Biz Law Assignment
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1) Advice Jason Miao whether he can go back on his promise of paying the extra $5,000. Jason Miao and Damien has concluded a contract to construct a swimming pool at the cost of $30,000 payable on completion of the work, which was not in dispute by either parties. After the construction work has commenced, Damien has asked Jason Miao for an extra $5,000 to cover the cost of materials and additional effort. The legal issue is whether Jason Miao is bound by thehis promise to pay Damien the such extra $5,000 to Damien to cover the cost of the materials and the additional effort. The extra $5,000 constitutes a new of term in the original contract. According to Preston Corporation Sdn Bhd V Edward Leong & Ors (1982) 2 MLJ 22, Damien’s request for an extra cost of $5,000 in order to complete the construction of the pool is specific, ascertainable and constitutes a valid offer. .Generally speaking, there can be no contract unless and until an offer has been accepted. It appears from the facts of the case that Jason Miao accepted the offer by agreeing to pay the extra $5,000 and such acceptance was communicated to Damien (Entores Ltd v Miles Far Each Corp. (1955) 2 QB 327).
In addition, in the case established that as long as the parties are willing to contract on certain terms, and an agreement is made with the intention that it shall become binding as soon as it is accepted by the person to whom it is addressed, the Likewise, the introduction of a new term of the original contract requires fresh consideration. The general rule of consideration is illustrated inillustrated in the case Stilk v Myrick (1809) EWHC KB J58. It has been established in Stilk that there may be insufficient consideration where the promise is under an existing duty to the promisor to perform an act which is to be the purported consideration. As there is already an agreement between Damien and Jason Miao for the construction of the swimming pool, Jason Miao may be able to go back on his promise of paying the extra $5,000 due to lack of consideration. However, it should be noted that Taking consideration that Damien did tell Jason that there will be an extra $5000 added to the cost of constructing of the pool, and Jason agrees to it. The general principle of law relevant to this issue is that in certain circumstances, discharging an existing duty owed to the promisor can may, in circumstances, constitute good consideration for a fresh promise (Williams vV Roffey Bros and Nicholls ([(1990))] 1 All ER 512).
The promise to pay extra will be enforceable where the promisor obtains a practical benefit, or avoids a disbenefitsetback, as a result of the promisee’s renewed undertaking to performedperform the contract (Glasbrook Brothers v Gianmoran City Council (1925) AC 270). In the current case, Jason Miao has concluded a tenancy agreement with two professionals with a term that there will be a swimming pool by the time they occupy the rooms in September. Jason Miao has chosen these professionals because they were willing to pay high rent. By ensuring that Damien completes his work in September, Jason Miao obtains the benefit that he would be able to get the high rent from these specific professionals, rather than other tenants. Jason Miao also avoided the disbenefitsetback of breaching the tenancy agreements for not having a swimming pool by the time the professionals occupy the rooms in September. Therefore, the agreement between Damien and Jason Miao to complete the construction of swimming pool is supported by fresh consideration, and Jason Miao should not be able to go back on his promise following this line of reasoning it can be argued that Jason obtained “practical benefits” from Damien’s work – this benefit was that Damien will complete the constructing of pool on time with the additional effort.
Alternatively, if it has been decided that there is no consideration for Jason Miao’s promise to pay $5,000, Damien may rely on the equitable principle of promissory estoppel. Further, iIn the case of Central London Property Trust V v High Trees [((1947))] 1 KB 130 (KB), it is. This case established that what is known as the equitable principle of promissory estoppel according to this principle when the promisor who, with the intention to be legally bound, makes a promise to the promisee to whom he knows will who relyies on it to his or her detriment, will be enforced provided the promisor has acted on it. This principle is intended to stop the promisor from denying that the statements, word or conduct did not happen. It is important to note that no consideration is necessary, but Ffor this principle to work there must already be a pre-existing contractual relationship and both parties must rely on the promise. With this principle and authority and applying it to In the current situation, Damien found that the work is more difficult than expected and the cost of materials for construction of the swimming pool have gone higher. Damien asked for an extra $5,000 which Jason Miao agreed to pay. Damien, relying on Jason Miao’s promise, has completed the work by September and as a result incurred extra and put in additional effort.
Therefore Jason Miao is estopped from going back on his promise of paying the extra $5,000.Jason and Damien, it can be argued Damien needs that $5000 extra for the materials and the additional effort in order to complete the construction on time and because of this, Jason made the promise so that he will have the pool by then. However as a counter argument, in the case Stilk V Myrick (1809) EWHC KB J58 establish that there may be insufficient consideration where the promise is under an existing duty to the promisor to perform an act which is to be the purported consideration. According to this principle, Damien already have an agreement with Jason to complete the construction at the cost of $30000 which that the extra $5000 is not included. Therefore, Damien may not be entitled to the extra $5000. In conclusion, it is high likely that Jason would not be able to go back on his promise of paying the extra $5,000 on two grounds. First, the promise is supported by fresh consideration and the new agreement constitutes a legally binding contract.
Second, if it is determined that there is no consideration for the new agreement, Jason Miao would be estopped from going back on his promise according to the doctrine of promissory estoppel. , not be successful in going back on his promise of paying the extra $5000 to Damien following the decision in Williams V Roffey Bros and Nicholls case. Furthermore, Jason cannot deny the promise he made to Damien that both of them relying on it according to the principle of promissory estoppel. In addition, in the case Preston Corporation Sdn Bhd V Edward Leong & Ors (1982) 2 MLJ 22 establish that willingness to contract on certain terms, made with the intention that it shall become binding as soon as it is accepted by the person to whom it is addressed. With this principle, Damien to do the extra work at $5000 is an offer, Jason’s agreement to pay constitutes an acceptance to the offer. Thus, Jason is bound to pay Damien the extra $5000.
