70.2K

Verified Solution

Link Copied!

Aris and Amy enter into a contract with Eddy trading as Simply Sheds to construct the shed for their new business. The contract details the build specification including the required size, position, services and security features. The terms of the contract required the shed to be completed by 1 April 2021 in order to start trading in time for the busy summer wedding period. The agreed price was 45,000. Aris and Amy have a large contract to provide flowers for Castle Hotel, a large local wedding venue during April and May. The contract includes a penalty clause payable if they are unable to supply the flower arrangements. 4 weeks into the contract, Aris and Amy were concerned at the lack of progress, when they approached for an update Eddy explained that he was experiencing financial difficulties and as a result had some supply and staffing issues. He was also being pressured by his bank (GB Bank PLC) in respect of an outstanding loan of 10,000. Aris and Amy made an interim payment of 20,000 to Eddy and promised an extra 5,000 if the work was completed on time as they were concerned about being able to complete the flower arrangements for the Castle Hotel contract if completion was delayed. Eddy subsequently met with the bank and agreed a revised repayment date in 2 months time and an agreement not to charge interest during that period. Eddy completed the shed by 1 April, Aris and Amy paid him 25,000 but not the additional 5,000. The 2 months payment extension has now expired and GB Bank PLC have also demanded re-payment of the 10,000 loan plus interest accrued during the additional 2 months. Advise Eddy as to his rights and liabilities as to: a) whether he has a right under the law of contract to receive the additional 5,000; and b) whether GB Bank PLC is entitled under the law of contract to claim the interest on the loan accrued during the 2 months repayment extension. Aris and Amy enter into a contract with Eddy trading as Simply Sheds to construct the shed for their new business. The contract details the build specification including the required size, position, services and security features. The terms of the contract required the shed to be completed by 1 April 2021 in order to start trading in time for the busy summer wedding period. The agreed price was 45,000. Aris and Amy have a large contract to provide flowers for Castle Hotel, a large local wedding venue during April and May. The contract includes a penalty clause payable if they are unable to supply the flower arrangements. 4 weeks into the contract, Aris and Amy were concerned at the lack of progress, when they approached for an update Eddy explained that he was experiencing financial difficulties and as a result had some supply and staffing issues. He was also being pressured by his bank (GB Bank PLC) in respect of an outstanding loan of 10,000. Aris and Amy made an interim payment of 20,000 to Eddy and promised an extra 5,000 if the work was completed on time as they were concerned about being able to complete the flower arrangements for the Castle Hotel contract if completion was delayed. Eddy subsequently met with the bank and agreed a revised repayment date in 2 months time and an agreement not to charge interest during that period. Eddy completed the shed by 1 April, Aris and Amy paid him 25,000 but not the additional 5,000. The 2 months payment extension has now expired and GB Bank PLC have also demanded re-payment of the 10,000 loan plus interest accrued during the additional 2 months. Advise Eddy as to his rights and liabilities as to: a) whether he has a right under the law of contract to receive the additional 5,000; and b) whether GB Bank PLC is entitled under the law of contract to claim the interest on the loan accrued during the 2 months repayment extension

Answer & Explanation Solved by verified expert

See Answer