Business Law and Ethics: Breach of Contract and Bhopal Disaster

This study material covers the topics of breach of contract and the Bhopal gas disaster. It explains the essentials of a valid contract and the remedies available for breach of contract. It also provides an overview of the Bhopal gas tragedy, including its history, warning signs, and factors that led to the disaster.

Business Law and
Ethics

Table of Contents
INTRODUCTION ..........................................................................................................................3
PART 1............................................................................................................................................3
Breach of Contractual Relationships and Remedies ..................................................................3
PART 2............................................................................................................................................5
Bhopal Disaster...........................................................................................................................5
CONCLUSION .............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Business law is large concept that regulate the working & functioning of various different
businesses. Various types of laws are cover under it like economic law, securities law, contract
law, labour law, commercial law, company law, tax law, Industrial laws etc. The contract law
covers the contract which is type of agreement that are legally enforceable between two or more
parties to do something as it also designed in such a manner so that it can easily regulate the
obligations, rights, conducts, and relations of the parties. This respective legislation bound all the
parties to work by following their rules if they engage in valid enforceable contract (Siedel,
2016). Business ethics are related to rules as well as regulations that every company must follow
to run the business in effective and profitable manner. The deep analysis of appropriate practices
and policies are relates controversial subjects such as discrimination, corporate social
responsibility, fiduciary relationship, corporate governance and other also. These respective
ethics act as guiding principles that helps in increasing the productivity as well as the morale of
the workforce. The related assignment is divided into 2 parts, in which one part deals in breach
of contractual relationships and the other part include the tragedy related to Bhopal gas.
PART 1
Breach of Relationships that are based on contracts and also explain their Remedies
For valid contract constitution, there are few essentials to that are necessarily be complied
with. It include offer that was given by one party, and another must needs to accept it by giving
consideration in terms of cash, kind and negotiable instrument that leads to create legal relations
among parties. In order to bound the parties to this legislations, these essentials requirements
must be completed so that aggrieved party can easily claim remedies in this Act. The remedies in
this law includes damages, specific performance , injunction, of contract. (Beheshti, 2020).
1. As per this case, Raymond runs tax specialised a small consultancy firm in which
Raymond & Samantha entered into a contract in this Raymond are responsible to
draft business accounts for her and £800 will pay the amount by Samantha after
completion of work as a consideration. When Raymond completed his work,
Samantha told him that she could only afford £200. After wards the offer are
accepted by Raymond as full & final settlement. After when Samantha paintings
begin to sell at high prices, balance of £600 are wishes to claim by Raymonds.

As Raymond & Samantha has put to enter into an agreement,in which all the essentials to
made a valid contract has been fulfilled as it is offer and acceptance by the involving parties,
consideration of £800 and legal intention is also present. The legal obligation of Raymond was
fulfilled by him and when Samantha was asked to pay the consideration, she denies to pay
complete consideration and ready to pay £200 only. This was reluctantly accepted by Raymond
as full & final settlement but promissory estoppel will not constitute by it. In the case of D&C
Builders v. Rees, the court held that defendant could not rely on estoppel as there is no agreement
to accept less and the defendant has taken advantage of the the claimant's position and misleaded
its financial position (Nadler, 2020). In the respective case, Samantha priorily agreed to pay
whole consideration and later on refused to pay and mislead regarding her financial status, so
Raymond is entitled to remedy.
damages and specific performance are the remedies that are available to Raymond related
to contract. Damages are the legal remedy which is a type of award in which compensation is
made to innocent party. The main objective for this remedy is to put the aggrieved party in such
position to which they would have been if the contract was performed. Specific performance is
the example of other remedy that is equitable remedy available at the discretion of the court. This
is an order that requires the party to complete its contract based liabilities and obligation.
If three weeks earlier Samantha had paid £200 than it tends to constitute a counter offer
by her and choice are given to Raymond to accept it or reject it. Basically counter offer is an
additional offer that destructs offer which was original and does not constitute acceptance to the
original offer. In case of Hyde v. Wrench, the court held that if counter offer is made, it destroy
the offer which is original and it is no longer given a chance to offeree to accept it (Gentili,
2020). As per present scenario, this counter offer by Samantha would make the choice to the
Raymond whether to accept or reject the offer and at low consideration Raymond would not
ready to accept the offer.
In case when £400 are requested by Raymond from Samantha as full and final
settlement, the legal position could have been different. Firstly the main offer is made by
Raymond and secondly,£200 as counter offer is paid by Samantha as full settlement. If
Raymond had also made a counter offer to pay £400 as full and final settlement, Samantha had a
alternative to accept or reject the offer. If it is accepted by Samantha than contract is constitute
by it and on the other hand if offer is rejected by Samantha than remedy can be claim by

