Business Law and Contract Principles

This assignment delves into fundamental business law concepts, focusing particularly on contracts. It examines key elements of contract formation, breaches of contract, and available legal remedies for such breaches. