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BREACH OF CONTRACT AND REMEDIES- CASE STUDY BUSINESS LAW

INSTRUCTOR: SIR. ASIF Z. WARSI

BREACH OF CONTRACT AND REMEDIES INTRODUCTION

PERSONS INVOVLED IN THE CASE Tyna Ek- She is the buyer of the boat and lives in Seattle Washington. Russel Peterson-Seller of the boat.

Tyna Ek and Russell Peterson met in Seattle, Washington. The Boat OHana Kai was in Juneau, Alaska. It was agreed that the boat would be transported to Seattle.

BRIEF OVERVIEW OF THE CASE A contract was formed between them in which Peterson persuaded Ek to buy boat while Ek agreed and paid $43000 for it. In the Contract, Peterson agreed to transport the vessel within one month while renovate it on his own expense and pay its moorage cost too. During the preparation of vessel for the trip to Seattle, Ek gave Peterson her cellphone on loan so that she could communicate with him. Moreover Peterson also borrowed $4000 from Ek. After two months, Ek got to know that she was being a victim of the fraud by Peterson on usage of her cellphone for other use rather than using it under the bracket of contract means and she began receiving unauthorized bills for vessel parts and moorage, and charge on her credit card was also done by Peterson. Ek then decided to go to Juneau to possess the boat where she found that Peterson moved it to Alaska and registered it under false name. Meanwhile Police seized him at Taku Harbor. Ek filed a suit against Peterson in Alaska court alleging breach of contract and seeking damages.

BREACH OF CONTRACT AND REMEDIES SUMMARY

This case is about the breaching of a contract and recouping the damages caused by the breaching with the help of the court. The case evolves between two persons, namely, Russell Peterson and Tyna Ek who entered into a contract of selling a boat named OHana Kai. Peterson met Ek in Seattle Washington, where Peterson urged her for purchasing the boat. He assured her of safe investment and that the boat will result beneficial for her as she will get maximized profit with the resale of the boat. The contract was formed in Seattle, Washington. The boat was in Juneau, Alaska and which was promised to be transported to Seattle. In the contract, it was agreed that Peterson would renovate the boat and would pay all the labor and moorage expenses incurring. He was liable to make the boat seaworthy so that it could be transported from Seattle to Juneau. The goal for bearing all the costs was to insure the maximization of the resale value. In return, Ek was to pay $43000 for the purchase of the boat. After the possession of boat, the proceeds from the sale would be distributed in the following: Ek would recover all the expenses and will be reimbursed with full purchase price (i.e. $43000) Peterson would be reimbursed for all the renovating, labor and moorage expenses. The remaining amount would be distributed in equal proportion as profit between two parties.

Both agreed to the conditions and entered into the contract. Ek provided cellular telephone to Peterson so that they could communicate while the renovation was going on. Peterson even took loan of $4ooo from Ek for the renovation of the boat. After two months, Ek began to receive unanticipated bills for the repairing and moorage costs. Unauthorized billing was done on her credit card and cell phone bills were extremely high. Ek then went to Juneau so that she could take the possession of the boat. Ek instructed Peterson not to move the boat from Juneau. But Peterson moved the boat to Petersburg, Alaska. He registered the boat under a false name. He then moved the boat to the Taku Harbor where the police seized the OHana Kai. On the other hand, Ek filed a case in Alaska court against Peterson for the breach of contract and compensation to the damages. The founded the case in favor of Ek and asked Peterson to recover the damages caused by the breaching of contract by him.

BREACH OF CONTRACT AND REMEDIES


The court found that the contract between Peterson and Ed was mutual, in which Peterson would repair the vessel and prepare it for resale at a valuable amount. It was found that Peterson breached the contract in various ways, for example, he failed to pay charges, he was in debt of Ek, and he moved the boat from Juneau and failed to transport it to Seattle. He was found liable to award Ek her damages caused by him. The damages caused could be measured according to the performance done by the breaching party in comparison to the promise made. They were categorized as following: Unauthorized charges on her credit card. Unanticipated bills. Moorage costs for the boats repossession. Loan to Peterson. Cellular charges. Travelling cost; when Ek travelled to Juneau for the possession of the boat

All these costs were to be recovered by Peterson as he breached the contract. Furthermore, he might also be entitled to pay cost for breaching the contract, failing the boat under a false name and for his failure in surrendering the possession of the boat to Ek.

BREACH OF CONTRACT AND REMEDIES FRAMEWORK

Peterson- Seller of the boat Contract formed for the sale of boat Ek- Buyer of the boat

Peterson breaches the contract He is liable to pay charges Ek files a case againt Peterson

BREACH OF CONTRACT AND REMEDIES THEORY


(1) Breach of contract: The refusal or failure by a party to a contract to fulfill an obligation imposed on him under that contract, resulting from, e.g. repudiation of liability before completion, or conduct preventing proper performance. The contract is discharged where the breach results in the innocent party treating it as rescinded and where it has the effect of depriving the party who has further undertakings still to perform of substantially the whole benefit which it was the intention of the parties as expressed in the contract as the consideration for performing those undertakings

Classification

Actual breach Anticipatory breach

(2)

Compensatory damages: These are also known as general damages which is the difference between the value of the breaching partys performance as promised in the contract and the actual value of the performance.

(3)

Consequential damages:
These are also known as special damages that are actually the foreseeable damages that results from a breach of contract.

BREACH OF CONTRACT AND REMEDIES CONCLUSION

Tyna Ek met Russell Peterson in Seattle, Washington. They formed a contract in which Peterson persuaded Ek to buy his boat in Juneau, Alaska. Ek paid Peterson $43000 for the boat. In the contract Peterson agreed to transport the vessel where he would renovate it on its own expense and pay its moorage cost too. Ek also gave her cellphone on loan so that she could communicate during the preparation of vessel. Moreover Peterson also borrowed $4000 from Ek. Two months later when she received an unauthorized bill for vessel parts and moorage the use of her phone and the charges on her credit card she got to know she was been fraud by Peterson. Ek then decided to go Juneau and protect it from further loss Ek found that Peterson moved it to Alaska and registered it under a false name. Police seized him at Taku Harbor, Ek filed a suit in an Alaska state court against Peterson, alleging breach of contract and seeking damages. The court should hold that Peterson breached the contract with Ek and award her damages. The damages would include; the loan to Peterson, the unauthorized charges on her credit card and other bills, and the moorage costs to the date of the boats repossession. If any damage would be avoided then it will reduces the amount of recovery. The amount of Ek loss would be offset by the increase in the value of the boat as a result of Petersons effort. In this case these damages would include the costs to repossess the boat which were a predictable result of Petersons material breach of the contract and his failure to surrender possession of the boat.

BREACH OF CONTRACT AND REMEDIES REFERENCES


http://caselaw.findlaw.com/ak-supreme-court/1047875.html

Books: (1) Business law revised edition 2012- Khalid Mehmood Cheema (2) Dictionary of law- third edition- L B Curzon

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