Raymond in the tribunal for the purpose of breach of agreement as Samantha had accepted the
original offer. Raymond would be entitled to remedy from the court.
As per this case, Raymond try to claim from Samantha the balance of £600 when the
advertisement is saw by him in daily local newspaper that in £20000 their painting had been
sold. As counter offer are accepted by Raymond as full and final settlement, there is no room to
claim the balance as the doctrine of promissory estoppel will apply. the court invoke the doctrine
in Central London property Trust v. High Tree House, Lord Denning held that if one party
promise to accept the smaller sum against larger amount discharge shall be binding
notwithstanding there was no consideration. Thus Samantha not be liable for £600 to Raymond
because the consideration related to £200 had been made by Samantha earlier.
PART 2
Bhopal Disaster
The Bhopal Disaster, also called the Bhopal gas tragedy as it was an accident of leakage
of gas on 2-3 December 1984 at Union Carbide India Limited (UCIL) pesticide plant situated in
Bhopal, Madhya Pradesh. methyl isocyanate (MIC) chemical is split out from factory usci
pesticides that results to turn Bhopal city into the gas chamber. Almost approx 30 tonnes MIC
gas was leaked that make impact on more than 600000 workforce and more than 15000
individuals were killed which created a panic in city thus around thousands of people attempted
to flee from the city of Bhopal.
History
several policies are initiated by indian government to motivate the foreign companies to
make investment in local based industries. To manufacture Sevin plan is built by Union Carbide
India Limited (UCIL). In their subsidiary company UCIL, governmanent has around 22 % stake.
. Initially, The plant was approved for the purpose of formation of pesticide only from MIC
based components that were imported from the parent company in small quantities. Therefore,
when from competitors pressure came it led organisation UCIL to implement backward
integration that are so hazardous as well as sophisticated process (Le Menestrel, 2020).
In 1984, due to decreased demand of pesticide company struggle the most and it is
for4ced by the local managers to close the plant because the earning capacity and profit is
declined. However no buyer was observe by the organisation so it planned to dismantle the key

