Contractual Problems in Business

This assignment explores various aspects of contract law within a business context. It examines the essential elements of a contract, such as offer and acceptance, and differentiates between express and implied terms. The case study focuses on a buyer purchasing a chair based on the seller's assurances, leading to a discussion on collateral contracts, warranties, and the implications of exclusion clauses. The assignment analyzes relevant legal principles and case precedents to provide a comprehensive understanding of contractual issues in business.

Running head: BUSINESS LAW AND ETHICS
Contractual Problems
Name of the student:
Name of the university:
Author note

1BUSINESS LAW AND ETHICS
Answer to question 1
The present case is based on terms of the contract. Contracts an agreement that is
enforced by law. Therefore, it can be said that every contract is agreement, but not every
agreement is contract1. In every contractual agreement, there are certain terms that present to
determine the rights and obligation of the parties. There are certain essentials stated under the
contract law to determine the validity of contracts. The most important elements of the
contract are offer and acceptance. Offer consists of promises to do something or refrains to do
something and when someone agrees to do certain offer, it becomes acceptance. The rule had
been followed in the case of Carlill v Carbolic smoke ball co. An agreement to contract can
either be oral or written. It is a statutory provision of the contract law that every contractual
agreement contains express terms and implied terms. Express terms are those that articulated
prior to the contract and those that are not mentioned under the contract agreement, called as
implied terms.
However, in the present case, the terms are not form contract. There is a provision
under the law named puffery. It is used regarding the promotional statement. The present
terms is used to promote the characteristics of the chair and therefore, it is not a contractual
terms.
Answer to question 2
In the second question, it has been observed that Peter who wanted to buy a chair for
lowering his back pain went to a shop and Samantha told that she has a perfect chair for him.
Therefore, it can be said that the subject matter of the case is a chair that can be perfect for
Peter. Samantha had suggested for Office Pro 9X chair and believed on the fact Peter had
1 Corones, Stephen G. Competition law in Australia. Thomson Reuters Australia, Limited,
2014.

2BUSINESS LAW AND ETHICS
bought the same. Thus, it can be stated that the statements of Samantha regarded as the
collateral contract2.
Collateral contracts are oral in nature and the statements are based on the promises.
The principle of the same has been followed in the case of the Savage (JJ) & Sons Pty Ltd v
Blakney (1970) 119 CLR 435.
Therefore, it can be stated that the statements made by Samantha for the sale of the
chair is a part of the contract terms.
Answer to question 3
In this present case, classes of terms are involved. There are three classes of terms that
present under the each part of the contract. The terms are conditions, warranties and in
nominate terms3. It is clear from the definition that when the seller gives an assurance to the
buyer regarding the product and state that the product is genuine in nature and based on the
fact when the buyer buy the product, it forms warranty. In the present case, Samantha told
Peter that the chair Pro 9X will be sufficient for him and it will help to reduce the back pain.
Therefore, the terms of the statement contained in the case are warranty in nature. Based on
the statement of Samantha, Peter has bought the chair. It is not necessary that the terms
should have to be mentioned expressly under the contractual agreement. It can be implied in
nature.
Answer to question 4
2 Freedland, Mark, et al., eds. The contract of employment. Oxford University Press, 2016.
3 McKendrick, Ewan. Contract law: text, cases, and materials. Oxford University Press
(UK), 2014.

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The subject matter of the case is based on the terms of exclusion clause. The term
“exclusion clause” mean certain contractual terms that restrict the parties’ right regarding the
contract4. In the common law, the base of the exclusion clause forms a part of the Unfair
Contract Terms Act 1977. It is a rule under the contract Act that if there is a statement
mentioned under the contractual terms and both the parties have given their consent over the
same, the terms of the contract becomes applicable on them5. However, under the exclusion
clause it has been stated that if any of the party to a contract is unknown to the terms of the
contract, that terms will not be apply on the party. The same principle has been followed in
Parker v South Eastern Railway (1877) 2 CPD 416.
In this present case, it can be observed that there is a clause (clause 10) has been
mentioned in the document that excludes the company from any kind of breach regarding the
warranty6. It should be stated here that as Peter did not know about the fact, therefore, the
conditions of the terms will not applicable on him and he can sue the shop for the breach of
contract.
4 Ayres, Ian, and Alan Schwartz. "The no-reading problem in consumer contract law." Stan.
L. Rev. 66 (2014): 545.
5 Asker, John, and Heski Bar-Isaac. "Raising retailers' profits: on vertical practices and the
exclusion of rivals." The American Economic Review 104.2 (2014): 672-686
6 Knapp, Charles L., Nathan M. Crystal, and Harry G. Prince. Problems in Contract Law:
cases and materials. Wolters Kluwer Law & Business, 2016.

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References
Andrews, Neil. Contract law. Cambridge University Press, 2015.
Asker, John, and Heski Bar-Isaac. "Raising retailers' profits: on vertical practices and the
exclusion of rivals." The American Economic Review 104.2 (2014): 672-686.
Ayres, Ian, and Alan Schwartz. "The no-reading problem in consumer contract law." Stan. L.
Rev. 66 (2014): 545.
Carter, John W., David J. Harland, and Kevin E. Lindgren. Contract law in Australia.
MICHIE, 1996.
Corones, Stephen G. Competition law in Australia. Thomson Reuters Australia, Limited,
2014.
Freedland, Mark, et al., eds. The contract of employment. Oxford University Press, 2016.
Knapp, Charles L., Nathan M. Crystal, and Harry G. Prince. Problems in Contract Law:
cases and materials. Wolters Kluwer Law & Business, 2016.
McKendrick, Ewan. Contract law: text, cases, and materials. Oxford University Press (UK),
2014.