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In January 2020, Jonathan, Mario and Emily formed a partnership, under the Partnership Act 1890, to run a wedding dress business trading as JME Wedding Dresses. On formation, Jonathan invested £3000 into the business, Mario invested £2000 and Emily invested £1000. All of them took an active part in the operation of the business and the partnership agreement stated that all profits and losses should be divided in proportion to the capital contribution. However, as Emily was the person who would actually be making the wedding dresses, it was agreed that she would not be liable for any more than her initial contribution towards any future debts. 
In August 2017, Emily was approached by Michael, who asked her if she would make a wedding dress for his daughter, Sophia. During Emily’s discussions with Michael and with Sophia, it was stipulated that they required particular silk fabrics and lace that could only be obtained from Italy. Emily pointed out that the materials in question were both unusual and very expensive. Michael responded that the cost was unimportant and that he wanted Sophia to have the dress she wanted for her wedding.
Emily entered into a contract, on behalf of JME Wedding Dresses, with Michael which provided that Emily would design and make a wedding dress to the requirements stipulated by Michael and Sophia for Sophia’s wedding. The price agreed was £10,000. All the money was paid up front. 
Emily used materials of similar quality but not imported from Italy and on the day of the wedding, the train of the dress came apart and the bride suffered great embarrassment and also realised that the materials used for the dress were not what had been agreed with JME Wedding Dresses.
Michael is now suing JME Wedding dresses for the price of the dress and wants further compensation for the embarrassment suffered by his daughter. 
A)    Consider whether breach of contract has occurred and justify your answer with relevant case law, AND
B)    Explain, in the context of the particular form of partnership, the potential liabilities of Jonathan, Mario and Emily for the partnership debts.

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Assignment brief

In January 2020, Jonathan, Mario and Emily formed a partnership, under the Partnership Act 1890, to run a wedding dress business trading as JME Wedding Dresses. On formation, Jonathan invested £3000 into the business, Mario invested £2000 and Emily invested £1000. All of them took an active part in the operation of the business and the partnership agreement stated that all profits and losses should be divided in proportion to the capital contribution. However, as Emily was the person who would actually be making the wedding dresses, it was agreed that she would not be liable for any more than her initial contribution towards any future debts. 
In August 2017, Emily was approached by Michael, who asked her if she would make a wedding dress for his daughter, Sophia. During Emily’s discussions with Michael and with Sophia, it was stipulated that they required particular silk fabrics and lace that could only be obtained from Italy. Emily pointed out that the materials in question were both unusual and very expensive. Michael responded that the cost was unimportant and that he wanted Sophia to have the dress she wanted for her wedding.
Emily entered into a contract, on behalf of JME Wedding Dresses, with Michael which provided that Emily would design and make a wedding dress to the requirements stipulated by Michael and Sophia for Sophia’s wedding. The price agreed was £10,000. All the money was paid up front. 
Emily used materials of similar quality but not imported from Italy and on the day of the wedding, the train of the dress came apart and the bride suffered great embarrassment and also realised that the materials used for the dress were not what had been agreed with JME Wedding Dresses.
Michael is now suing JME Wedding dresses for the price of the dress and wants further compensation for the embarrassment suffered by his daughter. 

  1. Consider whether breach of contract has occurred and justify your answer with relevant case law, AND
  2. Explain, in the context of the particular form of partnership, the potential liabilities of Jonathan, Mario and Emily for the partnership debts.

 

1.0 INTRODUCTION


1.1 English law and breach of contract

In English law, before even a breach of contract is considered, it must first be established if the contract is even valid based on some essential elements whose absence can render the contract void, voidable or unenforceable. These essentials are;

  1. Agreement: The first essential element that validates a contract is agreement when one party accepts an offer of another unconditionally. See Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256 for relevant case.
  2. Consideration: Each party must promise to give, or do something for another, which shows they have contributed something of material value to the bargain. See Williams v Roffey Bros [1990] 2 WLR 1153 for relevant case.
  3. Intention: The parties must intend their agreement to be legally binding thus have legal repercussions, which rules out purely domestic or social arrangements. See Balfour v Balfour [1919] 2 KB 571.
  4. Capacity to contract: The law would not consider under aged children (under 18), mental patients or drunken parties as legally capable of entering into a contract. See Cowern v Nield [1912] 2 KB 419 for relevant case law.
  5. Genuineness of consent: The parties must enter into an agreement voluntarily or freely and involve a ‘meeting of minds’. Otherwise, mistakes as to the subject matter of contract, misrepresentation or undue influence or duress can invalidate the contract (Keenan et al 2009, p.260)
  6. Legality: The purpose of the agreement must not be illegal or contrary to public policy. See Pearce v Brooks [1866] LR 1 Ex 213 for relevant case.

Once it has been established that all these elements have been fulfilled, the next step is to show that there has been a breach of contract. It is worth noting at this stage that Michael and Sophia are consumers while Emily is a representative of JME business. Consumers, defined as persons, making contracts for non-business purposes (r 3(1)) are heavily protected by statutes such as Sale of Goods Act 1979, Sale and Supply of Goods Act 1994 (Keenan et al. 2009).

A breach of a contract can happen when the terms of a contract are broken by one of the parties, which in this case, would be JME Wedding Dresses. Since this case involves the sale of goods, the most important terms stipulated under ss. 12–15 of the SGA 1979 statute are those that are implied during the agreement and these; 

  1. That the goods must correspond with the description, S.13
  2. That the goods must be suitable for the purpose, S.14;
  3. That the goods must be of reasonable or satisfactory quality, S.15. It is important to note here that oral assurances by Emily to make the dress according to the requirements stipulated by Michael and Sophia may still be contractually binding. This was demonstrated in Trac Time Control Ltd v Moss Plastic Parts Ltd [2004] EWHC 3298.

Looking at all the facts so far, it is clear a breach has occurred. In common law, a breach occurs when 

  • One party states they will not be able to fulfil their contractual obligation prior to performance 
  • One party fails to complete their contractual obligations or 
  • One party performs their contractual obligations but in a way that is defective (Adams 2010; Poole 2010; Keenan et al 2009).

Is there a breach of contract?
Yes. It is clear that one party (Emily and JME) have been deemed to have performed their contractual obligation in a defective manner.

But what kind of breach has occurred? What are the consequences of this breach? What are the potential liabilities of Jonathan, Mario and Emily for the partnership debts?

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