FACTS: Hogtown Hotels Inc (HHI) is about to open a new hotel in Toronto. HHI pla
ID: 421666 • Letter: F
Question
FACTS:
Hogtown Hotels Inc (HHI) is about to open a new hotel in Toronto. HHI plans to open on June 1, 2018. HHI has a contract with Evyl Empire Ltd (EEL) for the purchase and sale of beds and linens for the new hotel. Pursuant to this contract, EEL is supposed to deliver the beds and linens on May 23. It is important that HHI receive the beds and linens on time in order to ensure that the hotel is ready to open its doors on June 1.
On May 3, EEL contacted HHI to advise HHI that it had oversold its inventory of beds and linens. EEL told HHI that it would not have any beds or linens available for delivery until June 8. Alternatively, the representative of EEL explained that it could make beds and linens available IF HHI was willing to pay a higher price. If HHI agreed to pay the higher price (“Price 2”), then EEL said that it would be able to deliver the beds and linens on time. Because HHI plans to open on June 1 and cannot afford to wait for new beds and linens, HHI promises to pay Price 2, the higher price.
EEL delivered the new beds and linens on May 23. HHI signed for the beds and linens. However, when the bill came, HHI refused to pay the increased price. Instead, it submitted the original price it had agreed to in its contract with EEL. EEL was furious and it has demanded that HHI honour its promise to pay Price 2. EEL has threatened to sue HHI if it does not keep that promise.
HHI wonders if it is legally obligated to pay Price 2. It has asked you for legal advice about what legal obligations, if any, it has under the circumstances. Advise HHI.
Required:
What are is a legal issue or question that has raised from the facts above
***(One thing that I have personally discovered is that there wasn’t a new contract between them, so by law, they aren’t held responsible for the new price and all I think)***
Explanation / Answer
The question that rose from the facts given is that what legal obligations each party has if both parties mutually agree to change the terms of the contract for required contract performance.
I would advise HHI to pay the increased price because HHI is obliged to pay the price 2 as they have agreed EEL regarding the same based on which EEL performed its obligations. Here the first contract made between HHI and EEL has undergone alternation when both of them agreed to modify the terms related to price of the contract. The old contract has been discharged by mutual consent of the parties and a new contract has been formed when HHI agreed to pay the higher price. As EEL has fulfilled their duties as per the new contract by delivering the bed and linen on time, HHI is also legally obliged to fulfill their duties by paying the price 2. EEL has acted relying on the promise made by HHI and if HHI denies paying the price 2, the court would rule against HHI and they will have to pay the damages.
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