Business Law: Contractual Obligations and Liability

This article discusses legal issues related to business law, including contractual obligations, liability, and exemption clauses. It provides answers to specific case scenarios and cites relevant case law. The cases cover topics such as restrained trade, police protection, promissory estoppel, unilateral contracts, exemption clauses, and the Goods Act 1958 (Vic).

Running head: BUSINESS LAW
Question & Answer
Name of the Student
Name of the University
Author Note

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Table of Contents
Answer to problem 1.......................................................................................................................3
Issue:............................................................................................................................................3
Rules:...........................................................................................................................................3
Application:.................................................................................................................................3
Conclusion:..................................................................................................................................4
Answer to problem 2.......................................................................................................................4
Issue:............................................................................................................................................4
Rules:...........................................................................................................................................4
Application:.................................................................................................................................4
Conclusion:..................................................................................................................................5
Answer to problem 3.......................................................................................................................5
Issue:............................................................................................................................................5
Rules:...........................................................................................................................................5
Application:.................................................................................................................................6
Conclusion:..................................................................................................................................6
Answer to problem 4.......................................................................................................................6
Issue:............................................................................................................................................6
Rules:...........................................................................................................................................6
Application:.................................................................................................................................7

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Conclusion:..................................................................................................................................7
Answer to problem 5.......................................................................................................................7
Issue:............................................................................................................................................7
Rules:...........................................................................................................................................7
Application:.................................................................................................................................8
Conclusion:..................................................................................................................................8
Answer to problem 6.......................................................................................................................8
Issue:............................................................................................................................................8
Rules:...........................................................................................................................................8
Application:.....................................................................................................................................9
Conclusion:..................................................................................................................................9
Reference:......................................................................................................................................10

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Topic 3
Answer to problem 1
Issue:
The main issue in this case to consider whether Charlie can operate the flower shop
within the territorial area of Ali’s shop or not.
Rules:
This case specifically attracts the provision of restrained to trade. This provision of law
deals with the enforceable character of the contractual liabilities and evolved with the restrictions
regarding the freedom of operates a business. The principle of the restraint to trade has been
established in the case of Mitchel v Reynolds (1711) that states, it is the rights of a person to
operate his business from any place he desired to do so. However, if the law restrains the person,
he could not operate his business and he will be restrained to apply his free discretion to this
effect. In Balfour v Balfour, it has been mentioned that legal contract could not be done between
the relatives if they are not intended to bind by the law. However, in case they wanted to be
bound, contractual conditions will be imposed on them (Errington v Errington Woods [1952] 1
KB 290).
Application:
In this case, it has been observed that a contract has been made in between Charlie and
Ali that Charlie will sell his old shop to Ali and after Ali possessed over the shop, Charlie will
not open any similar business within two kilometers of the shop. The contract has been signed in
between both the parties and therefore, both the parties become legally bound by the same.

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Therefore, in this case Charlie could not operate his business within the speculated space and he
is legally restrained to do it.
Conclusion:
Therefore, it can be stated that Charlie cannot operate his business within the one
kilometer of the shop of Ali.
Topic 3
Answer to problem 2
Issue:
The main issue of the case is to determine whether Nick is liable to pay the extra money
to Police for giving him protection or not.
Rules:
There are certain elements of the contract law that must be followed up while making or
entering into the contract. There should be a valid offer and acceptance to that offer. Further, the
intention of the parties regarding the contract should be legal in nature and the parties should
have good faith regarding the same. In case of non-maintenance of any rule, there will be no
contract. It is the duty of the police officers to protect the citizen and maintain security and peace
in the society. They are obliged under the law to do the same. They could not demand money for
the same. In any adverse case, it will be considered as taking bribe. In case of Collins v Godefrey

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(1831) 1 B & Ad 950 it has been observed that the original duty of the police is to secure the
individual and any consideration regarding the same will not be treated as valid.
Application:
In this case, it has been that Nick was apprehended that mishap can be possible in the
party offered by him and therefore, he was asking for the police help and it has been stated by the
police that in case of extra help, he is required to pay extra money for the same. This has made
the duty of the police opaque and it can be stated that the police officer could not demand for
extra money. Therefore, legal intention of the parties has not been followed.
Conclusion:
It has therefore been stated that no contract has been made in between the Police and
Nick and Nick is not required to pay any money to police.
Topic 3
Answer to problem 3
Issue:
The main issue of the case is to determine whether part payment of debt can form valid
contract or not.
Rules:
The main subject matter of the case is based on the principle of promissory estoppels.
According to law, if a promise has been made to a person to do certain thing on certain
conditions and if the person to who the promise has been made relied on the promise, the

