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Contract Law

Introduction

The current case scenario between Mustafa and Perfect Patios demonstrates contract law related to the estimation and quotation price. It is found that Mustafa wanted to replace the existing patio; therefore, he hired Robby from Perfect Patios Ltd. After a full assessment of the site, Robby has provided an estimated amount of £3500 or thereabouts on which Mustafa agreed. However, they dispute the final bill as Mustafa was shocked to see the final bill of £4800. Therefore, it is important to advise Robby and Perfect Patios Ltd so that he can claim the price of his work and explain that there was a contract between the two parties or not.

Issue

After analysing the current case between Mustafa and Perfect Patios Ltd, it is found that there are certain issues related to it. Therefore, it is important to highlight issues to provide a solution to Perfect Patio Ltd. The first issue is that whether Perfect Patio Ltd has made a contract with Mustafa or not. The second issue related to the current case is that whether Perfect Patio Ltd has provided an estimated cost or a quotation to the party. Third and most important, if it was a contract between Perfect Patio Ltd and the party, whether he can claim the money as there was a huge difference between the estimated cost and final bill price.

Rule          

It is noted that certain businesses are operating in the UK cannot provide standard prices for their services and goods. There are specific reasons related to it, such as skills, materials and timeframe of the work as it merely demands upon the consumer's needs.

Therefore, it is noted that businesses used to provide a quotation or estimated price instead of a standard price to avoid legal issues[1]. However, it is important to understand the difference between an estimated price and a quotation. It is found that a quotation is considered as a fixed price that cannot be changed once the consumer accepts the offer. For this reason, the working party has to provide additional charges if they consider that the work cannot be completed at the quotation price[2]. On the other hand, the estimated price is considered an educated guess by the working party and therefore, it is mainly used to avoid conflicts at the time of final billing.

It is articulated in the Contract Act 1872 and Scots contract law[3] that one party has to provide an offer to the other party, and it should be accepted by the other party to make a legal binding[4]. Therefore, according to the definition of an offer, it is found that an offer is an open call from the offeror to an offeree. On the other hand, an acceptance mainly occurred when that offer was considered and mutually agreed upon by both parties[5]. However, Section 3 of (Scotland) Bill notified about the offer, rejection and acceptance[6]. Therefore, it is noted that an offer and acceptance are essential to forming a contract between two parties. For this reason, it is noted that the contract law in the UK considers the activities of two parties. Consequently, if the contractor has provided an estimated price to the customer and accepts the price, they have created a binding legal contract[7]. In the case of verbal and oral communication between two parties, the concept of offer and acceptance is essential, and it can be used to make a contract.

It is important to understand that in the case of estimated price, description of the services provided from the offeror. However, in some cases, the price is not vital, and two parties agreed and therefore, it is explicit that the customer has accepted the offer and has formed a contract. On the other hand, Section 8 (2) and (3) of the Sale of Goods Act 1979[8] articulated that contract should provide proper consideration, and if it was left out and not agreed in the contract, therefore, an implied term has been imposed on contracting party in order to pay the reasonable price. It is noted that the inclusion of VAT in the contract is essential, and it is mostly added to the services and goods that are sold in the UK. Therefore, the rate of VAT in the current UK market is 20 per cent.

For this reason, contractors have to include VAT in their final bill, and they have to include VAT in the right manner[9]. According to Value Added Tax Act 2014, it is found that the contractor who has been registered for VAT is considered to contain VAT tax in their price[10]. Moreover, it is found that the estimated cost presented by the contractor to their customer must be reasonable. However, it is noted that 10 to 20 per cent overage of the estimated price can be considered reasonable, but it is important that the contractor discover certain problems and issues that were not discovered while educating the site[11]

It is noted that the doctrine related to unjust enrichment mainly occurred when one party used to confer profits upon other party, without getting proper restitution related to the legislation. However, it is important to understand that this normally take part in the contractual agreement in which one party fulfil all his parts according to agreement. On the other hand, other party failed to fulfil their part according to the contractual agreement.