production units for the shipment to other developing country. As it was also observe that firm
use safety equipments which are below standards and the local government has great awareness
regarding it but the organisation not to want to place burden on industry which is struggle as
they feared of economic loss and their negative impacts.
Warning bell before the disaster
in the year 1969, the factory of UCIL was producing the Sevin, a pesticide by using
Methyl isocyanate as its intermediate. The trade unions in the city of Bhopal complained of the
pollution which was done by the factory in the year 1976 (Ram Mohan, 2019). Just after few
years of this, one of the worker in the factory accidently inhaled the toxic phosgene gas which
resulted in its death just after couple of hours. Soon after this incident, the journalist of Bhopal
began its investigation and published its finding which stated that wake up the people of Bhopal,
you are in the edge of volcano. Another incident which alarmed this tragedy was that two years
before this disaster, around 45 workers were exposed to phosgene and admitted to the hospital
and between 1983- 84, there was leak of the gas which included phosgene, methyl isocyanate,
mono methylamine and carbon tetrachloride.
Bhopal gas tragedy
2 ,December ,1984 at 11 PM around, approx one million Bhopal' s population was
sleeping, the plant operator observe that there was existence of small leakage of gas and the
pressure tends to increase inside the storage tank. Also it was notice that the vent gas scrubber
which is a safety device designed in order to neutralise the toxic discharge from MIC system was
turned off three weeks earlier. The safety component which is approx 230 ton refrigeration unit
which is used to cool torage tank of MIC has drained its coolant for use in different other part of
the plant. Nextly three months ago the gas flare safety system that was out of action (Sharma
and Umekar, 2019).
At 1 a.m. on 3, December1984, the loud rumbling reverberated as a safety valve gave
way which send a plume of mic GAS in the air. Around few hours Bhopal roads was littered
with large number of human corpses. Around three thousand eight hundred people died
immediately that covers the public living in small areas of slums which was adjacent to the UCC
plant. Local hospitals were drastically filled with large number of injured people. The crisis
compounded by the lack of knowledge as to what exactly happened and what has was involved
and its effect.

Factors which led to this disaster
Due these disasters many factors make impacts that covers the following that as
describe as follows-
 In year 1969, the industry stored large MIC tankers and beyond the recommended level
it was filled that forced gin leakage. UCIL produced sevin, a pesticide with Methyl
isocyanate as intermidiaries. In 1976 in Bhopal complain is made by trade unions
regarding pollution which creates due to factory (Ram Mohan, 2019). After few years
one of the worker inhaled the gas toxic phosgene in factory in ew hours later that
resulted their death. After this journalist of Bhopal begins the process of investigation
and published the results that was founded by them as it reflects that all the audience of
Bhopal wake up, as they serve that you are exist in the4 edge of volcano. The another
incident that alarmed tragedy was that before 2 years this disasters, approx forty five
workers that were exposed due to phosgene and immediately admitted to nearby hospital
and between 1983 to 84, there was gas leakage that covers phosgene, mono
methylamine , carbon tetrachloride and methyl isocyanate.
 Bhopal gas tragedy
 In 1984,2, December, at 11 :00PM, approx one million Bhopal population was
sleeping, the operator of the plant noticed that there was small leak of the MIC gas and
the increased pressure inside the storage tank. It was found that the vent gas scrubber
which is a safety device designed in order to neutralise the toxic discharge from MIC
system was turned off three weeks earlier. Secondly, the safety component that is 230 ton
refrigeration unit to cool MIC storage tank has also drained of its coolant for the use in
other part of the plant. Thirdly, the gas flare safety system was also out of action three
months ago (Sharma and Umekar, 2019).
 Then at around 1 AM, on December 3, 1984, the loud rumbling reverberated as a
safety valve gave way which send a plume of mic GAS in the air. Within few hours, the
Bhopal roads was littered with huge number human corpas.
 The industry was poorly maintained as the equipments were of old standards and not
updated which was also insufficiently maintained.
 The safety system of the plant was also outdated which led to many accidents earlier also
in the past as there was reduction in the management of safety.

