Question

1. Which of the following is a material breach of contract? Explain why. A. Homeowner contracts with an electrician to install high-grade wires for safety purposes. Instead, the electrician installs low-quality wires that do not work as well and cause damage to the walls. B. Homeowner contracts for green wires but the electrician installs red wires, which perform just as well and are not visible after installation.


Equitable Remedy

1. A pizza that has already been paid for is delivered to your apartment but you did not order the pizza. If you do not correct the delivery person and keep the pizza, the court could issue an equitable remedy requiring that you pay back the amount of the pizza to the party that paid for the pizza. What type of equitable remedy might the court give in this situation? Explain.


2. An employer makes an oral promise to an employee to pay the employee a specified monthly amount when the employee retires. If the employee then retires relying on the employer's promise, the employer could be required to make the retirement payments. What type of equitable remedy might the court give in this situation? Explain.


Conveying contract rights: Assignment, Delegation, Novation

1. Karen contracts to do tax services for Company A for the 2018-2019 fiscal year. Karen wants to donate her payment to a non-profit organization. Karen can give her rights (the payment) under the contract to the non-profit, unless she is restricted from doing so under the contract. Karen remains responsible for completely performing the contract. Is this an example of assignment, delegation, or novation? Explain why.


2. Karen contracts to do tax services for Company A for the 2018-2019 fiscal year. Karen can share her duties under the contract with a bookkeeper to help her do the tax work. But, Karen remains responsible for completely performing the contract. Is this an example of assignment, delegation, or novation? Explain why.


3. Karen contracts to do tax services for Company A for the 2018-2019 fiscal year. Karen gets ill and is unable to fulfill the contract. Karen and Company A can agree that Karen transfers her rights and duties to another accountant to take over the contract. Karen is released from any further obligation under the contract. Is this an example of assignment, delegation, or novation? Explain why.

Answer 1

Breach of contract

Option A seems fitting as an example of Breach of contract.

Homeowner contracts the electrician to install high grade wires for the specific purpose of safety instead he does the exact opposite by installing low quality wires that don't work properly and also cause damage to the wall thus jeopardizing the safety of the homeowner. This is material breach of contract whereby the other party i.e electrician fails to do the very thing for which the contract was created. Homeowner's concern for safety caused him to have high grade wires installed but the electrician breached the contract by neglecting the very purpose of the contract.

Equitable remedies:

1. In the case of pizza delivery the court may order RESTITUTION where what has been given is restored. Here the court might order the party who accepted the delivery to provide the restitution in the form of monetary compensation, where the party may be required to either return the pizza or provide the cost incurred on it.

2.In the case of the employee the court may order the employer to perform the action as specified in the oral contract i.e he will issue the judicial order of SPECIFIC PERFORMANCE.

Conveying contract rights:

1. Assignment: An assigment of contract has the following standard definition" when an existing party of a contract agrees to transfer rights and obligation to another third party after properly informing the other party involved in the initial stage".

Either the contracts contain clauses prohibiting any assignment or they require the consent of the parties involved.

In the case of Karen; she agrees to perform the tax services for company A for the fiscal year 2018-19. Now she is wants to transfer her rights and obligation to another third party i.e Non Profit organisation. She can enter into an assignment of contract with the non-profit org. only if her initial contract  with company A doesn't prohibits her from doing so.

Assignment does not guarantee relief from the liabilities mentioned in the contract unless specified.

Which means even if Karen may give away her rights and obligation but still she only would be responsible or answerable to company A in case of any misconduct or breach by the non-profit org.

2. Delegation : The process of transferring duties and responsibilities without the transfer of accountability. It doesn't require the consent of the other party involved.

Karen agrees to share her duties with the bookkeeper to receive help in doing the tax work but she remains accountable and will solely be held responsible for any mishap. She is only sharing her duties and not her rights or benefits she might receive from the completion of the task. This is a classic example of delegation of duties since she can increase or decrease the amount of help she requires according to her will. Here, the bookkeeper may not be held accountable in any way in case of any mistake on is part.

3. Novation: It is an agreement entered into by two parties which allows the existing parties to substitute the other one with a third party. The existing party which is replaced by a new party, has to give up all the rights as allotted in the contract. Novation may be exercised only after the consent of both the existing parties.

Karen due to being ill agrees to transfer her rights to another accountant for fulfilling the tax duties which were assigned to her in the original contact she entered with company A. Here the new accountant is being substituted in the place of Karen after the consent of both the original parties. Karen agrees to give up the rights to the new accountant and now the accountant will be held accountable for the completion of the task.