[1] MacQueen, Hector. "Joe Thomson and Contract Law in Scotland." Juridical Review (2019): 18-32.

[2] Macgregor, Laura. "Remedies for breach of contract in Scots law." In Research Handbook on Remedies in Private Law. Edward Elgar Publishing, 2019.

[3] Scots contract law

[4] Contract Act 1872

[5] Ezike, Obiora, and John Macleod. "Restitution Under an Illegal Contract: A Scots Law Perspective on Patel v. Mirza." European Review of Private Law 26, no. 2 (2018).

[6] Section 3 of (Scotland) Bill

[7] Macgregor, Laura. "Partnerships and legal personality: cautionary tales from Scotland." Journal of Corporate Law Studies 20, no. 1 (2020): 237-262.

[8] Section 8 (2) and (3) Sale of Goods Act 1979

[9] Hughes, Cathy, William McCluskey, Sarah Sayce, Edward Shepherd, and Peter Wyatt. "Investigation of potential land value tax policy-options for Scotland." (2018).

[10] Value Added Tax Act 2014

[11] Congreve, Emma, Kevin Connolly, Jordan Harrison, Ashwin Kumar, Peter McGregor, and Mark Mitchell. "A preliminary investigation into modelling the impact of measures to reduce child poverty in Scotland." (2021).

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Analysis

As per the English Legal System, in the case of Mustafa, the contract was based between Him and Robby/Perfect Patios. It must be known that as per the legislative bodies of the UK, Contract Law obligates the involved parties to indulge in agreements other than verbal. Mr Mustafa, in his argument, is quite right as the price mentioned to him was 3500 thereabouts GBP whereas, it should mention that the price quoted is an estimate, which articulates that the price mentioned can either be increased or decreased. As Robby provided an estimate due to being unsure for some reason, based on the English Legal System, it was made clear through verbal communication that the prices have chances to be increased or decreased by using the term thereabouts.

Moreover, the contract law of the UK can only consider legal relationship when it is produced in written form or verbal, but the contract must be offered and accepted by both parties[1]. Robby offered the contract, although the term was quite vague, the quotation was provided, which was agreed by Mustafa. According to the legislative bodies of the UK, once the contract is accepted, the quoted price can only be changed once the work by the party is added or modified, which requires additional efforts. However, for the same work, the parties are not entitled to charge additional. The Contract Law allows the parties to change their quoted cost if they have given an estimated price.


 

For the case of Robb, since he provided estimated cost; therefore, the contract law and English Legal System allows him to change the quoted price. Ingram v Little [1961], this has also been supported were two sisters sold a car to Mr Hutchinson. Who provided a cheque and then sold the car but then the cheque was dishonoured, prompting the two sisters to go to court but due to no formal agreement between the two, the final decision held was that the two individuals sought to deal at the address as they were not accepting cheque but cash? This was a loss for the sisters, but taking from the case, we can see that due to no formal agreement between the two involving fixed price and then if further cost is to change how it will be charged could have helped the proposed case.

According to the Sale of Goods Act of 1979, the individuals who provide service must be paid in full. However, it must be ensured that a price per hour or in a set ratio must be used to disallow the buyer or the seller to bear the loss. Devising a physical contract would have allowed clearer guidelines and a vision of what is to be expected. This will allow for increased chances of satisfaction rather than dissatisfaction which can land the other party in court facing potential charges[2].

Mustafa agreed to 3500 GBP and 'thereabouts' it must have been asked by Mustafa as to how much variance is to expect as 4800 GBP seem quite rational the reason is, the added cost also included tax, which is interesting as Robby being a patio worker did a good job by removing the existing slabs, removing soil to lay the foundation, fitting the kerbs, before laying and compacting the paving stones.


