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BNV 5079 Contract Law

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BNV 5079 Contract Law

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BNV 5079 Contract Law

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Course Code: BNV5079
University: Birmingham City University

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Country: United Kingdom

Questions
Scenario
The ABC Group, a developer is into the business of developing shopping centres and retail parks throughout the UK and other parts of Europe. Due to the nature of clients the company deals with, sustainability is a key requirement for all the company’s projects. The company has acquired land/premises at different locations within the West Midlands and wishes to undertake work on three different projects at once.  This involves undertaking both new building works and some refurbishment works to existing premises they have acquired.  Some of the works required are as follows:
a) ABC has acquired some land and is currently building a retail Park in Wolverhampton;
b) ABC has acquired an existing property in Perry Bar which is suitable for building a shopping centre; and
c) ABC intends to build a leisure centre in Coventry where the company has acquired some land with existing property
Vardy who works for ABC, has been given the responsibility of managing these projects.
1. Why are alternative forms of dispute resolution (ADRs) preferable to litigation for settling construction disputes?  Discuss three alternative forms of dispute resolution give examples of when they can be adopted by ABC for settling disputes that may arise during the execution of their projects. 
2. Frank has shown interest in renting a space for his bridal shop in Perry Bar. For this reason, Vardy invites Frank to the site for the shopping mall at Perry Bar, to view some completed sections of the mall. After visiting the designated sections, Frank decided to walk to other areas of the site and falls during the process leaving him with a sprained knee. This accident causes him to miss his daughter’s wedding which was the next day. Frank wants to sue the ABC group for missing his daughter’s wedding due to this accident. Advise both Frank and Vardy. 
3. Using your choice of contract form as the basis, discuss the roles of four of the parties to a building contract. Make reference to contract clauses where appropriate.
4. Discuss four remedies for breach of contract and advise Vardy on the likely situations that would require the application of such remedies on the three projects the company is currently involved in. 
5. The ABC Group as part of their current reshuffling, has transferred a member of their senior management team, Pierre, from France to head their contracts management division in the West Midlands. Even though Pierre knows a lot about the industry due to his experience in France, he wants to be sure he understands the UK legal system and how it influences the construction industry. He specifically wants to know how laws are made in the UK and any specific legislation which influences the formation and execution of construction contracts. You are to write a report to the contracts manager providing answers to all his queries.
6. As part of the retail part project in Wolverhampton, Pierre needs to obtain some tenders for the resurfacing works for the car park and called three known paving experts if they were willing to tender. All three companies were invited at different times to measure the car park so they can send in quotations for the works to be done. One of the companies, Kings Outdoors sent a ‘Works Order’ letter with the following cover.
“We are happy to undertake the necessary works for the price of £285,000”.
Upon receiving the letter, Vardy sends a response to Kings Outdoors with the following statement.
“Thank you for your interest in undertaking this project. We are very happy to inform you that, we are willing to give you this project if you will be able to execute the work for £15,000 less than the amount quoted in your works order. If we do not receive any response from you within the next two weeks, we will assume you are happy with the terms and will be expected to commence work on the 16th of January, 2017”.
As at 24th February 2017, no work had commenced on the site by Kings Outdoors and Vardy has called the company threatening to sue them for non-performance.
Advice the two parties.