2) Advice Damien whether his promise to accept $20,000 from Jason Miao is legally binding. To determine whether Damien’s promise to accept $20,000 from Jason Miao is legally binding, one should establish whether The key legal points in this question whether Damien’s agreement to accept the $20000lesser sum from Jason Miao as full settlement is constituted an agreement when Jason is unable to pay the full amount of $35000 as he is having some financial difficulties. Jason Miao’s request to settle the contract with $20,000 is an alteration of term of the original contract. As established in question 1 above, according to Preston Corporation Sdn Bhd v Edward Leong & Ors (1982) 2 MLJ 22, Jason Miao’s offered to pay Damien for his work done with $20,000 constitutes a valid offer, which Damien is free to accept or not. In our case, Damien has agreed to accept the $20,000 as full settlement. It should follow that whether Damien’s agreement to accept a lesser amount is supported by consideration. The general principle is that unless the debtor provides fresh consideration in t, an agreement to discharge a liquidated debt by the payment of a smaller sum will be void.
This is known the ‘Rule in Pinnel’s Case’. According Pinnel’s Case (1602) Co. Rep. 117a, part payment of a debt is no consideration for discharge of the whole debt. The rule was subsequently confirmed by the House of Lords in Foakes v Beer (1884) 9 App Cas 605 (HL). and endorsed in Singapore in the case of Euro-Asia Realty Pte Ltd v Mayfair Investment Pte Ltd (citation??). Therefore, prima facie, Jason Miao’s part payment of $20,000 to pay the whole debt of $35,000 would not be considered a discharge of its debt to Damien. Similarly, the rule of consideration stipulates that the person to whom the promise is made must furnish the consideration (Tweedle v Atkinson (1861) EWHC QB J57). If the person gives no consideration for a promise he cannot sue on that promise whether or not he is the person to who the promise is made. In our case, Jason Miao, the promisee, gives no practical benefit to Damien for Damien’s promise to accept a lesser amount for his work done on the swimming pool. The relevant principle of law in this situation is based on the case law authority D & C Builders Ltd V Rees (1965) EWCA Civ 3.
This case establish that payment of a lesser sum of money for a greater debt is not good consideration. According to this principle, Damien was forced to accept the $20000 by Jason as he is unable to pay the full amount of $35000 as he is having financial difficulties. Therefore, Jason is bound to pay the remaining $15000 because Damien gave no consideration to accept an agreement that was unsatisfactory. However, there are four exceptions to the Rule in Further in the case of Pinnel’s Case (1602) 5 Co. Rep. 117a. iIt was held, amongst other, that if a new element is introduced to which the creditor was not already entitled, such as in the court that the payment before the due day at the creditor’s request, provided the new element is introduced for the creditor’s benefit and not merely the debtor’s convenience, is valid consideration (Vanbergen v St Edmunds Properties Ltd  2 KB 223 (ECA)). This exception should not be applicable to the current case because (i) it was Jason Miao (the debtor) and not Damien (the creditor) who made the request for a smaller sum, and (ii) the promise to pay a lesser sum was made after the due day, when Damien has already completed the work. creditor’s promise to accept a smaller sum would be binding if he ask the debtor to pay that smaller amount before the due date at creditor’s request.
According to this principle, Damien is entitled to the remaining $15000 as he did not voluntarily agrees to accept the lesser sum of $20000 in satisfaction. Further, one should also consider whether there is sufficient legal intention to create legal relations. It should be noted that there is a presumption that parties to an agreement of a commercial character intend their agreement to be contractually binding. The presumption can only be rebutted by sufficient evidence indicating that the parties in fact possessed a contrary intention at the time the agreement wasagreement was concluded. From the facts of the case, it appeared that Damien was “not very happy” with accepting a lesser sum. From a reasonable persons in Damien’s position, it is unlikely that Damien regarded their agreement as binding, especially when he has previously demanded extra $5,000 for the cost of the material and additional effort.
One may raise the doctrine of promissory estoppel as a counter-argument. Promissory estoppel forbids a party from resilingpulling out from a statement made or a position adopted where it would be inequitable to do so. In the current case, Damien has agreed to accept a lesser sum of $20,000 because Jason Miao has alleged that he is in financial difficulties. From a strict construction of the partiesparties’ performance, it cannot be argued that it would be inequitable for Damien to go back on his promise because Damien has performed his work and Jason Miao there has been no facts suggesting that Jason Miao has acted upon such promise in detriment. Accordingly, it is likely that Damien’s agreement to accept $20,000 as a full settlement would not be legally binding due to lack of consideration and lack of intention to create legal relations.
As Damien was forced to accept the smaller sum, this means the intention to create legal relation is absent. In the case Edwards V Skyways (1964) 1 WLR 349, where a bonus payment was promised to an employee, this was found to be legally binding. He had relied upon the promise in accepting it, and his employer could not adequately prove that they had not intended their promise to become a contractual term. According to this principle, Damien can argue that he didn’t have the intention to accept the $20000 (lesser sum) as full settlement of the construction of the pool, thus there is no legally binding contract between him and Jason. However as a counter argument, in the case Central London Property Trust V High Trees (1947) KB 130 establish that an equitable doctrine which in some instances can stop a person going back on a promise which is not supported by consideration. With this principle, Damien may not be entitled to the remaining $150000 as he accepted the lesser sum, he was estopped from going back on this promise. Therefore, Damien’s promise in accepting the $20000 from Jason has not created any binding obligation at all as he showed no intention accepting the lesser sum as the full payment. Jason will have to pay back the remaining $15000 to Damien