Introduction to Business Contracts and the Law

This report discusses the validity of business contracts, breach of contract, and case studies related to contract law. It explains the legal aspects of offers, acceptance, and rejection of contracts. The report also presents case laws and their relevance to the discussed topics.

INTRODUCTION TO
BUSINESS CONTRACTS
AND THE LAW

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................2
MAIN BODY..................................................................................................................................2
QUESTION 1..................................................................................................................................2
Legal validity of the statement....................................................................................................2
QUESTION 2..................................................................................................................................4
Scenario A...................................................................................................................................4
Scenario B....................................................................................................................................5
Scenario C....................................................................................................................................5
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7
REFERENCE CASE LAWS...........................................................................................................8
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INTRODUCTION
Business contracts and Contract Law governs all the aspects that are associated with the
formulation, execution and fulfilment of contracts entered between two or more parties
(Akhoundi, 2021). In this report, validity of the statement regarding entitlement of a party to
claim for all losses in case of breach of contract will be evaluated. Also, different scenarios
presenting Adam’s problems will be solved and presented in this report.
MAIN BODY
QUESTION 1
Legal validity of the statement
In UK, Contract Law is followed and to constitute a valid contract it's should fulfil the
essential elements of the valid contract, should have contractual obligation and presence of the
consideration. The general rule of law states that both the parties to contract is bound by the
terms and conditions mentioned in the agreement and should perform their part of performance.
It is also stated that it is mandatory for the party to pay for the damages caused to the other party
due to the non-performance which resulted in the loss to the aggrieved party. There are laws
made to provide remedies to the aggrieved party (Smits, 2017).
When two parties enter the contract, they are entitled to perform their part of the terms of
the contract and non-compliance of the terms of the contract results in breach of contract by the
party who did not perform their part. It is said to be breach of contract when one party in the
agreement fails to perform their part of promise according to the terms and conditions of the
agreement. It is also considered a legal cause of actions and also civil wrong in which the terms
of the agreement are not followed or complied with the contract. Breach of contract involves the
defective performance when the party has partly performed their part but not the standard part,
when the party do not perform within the time period or according to the terms of the contract
(Courtney, 2019).
The legal issues regarding the breach of contract is that the plaintiff claiming for the
damages should establish that there was a contract existing between the plaintiff and the
defendant and the person against whom the damages is claimed has failed to perform the part of
the performance in accordance with the terms of the contract (Pargendler, 2018). The main
elements to claim for the breach: there should be existence of the contract, party seeking
recovery has done their part of performance (plaintiff), non-performance by the other party
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(defendant) and damages of breach. Claiming for damages is way to put the aggrieved party in
the same position as if the contract was not breached.
Anticipatory breach refers to the breach where one of the parties acknowledges that won't
be able to perform their part of performance but the party who has breached the contract is liable
to pay the compensation to the aggrieved party. There are basically five remedies available for
the breach of the contract that is restitution which restores the damaged party into the position if
there had been no breach. Where the monetary compensation is not adequate then the party has
to perform its part of performance according to the terms decided by both the parties in a
contract and rescission where the contract is terminated by the court.
Every party is bound by the terms and conditions of the contract and the aggrieved party is
liable to seek damages for the breach of the contract by the defendant. Breach of contract give
rise to the cause of action, where the aggrieved party has right to receive monetary compensation
for the non-performance of the contract or can terminate the contract (Righetti, 2018.). Nominal
damages are awarded where the aggrieved party has not suffered damages from the breach of
contract and substantial damages where the monetary compensation is awarded for the damages
from the breach of contract. To claim for the substantial damages, the party has to prove the loss
suffered due to the breach of contract and the amount of loss the party has suffered from the
breach.