Answers
The Enforceability of Contractual Promises
Introduction
Construction projects involve lots of care and obligations. And in case any party to a construction contract fails to perform its responsibilities, the law grants a remedy to the affected party. This paper will discuss some of the general provisions of construction law using the case of ABC Company.
1. Three Dispute Resolutions (ADRs) preferable to litigation 
ADR is either formal or informal dispute resolution processes sort to solve disputes without going to a trial.
Negotiation: It’s usually classified as a preventive method of ADR, and it’s also called a conflict prevention method. And in, (Beatty and Samuelson, 2010) Negotiation are usually applied as soon as the disputed arises. So Vardy can always use it as soon as he notes a problem starting in the construction.
Mediation; This one is a process where the conflicting parties involve the help of an independent and neutral third party. Notably, the third party is not supposed to make a judgments or determination.
Conciliation; This method is extensively applied in resolving disputes in the construction industry. It involves the call for a third party who helps the parties in evaluating the dispute and also actively aids them in reaching an agreement.
Arbitration; This one is a determinative ADR method. It is also extensively used in construction industries, and it involves a neutral third party who listens to both sides and determines a case.
2: Construction Accidents
Common law requires the occupiers of the land to take care of the visitors coming to a building site so as to guarantee their safety and prevent them from exposure to the possible risks of physical injuries. In the case of constructions, the owner of the land is regarded as the occupier. In (Jandson Pty Ltd v Welsh [2008]), the owner was held liable of for the damages that the plaintiff acquired when she fell on timbered steps of the floor. So for this reason, Vardy can be held liable for the accident.
On the side of missing the wedding, the general provisions of consequential damages were established by the judgment of (Hadley v Baxendale [1854]). The court stated that;
“The injured party could only recover those damages arising naturally from the breach. The second principle is that losses can be recovered if the parties can reasonably contemplate them as per the contract. Other losses that are extraordinary, special or unlikely are weighed too ‘remote’ to be recoverable unless the special circumstances were known at the time that the contract was entered into, whether or not they were caused by the breach. If this were not the case, an almost unlimited liability could arise for losses that were entirely unforeseeable.”
Following this reasoning, Frank cannot recover the damages of missing the wedding. It’s not reasonable that he missed wedding due to the accident. He could have also missed it due to other causes anyway.
3: Roles of Four Of The Parties To A Building Contract
The main parties are the principal, the architect/engineer, the contractor and the subcontractors.
Principal; This is the owner, or agent appointed by the owner. According to (Fisk and Reynolds, 2010), the work states that, “The owner participates during the design period to set criteria for design, cost, and time limits for completion and to provide decision-making inputs to the architect/engineer or design–build contractor.”
Architect or Engineer; The architect contractual obligation is typically exercise of professional duties as summarized by Denning LJ summarized the duties of an architect as in (Greaves & Co (Contractors) Ltd v Baynham Meikle & Partners [1975]) as;”The law does not imply a warranty that the architect will achieve the desired result, but suggests a term use reasonable care and skill.”
Contractor; It’s the duty of the contractor to ensure the smooth progress of the work. Contractor has the duty to coordinate and schedule the routines of its subcontractors. Contractor has responsibility of giving the of its subcontractors a sound opportunity for execution of its responsibilities as necessary.
Subcontractor; A subcontractor’s duty is to execute its work in a realistically workmanlike manner. Also, it has a duty for ensuring the safety of its employees.
4: Four Remedies for Breach of Contract and their Application
When one party neglects to act according to the agreed promises, the innocent party may choose to elect an action claiming for relief. Markedly, remedies to a breach can be one or more depending on the promises of the parties.  According to (Anderson, 2012), There are essentially four distinct categories of damages.
Compensatory Damages; Damages intended to repay the innocent party for the loss it underwent when the guilty party refused to do its obligations.  These awards depend on circumstances such as; the owner breached before the commencement of the work, in the middle of the work, or after completion. On the other hand, if the breach comes from the contractor, the court awards damages depending on the conditions of the breach as held in (Jamison Well Drilling, Inc. v. Pfeifer, [2011]).
