‘Peace at Home’ Ltd operates a construction company, which specialises in constructing and repairing/maintaining residential homes for elderly people. In 2014, the company entered into two contracts.
(a) ‘Peace at Home’ Ltd entered into an agreement with Mr Smith to renovate an old building according to the specification (including health and safety regulations) of Mr Smith for the payment of £2,000. However, just before the project was completed, Mr Smith informed ‘Peace at Home’ that, due to the recent world financial crisis, many elderly people would be looked after by relatives and it would no longer proceed with his project. ‘Peace at Home’ immediately started a legal action against Mr Smith for breach of contract. However, a few days before the case was to be decided in the court, ‘Peace at Home’ sold the renovated building for the same amount of payment that they would have received from Mr Smith.
Advise ‘Peace at Home’ whether it would be entitled to claim damages from Mr Smith and, if so, what would be the extent of those damages.
(b) ‘Peace at Home’ also entered into a contract to build a new building for Mr Williams for a payment of £1,000. The contract contained a term that the payment would be made in 12 instalments and, in the event, Mr Williams could not pay according to the agreement, ‘Peace at Home’ would have the right to terminate the contract and claim an amount equal to 10% of the total contract payment as damages. Any amount paid over the 10% was agreed to be paid back to Mr Williams.
Mr Williams paid the first two instalments but failed to pay the third one, but refused to pay the damages as it was provided in the contract on the grounds that they were excessive.
Advise ‘Peace at Home’ whether it can claim damages from Mr Williams and, if so, what would be the extent of those damages.
• Your first task is to identify the legal issues raised by the facts. You should also identify the actions (if any) potentially available to each party based on the facts.
• In relation to each issue identified, you need to advise the parties as to the most appropriate method(s) available for settling the dispute in question.
• You must also advise each party on the possible legal arguments available to them. In this advice you should make reference to appropriate case law authority and any other material which you may feel is relevant.