Judging by the given case study, there are (2) two issues that are required to be addressed and clarified accordingly. Firstly, can Caryn refuse to pay? This issue is referring to when Benny has only managed to finish renovating 3 rooms instead of 5 rooms as he promised Caryn that he would supply and install fully laminated wood flooring at an extraordinary rate of RM 1000 per room by paying little heed to the size of the room, during a pre-GST sale in April 2015. So, the subject of this matter for this case whom Benny and Caryn are both involved will be frustration. According to (Davis Contractors Ltd v Fareham Urban District Council [1956] AC 696), “frustration occurs whenever without default of either party, a contractual obligation becomes incapable of being performed because circumstances in which performance is called for renders it radically different from that which was undertaken by the contract.”. In this case, it the circumstance outside the control of Benny to the contract which has made his performance of the contract impossible while sourcing for Burmese Teak laminated wood. However, there are (3) three elements to be fulfilled before frustration can be applied. Such as, no provision has been made in the contract, event depended upon by the promisor must be one which he/she is not mindful, and it would be unjust to enforce the original promise.
However, Benny’s situation could be applied to the case of (Taylor v Caldwell [1863] B & S 826) under the destruction of subject matter. For example, the music hall enlisted for a progression of shows was annihilated by fire and the court has held regarding that the contract arrived at an end by releasing parties from further obligations under it. The justification for this is there was a suggested condition that the hall would exist for the reason for which it was hired initially. The principle of the case is rather similar to the case study that Benny has left with no other choice than to notify Caryn that he could no longer source for further supplies of Burmese Teak laminated wood since the production of Burmese Teak laminated wood has been limited in the market which has caused Benny not being able to obtain anymore supplies of them and due to frustration. This has shown and proved that the circumstances distinguished has caused Benny’s obligations to accomplish his objectives or aim of the contract unachievable as a matter of fact. Also, the contract between Benny and Caryn may be subject to an implied condition. In this case, Benny shall be pardoned in the case that execution winds up incomprehensible from the perishing things without fault on the part of renovating only 3 rooms after discovering that he could not continue supplying or installing the remaining unfinished rooms. In fact, if the contract has been terminated it means that the agreement between them both will be scrapped.
Furthermore, if this situation was to be viewed in a different angle such as discharge by performance, the consequences would be different. Discharge by performance can be explained as “A contract is discharged when it is brought to an end, dissolved or terminated.” There are several ways it can be discharged. For example, discharge by performance, agreement, dispensation, breach and frustration. Moreover, acceptance of part performance will be discussed under Section 38(1) of the Contract Act 1950, discharge by performance. The law has stated that “Parties must perform their respective promises. It is apparent that the words “must perform” and “respective promises” suggest that parties to the contract must perform all obligations attributes to them” and acceptance of part performance can be deduced as party who halfway performs contract cannot guarantee contract cost except if other party acknowledges the incomplete execution. In such a case the performing party can sue on quantum meruit for estimation of the work done.
According to the case of (Smith Construction Ltd. v Phit Kirivatna [1955] MLJ 8), plaintiff utilized to construct house for the defendant. The house was infringing on connecting land. Defendant was consulting with the owner of bordering land. Plaintiff needed to be paid for work done however defendant can’t. Plaintiff then ceased work right after. In the nutshell, the court has held by concluding that there was an implied contract by defendant to pay for work done by plaintiff. In this case, Benny has only finished renovating 3 rooms instead of 5 rooms which he has promised Caryn. So, Benny would not be able to claim or bill Caryn for what he has done because he has only performed part of the contract between the both of Benny and Caryn. Therefore, this has resulted Caryn can refuse to pay Benny for his partial services. This is because the rule of contract is evident from the choices made by the court. Likewise, the decide is that a party who is under obligation to perform duty under contract ought not have the capacity to claim if the whole contract has not been performed or has only been performed partially.
