In January 2011, Ming Ltd (“Ming”) and Jools Ltd (“ Jools”) execute a contract in the form of a deed under seal that is attested by a witness, in which Ming appoints Jools as its exclusive agent for the sale of mobile phones, manufactured by Ming, to customers in the Sydney area, New South Wales. The term of the appointment is for a period of three years and Clause 3 gives Jools the right to extend the term for a further three year period, provided it has performed its obligations under the original contract, and serves a notice on Ming requiring the extension before the expiry of the original term.
The contract also provides that Ming will pay Jools each month, a commission of 60 percent of the profit on sales. However, in August 2013, Ming advises Jools that due to growing competition from other mobile phone brands, from now on it will only pay Jools a reduced commission of 40 percent of the profit on sales each month and that if Jools fails to agree to this, Ming threatens that it will terminate their contract knowing that if Jools fails to agree, Jools will go out of business. Jools advises
Ming that it objects, but faced with no alternative accepts the reduced payments from August, 2013. In November 2013, in accordance with Clause 3, Jools serves a notice on Ming requiring the extension for a further three year period. Jools also demands that Ming pay Jools the arrears in commission, that is the difference between the reduced commission that Ming has been paying since August 2013, and the 60 percent commission stipulated in the contract. In December 2013, Ming advises Jools that it is terminating their contract immediately, as it has found a much cheaper agent to service the Sydney area.
Advise Jools of its legal rights and remedies, if any. In your answer discuss any legal points that Ming may argue. You may assume that Jools has satisfactorily performed all of its obligations under the original contract.
Chapter 21 - Making the Contact: Offer and Acceptance
(Sweeney, O'Reilly & Coleman, Law in Commerce, 5th edition, 2013, Chapter 4)
Chapter 22 - Making the Contact: Intention and Consideration
(Sweeney, O'Reilly & Coleman, Law in Commerce, 5th edition, 2013, Chapter 5)
Chapter 24 - Contracts: Issues Affecting Consent and Agreement
(Pentony, Graw, Parker & Whitford, Understanding Business Law, 6th edition, 2013, Chapter 6)
Chapter 25 - Termination of Contracts and Remedies for Breach
((Pentony, Graw, Parker & Whitford, Understanding Business Law, 6th edition, 2013, Chapter 7,
including insert from Sweeney, O'Reilly & Coleman, Law in Commerce, 5th edition)