 from three months some safety measures was switched off in respect to save the money
that covers MIC tank refrigeration system that supports in saving the people from
disaster.
 on manual operations the industrial plant are dependent that made impossible to avoid the
gas leakage.
 The plant location was near to most densely populated area that include slum based areas
where slum people live and rested. The disaster majorly affects their life.
 dangerous pesticide manufacturing method is used by industry that is called as route
where similar raw materials were combined in different orders related to manufacture. In
this phosgene is first reacted with the naphthol in order to form the chlotoformate ester
which lastly reacted with the methyl amine. This combination leads to increase chances
of disaster that was not possible to controllable (Sharma, 2016).
Consequences of disaster
Soon after the incident, the UCC industry which is a parent company started to distance
itself with the Indian subsidiary, that is UCIL in order to evade the liability and transfer the
blame to the UCIL company. The operations of the plant were also discontinued.
Secondly, due to the gas leak, thousands of people and animals died and the devastating
effect of this disaster was carried over to the next generations. The people suffered major short
term and long term health problems. The short term health effects included vomiting, coughing,
feeling of suffocation and even severe eye irritation. The people also experienced breathlessness
and stomach pains. The major causes of death involves chocking, pulmonary oedema and even
reflexogenic circulatory collapse. The long term health effects included that people sffered
permanent injuries and reported symptoms included respiratory difficulties, eye problems,
cardiac failure, birth defects and many other disorders. However the Indian government denied
that the permanent injuries were the effect of the MIC gas leak (Thompson, 2017).
Thirdly, the environment was also severely harmed and the corporation refused to take
responsibility of restoring the healthy environment. The company used to dumped huge amount
of toxic outside the plant site and these wastes slowly degrade and pollute the groundwater and
soil. The Greenpeace in 1999 collected the water and soil samples from the plant site and found
that these are toxic for the humans.
Aftermath of gas leakage

the government enacted the Bhopal Gas leak Disaster (Processing of Claims) Act, 1985
on 29th March 1985 which gave right to the central government to act and represent on behalf of
the persons who are entitled to make the claims in relation to the gas leak in Bhopal. This
authority was given to the central government as 'parens patriae'. How2ever this action was
criticised as it evade the responsibility to initiate the proceedings against the state by the victims
as they were stopped to take initiative.
The central government filed a complaint in the Southern District Court of New York,
USA, and argues that the Indian courts could not deal with the matter effectively and it must be
dealt in the US court (Roessing and El-Jourbagy, 2018). On the other side company forced to
deal the matter in the Indian court and in 1986, September, the Union of India filed the complaint
in the Bhopal district court to seek interim compensation of 3.5 billion rupees. Then in an appeal,
the MP High court reduced the amount to 2.5 billion. Afterwards, UCC filed an appeal in the
Supreme court of India and the court ordered to pay 470 million dollars which is approx 750
Crore rupees in full settlement of the claims, liabilities and rights which arose out of the Bhopal
disaster. Moreover all civil proceedings were then concluded and the criminal proceedings were
quashed subsequently.
Moreover the people criticised the judgement and and quashing of the criminal
proceedings. Then in the year 1989, the Supreme court of India clubbed many petitions and then
revived the criminal proceedings and held that the in case of any shortage in the amount of
compensation, the state would be obliged to bridge the gap. Then in 1990, the central
government in its five year plan sanctioned the amount of 258 crore rupees as funds for the
medical, social, economic and environment rehabilitation of the victims.
Additionally, the former employees of the UCIL including chairman were convicted for
death by negligence and were sentenced to 2 years of imprisonment and a fine of $2000.
Development of laws
After the Bhopal gas tragedy, the government brought many legislations and made
developments in the law. Some of which are discussed below-
The principle of absolute liability- In this case, the Supreme court held that any enterprise
which is engaged in the harmful or dangerous activity shall have the absolute and non delegable
duty to ensure that there is no one who is harmed and in case nay person is harmed, it shall