The second issue will be, if Benny were to finish the entire project by renovating all (5) five rooms as he has promised Caryn from the beginning, what could possibly happen if Caryn refuse to pay? The answer to this question is that, Benny would be able to sue Caryn under the law Section 40 Contracts Acts, for breach of contract due to not making her payment for the services that she has received from Benny. The law has stated that “When a party to a contract has refused to perform, or disabled himself/herself from performing, his/her promise in its entirely, the promise may put an end to the contract, unless he/she has signified, by words or conduct, his/her acquiescence in its continuance.” Besides, a breach of contract happens when involved with a contract that has been neglected to satisfy an obligation under the contract or has failed to attractively perform obligations under the contract. There are also two conditions that should be viewed as while invoking Section 40. The innocent party would need to demonstrate that the other party who has denied the contract either “refused to perform” or “disabled himself/herself from performing”. Once the innocent party puts the direct of the other party inside the ambit of one of the two prerequisites, at that point the innocent party would need to demonstrate that the refusal and disability influences the guarantee of the other party completely. In fact, once the innocent party demonstrates these (2) two conditions, at that point the innocent party may put a conclusion to the contract and claim damages under Section 74 of the Contracts Act 1950. On a side note, majority breaches qualify the innocent to terminate but just breach of condition and not breach of warranty.
The case of (Sik Hong Photo Sdn Bhd v Ch’ng Beng Choo) regarding suing for and on behalf of Ng Hua’s estate, deceased. This can be applied to the situation of Benny and Caryn, for instance. It has mentioned that the defendant has fallen within the first limb of section of Section 40 for example, refusing to perform. In this case, Benny will be the appellant whereas Caryn will be the defendant. The principle of the case that has mentioned above can be applied in the sense of Caryn refused to pay for the services that have been provided by Benny for supplying and installing the Burmese Teak laminated wood flooring. This has resulted that Benny will be eligible to claim damages under Section 74 Contracts Act 1950. The section of law has deduced that at the point when a contract has been broken, the party who endures by the breach is qualified for get, from the party who has broken the contract. Compensation for any damages caused to him/her accordingly, which normally emerged in the standard course of things from the breach, or which the parties are aware of, when they made the contract, to probably result from its breach of the entire contract. Since Caryn is the person who has breached the contract by not playing her part as a customer, Benny will be entitled to be compensated by Caryn for the damages that she has caused Benny. For example, Benny could be compensated by claiming the RM5000 worth of services that he has provided for Caryn.
Additionally, what are the damages under remedy that Benny can possibly claim under? In by far most of cases, the term “damages” alludes to the financial pay payable upon the honor of a court in confirming that the defendant had breached the contract. In fact, it is a common-law remedy which can be known as the amount of money which will put the party who has been harmed or who has suffered, in indistinguishable position from, if the contract had been legitimately performed. In the typical course of situations, where a contract had been breached, damages are accessible starting at right. In other words, its purpose is to compensate innocent party for loss maintained by breach and not penalize the wrongdoer. Meaning to say, since the contract have been signed that the price for each room is RM1000, if Caryn were to refuse to pay, Benny’s company would have an outstanding RM5000 worth of bill in deficit. Since there is already a damage for the innocent party, there are (2) two kinds of possibilities to apply for the law of remedy such as liquidated damages and specific performance.
Liquidated damages under Section 75 Contracts Act 1950 has stated that “When a contract has been broken, if a sum is named as amount to be paid in case of breach, or if contract contains any stipulation of penalty, party complaining of breach is entitled, whether or not actual damage or loss is proved, to receive from party who has broken contract reasonable compensation not exceeding amount or penalty so named”. can be defined as a sum stipulated in contract payable in the event of breach. In most contracts, there must be a penalty clause. The embodiment of a penalty clause is an installment of cash stipulated as in terrorem of the offending party whereas liquidated damages is a veritable covenanted pre-estimate of damage. Furthermore, a clause intended to compel the party to agree for paying instead of breaching the contract. In other words, if one part breaches the contract of fail to fulfill his/her obligations, he/she needs to pay for the stipulated amount of money they agreed before in the contract or not, being forced to pay. Such as the case of (Selva Kumar a/l Murugiah v. Thiagarajah a/l Retnasamy [1995] 1 MLJ 817).
Meaning to say if Caryn were to refuse to pay, Benny who is claiming for actual damages in an action of breach of contract must still prove the actual damages or the reasonable compensation. However, any failure to prove such damages will result in the refusal of the court to award such as damages. In this situation, Benny’s loss will be RM5000 in total since he has advertised to renovate each room for RM1000 each which is reasonable and he has fully performed his obligations. In conclusion, Benny would be able to cover his loss or either force Caryn to pay the amount of stipulated bill regardless if she refuses or not since she has breached the contract for not paying Benny for the cost of the rooms that he has finished renovating all 5 rooms.