Business Law and Ethics: Breach of Contract and Remedies

This report discusses the breach of contract in business law and the remedies available to the aggrieved party. It also explores the application of the doctrine of promissory estoppel in a case scenario.

BUSINESS LAW AND
ETHICS

Table of Contents
INTRODUCTION ..........................................................................................................................3
MAIN BODY...................................................................................................................................3
CONCLUSION ...............................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Businesses are mainly engaged in the commercial activity which helps in uplifting the
economy. These are governed by the business law which includes vast field which involves
company Act, contract Act, employment law, data protection Act and many other. These play an
important role in smooth functioning of the organisation as it involves laws and regulation which
are to be complied with by the owner or the employer in order to prevent any legal
consequences. These laws states the rights and duties of the employee and employer so that they
are protected from the exploitation (Haidt and Trevino, 2017). Contract law deals with the
relation, conduct, rights and obligations of the parties who have entered into a valid contract with
each other. To constitute a legal binding contract the necessary requirements is firstly an offer
then an acceptance, a consideration and an intention to create legal relationship. This report shall
cover the breach of contractual relationship through a case scenario.
MAIN BODY
The contract law is a branch of business law which deals with the business transactions
involved through valid contracts. The blueprint of a valid contract includes an offer by one party
then the acceptance by the other party, consideration is involved between the parties and an
intention to create legal relations. The fourth requirement was initially not a part of legal valid
contract but it has been developed through the common law in the case of Balfour v. Balfour,
where the court was of the opinion that it is very important to have an intention to create legal
relations between the parties otherwise the contract shall be a domestic contract between the
parties which have no relevance as of the commercial contract so this essential requirement is the
most necessary one which party must have in order to create a valid contract. The court will
consider the facts and circumstances of the case in order to see whether there was an intention to
create legal relationship or not (Greenwood and McGill, 2017).
In this case, Raymond works on a part-time basis in a accountancy firm which specialises
in taxation and on the other side he has opened a sole proprietorship firm where he provides legal
advice based on tax. One day Raymond and Samantha enter into a contract that Raymond will
prepare some draft business accounts for Samantha for the past three years and in return of that
she will pay €800 consideration. When the contractual obligation were fulfilled, Samantha

offered to pay only €200 in place of €800 and Raymond reluctantly accepted it. One day when
Samantha‘s painting was sold for €20,000 Raymond wishes to claim the balance of €600.
In this case study, Samantha and Raymond entered into a valid contract which had an
offer by Raymond, the acceptance by the Samantha and a consideration of €800. The intention to
create the legal relationship is also present in this contract so it is a valid contract between the
parties. Raymond has been subject to breach of contract by Samantha as she had not paid the
fixed consideration which is of the amount of €800 rather she paid only €200 so Raymond is
entitled to claim the remedies which this law offers.
The contract law offers various remedies to the aggrieved party which includes damages,
specific performance of contract, repudiation, injunction order and many other. In this case
Raymond can claim damages and specific performance of the contract. Damages are the award
of money which is given to the aggrieved party in order to bring the party to the position which
could have been if the contract was performed. In order to claim damages, court will look into
the remoteness of the damages caused to the party, the duty of the claimant to reduce the loss and
the loss caused to the claimant. Specific performance of contract is awarded to the aggrieved
party at the discretion of the court if it thinks that it is necessary for the party to perform the
obligations of the contract (Park, 2020). In case, court is of the view that damages can
compensate for the loss to the party then it shall not order to specific performance of the contract.
In case Samantha had offered to pay €200 before the obligations of the contract were
fulfilled the situation would have been different. In case Samantha had offered for the payment
of €200, it would be a counter offer rather than the acceptance to the original offer which was
made by Raymond. Counter offers are such offers which destroys the original offer and leaves no
room for the party to accept it further. The case of Hyde v.Wrench the court was of the view that
counter offers destroy the original offer and the promisee cannot be allowed to accept the
original offer in case it has accepted the counter offer (Miller, 2016).
So here in this case if Samantha had offered to pay €200 three weeks earlier, then it
would be at the option of Raymond to accept it or reject it. For instance if he accepts the offer, it
would constitute a valid contract with an offer of €200 and the acceptance by Raymond for the
consideration of €200 only and parties shall have the legal intention to create legal relationships.
But if he rejects the offer, there would not be any contract between the parties and no party shall
be at loss as there is no performance of the contract obligation.

In case Raymond request the sum of €400 as full and final settlement, then the situation
would have been different as there was new offer by Raymond to which Samantha must accept it
or reject it and in case Samantha accepts it, it would be fulfilment of the contractual obligation
and no party shall be liable for the breach of contract. But in case, she rejects the offer then this
will not constitute the valid contract and the scenario shall be different. In this case, Samantha
had paid to Raymond only €200 and Raymond can claim the remaining balance and plead that
the doctrine of promissory estoppel shall not be applied as Samantha had mislead her financial
position to Raymond and he is entitled to the remaining balance of €600. In the case of D & C
Builders v. Rees, the court held that if the party takes advantage of the position of the other party
and mislead the financial position of itself then the doctrine of promissory estoppel shall not be
applied and the party have the right to claim the remaining balance (Gaitán, Herrera-Echeverri
and Pablo, 2018). So here in this case Raymond can successfully claim his remaining balance of
€600 which was not paid by Samantha at the time when she misleaded it her financial position.
In this case study, from the point of view of Samantha, she has already offered Raymond
to pay €200 as full and final settlement, so Raymond cannot claim the remaining balance of €600
as the doctrine of promissory estoppel shall apply and Raymond cannot bound Samantha to pay
the remaining balance of €600. This doctrine was developed by Denning J in the case of Central
London Trust Ltd v. High Trees Ltd where he was of the opinion that if a party accepts the
smaller amount in place of larger amount then the doctrine of promissory estoppel shall apply
where the party cannot go back in the past and claim the remaining balance (Macaulay, 2020).
So in this case Samantha is not liable to pay the remaining balance as he had accepted her
counter offer which includes €200 of consideration and the contractual obligation by both the
parties have been fulfilled.

CONCLUSION
It is concluded from this report that, business law is that branch of law which regulate the
working of the businesses. The contract law is the most important legislation which regulate the
rights and liabilities of the parties together with their conduct and relations. From this case
scenario, it can be said that the valid contract requires the essential requirement which includes
an offer, acceptance, consideration and the intention to create legal obligations. In this case study
as Raymond has accepted the counter offer of Samantha as full and final settlement so he cannot
the claim the remaining balance as their has been doctrine of promissory estoppel applied. From
the point of view of Raymond, this doctrine cannot be applied as Samantha has misleaded her
financial position in order to pay less consideration.

REFERENCES
Books and Journals
Haidt, J. and Trevino, L., 2017. Make business ethics a cumulative science. Nature Human
Behaviour, 1(2), pp.1-2.
Greenwood, K. and McGill, D., 2017. Law and Ethics for Today’s Photocommunication.
In Photocommunication Across Media (pp. 149-171). Focal Press.
Park, S., 2020. Ethics in Business (Vol. 2). Seohee Academy.
Miller, R.L., 2016. Business Law Today, Comprehensive. Cengage learning.
Gaitán, S., Herrera-Echeverri, H. and Pablo, E., 2018. How corporate governance affects
productivity in civil-law business environments: Evidence from Latin America. Global
Finance Journal, 37, pp.173-185.
Macaulay, S., 2020. The Impact of Contract Law on the Economy: Less Than Meets the Eye?.
In Stewart Macaulay: Selected Works (pp. 297-309). Springer, Cham.