INTRODUCTION TO THE LAW OF OBLIGATIONS

Introduction to the Law of Obligations

Introduction to the Law of Obligations

Case Description 1:

This case study is about a client Graham who asks Steve a building merchant to supply some Yorkshire stone by 3rd January. But Steve replied that he could only deliver it after 12th January because it is difficult for him to precede because of the Christmas leaves. Graham faxed Steve that he is ready to make a deal, but Steve could not receive that fax. After a while Graham again faxed that he is ready to cancel the deal and he is making this deal with another party.

To what extent is it true to say that the performance of, or the promise to perform, an existing obligation cannot be good consideration for a new contract?

It is not good for a person to be engaged in a new contract when he is already in a contract. This is because a person maintains and builds his reputation because of the promises he made. In this case Steve made a promise to Graham that he is going to buy the Yorkshire Stones from him but after a day he cancelled the deal. This may create a bad reputation of Graham in front of Steve. In future Steve might be cautious that next time he would not make any deal with Steve.

This is a very common case in the contract terms. Normally it happens in the contracts that after making a contract with anyone, the contractor changes the contract. The most common example of this situation is with the Construction Contracts. In construction contracts let's suppose the builder made a contract with the land owner that he will build this house in that price. But afterwards he realizes that he may change the soil for the building or may use any other material for the construction. Thus he changes the contract's price. This change in the contract price makes the contractor an unreliable one. And the other party does not rely on that contractor anymore; as a result the contractor does not remain reliable anymore.

In this case the law of breach of contract is also applicable. According to this law if a contract is made and for any reason any party changes the contract or withdraw from this contract then this will be termed as breach of contract. There is some law for the breach of contract. In accordance with Art 330 of the Civil Code for breach of contractual obligations in the agreement may provide for payment by the debtor to the creditor penalties (fines, penalties). Penalty (fine, penalty) recognizes a certain law or the contract sum of money which the debtor must pay the lender in case of failure or improper fulfilment of obligations (Section 1, Art. 330 Civil Code). Agreement on the penalty must be made in writing. Penalty is a way to ensure commitment in the form of a sum of money received by the counterparty in the event of ...