Contract Law & Breach of Contract Scenarios

This assignment delves into contract law concepts, focusing on the distinction between contractual terms and representations. It presents three scenarios involving Best Cars Ltd. and Car World, requiring students to identify the type of breach (condition or warranty) in each case, explain the effects of the breach, and draw upon relevant case law to support their analysis.

Assignment front sheet
Qualification Unit number and title
Pearson BTEC Level 5 HND Diploma
Business Unit: 5 Aspects of Contract and Negligence for Business
Student name Assessor name
Date issued Completion date Submitted on
Assignment title Application of Aspects of Contract and Negligence in Business Context
Learner declaration
I certify that the work submitted for this assignment is my own and research sources are fully
acknowledged.
Student signature: Date:
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INTRODUCTION
In this project report, essential elements of valid contract are discussed. Along with this,
different types of contract and the term which are included in it are also enclosed. In addition to
these elements of vicariously liability, contractual liability and liability in tort are mentioned.
Lastly, various case studies have been solved out by considering different elements of a contract.
TASK 1
1.1 EXPLAIN THE IMPORTANCE OF THE ESSENTIAL ELEMENTS REQUIRED FOR
THE FORMATION OF A VALID CONTRACT.
A contract is a legal agreement between two or more person who come together to exchange
something. A valid contract can be formed only when offer and acceptance is present (Adams,
2010). A contract can be in tangible and intangible.
There are five major elements that are required for forming a valid contract.
Offer: - It is act of offering something to another person with an aim to sell things or to
generate profit. Suppose a owner of a book shop sells book then in that case; it will treated as
the owner who is offering books to the individual person in order to sell it (Beever, 2007).
Example - Carlill v. Carbolic Smoke Ball Company Ltd (1892)
Acceptance: - It is an act of accepting something in exchange of anything that is offered
by another person. Considering the above example, it can be said that the person who purchase
the book form bookshop is acceptor of the book. Example - Williams v. Carwardine (1833):
Consideration – It refers to anything which is of value promised to another while making
a contract. An agreement made without consideration is considered void. However it must have a
value which can be determined objectively. Example Thomas v. Thomas (1842
Intension - It can be regarded as the determination to a specific act or to act in a specific
manner for a particular reason. It also refers to the intention of the parties in order to create legal
obligations. Example Rose and Frank Co. Ltd v. Crompton Brothers Ltd.
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Capacity – It can be regarded as the legal right, power or competency to perform a
particular act. As a general rule, in the absence of capacity, the law does not recognize the right
to create binding contracts between the parties. Example is Nash v. Inman (1908):
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1.2 DISCUSS THE IMPACT OF DIFFERENT TYPES OF CONTRACT IN TERMS OF
FORMING, BINDING AND ENFORCEABLE CONTRACT IN ENGLISH LAW.
 Unilateral contract: - In this type of contract, only one individual is mandatory to follow
terms and conditions which are included in a contract.
Impact: - These types of contract can be revoked anytime as and when liked by the other
party. But, if any party has started performing the act as per the contract then in that case a
contract cannot be cancelled (Caruso, 2007).
 Bilateral contract: - In this type of contract, both the parties who enter into a contract are
obliged to consider all terms and conditions of a contract.
Impact: - Once the offer and acceptance has been made then in that case both the parties are
liable to perform the act of the contract.
Express or implied contracts – Express contract needs an oral and written agreement between
the parties. This kind of contract must have a definite offer, acceptance and unreserved
consideration. Under the implied contract, a party accepts a benefit from the other party
knowingly which cannot be termed as a gift. (Case: Hutton v Warren (1836).
Contract can also be classified according to the form.
• Verbal contract - This kind of contract is made on the basis of spoken words. The
conditions attached to it are decided verbally.
• Written contract - It is made in writing and act as a proof of evidence between the
parties.
• Contract by deed – This kind of contract facilitates the buyers to purchase properties
when they are not able to qualify for the lending options. The buyer is required to make
the regular payments to the seller till the amount is paid in the full.
• Distance selling contract / Online contract – There is no physical contract made in this
kind of approach. The buyer does not have the opportunity to inspect the goods.
(explain them)
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1.3 ANALYSE CONTRACT TERMS WITH REFERENCETO THEIR MEANING AND
EFFCTS.
Terms of contract places the duties and obligations of each party under the agreement.
Express terms: - These are the terms that are expressed at the time of forming a contract.
This is a clause that is included by both parties at the time of its formation.
Implied terms: - this term is expressed at the time of forming a contract (Chandler, 2015).
