The first issue here is to see whether there is a binding contract between the catering company Volvent Ltd. and the University for the additional amount?

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The first issue here is to see whether there is a binding contract between the catering company Volvent Ltd. and the University for the additional amount? Initially the University contracted with Volvent Ltd to cater for one thousand people but three days before the banquet, they were asked to cater for an additional two hundred people. Volvent Ltd agreed to cater for extra only if the University would pay 40 % more than original price. The university accepted the revised offer.

Volvent Ltd. clearly stated their terms with which they were prepared to do business with the University by revised offer. The university communicated their unconditional total acceptance, fulfilling an essential requirement for a legally binding contract.

There is not argument regarding any loopholes on the basis of offer and acceptance, because both fundamental elements exist here in their entirety. Third and the most important element for a contract to be enforceable is consideration. Consideration is the bargained for exchange. It is the legal benefit received by one person and the legal detriment imposed on the other person. Usually consideration takes the form of money, property, or service. An agreement without consideration is not a contract. In this case the Volevont has executed their consideration by complying with their side of bargain (catered for extra 200 people). On the other hand the University has not paid for the extra work so their consideration is still executory.

The account of Blackburn judge in Smith v. Hughes (1871) was:1

'If whatever a man's real intention may be' he so conducts himself that a reasonable man would believe that he was assenting to the terms proposed by the other party' and that other party upon that belief enters into the contract with him, the man thus conducting himself would be equally bound as if he had intended to agree to the other party's terms.'2

By applying above mentioned account to the present case we can say that Volvent relied on the University's promise and rendered their services according to the mutually accepted terms. With this approach the court will see no problem in deciding that the agreement between both parties has been reached.

The university can not raise the defence under the original contract because the both parties provided new consideration to abandon their original agreement. The same rule was adopted by the Supreme Court of New Hampshire in Watkin &son Inc v. Carrig (1941)3. The parties entered into a contract under which the claimant agreed to excavate a cellar for the defendant for a fixed price. Shortly after commencing the work the claimant discovered the presence of solid rock in the area which he had agreed to excavate. Discussions took place between the parties and the defendant agreed to pay a price which was approximately nine times the amount of the original contract price. The claimant did the work and then sued to recover the promised sum. The defendant tried to argue the case on the basis of the original agreement. The argument was rejected and the trial judge found that the original contract between the parties had been superseded by a new agreement which was enforceable. It has always been accepted that if a promise has done more than he was contractually obliged to do, then the extra performance is consideration to support the promisor's promise. In North Ocean Shipping Co. Ltd v. Hyhundai Construction Co. Ltd (1979)4 a shipbuilding company agreed to build a tanker for the owners, and opened a letter of credit to provide security for repayment of the instalments paid by the owners in the event of the shipbuilding company's default. The owners promised to pay an additional 10 per cent in the instalments when the US dollar was devalued, and asked the company to make a corresponding increase in the letter of credit which the company did. Held although with come hesitation in agreeing to increase the letter of credit the company had undertaken an additional contractual obligation which rendered them liable to an increased detriment , and that this constituted consideration for the promise by the owners to increase the instalment payments.
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After exploring the facts in above mentioned cases we can conclude that modified contract supported by new consideration between Volvent Ltd and the university has superseded their initial contract. In the words of one law professor5: "where a contractual duty already exists, it may be possible...to vary the original agreement without necessarily establishing a whole new contract, with fresh consideration on both sides." It means that the University under the new contract is liable to pay for the extra 200 people otherwise they can be held for the breach of contract. Volvent may take legal action against the ...

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