Contract and Tort Law

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2A) Fact and issues Entertainment Sdn Bhd rented the Very Lucky plaza hall for the pageant for RM500,000 and they also paid the deposit of RM100,000.The hall was old and dilapidated so Wan asked to touch up the places and it cost Very Lucky RM 50,000.However, a faulty wiring caused fire and burn down The Very Luck Hall. Entertainment is asking to refund the deposit but The Very Lucky Hall refused it and if fact they are asking to pay the balance of RM 400,000. Can Entertainment Sdn Bhd claim their deposit? Law Discharge Contract To Discharge Contract relates to the circumstances in which the contract isbrought toan end. Where a contract is discharged, each party is freed from their continuing obligations under the contract. A contract may be discharged in by Frustration, Specific performance, breach of contract or agreement. 1)Frustration In the law of contracts, the destruction of the value of the performance that has been bargained for by the promisor as a result of a supervening event. Frustration of purpose has the effect of discharging the promisor from his or her obligation to perform, in spite of the fact that performance by the promisee is possible, since the purpose for which the contract was entered into has been destroyed. For example, an individual reserves a hall for a wedding. In the event that the wedding is called off, the value of the agreement would be destroyed. Even though the promisee could still literally perform the obligation by reserving and providing the hall for the wedding, the purpose for which the contract was entered into was defeated. Apart from a nonrefundable deposit fee, the promisor is ordinarily discharged from any contractual duty to rent the hall.In order for frustration to be used as a defense for nonperformance, the value of the anticipated counter performance must have been substantially destroyed and the frustrating occurrence must have been beyond the contemplation of the parties at the time the agreement was made. Type of Frustration Non occurrence of the event Non-occurrence of a particular event: The doctrine of frustration also applies to cases concerning the cancellation of an expected event. It is possible that the performance of a contract remains entirely possible, but owing to the non-occurrence of an event contemplated by both parties as the reason for the contract, the value of the performance is destroyed Case is Krell v Henry [1903]   Paul Krell (plaintiff) owned a suite of rooms at 56A Pall Mall. Krell left the country for a period of time and left instructions with his solicitor to sublease his rooms however he saw fit. On June 17, 1902, C.S. Henry (defendant) noticed a sign advertising Krell’s rooms for rent during the upcoming coronation of the King of England on June 26 and 27. Henry requested to rent the rooms from Krell for these two days for the sum of seventy-five pounds. Henry sent a letter to Krell with a deposit of twenty-five pounds and a promise to pay the remaining fifty pounds on June 24.

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