Business Law Assignment

This Business Law Assignment covers topics such as exclusion clause, discharge of contract, misrepresentation, and implied terms. It includes relevant cases and their application to the given scenarios.

Business Law
Assignment
2018

1
QUESTION 1
I: ISSUE
The key issue raised in this case is whether Weitao is liable to pay the replacement fee to
Evelyn as per the terms of the contract signed by him?
R: RULE
An exclusion clause is referred to a term which is included by the parties to a contract in
order to avoid their liability which is raised in case of breach of the contractual terms. These
terms are used by parties to avoid paying compensation or damages to another party by
eliminating their liability. While including an exclusion clause, the parties have to comply
with the general rule of exclusion clause. The rule provides that the term must bring into the
notice of the party while forming the contract. In Chapelton v Barry UDC1 case, a receipt was
given to the claimant, and the exclusion clause was included in the receipt.
The claimant suffered an injury and filed a claim against the defendant; the defendant
wanted to rely on the exclusion clause to eliminate the liability. The court provided that the
receipt received by the party was not considered as a contract based on which the exclusion
clause is not valid2. Moreover, the court provided in Olley v Marlborough Court3 case that
the exclusion clause must bring into the attention of the party before the formation of the
contract or during its formation. There is an exception to this rule which provides that in
case the term is included in a written contract, then the exclusion clause is not required to
bring into the attention of another party as provided by the court in L’Estrange v Graucob4
case.
A: APPLICATION
While hiring the projector from Evelyn, Weitao signed a document in which the exclusion
clause was contained. As per the clause, Evelyn terminated her liability to pay for
1 (1940) 1 KB 532
2 Richard Stone, Q&A Contract Law (Routledge, 2013) 124.
3 (1949) 1 K.B. 532
4 (1934) 2 KB 394

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compensation in case the customers damage the product. Evelyn did not comply with the
general rule of including the exclusion clause since it was not brought into the attention of
Weitao (Chapelton v Barry UDC). However, a written contract has formed between the
parties based on which the general rule did not apply, and the exclusion clause is valid
(L’Estrange v Graucob).
C: CONCLUSION
To conclude, Weitao is liable to pay the replacement fee to Evelyn as per the terms of the
contract.

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QUESTION 2
I: ISSUE
The key issue raised is whether Warren has the right to discharge the contract?
R: RULE
A contract which is formed between parties can be discharged based on certain elements.
After discharging the contract, the parties are removed from their legal obligations which
rose under the contract. A contract can be discharged by breach of terms, frustration,
agreement, and performance. While discharging a contract based on performance, the
parties have the right to rescind their contract in case a contracting party declines the
performance of the contract. If the performance of a contract is declined by a party, then
another party has the right to rescind the contract. In the case of Planche v Colburn5, the
contract was rescinded based on the decline of performance and the court awarded the
compensation to the claimant. The claimant was hired by the defendant to write a book,
however, the defendant cancelled the book series and declined to pay the claimant for the
work performed by him6. The court provided that the contract is discharged based on the
decline of performance by the defendant and the claimant is liable for compensation.
A: APPLICATION
Evelyn entered into a contract with Warren in order to improve the layout of her store and
its décor. Warren told Evelyn that it would take two days to complete the whole work;
however, Evelyn keeps declining the performance whenever Warren wanted to complete
the job. Since Evelyn is not letting Warren gets the benefit of the contract by complying with
its terms, the contract can be discharged by him based on decline of performance by Evelyn
(Planche v Colburn). Warren can also claim compensation from Evelyn as well for not letting
him get the benefit of the contract.
C: CONCLUSION
5 (1831) EWHC KB J56
6 Charlie Webb, Reason and restitution: a theory of unjust enrichment (Oxford University
Press, 2016) 114.

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To conclude, Warren has the right to discharge the contract since Evelyn is declining the
performance.

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QUESTION 3
I: ISSUE
The key issue raised is whether Ambreena can hold Evelyn liable for misrepresentation even
though she did not specifically ask for the storage of the tablet?
R: RULE
A misrepresentation is referred to a false statement which is made by a party with an
objective to induce another party to form a contractual relationship with them. During the
negotiation stage of a contract, any false statement or representations made by a party in
order to constitute the contract are considered as misrepresentations which are made by
the party. In case a false statement is made by the party to form a contract, then such
contract will be considered as voidable. Since the contract becomes voidable, the innocent
party has the right to set aside the contractual obligations and held the breaching party
liable for violation of the contract as provided by the court in Esso Petroleum v Mardon7
case. A misrepresentation is separate from the personal opinion of the party since a party
cannot be held liable for providing a personal opinion which is false8. However, the court
provided in Smith v Land & House Property Corp9 case that if the person is in the position to
know the true facts, then the statements will not be considered as personal opinion. In this
case, the seller told the claimant that the tenant is ‘most desirable’ whereas he was on the
verge of bankruptcy. The court provided that the seller was in the position to know the true
facts, thus, it was considered as misrepresentation.
A: APPLICATION
During the negotiation stage of the contract, Evelyn told Ambreena that the tablet has
enough storage to install many applications. The statement was made by Evelyn to induce
Ambreena to sign a contract which is considered as misrepresentation (Esso Petroleum v
7 (1976) QB 801
8 Christian Twigg-Flesner, The Europeanisation of contract law: current controversies in law
(Routledge, 2013) 146.
9 (1884) 28 Ch D 7

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Mardon). Moreover, Evelyn is in the position to know the true facts since she is the owner of
the shop based on which she cannot provide that the statement was her personal opinion
(Smith v Land & House Property Corp). Therefore, Ambreena can hold Evelyn liable for
making misrepresentation to him.
C: CONCLUSION
To conclude, Ambreena can hold Evelyn liable for misrepresentation even though she did
not specifically ask for the storage of the tablet.

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QUESTION 4
I: ISSUE
The key issue raised is whether giving the charger with the laptop is an implied term of the
contract?
R: RULE
The terms of a contract are divided into two parts which include expressed and implied
terms. The expressed terms are included in the contract by the parties while forming the
contract. On the other hand, the implied terms are included in a contract by the court or the
statute. As per the provisions gave under the common law, the court has the right to include
the implied terms in a contract based on the facts, custom or law. While establishing the
implied terms based on customs, the court evaluates whether a particular term is prevalent
in trading practices. The court analyses similar contracts while determining whether a term
is implied in the contract. The court used this rule in Hutton v Warren10 case while providing
its judgement. In this case, a farmer was hired by the defendant for ensuring that its crops
would grow properly. The claimant gave a bill to the defendant for the work and the price
paid for the cost of purchasing seeds. The defendant declined to pay by providing that it is
not included in terms of the contract. The court provided that it is customary in farming
tenancies that the amount for seeds and work is given by the party, thus, the defendant is
liable to pay the money to the claimant11.
A: APPLICATION
While purchasing the laptop, Jake found out that Evelyn has not included the charger along
with the laptop. Evelyn wanted Jake to pay extra money for the charger. However, a charger
is included with the laptop which is considered as a custom. The customs of trade practices
are considered as implied terms based on which including the charger with the laptop is
customary for businesses, therefore, Jake can demand the charge from Evelyn without
paying any extra charges (Hutton v Warren).
10 (1836) EWHC Exch J61
11 Daniel Rahnavard, Course Notes: Contract Law (Routledge, 2013).

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C: CONCLUSION
To conclude, including the charger with the laptop is considered as an implied term of the
contract based on the customs of the trade, therefore, Evelyn has to give the charger to Jake
without imposing extra costs.