Business law Case Study Example | Topics and Well Written Essays - 3500 words - 1

Business law - Case Study Example The respondents was one of the growers who filed a representative suit claiming breach of clause 7.4 contract and sought damages arising out that breach. The Court of first instance heard the case in two separate hearings. The first one dealt particularly with the rule of construction as applied to the disputed clause but also extended in the second hearing. The Judge held that the clause meant offering to growers’ first priority in growing chicks in preference to third parties. The second part of hearing specifically dealt with breach and the implied term of the contract by interpreting the clause on reasonable and equitable grounds. The Judge held in favour of the growers’ that there was breach of the clause and that the growers’ had the capacity to do so, hence the appeal. The Court of appeal reversed that judgment stating that the word capacity related to the appellant’s business growth and not capacity to rear chicken. It gave wide discretion to the a ppellants to contract third parties. Other standard clauses of the contract touching the case at hand included but not limited to the general clause 2, giving an over view that the growers were to provide â€Å"sealable birds† from any farm location ready to be picked and processed by the appellants. It also defined the payment terms. Clause 5 dealt with appellants delivering chicks to growers’ in unspecified quantity but the growers’ had to be notified of that delivery upon picking. The appellants remained the owner of the birds. Clause 7 set out the fundamental obligations of the appellants including providing assistance for â€Å"extra shed capacity† to growers equitably. Clause 8 stated the obligations of the growers’ such as keeping the shed in minimum standard conditions of not less than â€Å"$40 per square meter of shed floor space† and allowing access to that shed by appellants. Clause 12 dealt with the manner of collection of birds from the firm by the appellants. Clause 14 was on payments and notifying the growers’ about it upon collection of birds. Clause 20 was on the five years duration of the contract including termination of the contract if the processing plant was closed. Clause 25 provided for substantial amendment of the contract in writing. and all the above accounts for the case at hand. Case law governing the rule of Construction (b) This is predominantly based on clause 7.4 which according to the Court of first instance gave preference to growers’ as the first people to be offered the opportunity of rearing more chicken unless they are unable to do so. In other words, the appellant were in breach of this fundamental condition by offering such opportunity to third parties at the detriment of growers’. However, the appellate Court differed from the above ratio decidendi stating that Jagot, J did not establish whether the growers’ had capacity to rear more chicks at the t ime, the appellants were allocating the chicks to third parties. Their Lordships made reference to the objective principle enunciated in the case of â€Å"Pacific Carriers Ltd v BNP Pariba†1 to the extent that Court must ascertain the intention of parties by subjecting the clause to the test of a reasonable man in ordinary and plain interpretation.2 That in doing so the Court should not rewrite the clause for that would be interfering with the freedom of contract3 hence causing injustice as upheld in â€Å"