Business Law Cases

Only available on StudyMode
  • Download(s) : 63
  • Published : June 25, 2008
Open Document
Text Preview
Case 1: Nike (BD) Ltd., presently operating in Bangladesh and selling different goods of the said brand name, enters into a contract with Sunshine Fabrics (a Local Knit-ware manufacturer) for supply of 50,000 pcs of T-shirt as per sample and design. One of the provision/ stipulation of the said contract was that-“the Sunshine Fabrics would not sell to his other customers for a period of 2 years any T-shirt of the same design and description”.

Eventually the said design T-shirt (of Nike) became very popular in Bangladesh and, many retail shops show keen interest to buy them at higher price and as such, Sunshine Fabrics started selling them to different shops ignoring their contract with Nike (BD) Ltd.

In the above circumstances, Nike (BD) Ltd. served legal notice to Sunshine Fabrics asking to pay for damage and compensation on account of breach of contact. In reply to the legal notice, Sunshine Fabrics asserts that the contract which they signed with Nike (BD) Ltd. is, in fact, void, in as much as, the same is in restraint of trade.

Discussion: In his book Mercantile Law (2003) MC Kuchhal writes, “The Law of Contract is the foundation upon which the superstructure of modern business is built”. In business transactions often promises are made at one time and the performance follows later. In circumstances like this, if either of the parties was free to reverse its promise without incurring any accountability, there would be endless complications and it would be impossible to carry on trade and commerce. “Hence the law of contract was enacted which lays down the legal rules relating to promises: their formation, their performance, and their enforceability.” Explaining the object of the law of contract Sir William Anson writes, “The law of contract is intended to ensure that what a man has been led to expect shall come to pass; that what has been promised to him shall be performed.”

The law of contract in Bangladesh is governed by Contract Act, 1872. This law was passed by the British parliament for the people of British India as this region was a British colony then. The case presented here falls under the doctrine of Contract Act, 1872 and especially under the provisions regarding breach and remedies for breach of a contract.

When the rights and responsibilities arising out of a contract are extinguished, the contract is said to be dissolved or terminated. A contract may be dissolved in any of the following ways: 1.By Agreement: A contract can be terminated by an agreement between the same parties who entered into the contract with mutual agreement. 2.By Performance: As the parties into the contract complete performance of their shares of promises a contract in terminated. 3.By Frustration: A contract can be terminated by the impossibility in the fulfillment of the purpose of the parties in entering into a contract. 4.By Breach: When a contract is not honored by one or more of the parties to the contract by non-performance or interference with the other party's performance. 5.By Operation on Law: Discharge of a contract by operation of law may occur by merger, by insolvency or by alteration of the written document.

In the case in concern, Nike (BD) Ltd. enters into a contract with Sunshine Fabrics for supply of 50,000 pcs of T-shirt as per sample and design. One of the provision/ stipulation of the said contract was that-“the Sunshine Fabrics would not sell to his other customers for a period of 2 years any T-shirt of the same design and description”.

Eventually the said design T-shirt (of Nike) became very popular in Bangladesh and, many retail shops show keen interest to buy them at higher price and as such, Sunshine Fabrics started selling them to different shops ignoring their contract with Nike (BD) Ltd.

This is a clear case of breach of contract. A breach of contract is failure to perform as stated in the contract. When a contract is broken the party who suffers on account of it has one or...
tracking img