In a given case Hadley v Baxendale (1854), it was held that the loss should be related to the
terms and conditions of the contract and the breach and all the losses should be in consideration
of the parties at the time of the existence of the contract and if the conditions are not fulfilled
then it will be too distant and the party will not be able to receive any damages for the loss
suffered due to the breach by the other party (Ford, 2018.). It is said that the reasons which falls
in the scope may be recovered. It is said that if the party who has breached the contract has made
any advance payment to the plaintiff will be set off from the claim of the damages. If the contract
clearly states in the amount of damages will be paid in relation to the breach of contract, the
parties are bound to pay the damages specified in the contract. To constitute a breach of contract
the judge need to examine that there exists contract between the parties and breach has occurred
and non-compliance of terms of the contract has been done and it is important for the plaintiff to
inform the defendant of the breach prior to filing the against the party and claiming damages
against the party (Davies, 2018). The aggrieved party is liable to the damages to the extent the
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loss suffered due to the breach by the defendant party. The defendant is liable to pay damages for
the loss and affected the image of the company.
QUESTION 2
Scenario A
Issue: Adam here intends to buy the puppies that have been advertised by Mara in the local
newspaper and hence makes an offer for buying the puppies.
Rules: As per the Contract Law, an advertisement is considered merely as an invitation to enter
intro contract and not an offer until it is unilateral in nature. When the advertisement is specific
i.e. definite, communicates to a specific group of people and shows the intent of entering into a
contract, then it is termed as unilateral offers. Case law of Partridge vs Crittenden (1968), can be
taken into consideration (Akhoundi, 2021). Defendant placed an advertisement for sale of
Bramblefinch cocks and hens to which the RSPCA brought prosecution that sale of wild birds
was an act of cruelty. However, it was held that advertisement was simply an invitation and not
an offer thus making defendant not guilty.
Application: Based on the act and case law, it can be argued that the advertisement placed by
Mara was simply an invitation and not an offer for the contract. As per contract law, there needs
to be offer, acceptance, consideration and mutual consent amongst the parties entering into
contracts. It can be clearly stated that advertisement was not unilateral in nature as it did not meet
all the three conditions necessary to make a contract unilateral in nature. Further, with relevance
to the case law as well, it can be identified that the mere advertisement of any particular product
does not convey the intention to offer that product (Draper and Newton, 2017). Hence the
intention of Adam to buy those puppies was an offer and not an acceptance. When Adam read
the advertisement and contacted Mara for puppies, it was an offer but due to non- availability of
puppies any more, the invitation presented by Mara had expired thus rendering the offer as
invalid. The case of Tom vs Chris discussed in class is also indicative of the fact that since the
advertisement presented by Chris met all the three criteria’s required for an offer to be declared
as a Unilateral offer. There was an offer which could be easily accepted and along with
consideration.
Conclusion: It can be concluded that Mara is not liable to Adam in any manner as there was no
such contract that was brought into existence amongst the two parties. Hence, it can be
concluded that the Adam simply made an offer which was rejected by Mara.
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Scenario B
Issue: Here issue is that Adam wrote a letter clearly stating his intention to buy Steph’s Ferrari
for £10,000 in case she did not revert to his letter till Saturday. This indicates that Adam
intended to buy the car but acceptance of Steph or her intention to sell is not clear.
Rules: As per The Contract Act, the clause of Offer and Acceptance exists which states that
Acceptance by Silence cannot be treated as a valid form of acceptance and hence the contract
would not be valid in such cases. The case law of Felthouse vs Bindley (1862), can also be
referred here (Kötz, 2017). In this case, Felthouse sent a letter to builder stating that he would
consider the horse as his own if he does not hear from him again at £30.15s. It was ruled that
Felthouse could not claim ownership due to lack of any acceptance given.
Application: In the present case, it can be identified that the legal aspects as well as the case laws
both indicate irrelevance of these types of contracts. Acceptance by silence is not treated as a
valid basis of contract (O'Sullivan, 2020). It was also identified from case argued in class of Tom
vs Chris that only in case of acceptance by postal letters, an acceptance is presumed to be valid
after posting a letter. Here, Adam’s condition that if Steph does not revert to his letter till
Saturday, he will buy Ferrari at £10,000 is in accordance with acceptance by silence clause.
Since there is no mutual consent and acceptance amongst both the parties, Steph is not bound
legally to sell her car to Adam as there was no contract in the first place.