compensate (Nersessian, 2018). The court did not accept any exception to it as it has in case of
strict liability which was adopted by the court in MC Mehta v. Union of India.
The Environment protection Act, 1986- this legislation was designed to authorise the
central government to take all measures for the purpose of improving and protecting the
environment and prevent, control and abate the pollution in the environment. Moreover the
government has power to issue order to any industry, process or operation to stop or regulate its
supply of water, electricity or other service.
Other legislations include Factories Act, hazardous wastes (Manament, Handling and
Transboundary movement) Rules, Chemical Accidents (Emergency planning, preparedness and
Response) Rules, Public Liability Insurance Act and many other.
Ethical negligence
From the side of UCC, it found from its internal report on West Virgin plant in USA that
there were number of defects and malfunctions. It was also warned that a runaway reaction can
occur in the storage tank of MIC unit. This report was never given or forwarded to the plant of
Bhopal but the main design was same. Moreover the UCC company argues that it has sufficient
safety system in the plant and were operative to prevent intrusion of the water. This was dictated
on the website of tragedy and claims maintained by UCC as a incident which is a result of the
sabotage. The company underinvested in the safety which resulted in the dangerous working
environment for the workers (Dove and Bryant, 2019).
Ethical issues
There were lack of training to domestic country supervisor and they must be trained as
per American value system. The respective problems was highlighted by tribunal of Us. this
tragedy is used by government as political pawn where the state and the central government have
unstable response to it and it reflects unstable response was blamed with regards to Union
Carbide. However the organisation has initiate various programs related to out reach that were
not completed. These programs must be concurrent from the start of the project.
Other ethical issue include that the supervisor were not ready to take responsibility rather
they should have multi diversionary authority to suspend the activity when needed and impose
penalty hen required. The supervisors were also not diversed training in order to invoke personal
responsibility on them.

CONCLUSION
After deep study it is conclude that ethics as well as business law plays a significant role
in providing guidance and directions at the time of working & functioning of the business.
Obligations which are contractual are bound involving parties so that they fulfil their liabilities
on time in effective and appropriate manner. And should not involve any breach of agreement.
The respective law gives remedy to that party that were aggrieved in the condition where
contract was breach. How ever the tragedy of Bhopal Gas affects the world negatively. The
citizens of all the developed nations also become more aware regarding the safety precautions so
that these kind of tragedies can easily be eliminate. The tragedy reflects many health related
issues to the public and death of thousands of people. The lack of knowledge relates to safety
measures and aspects like professional ethics, responsibility, risk assessment etc for safety that
must be looked into by the management in respect to evade the liability related to disaster. Thus
from this incident,in law new development was given that resulted to absolute liability principles
and protect law related to environment.

REFERENCES
Books and Journals
Beheshti, R., 2020. The circular economy and the implied terms of contract in English sales
law. Journal of Property, Planning and Environmental Law.
Dove, L.R. and Bryant, N.P., 2019. Welcome, Y'all! Introducing Legal Environment and
Business Ethics Courses with Paula Deen. Journal of Legal Studies Education, 36(2),
pp.189-211.
Gentili, A., 2020. Fundamental Rights as a Part of Contract Law. European Business Law
Review, 31(3).
Le Menestrel, M., 2020. Corporate Social Responsibility: The Bhopal Gas Tragedy (Video, Case
Study & Discussion) Monday 15th of April, 2013–Marc Le Menestrel.
Nadler, J., 2020. A theory of mistaken assumptions in contract law. University of Toronto Law
Journal, p.e20190136.
Nersessian, D., 2018. The law and ethics of big data analytics: A new role for international
human rights in the search for global standards. Business Horizons, 61(6), pp.845-854.
Ram Mohan, M.P., 2019. Criminal negligence and director's liability under Indian Penal Code:
the case of Bhopal gas tragedy.
Roessing, M. and El-Jourbagy, J., 2018. Toward a More Perfect Pedagogy: Developing
Constitution Week Activities to Support a Business Law and Ethics
Curriculum. Journal of Legal Studies Education, 35(2), pp.255-275.
Sharma, D., 2016. A tale of two tragedies: Bhopal gas leak in India and BP oil spill in
US. Indian Institute of Management Ahmedabad.
Sharma, M. and Umekar, S., 2019. Socio-Economic assessment of Bhopal gas victims. ZENITH
International Journal of Multidisciplinary Research, 9(3), pp.1-12.
Siedel, G.J., 2016. The three pillar model for business decisions: strategy, law and ethics. Van
Rye Publishing, LLC.
Thompson, D.B., 2017. Teaching the Business Law and Ethics of Arbitration After
Concepcion. Journal of Legal Studies Education, 34(1), pp.63-88.