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promise maker could not take any other action against the person. This principle is known as
promissory estoppels. It is a legal norm and the parties are legally bound by the rules of the
same. In case the promise maker does not follow the contents of the promise, it will be
inequitable for the person who relies on the promise and therefore, the promise maker is
restrained to violate the contents of the promise. It is a general provision of law that in case of
any payment of debt made partly by one party before the due date could be a part of the valid
consideration. The same notion has been taken in the case of Pinnel (1602). Further, it has been
mentioned in Foakes v Beer, that payment that has been made before the due date should be held
good payment and should be treated as valid.
Application:
In this case, it has been observed that Mike could not pay the debt he owed from Helen
and confessed the same to Helen in this regard. After his contention, it has been promised by
Helen that if Mike can give him certain amount of money within specific period, she will
condone his debt. Mike relied on the same and the basis of the promissory estoppels has been
established. Therefore, it can be stated that Helen could not break the provisions of his promise.
Further, it has been observed that Mike has made valid part payment.
Conclusion:
In these circumstances, it can be stated that Helen could not sue Mike for breach of
contract.

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Topic 4
Answer to problem 4
Issue:
The main issue of the case is to determine whether any breach has been made regarding
the contract in between the shop and Lizzie or not.
Rules:
The subject matter of the case is based on the ideology of unilateral offer. The rule
regarding the unilateral contract is generally applied in case of advertisement. According to the
rule, when a party has advertised a thing, he promised to do so and when other party has
accepted the same offer, contract has been made in between the two and it can be stated that both
the parties will be bind by the norms of the contract. This principle has been established in the
case of Carlill v Carbolic Smoke Ball [1892] EWCA Civ 1. In this case, it has been observed
that the person who made the advertisement and the person who accepts the same are binding by
terms of the contract. Further, it has been observed in case of Errington v Errington and
wood that if the person who has accepted the offer through advertisement is bound by the terms
of the contract and he could not disregard the same in subsequent event. However, it has been
observed in Interfoto Picture Library v Stiletto Visual Programmes that unusual terms of
contract should brought into the notice of other party to the contract. otherwise, the same should
not be come under the terms of the contract.
Application:
In this given case, it has been observed that Lizzie has accepted the terms of an
advertisement that was published in a DVD shop, accepts the terms of the contract, and became

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the member of the shop. However, it has been observed that there are many contractual terms
and the shop owner had not aware Lizzie regarding each terms of the contract. there is a
possibility that Lizzie had not given attention regarding the subjected term abnd therefore, she
will not be liable for the same.
Conclusion:
DVD store cannot win the case against Lizzie based on the principle of unilateral
contract.
Topic 4
Answer to problem 5
Issue:
The main issue of the case is to determine whether Tori can sue the dry cleaners for the
destruction of her dress or not.
Rules:
The main principle of this case is based on exemption clause. According to this principle,
the liability of any party to the contract can be excluded based on certain situation. According to
the general principle of law, the parties to the contract are liable to fulfill all the terms of the
contract. however, exemption clause is the exception to this rule. According to the law, when an
offer has been made by a person, it is required that the offer maker will point out every single
matter and terms to the contract and if the person who accept the offer is unaware of any terms of
the contract at the time of accept the offer, that term will not apply on him and he will be exempt

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from the term. This principle has been established in the case of Olley v Marlborough Court
(1949).
Application:
In this case, it has been observed that Tori did not know about the facts of agreement and
therefore, the alleged heading will not apply in her case.
Conclusion:
She can win the case before the court.
Topic 5
Answer to problem 6
Issue:
The main issue of the case is to consider whether Sandra can make any claim against
Smith under the provision of Goods Act 1958 (Vic) or not.
Rules:
Goods Act 1958 deals with the selling contract made between two parties. There are
certain provisions that regulate the acts of the parties of the sell. According to section 19 of the
Act, the seller is not responsible for the quality of the goods if the buyer has not mentioned the
same. Further, it has been stated in section 34 of the Act, the seller has to deliver right goods to
the buyer and he will be held liable for anything within the period of warranty. It has been
observed in the case of David Jones v Willis (1934), buyer should rely on the terms of the
experts.

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Application:
In this case, Sandra had mentioned the essentiality of the goods and Smith has to supply
the same. If any disturbance has been made regarding the goods, Smith is under the liability to
replace the same or resolve the dispute.
Conclusion:
Sandra can sue Smith for non-performance of contractual obligation.

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Reference:
Balfour v Balfour [1919] 2 KB 571
Broad v Jolyffe (1620) Cro Jac 596
Carlill v Carbolic Smoke Ball [1892] EWCA Civ 1
Collins v Godefrey (1831) 1 B & Ad 950
Crabb V. Arun DC (1976) 1 Ch 179
David Jones v Willis (1934) 52 CLR 110
Errington v Errington and wood [1952] 1 KB 290
Errington v Errington Woods [1952] 1 KB 290
Foakes v Beer [1881–5] All ER Rep 106
Hughes V. Metropolitan Railway (1877)2 App Case 439
Interfoto Picture Library v Stiletto Visual Programmes ([1988] 1 All ER 348
Mitchel v Reynolds (1711) B. R.. Case 44
Olley v Marlborough Court (1949) 1 KB 532
Pinnel’s case (1602) 77 ER 237

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