This is a clause which is additionally included by the court of law.
In nominate terms: - These are not the terms that cannot be treated as a warranty nor it
can be treated as conditions.
Conditions
They are the essential or important terms which are vital to the contract. Nonfulfillment
of the conditions has an impact on the main purpose of the agreement. In case of breach of
condition, the aggrieved party has a right to terminate the contract.
In case of Poussard v Spiers & Ponds (1876): Madame Poussard was invited to sing and play
the lead role in French opera at the Criterion Theatre. Poussard agreed in writing that she will
receive £11 a week for three months. She could able to perform as she got sick. Spiers and Ponds
hired another perform named Miss Lewis. After recovering Poussard came back but she was
refused to perform. The Court held that it was a breach of condition. It entitled the aggrieved
party to treat the contract has ended.
Warranties
It can be regarded as the less essential term. In case of rupture of warranties, the harmed
party can be sued for the damages but not the whole contract can be terminated.
In Bettini v Gye (1876): Bettini and Gye entered into an agreement that Bettini will sing at the
Royal Italian Opera. The performance was decided to be last from March 30 to July 13 and
Bettini was hired at £150 monthly. He was supposed to be in London six days prior to the
rehearsal but he was not able to make it. He did not arrive till 28 March and Fredrick did not
permitted him to perform though Bettini was fully prepared. The Court held that his arrival of 6
days before was not a condition, hence breach of warranty cannot lead to termination.
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Define terms
Terms v Representation
– Relevant Cases:
• Bannerman v White 1861
• Routledge v McKay 1954
Types of terms: (explain all three types of terms with reference to cases)
1. Conditions:
– Relevant Case:
• Poussard v Spiers 1876 (Pg 50 in Kaplan or Pg 116 in BPP)
2. Warranties:
– Relevant Case:
• Bettini v Gye 1876 (Pg 50 in Kaplan or Pg 116 in BPP)
3. Innominate terms or indetminate terms
– Relevant Case:
• Hong Kong Fir Shipping.
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TASK 2
2.1 APPLYING YOUR UNDERSTANDING OF THE ESSENTIAL ELEMENTS OF A VALID
CONTRACT TO ADVISE BOTH PARTIES IF CONTRACT HAS BEEN FORMED IN
THIS SITUATION.
According to the given situations William advertised to sell the Airbus 320. In an
aviation. Later on after seeing the add Harry was ready to pay the advance of £100000 to
William for not selling the Airbus to anyone else. However, the same proposal was accepted by
William. Thus, as per the situation it can be said that both offer and acceptance has been
included in a contract (Ciccarelli and Ciccarelli, 2005). Therefore, a valid contract can be
formed. In this case William is the offeree who offers Airbus 320 for sale. Similarly, on the other
hand Harry was the acceptor who modified the offer made by William. Then the same was
expected by William at last.
According to contract is deliberate and voluntary binding agreement between two or
more parties. It is evidenced by an acceptance, offer, consideration and other factors.
 By way of introduction define the legal meaning of term ‘contract’ and mention the legal
requirements for a valid contract.
 Has a valid ‘offer’ been made? Or is it merely an ‘invit ation to treat’? Outline the types
of ‘invitation to treat’ and state the specific form of ‘invitation treat’ in the scenario.
 State the offeror and offeree and the terms of the offer.
 Has there been acceptance of the offer (if any). Briefly explain of an acceptance in
contract with reference to relevant case laws
 What is the consideration moving between the parties?
 Is there intention to create legal relations? If yes explain the why do you think that
there is intentions to be bind by the contract.
 Are there any vitiating factors that would affect the validity of the contract between
William and Herry ? Do they have the capacity?
 Is there any contract formed?
 Is there any contract for the sale of the airbus?
 Don’t forget to refer to relevant case laws
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2.2 ADVISE MR.PETER IF HE CAN CLAIM FOR DAMAGESOR NOT APPLY THE LAW
ON THE TERMS IN DIFFERENT CONTRACTS.
As per the following case Mr. Peter took his bike for repair at this favorite bike shop. He
presented the same and was received a docket on which it was return that all goods accepted only
subject to terms and conditions displayed. After seeing this message, Mr. Peter has asked about it
from the shop assistant. In lieu of which he say not to worry it is simply related to the price
change for new bikes. After this, Peter left and was not able to see the most important message
because of the carelessness of shop assistant. After 6 days, when Peter came to collect his bike
he found that his bike was thrown away in unclaimed bikes.
