Contract Law

Contract Law

Case Summary

The main purpose of this paper is to make an analysis on the case study of Jardinia Ltd. The company is an automatic drip and garden watering System Company, which has been involved in a contract with the local garden centre named Southern Belles Ltd. The contract was about the installation and fitting of an industrial size system for the greenhouses and poly tunnels. As per the contract, the payment will be received on completion of work. The second contract is about the resale of the 100 units. As per this contract, 100 units to be provided for resale to the general public at a cost of £250 each to Southern Belles Ltd. A £5,000 deposit has been paid. Due to some problems in the watering system, Southern Bells Ltd had to end the contract . This paper provides an advice to Jaardinia Ltd as Southern Belles Ltd is claiming that both contracts are discharged on the grounds of frustration, with no money payable on the fitting contract (1), and the deposit being refundable on the stock (2).

Discussion

Southern Bell has ended the contract because of the unavoidable circumstances; therefore, the force majeure clause is applicable in it. According to the principle established by Article 1148 of the Civil Code, when an external event, unforeseeable, unavoidable happens, the one who suffers is released to perform its obligations and is therefore not obliged to repair the damage that has been be caused. Similarly, the other party is not required to execute its own commitments. However, the parties are free to adopt other provisions more suited to their situation. Jurisprudence considers that the force majeure may be waived by a specific contractual provision. Conversely, the parties may stipulate in their agreement that an event, even if it does not possess the characteristic of force majeure, will have consequences. In this sense, the refusal of an administrative authorization, although not unexpected, can not engage the responsibility of the parties; they have decided to recognize the nature of force majeure. Such a decision of the administrative authorities was one of the events that, under the terms of the contract, constituted a force majeure "which each party should bear the adverse consequences to his own business".

> Formal requirements to invoke force majeure

The parties may indicate the conditions under which a force majeure clause may be implemented. The agreement set a time limit for notification of the event required for the one party invokes a force majeure (it can be expected that this information should be given to the partner within five days of the event). It is prudent to provide the form it should take this information.

> Implications of the involvement of the force majeure

The parties have the ability to attach consequences more or less radical intervention of a force majeure event. Similarly, the contract may provide a gradation in these consequences. Thus, if a force majeure occurs, the parties have stipulated that their contract would simply be suspended, and ...