Legal Action for Negligence
Added on 2022-12-22
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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. Issue:
The issue involved in the present case scenario is that whether there was any intention of
creating an agreement between the parties involved in the contract.
Rules:
In order to create a valid contract, the parties involved in it must possess a legal intention
to create such contract. Here in order to create a valid contract, the offeror must make an offer
and the offeree must accept such offer with the intention to be legally bound under the terms of
the contract. Usually in the social as well as domestic agreements, the parties do not have the
intention to form the legal contract as seen in Balfour v Balfour [1919] 2 KB 5711. However this
is not case in commercial transactions where it is presumed except in few situations that the
parties have legal intention to create the contract as laid in Edwards v Skyways Ltd [1964] 1
WLR 3492.
Application:
In the present case scenario, it is observed that though Ethan and Sally are cousins they
entered into a commercial agreement. As his business was not doing well and she needed money
immediately she sold her store to Ethan at 155,000 $. The cost includes the cost for goodwill of
the business which is 25000 $. Sally even showed strong profits and business growth to convince
Ethan to buy the store although it was not true. This showed that the parties have legal intention
1 Balfour v Balfour [1919] 2 KB 571.
2 Edwards v Skyways Ltd [1964] 1 WLR 349.
Part A:
1. Issue:
The issue involved in the present case scenario is that whether there was any intention of
creating an agreement between the parties involved in the contract.
Rules:
In order to create a valid contract, the parties involved in it must possess a legal intention
to create such contract. Here in order to create a valid contract, the offeror must make an offer
and the offeree must accept such offer with the intention to be legally bound under the terms of
the contract. Usually in the social as well as domestic agreements, the parties do not have the
intention to form the legal contract as seen in Balfour v Balfour [1919] 2 KB 5711. However this
is not case in commercial transactions where it is presumed except in few situations that the
parties have legal intention to create the contract as laid in Edwards v Skyways Ltd [1964] 1
WLR 3492.
Application:
In the present case scenario, it is observed that though Ethan and Sally are cousins they
entered into a commercial agreement. As his business was not doing well and she needed money
immediately she sold her store to Ethan at 155,000 $. The cost includes the cost for goodwill of
the business which is 25000 $. Sally even showed strong profits and business growth to convince
Ethan to buy the store although it was not true. This showed that the parties have legal intention
1 Balfour v Balfour [1919] 2 KB 571.
2 Edwards v Skyways Ltd [1964] 1 WLR 349.
CONTRACT LAW2
to create the contract as seen in Esso Petroleum v Commissioners of Customs & Excise [1976] 1
WLR 13.
Conclusion:
There was any intention of creating an agreement between the parties involved in the
contract.
2. Issues:
The matters of dispute to be analyzed in this part of the assignment is deciding in what
manner the court can determine the representations made to Ethan by her cousin Sally and the
remedies available to Ethan.
Rules of law:
The statements made by one party to another during negotiating a contract can be puffs,
terms or representation. A representation denotes a statement which is false made by one party
with an intention to induce other to enter into the contract. The term refers to a valid part of an
agreement of the contract which if breached cause the breach of contract.
In case a representation made is found to be false, then the other party which relied on it
to enter into the contract can sue for seeking damages. A representation amounts to
misrepresentation when it is made by a party who has knowledge of it to be untrue, does not
believe it to be true and makes such representation in careless or reckless way.
In order to decide whether a statement amounts to a misrepresentation, the court
considers the following the six factors;
3 Esso Petroleum v Commissioners of Customs & Excise [1976] 1 WLR 1.
to create the contract as seen in Esso Petroleum v Commissioners of Customs & Excise [1976] 1
WLR 13.
Conclusion:
There was any intention of creating an agreement between the parties involved in the
contract.
2. Issues:
The matters of dispute to be analyzed in this part of the assignment is deciding in what
manner the court can determine the representations made to Ethan by her cousin Sally and the
remedies available to Ethan.
Rules of law:
The statements made by one party to another during negotiating a contract can be puffs,
terms or representation. A representation denotes a statement which is false made by one party
with an intention to induce other to enter into the contract. The term refers to a valid part of an
agreement of the contract which if breached cause the breach of contract.
In case a representation made is found to be false, then the other party which relied on it
to enter into the contract can sue for seeking damages. A representation amounts to
misrepresentation when it is made by a party who has knowledge of it to be untrue, does not
believe it to be true and makes such representation in careless or reckless way.
In order to decide whether a statement amounts to a misrepresentation, the court
considers the following the six factors;
3 Esso Petroleum v Commissioners of Customs & Excise [1976] 1 WLR 1.
CONTRACT LAW3
The representation made must be of fact,
It is false,
The party who makes such false statement knows that the statement is false and has no
faith on it. Such party makes the statement to the other party in a reckless or careless
manner and has better knowledge of the fact of the misrepresentation as laid down in
Oscar Chess v Williams [1957] 1 WLR 3704,
The intention of such party is to convince the other party and make him belief on that
misrepresentation thereby inducing him to consider it to enter into the contract as seen in
the case of Johnson v Buttress (1936) 56 CLR 1135 where one oarty has exerted undue
influence on the other,
The party to whom such representation is made must believe the statement to be true and
must have relied and acted on it,
The other party must have suffered or will suffering due to his reliance on the
misrepresentation.
The remedies available to the party who has trusted the misrepresentation and relied on it to
enter into the contract are rescission or/and damages.
Application:
In the present case it is observed that in order to convince Ethan to buy her store Sally
showed him last 3 years figures of her business claiming that her business was running
successfully and she was earning profits. However those were false as her business was not
doing good at all. Ethan being a layman trusted those figures completely and thus entered into
4 Oscar Chess v Williams [1957] 1 WLR 370.
5 Johnson v Buttress (1936) 56 CLR 113.
The representation made must be of fact,
It is false,
The party who makes such false statement knows that the statement is false and has no
faith on it. Such party makes the statement to the other party in a reckless or careless
manner and has better knowledge of the fact of the misrepresentation as laid down in
Oscar Chess v Williams [1957] 1 WLR 3704,
The intention of such party is to convince the other party and make him belief on that
misrepresentation thereby inducing him to consider it to enter into the contract as seen in
the case of Johnson v Buttress (1936) 56 CLR 1135 where one oarty has exerted undue
influence on the other,
The party to whom such representation is made must believe the statement to be true and
must have relied and acted on it,
The other party must have suffered or will suffering due to his reliance on the
misrepresentation.
The remedies available to the party who has trusted the misrepresentation and relied on it to
enter into the contract are rescission or/and damages.
Application:
In the present case it is observed that in order to convince Ethan to buy her store Sally
showed him last 3 years figures of her business claiming that her business was running
successfully and she was earning profits. However those were false as her business was not
doing good at all. Ethan being a layman trusted those figures completely and thus entered into
4 Oscar Chess v Williams [1957] 1 WLR 370.
5 Johnson v Buttress (1936) 56 CLR 113.
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