BUS205-Introduction to Aspects of Business Law Essay

BUS205-Introduction to Aspects of Business Law - Essay Example Rights against Costumes R Us English National Operetta Company (ENOC) entered into a contract with Costumes R Us for the purchase of theater costumes. The contracts of sale are governed by Sale of Goods Act, 1979 which defines a contract of sale in s.2 (1) as: ‘a contract whereby the seller transfers or agrees to transfer ownership in goods to the buyer in return for a money consideration called the price.’ In the given case, Costumes R Us agreed to manufacture and deliver theater costumes to ENOC and ENOC agreed to pay ?5,000 in return. The agreement was made on 1st May 2010. This is an agreement to sell. It pertains to future goods which would be delivered on 1st September 2010. But before Costumes R Us could begin the manufacturing process for the agreement, on 1st June 2010, a fire broke out due to a fault of some children and burnt down their premises. They could not manufacture the costumes and hence could not deliver them to ENOC. ENOC has threatened to sue Costum es R Us for damages. Costumes R Us could not perform their promise. ENOC had to purchase the same quantity of costumes from Theatre Togs Ltd at a cost of ?6,000. ENOC is looking to recover their resulting loss in the form of damages from them by suing them for breach of contract. Costumes R Us would look to defend by pleading on the basis of Doctrine of Frustration. ... The happening event must have been outside the contemplation of the parties at the time they entered into the agreement. Where the parties have foreseen the likelihood of such an event arising and have made express provision for it in the contract the doctrine of frustration will not apply; and iii. The frustrating event was not self induced. In other words, the frustrating event must not have been the fault of, or due to the actions of, either of the contracting parties. In the given case, on June 1st 2010, the fire accident rendered it impossible for Costumes R Us to manufacture the costumes. The event is a frustrating event. On May 1st 2010, the time of making of the agreement, this event could not have been foreseen as it is not normal that the whole premises of a business are burned down due to an outbreak of fire. According to the given facts, the fire was caused by some children who were playing with matches near the premises. Therefore, the fire was not caused due to negligen ce or a fault by either of the parties. On the other hand, the breakout of fire occurred before the stipulated time of delivery i.e. 1st September 2010. If three months were sufficient for Costumes R Us to recover from the accident and perform their promise of making the costumes and delivering them, the Doctrine of Frustration would not be applicable. The subject matter of this contract is not of existing goods. It pertains to future goods which would be manufactured by Costumes R Us in the future. The fire could not have destroyed the subject matter of the contract. But it can be assumed that the machinery required to process the material was destroyed so the subject matter could not have been brought into existence. The courts would discharge both the parties from the contract by the