Contract Law: Legal Intention, Misrepresentation, Restraint of Trade Clause, and Remedies
Added on 2022-11-04
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Running head: CONTRACT LAW
CONTRACT LAW
Name of the Student:
Name of the University:
Author Note:
CONTRACT LAW
Name of the Student:
Name of the University:
Author Note:
CONTRACT LAW1
Part A:
1. Issues:
The issues that are needed discussed in the case study is that whether between the two
cousins exist any legal intention behind the creation of the contract.
Law:
A contract can be successfully formed when all its essential elements are satisfied. One such
element is the existence of intention of the parties to result into a legally enforceable contract.
Such intention can be referred as the intention of the parties contracting an agreement to be
legally binding and enforceable as held in Blue v Ashley [2017] EWHC 19281.
In case of social or domestic type of agreement, the parties have no intention to result into an
agreement that can be legally enforceable and binding. In such cases, the parties usually enter
into an agreement without any legal motive as found in Jones v Padavatton [1969] 1 WLR 3282.
On the other hand, if the contract involve any commercial transaction, it is generally
presumed that the parties have legal intention to result into a legally enforceable contract as in
Esso Petroleum v Commissioners of Customs & Excise [1976] 1 WLR 13.
Application:
In the current case study, it is seen that Sally wants to sell her store for 155000 $ to get
some money and for this she sold it to her cousin Ethan. The selling price comprises of the
goodwill cost of the company amounting 25000 $. To convince Ethan, Sally also profits and
1 Blue v Ashley [2017] EWHC 1928.
2 Jones v Padavatton [1969] 1 WLR 328.
3Esso Petroleum v Commissioners of Customs & Excise [1976] 1 WLR 1.
Part A:
1. Issues:
The issues that are needed discussed in the case study is that whether between the two
cousins exist any legal intention behind the creation of the contract.
Law:
A contract can be successfully formed when all its essential elements are satisfied. One such
element is the existence of intention of the parties to result into a legally enforceable contract.
Such intention can be referred as the intention of the parties contracting an agreement to be
legally binding and enforceable as held in Blue v Ashley [2017] EWHC 19281.
In case of social or domestic type of agreement, the parties have no intention to result into an
agreement that can be legally enforceable and binding. In such cases, the parties usually enter
into an agreement without any legal motive as found in Jones v Padavatton [1969] 1 WLR 3282.
On the other hand, if the contract involve any commercial transaction, it is generally
presumed that the parties have legal intention to result into a legally enforceable contract as in
Esso Petroleum v Commissioners of Customs & Excise [1976] 1 WLR 13.
Application:
In the current case study, it is seen that Sally wants to sell her store for 155000 $ to get
some money and for this she sold it to her cousin Ethan. The selling price comprises of the
goodwill cost of the company amounting 25000 $. To convince Ethan, Sally also profits and
1 Blue v Ashley [2017] EWHC 1928.
2 Jones v Padavatton [1969] 1 WLR 328.
3Esso Petroleum v Commissioners of Customs & Excise [1976] 1 WLR 1.
CONTRACT LAW2
growth of her business which are false actually. From the facts all the elements of a commercial
transaction are present which show that both of them have legal intention to result the contract as
observed in Edwards v Skyways Ltd [1964] 1 WLR 3494.
Conclusion:
It can be concluded that between the two cousins there exists a legal intention behind the
creation of the contract.
2. Issue:
Issue here is determining how the court can assess the representation made by Sally and
whether Ethan is eligible to remedies.
Rules:
Statements made by one party to other during negotiating any contract can be terms,
representation or puff which is decided by court to analyze the remedies.
For determining whether the statement made is a term or representation, few elements are
considered;
a. The statement must be false as observed in Bisset v Wilkinson5.
b. Representor must have tried to induce the representee to enter into contract and the latter
must have believed and acted on it relying it as seen in Horsfall v Thomas6.
c. The representee must suffer from some loss or injury for relying on the
misrepresentation.
4 Edwards v Skyways Ltd [1964] 1 WLR 349.
5 Bisset v Wilkinson [1927] AC 177.
6 Horsfall v Thomas [1862] 1 H&C 90.
growth of her business which are false actually. From the facts all the elements of a commercial
transaction are present which show that both of them have legal intention to result the contract as
observed in Edwards v Skyways Ltd [1964] 1 WLR 3494.
Conclusion:
It can be concluded that between the two cousins there exists a legal intention behind the
creation of the contract.
2. Issue:
Issue here is determining how the court can assess the representation made by Sally and
whether Ethan is eligible to remedies.
Rules:
Statements made by one party to other during negotiating any contract can be terms,
representation or puff which is decided by court to analyze the remedies.
For determining whether the statement made is a term or representation, few elements are
considered;
a. The statement must be false as observed in Bisset v Wilkinson5.
b. Representor must have tried to induce the representee to enter into contract and the latter
must have believed and acted on it relying it as seen in Horsfall v Thomas6.
c. The representee must suffer from some loss or injury for relying on the
misrepresentation.
4 Edwards v Skyways Ltd [1964] 1 WLR 349.
5 Bisset v Wilkinson [1927] AC 177.
6 Horsfall v Thomas [1862] 1 H&C 90.
CONTRACT LAW3
In case it is proved that the party has committed misrepresentation on other party, then the
other party has the right to remedy of rescission and/or damages.
Application:
Here Sally shows profits and growth of her business which are false to Ethan who was a
novice in this business and he trusted on such statements and documents completely to purchase
her business. Here the statements made by Sally satisfied the conditions of misrepresentation.
Thus Ethan is left with remedies of contract rescission and claiming damages as held in Doyle v
Olby7.
Conclusion:
From the discussion made above it is seen how the court can assess the representation
made by Sally and Ethan is eligible to remedies of rescission and damages.
3. Issue:
Here the issues are:
Whether the restraint of trade clause is valid,
What remedies are available to Ethan if clause is breached.
Rule:
Under the common law, restraint of trade denotes the restriction or limitation imposed by
one party to the other by a contract where the latter is limited or restricted to conduct trade at a
particular area for a particular period.
7 Doyle v Olby [1969] 2 QB 158.
In case it is proved that the party has committed misrepresentation on other party, then the
other party has the right to remedy of rescission and/or damages.
Application:
Here Sally shows profits and growth of her business which are false to Ethan who was a
novice in this business and he trusted on such statements and documents completely to purchase
her business. Here the statements made by Sally satisfied the conditions of misrepresentation.
Thus Ethan is left with remedies of contract rescission and claiming damages as held in Doyle v
Olby7.
Conclusion:
From the discussion made above it is seen how the court can assess the representation
made by Sally and Ethan is eligible to remedies of rescission and damages.
3. Issue:
Here the issues are:
Whether the restraint of trade clause is valid,
What remedies are available to Ethan if clause is breached.
Rule:
Under the common law, restraint of trade denotes the restriction or limitation imposed by
one party to the other by a contract where the latter is limited or restricted to conduct trade at a
particular area for a particular period.
7 Doyle v Olby [1969] 2 QB 158.
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