SINGAPORE MANAGEMENT UNIVERSITY LGST 101 BUSINESS LAW Term 1- 2010/2011

Skeletal for Assignment: DISCHARGE OF CONTRACT

Group Members:

G17 Peh Shule Jolene Chui Sherilyn Quek Yu Lin Lum Choon Shan Ryan Fan Zhiming

Course Instructor:

Prof. Wan Wai Yee

Date of Submission:

20/10/2010

Question : Advise BJCPL and PCK of their respective rights and liabilities. There are various issues in the contract between BJCPL and PCK: Starting date and ending date of renovation of the shop space Type of glass used for the display units Centralised security system that is linked to the 15 display units General layout of the shop space (wallpaper, lighting et cetera) The contract is clearly not brought to an end by performance with regards to the issues raised above. PCK cannot rely on the De Minimis Rule (which states that if the deviation in performance is microscopic, the contract is deemed to have been performed fully and precisely) as the deviation in performance is significant. As such, the Precise Performance Rule is not fulfilled and there is no discharge of contract under performance. The contract is deemed to be entire since it is not substantial enough to be broken into several parts (such as in the case of building a house). There is a clear breach of contract since PCK failed to perform his part of the obligations according to the terms of the contract agreed upon by the parties. Terms of the contract state that renovation will begin 1 week after the date of the contract (15 June 2009) and be completed 3 weeks from the date of commencement. The work schedule attached also stated that the 15 display units must be controlled by a centralized security system, the glass used must comply with Cose 2013B and that the general design of the shop space must create an exclusive impression with soft lighting, colours and materials that create a back-to-nature feel. In this case, the breach is an actual breach as it has already happened. With regards to the terms of the contract that were breached: Starting date and ending date of the renovation of the shop space o Renovation was supposed to start on 22 June 2009, but it was delayed until 15 July 2009. Furthermore, renovation was completed only 1.5 months after date of commencement, not 3 weeks as stated in the contract. o The delay caused Ben and Jerry to have very little time for necessary rectifications but did not delay their official launch date.

o Furthermore, PCK did perform the task set out in the contract, though not precisely. Thus, this is only a non-repudiatory breach and BJCPL can only sue for damages. Type of glass used for the display units o The type of glass used was supposed to be a type that complied with Code 2013B so it was less fragile, but PCK only used 2011C glass as it was cheaper and easier to get. o The use of lower quality glass puts BJCPL in a position whereby it will be easier for theft to occur since the glass is easier to break. Furthermore, since BJCPL deals with selling diamonds, losses will be substantial if theft happens. o This is considered a repudiatory breach. When PCK signed the contract, they are agreeing to carry out renovations according to BJCPLs specifications for their shop space. Hence, when they use lower quality glass, they are compromising the safety of the shop. Centralised security system that is linked to the 15 display units. o The security system only controls 13 out of the 15 display units due to difficulty in laying the necessary cables. o The security system is vital for the shop, especially due to the nature of the goods that BJCPL is dealing with. The contract stated that all display units have to be connected to the security system and PCK failed to do that. o This is considered a repudiatory breach. Similar to the breach with regards to the type of glass used, these 2 terms are fundamental to the contract. In the business sense, compromising on safety would lead to losses in the event that theft happens. - The repudiatory breach of the contract with regards to the type of glass used and the security system would enable BJCPL to sue for damages and discharge or affirm the contract. General layout of the shop space o The lighting was not in an optimal position and the wallpaper of the shop was applied shoddily and unevenly. However, the wallpaper is of the type that was specified by Jerry. o The general design is supposed to create an exclusive impression that has a back-to-nature feel but this statement is unclear as this is a matter of opinion. The details stated are not specific enough to say

what constitutes an exclusive impression and gives the back-tonature feel. o However, it is implied that the wallaper should be applied properly since when PCK agreed to renovate the shop space, it is already implied that the work done would have a certain standard, as it is reasonable to say that no one will expect wallpaper to be applied unevenly and shoddily. o Hence, there is a non-repudiatory breach and BJCPL can only claim for damages.

Question: Advise Jerry as regards his liability, if any. (in relation to Avon Gard) Jerry is in a contract with Avon Gard but he called to terminate the agreement before with any work was done. Is the contract considered as discharged? There is anticipatory breach of contract by Jerry since he entered in another agreement with Sensa. Since Avon is the innocent party here, he has the right to choose whether to affirm the contract. There is legitimate interest for Avon to affirm the contract as he will get monetary returns. Affirmation can be communicated via an unequivocal act or statement from the innocent party to the party-in-breach to clearly show the intention of affirming the contract. In this case, the act would be that of Avon producing 20 designs for BCPL. Hence, Jerry is liable to pay the $50, 000 as when the anticipatory breach is rejected and the contract affirmed, the anticipatory breach is treated as if it never occurred and the contract continues in force. Since the contract is treated as no breach at all, there is no right to discharge or claim for damages.