Consequential damages; These are secondary or foreseeable losses amounting from the breach. These losses arise from unusual incidents exceeding the contract itself, and they emerge from the outcome of the breach. In (Hadley v Baxendale [1854]), the general rules for were set as  “Recoverable damages are those arising naturally from the breach, or those which can be reasonably contemplated.”
Punitive Damages; These are rare damages within contract law but common in tort law. Punitive damages are mainly awarded to punish lawbreakers and to deter related actions in future. (Emanuel, 2010).  In (Cuddy Mountain Concrete v. Citadel Const [1992]), punitive damages can also be awarded when the contractor commits a fraud.
Nominal Damages; These are damages that the court award when there is no real or actual financial loss, but just technical losses. In simple, these damages occur due to the fundamental theory that when a breach occurs, there should be some relief regardless of substantial loss. (Beatty and Samuelson, 2007)
5: UK Legal System And How It Influences The Construction Industry.
How Laws Are Made In the UK 
In the UK, the procedure of making a law starts starts with an introduction of the Bill by a First Reading. This first notice gives the MPs a time to plan and consider it. After that, it goes to the Second Reading.
During the second reading, it becomes a time for the floor of the House to consider the principles of the Bill. After this, the Bill goes to the small groups of MPs who look and examine it in detail. At the Third Reading, this is where the Bill is discussed and a voting is conducted. If the Government gets a majority vote, the Bill then passes to the House of Lords. Once both houses pass it, the Bill crosses to the Queen for the Royal Assent. Once the Queen gives it a Royal Assent, it then matures to an Act of Parliament.
UK Legislation for Construction Contracts in the UK.
Construction law is a blend of different statutes. For one, the law of contract provides the doctrine of legal rights and duties owed to each party in a construction project. Apart from contract law, in (Bailey, 2014) the work states that “principles of tort, restitution, property, equity, statute, civil procedure and occasionally criminal law are all of the application to construction and engineering projects.”
6: Vardy sends a response to Kings Outdoors
This question is an illustration of two issues, the counter-offer, and acceptance by silence.
Counter-Offer
One rule of an enforceable agreement is that that the there should be an offer and acceptance, plus there should be a consideration. Additionally, the rules of acceptance state that acceptance should be unconditional. Whenever there is a condition in the acceptance, it terminates the offer, and it becomes an offer itself. The original offeror becomes the offeree, the original offeree becomes the offeror. That’s what happened to Vardy and Kings case. Vardy became the offeror, and Kings became the offeree. It was then upon Kings to accept or reject Vardy’s offer.
Acceptance by silence
A question of acceptance by silence was ruled in in (Felthouse v Bindley [1862]). This was a mirror case of what happened between Vardy and Kings. Like we have said above, when Vardy suggested a new price to Kings, that was a counter-offer, and it went to Kings as a new offer. King had the right to accept or deny it. And like we have seen in the case (Felthouse v Bindley [1862]), the silence of Kings could not be counted as a substantial acceptance.
Conclusion
The process of contract development starts with one party making an offer, and the other one affirming it. The acceptance must be unequivocal, and any condition or term will cause a counter-offer.  Moreover, the offeree must clearly communicate the acceptance to the offeror.
References
Anderson, P. (2012). The economics of business valuation. 1st ed. Stanford, Calif.: Stanford Economics and Finance, an imprint of Stanford University Press, p.389.
Beatty, J. and Samuelson, S. (2015). Business law and the legal environment. 7th ed. Mason, Ohio: Cengage Learning.
Fisk, E. and Reynolds, W. (2010). Construction project administration. 9th ed. Boston: Prentice Hall, p.1.
Emanuel, S. (2010). Contracts. 2nd ed. New York: Aspen Publishers, p.341.
Beatty, J. and Samuelson, S. (2007). Business law and the legal environment. 4th ed. Mason, Ohio: Thomson/West, p.410.
Cases
Felthouse v Bindley [1862] EWHC CP J35
Jamison Well Drilling, Inc. v. Pfeifer, 2011 Ohio 521 (Ct. App. 2011).
Hadley v Baxendale [1854] EWHC Exch J70 Courts of Exchequer.
Jandson Pty Ltd v Welsh [2008] NSWCA 317
Greaves & Co (Contractors) Ltd v Baynham Meikle & Partners [1975] 1 WLR 1095
Cuddy Mountain Concrete v. CITADEL CONST., [Ct. App. 1992] 824 P.2d 151, 121 Idaho 220

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