Business Law Case Study: Analyzing Contract Validity and Frustration

This case study delves into two distinct scenarios within business law, focusing on contract validity and frustration. The first scenario examines the enforceability of an oral contract between Frances and Frank regarding the lease and potential sale of Frank's house. It assesses whether the ora...Read More

Running head: BUSINESS LAW
Case study on Contract
Name of the Student
Name of the University
Author Note

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Table of Contents
Answer to question 1:......................................................................................................................2
Issue:............................................................................................................................................2
Rules:...........................................................................................................................................2
Application:.................................................................................................................................2
Conclusion:..................................................................................................................................3
Answer to question 2:......................................................................................................................3
Issue:............................................................................................................................................3
Rules:...........................................................................................................................................3
Application:.................................................................................................................................4
Conclusion:..................................................................................................................................4
Reference:........................................................................................................................................5

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Answer to question 1:
Issue:
The main issue of the case is to determine whether the oral contract made in between
Frances and Frank is valid or not.
Rules:
The main subject matter of the case is based on the application and validity of the oral
contract. According to the contract law, a contract is an agreement enforceable by law. In most
of the cases, all accept written contracts and certain problems have been cropped up regarding
the validity of the oral contract. However, the law has not mentioned that the nature of the oral
contract is invalid. According to the Contract law of USA, an oral contract can be legally
enforceable and affected party can bring action against the other party for making breach
regarding the provision. However, there are certain grounds where the courts are not considering
the oral contract valid such as real estate sales and in debt related issues. However, there are
certain exceptions to this rule. It has been mentioned that in case the affected party can show that
he has been relied on the oral promise of the other party and he has to face certain dilemmas for
the promise, the effect of the oral contract will be enforced.
Application:
Considering the facts of the case, it has been understood that Frances was looking for a
house and she has contacted with Frank who wanted to lease his house. An oral contract has been
made in between them with the condition that once the lease agreement of Frances has been
over, she could take the possession of Frank’s house. Further, it has been observed that Frances
started to live in the home of Frank. No written agreement has been made in between them, as

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Frank’s counsel was out of the town. In addition to this, Frances has no place to live. Therefore,
she was totally depending on the house of Frank. In the subsequent event, Frank told Francis to
vacate the possession, as he wanted to make contract with Green and denied to sale the house to
Frances. According to Frank, he is not liable, as there was no written contract. According to the
contract law, it can state that oral agreement made in between Frances and Frank is valid because
Frances has no place to live and she will face hardship if the contract will not valid.
Conclusion:
Therefore, it can be stated that the oral contract made in between Frances and Frank is
valid.
Answer to question 2:
Issue:
The main issue of this case is to determine whether the contract between Stacey and
Twisted Wine is still valid or not.
Rules:
The subject matter of the case is based on the frustration of contract. It is an English legal
principle and it is used to set aside the contract entered by two parties. In Pioneer Shipping Ltd v
BTP Tioxide Ltd [1982] AC 724, Lord Roskill has observed that frustration of contract is "not
lightly to be invoked to relieve contracting parties of the normal consequences of imprudent
bargains". Further, in Taylor v Caldwell [1863] EWHC QB J1, it has been held that if there is a
change in the circumstances happened after a contract has been entered between two parties and
where no possibilities to perform the contract has been cropped up, the nature of the contract will

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be frustrated. In this case, it has to be proved that no parties are liable for the mishap. In case a
contract has been frustrated, no future obligation will be imposed on any of the parties.
Application:
In this case, a contract has been made in between Stacey and Twisted Wine for the
delivery of wine in the wedding of her daughter. From the facts of the case, it has been observed
that one day before the delivery, the delivery van of Twisted Wine had met with an accident.
According to the doctrine of frustration of contract, accident has made the contract in between
them frustrated and none of the parties will bind by any future obligation. Further, according to
the case of Taylor v Caldwell, no party may sue each other for breach of contract, as no parties
are liable for the accident. Therefore, it can be stated that Stacey is not required to accept any
delivery from Twisted Wine, as the contract has been frustrated.
Conclusion:
Therefore, it can be stated that Twisted Wine could not held Stacey for breach of
contract.

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Reference:
Crandall, T.D. and Whaley, D.J., 2016. Cases, Problems, and Materials on Contracts. Wolters
Kluwer Law & Business.
Fried, C., 2015. Contract as promise: A theory of contractual obligation. Oxford University
Press, USA.
Horodnic, I.A., 2016. Cash wage payments in transition economies: consequences of envelope
wages. IZA World of Labor.
Pioneer Shipping Ltd v BTP Tioxide Ltd [1982] AC 724
Taylor v Caldwell [1863] EWHC QB J1
Willett, C., 2016. Fairness in consumer contracts: The case of unfair terms. Routledge.