 

Therefore, as per the Contract Law, since Mustafa was living in that house; therefore, instead of Robby, Mustafa had a better image regarding the work required. As per ruling in Bolton v Mahadeva [1972][3], lack of evidence of a job well done is the only time when the payment should be made in pull same in the case of Sumpter v Hedges [1898],[4] where a builder performed 333 GBP worth of work but then abandoned, which led to losses being faced by the party. The builder got to know that the prices he has quoted initially without using the estimated term will cost additional losses and the wages that he needs to pay to the workers. From this, it can be articulated that since Robb has used "£3500 or thereabouts", this means Robb has given the idea to Mustafa that the price he is quoting for the completion of the work can be changed. Also, the tax-related term is something understood which both parties need to pay that is why according to the legislative bodies of the UK, Robb's job was to quote an estimated price he did while offering the contract.



[1] Hardman, Jonathan. "Further legal determinants of external finance in Scotland: an intra-UK market for incorporation?." Edinburgh Law Review 25, no. 2 (2021): 192-214.

[2] Macgregor, Laura. "Agency Law in the Scottish Courts: Time for a Broader Approach?." (2019): 94-100.

[3] [1972] EWCA Civ 5

[4] [1898] 1 QB 673

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Conclusion

It is concluded from the case scenario between Mustafa and Perfect Patios Ltd that they have a legal contract. First, it is found that Perfect Patios Ltd has provided an offer to Mustafa regarding the price and services, and he accepted it. Therefore, it is concluded that they have fulfilled the concept of offer and acceptance, and therefore, they have a legal binding contract. Secondly, it is found that Perfect Patio Ltd has provided the estimated price of their service after analysing the site. It is noted that the quotation price is considered a fixed price, and it cannot be changed.

However, an estimated price can fluctuate as it can be increased and decreased demanding upon the circumstances. Therefore, it is concluded that £3500 or thereabouts has been considered as an estimated price. After analysing the case scenario, it is concluded that Perfect Patio Ltd has a legal contract with Mustafa, and they have provided an estimated price that he also accepted. For this reason, it is advised to Perfect Patio Ltd to claim the prize for their service. Moreover, the final billing price includes VAT, and it is not overaged the 10 to 20 per cent of reasonably estimated price limitation. However, it is important to understand that there was an unjustified enrichment from Mustafa as he failed to fulfil the part that was agreed in the contractual agreement. Therefore, it is concluded that Mustafa has no contract with Perfect Patio Ltd and to pay the price to Perfect Patio Ltd for the services.


 

Bibliography

Primary Sources

Case Laws

Bolton v Mahadeva [1972] EWCA Civ 5

Ingram v Little [1961] 1 QB 31

Sumpter v Hedges [1898]

Legislation

Contract Act 1872

Scots Contract Law

Section 3 of (Scotland) Bill

Section 8 (2) and (3) the Sale of Goods Act 1979

Value Added Tax Act 2014

Secondary Sources

Articles & Other Sources

Congreve, Emma, Kevin Connolly, Jordan Harrison, Ashwin Kumar, Peter McGregor, and Mark Mitchell. "A preliminary investigation into modelling the impact of measures to reduce child poverty in Scotland." (2021).

Ezike, Obiora, and John Macleod. "Restitution Under an Illegal Contract: A Scots Law Perspective on Patel v. Mirza." European Review of Private Law 26, no. 2 (2018).

Hardman, Jonathan. "Further legal determinants of external finance in Scotland: an intra-UK market for incorporation?." Edinburgh Law Review 25, no. 2 (2021): 192-214.

Hughes, Cathy, William McCluskey, Sarah Sayce, Edward Shepherd, and Peter Wyatt. "Investigation of potential land value tax policy-options for Scotland." (2018).

Macgregor, Laura. "Agency Law in the Scottish Courts: Time for a Broader Approach?." (2019): 94-100.

Macgregor, Laura. "Partnerships and legal personality: cautionary tales from Scotland." Journal of Corporate Law Studies 20, no. 1 (2020): 237-262.

Macgregor, Laura. "Remedies for breach of contract in Scots law." In Research Handbook on Remedies in Private Law. Edward Elgar Publishing, 2019.

MacQueen, Hector. "Joe Thomson and Contract Law in Scotland." Juridical Review (2019): 18-32.

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