Assignment Business Law Rule Agreement

Running head: BUSINESS LAW
Business Law
Name of the Student
Name of the University
Author Note

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Question 1
Issue
The issue arising from the given situation is whether Flyways Airlines Ltd has any legal
position by virtue of the contract a situated with the Boeing Corporation Ltd (Boeing).
Rule
Any agreement having the status of enforceability in the eyes of the law and recognising
as well as controlling the rights of the parties involved depicts a contract. A contract needs to
have an agreement instituted by an offer being accepted along with consideration for each of
the parties as well as the intention of the parties to be bound by legal relation. An agreement
is said to be instituted when an offeror initiates with his willingness to be bound by legal
relations with the offeree in terms of certain conditions. Such an offer needs to be extended
with an acceptance by the other party with all the conditions contained in the same.
An agreement to be valid needs to be initiated with an offer which is valid as well as
acceptance of that offer in an absolute and unconditional manner. This can be illustrated with
the case of Smith v. Hughes (1871) LR 6 QB 597. Both the parties involved in a contract
needs to have a similar understanding of the terms of the contract. This can be supported with
the case of Household Fire and Carriage Accident Insurance Co Ltd v Grant (1879) 4 Ex D
216. However any contract which has been signed by the parties needs to have a binding
effect upon the parties and there is a presumption that the party’s had to read and understand
the documents before signing. This can be best explained with the case of L’Estange v
Graucob (1923) 2KB 394.
The offeree needs to accept the offer in an absolute manner and the acceptance needs to be
unconditional. There should not be any alterations made in the terms of the offer by the

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offeree while accepting an offer. In case the acceptance has been qualified with
supplementary alterations by the offeree being made to the actual offer then the same will not
be treated as an acceptance and it will be given the status of a counter offer.
Any alterations that an offeree might make while accepting a previously initiated offer at
the time of negotiating the main offer depicts a counter offer. The effect of a counter offer is
the nullification of the previous offer and the same being replaced by the counter offer. The
counter offer generally cancels the previous offer and replaces the same. This can be
supported with the case of Hyde v Wrench [1840] EWHC Ch J90.
The parties to a contract may insert an exclusion clause for the purpose of limiting their
liability towards certain aspect of the contract which has the effect of excluding their liability
legally. This can be best explained with the case of Chapelton v Barry Urban District
Council (1940) KB 532. The exclusion clause needs to be listed as a term in a contract that
has the effect of an agreement being created between the parties limiting or excluding the
liability pertaining to the party inserting the same in relation to certain contractual obligations
he has been conferred with by virtue of the contracts. However, for the purpose of validating
the exclusion clause it needs to be brought to the awareness of the other party prior to the
execution of the contract. This can be best explained with the case of Causer v Browne
(1952) VLR 1. In case the exclusion clause has not been expressly brought to the awareness
of the party against whom it needs to be enforced and eventually has caused detriment to that
person, cannot be given the status of validity and enforceability. This can be illustrated with
the principles established in the case of Thornton v Shoe Lane Parking Ltd (1971) 2 QB
163. All the terms to the contract needs to be incorporated prior to the institution of the
contract, no additional terms can be inserted in the contract afterwards. This can be best
explained with the case of Interphoto Picture Library v Stiletto Visual Programmes Ltd
(1988) 2 WLR 615.

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Any term of the contract, which on being contravened confers the other party with the
right to repudiate the contract and bring a claim for damages against the party in
contravention in relation to the losses incurred by the party owing to the breach of such a
term can be referred to as a condition of a contract. Again, any term arising out of the
contract, that does not give a right to repudiation to the other party on being contravened by
one of the parties to the contract needs to be referred to as a warranty. These terms does not
depict the subject matter of the contract and are consequential to the contract. The breach of
warranty confers the aggrieved party to the contract with the right to claim compensation but
does not have the right to claim repudiation of the contract.
While awarding damages to a party the court would consider the situation of the parties
that has existed prior to such a contravention of the terms contract and would compensate the
parties with an objective of restoring their previous position. Compensation can be awarded
both in case of breach of warranty as well as in case of breach of a condition as per the
principles established in the case of Tabcorp Holdings Ltd v Bowen Investments Pty Ltd
[2009] HCA 8.
Application
In the present situation, prior to the analysis of the position that Flyways has been holding
over Boeing, the existence of a valid contract between them needs to be assessed. This
requires the existence of a loafer and its valid acceptance between them. Both the parties in
this situation has instituted a valid contract with the incorporation of 678 terms in the same. It
can be contended that there is a presence of a valid agreement instituted by an offer and its
acceptance and all the terms of the contract has been duly agreed upon. This makes all the
687 terms being agreed upon by the parties and being binding upon them.