Conclusion: On the basis of analysis done, it can be concluded that Adam cannot claim Steph’s
Ferrari and hence there does not exist any contract between the two. Since Acceptance by
Silence is not treated as a valid contract, the letter presented by Adam cannot be held enforceable
making the offer invalid.
Scenario C
Issue: The main issue here is that Adam made another offer of £250 to Eleanor who intended to
buy machine at £200 but Eleanor refused to buy at this price thus cancelling the contract. The
fact that whether Adam can now accept the initial offer made by Eleanor of £200 for the washing
machine needs to be evaluated.
Rules: As per the Rejection of an Offer clause, under The Contract Law of UK, it can be said
that an offer automatically gets rejected when a counter offer is made against that offer or the
terms of the offer are not accepted. In the class discussion, it was identified that in case of Tom
vs Chris as well, when Chris made an offer to buy the advertised product for £8000, he made a
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counter offer which rendered the initial offer made by them as invalid. Further the case law of
Wolf and Wolf vs Forfar Potato Co (1984), can be studied here (Knapp, Crystal and Prince,
2019). Here, Forfar offered to sell potatoes to Wolf and Wolf with certain instructions related to
size and dates before 30th November, 1977. Wolf and Wolf proposed to accept the offer but with
certain additional conditions. However, Forfar did not supply potatoes and was sued for
damages. But in the court it was held that since there was no valid acceptance the contract was
not brought into existence.
Application: Based on the relevant law and case law it can be argued that Adam made a counter
offer to Steph which indicates that initial offer was rejected and hence there was no contract.
Further, Adam by stating his intention to sell the machine at £250, made a new offer to Eleanor
which she again refused (Morgan, 2020). This again led to rejection of another contract that was
made by Adam. Lastly, the fact that now there exists no offer legally, Adam is not legally
entitled to accept the original offer that was made by Eleanor for £200. Hence no acceptance can
be given. However, there can be a new contract formed between the two parties if Eleanor
accepts the offer of Adam to buy machine for £200.
Conclusion: It can be concluded that there is no contract and hence no acceptance can be given
by Adam. On the other hand, Adam can offer to enter into a new contract for the sale of machine.
CONCLUSION
Based on the analysis done above, it can be concluded that any party cannot claim all the
damages in case of breach and is subjected to various terms and conditions. Only genuine losses
can be claimed. Further, different cases were resolved and relevant judgement was presented
using contract law of UK and case laws.
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REFERENCES
Books and Journal
Akhoundi, R., 2021. Vice of Agreement (Mismatch between Offer and Acceptance). Islamic
Law, Jurisprudence and Methodology, 6(4), pp.195-227.
Courtney, W., 2019. Good faith and termination: The English and Australian experience. Journal
of Commonwealth Law 1(1). pp.185-226.
Davies, P.S., 2018. Being specific about specific performance. Conveyancer and Property
Lawyer 2018(4). pp.324-338.
Draper, M.J. and Newton, P.M., 2017. A legal approach to tackling contract
cheating?. International Journal for Educational Integrity, 13(1), pp.1-16.
Ford, M., 2018. Employment tribunal fees and the rule of law: R (Unison) v Lord Chancellor in
the Supreme Court. Industrial Law Journal 47(1) pp.1-45.
Knapp, C.L., Crystal, N.M. and Prince, H.G., 2019. Problems in Contract Law: cases and
materials. Aspen Publishers.
Kötz, H., 2017. European contract law. Oxford University Press.
Morgan, J.E., 2020. Great debates in contract law. Red Globe Press.
O'Sullivan, J., 2020. O'Sullivan and Hilliard's the Law of Contract. Oxford University Press.
Pargendler, M., 2018. The role of the state in contract law: The common-civil law divide. Yale J.
Int'l L. 43 p.143.
Righetti, T., 2018. Contracting for Sustainable Surface Management. Ark. L. Rev. 71 p.367.
Smits, J.M. ed., 2017. Contract law: a comparative introduction. Edward Elgar Publishing.
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REFERENCE CASE LAWS
 Hadley v Baxendale (1854)
 Partridge vs Crittenden (1968)
 Felthouse vs Bindley (1862)
 Wolf and Wolf vs Forfar Potato Co (1984)
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