves rejection of the initial offer and replacing it with a new one. The offeree may reject the offer by conducts or words which lead to termination and any other attempt to accept it will be viewed to be a new offer (Miller, Roger, 246). An offer can be terminated through the law’s operation due to occurrence of various events which include lapse in time, where a given subject matter of this offer is destroyed, where the offeror or offeree dies or become incompetent and if such offer is seemed to be illegal (Miller, Roger, 246). If Levin did not communicate to Brice about his decision to terminate the offer, its termination would occur at the end after a period of time that is considered reasonable as depending on the offer’s subject matter.

 

Section 2

 Specific performance involves an equitable remedy and normally requires the carrying out of the specific promise in a contract. To be specific, personal service contract calls for one party to perform a task personally on behalf of another party (Miller, Roger, 333). The case in point involves the personal services that are to be rendered by Zinatra on behalf of Grony Music Studio. In this case, both parties are to benefits when Zinatra sings for the subject album. However, it takes the willingness and judgments of Zinatra to performe the contract and especially if he is certain the marketing approaches for his album will be beneficial to his course. As a contract involving personal services, it will be impossible for Grony Music Studio to seek specific performance for this contract. Courts usually declines to compel specific performance where the contract involves providing personal services since ordering a person to offer personal services when he or she is not willing can be seen as a kind of involuntary servitude (Miller, Roger,333). Hence, in the case the court will decline to monitor an agreement for personal services since this needs the exercise of one’s talent or his or her personal judgment.

Singing for this album requires the talent or willingness of Zinatra and it would not be reasonable to force him to utilize his talent to the fullest against his will or judgment. Doing so will mount to involuntary servitude. This will go against the public policy whose expression is made clear in the 13 Amendment. The refusal by the court to grant specific performance on behalf of Groyn Music Studio may driven by the fact that the set up of the court does not allow it to operate as a supervisor of any given performance. In addition, the Studio cannot seek specific performance because the person because the party is entitled to get some compensation due to the breach of this contract and the judgment of the singer makes him incapable of freely performing the essential part of the contract due to the disputes on the marketing strategies that are to be used. The circumstance in which a party fails to perform the promise is relevant and material and has to be put into consideration by the court in the case of specific performance (Miller, Roger, 340). In determining whether a person is willing to perform the part of the contract he promised, the court has to consider the behavior of the plaintiff, in this case the Groyn Music Studio before and after filing of the compliant along with other surrounding circumstances. In the case of Zinatra, the circumstances surrounding include the heated argument and disagreement on the marketing strategies for the album and which could have made him unwilling to perform. Since his singing involves utilizing his talent to fulfill the contract, the court cannot require his specific talent to fulfill the contract.

In accordance with limitation of liability clauses provisions, whether such a clause can be enforced by a court will be determined by the kind of breach that the provision excuses (Miller, Roger, 348). After being served the tea, Zinatra loses his voice through the action of the Grony’s employee. The contract provided for exclusion for liability for only nominal damages to Zinatra while he is recording for his album with the company. This means that Grony Music Studio does limit the kind of exposure from law suits arising from the contract in relation to the singer’s injury. It does not cap the kind of damages that the firm is exposed due to the injury caused to Zinatra by the actions of the employee even if such actions were not intentional. Therefore, court is not likely to enforce a limitation of liability clause since the contract entered between Zinatra and Grony does not provide injuries that would result to substantial losses. The injury in this case involves loss of Zinatra’s voice which can lead to financial loss where recording will not take place as planned. This in turn will lead late completion of the recording and may not take advantage of the holiday shopping season and hence the loss will not just be nominal.

In determining whether the $10 million liquidated damages provision constitutes valid damages or is a penalty, the court would consider how the payment to be in case of a contract breach is characterized. The court would look into the estimation of the damage and whether the amount stipulated in the contract is reasonable. The structuring of the contract should have been done within the limits that have been put into place by current statute. This involves providing specific damages that are to be paid by Zinatra in case there is violation of the contract on his part. The court would, therefore, consider whether the contract specified whether the payment is a penalty or liquidated damage. On the other hand, if the amount termed as liquidated damage is of gross disproportional in relation to the actual loss incurred, the court is likely to consider it a penalty and hence, refuse the enforcement of that provision. This means that a court will put into consideration the reasonableness estimation of the damage on the basis of real loss during the violation of the contract. 

 According to special damages provision, Zinatra could seek damages for the profits he will have lost from sales in the holiday season. Consequential damages are brought about by results of violating the contract (Miller, Roger, 352).  In this case, Grony failed adhere to the contract provisions, with full knowledge that Zinatra was counting on the holiday season in order to gain substantial revenue from the sale of the album. The violation of the contract meant that the album would not be released into the market at the right time and the Grony knew that if that season passes by without the album production, Zinatra will have lost that profit. This means that Zintra can seek special damages for the lost profit.

Works cited

 

Miller, Roger L. R. Business Law: Text and Cases: the First Course. , 2014.