Therefore, after examining the case it can be concluded that Peter is liable to claim for a
sum of compensation for a damage caused to him. As he has talked to shop assistant about the
notice but it was ignored by the shop assistant. Peter was not able to see another important
message due to the carelessness of the assistant (Cimino, 2010). Thus, it can be said that it the
implied term where a contract is not formed by mutual understanding of both the parties.
The crux of the question is ‘Is the exclusion clause part of the contract or not?’
Peter wants to recover damages from the bike shop, there are two things to consider.
Issue 1: Is the exclusion clause, on which the shop would like to rely, included in the contract?
Issue 2: If yes, how will it be interpreted?
Issue 1: Is the exclusion clause included in the contract?
Incorporation of exclusion clause:
- by signature (L’Estrange v Graucob 1934)
Has Peter signed a document?
- by notice ( unsigned document)
When was the contract made? When Peter handed over the bike and received the docket? When
was the clause brought to Peter ’s attention? Is a receipt/ docket a contractual document? Would
a reasonable person regard it as a document containing contractual terms or as a mere voucher to
produce when collecting the goods?
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 Does the docket contain the term or just give notice of a further term?
Have reasonable steps been taken to bring to exclusion clause to Peter ’s attention?
 Sign on the wall is large
 It is obscured?
 Where exactly is it, is it visible at the time the customer enters the
contract or only after? (Olley v Marlborough Court) – when was
the contract made?
 Does the docket provide notice to Peter that there are further terms
Has the exclusion clause been incorporated by a course of dealing?
 ‘favourite bike shop”
 Peter has a keen interest in bike riding
 What is the effect of the comments by the shop assistant? Do these
override the clause as it is written?
Issue 2:Is the meaning clear and unambiguous?
Why was the bike lost? How did the bike end up with the wrong tag? Negligence? Is the
negligence in wrongly storing the bike covered by the clause?
There is no express reference to negligence. Are the words “howsoever caused” wide enough to
include negligence? Are the words ambiguous?
Was there any misrepresentation by the shop assistant?
Other relevant cases can include:
Chapelton v Barry UDC 1940
Curtis v Chemical Cleaning Co 1951
Thompson v LMS Railway 1930
Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd 1988 Etc.
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2.3 EVALUATETHE EFFECT OF THE CONTRACTTERM QUOTED ABOVE IN THE
CONTRACT IN THE FOLLOWING SITUATION.
As per the given situation, Best cars Ltd has formed a contract with Car World to
purchase 30 cars in a condition which are ready to run on the roads of UK. Therefore, by
assuming in nominate terms the following statements has been examined.
I) If the car supplied by Car World are illegal then cannot be even modified after a
particular period of time. Thus, in this case The Best Cars Ltd. are completed susceptible
to claim for the sum of compensation for the loss suffered by him and he can even revoke
the contract made by Car world at any time (Dickinson and Nicholson, 2015).
II) In the given statements the engine of the car are required to be adjusted with an aim to
conform the EU environment law, which will only take 5 minutes. Thus, after applying
the concept of in nominate terms it can be said that contract cannot be cancelled and
compensation cannot be claimed. Because on loss has been suffered by Best Cars.
III) As per this statement Best Cars Ltd can claim for a compensation for the damages
caused to him for 3 months. But cannot cancel the contract. Because in order to conform
that the engine supplied are prefect by EU environmental law it will take the time period
of 3 months.
Contractual terms can be regarded as the provisional inclusions within the contracts. While
on the other side, representation is an action which can be transformed into a statement of fact.
In case of Poussard v Spiers & Ponds (1876): Madame Poussard was invited to sing and play
the lead role in French opera at the Criterion Theatre. Poussard agreed in writing that she will
receive £11 a week for three months. She could able to perform as she got sick. Spiers and Ponds
hired another perform named Miss Lewis. After recovering Poussard came back but she was
refused to perform. The Court held that it was a breach of condition. It entitled the aggrieved
party to treat the contract has ended.
 By way of introduction, explain the meaning of contractual term, and its difference from
representation.
 Outline the types of contractual terms with reference to case law on each type.
I. Is there any breach of contract in (I)? Explain how and the type of term breached with
reference to relevant case law.
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Tips: It is a breach of Condition. Explain why? And evaluate the effects
II. Is there any breach of contract in (II)? If so explain how and the type of term breached
with reference to relevant case law.
Tips: It is a breach of Warranty. Explain why? And evaluate the effects
III. Is there any breach of contract in (III)? If so explain how and the type of term breached
with reference to relevant case law.
Tips: It is a breach of Condition, Explain why? And evaluate the effects
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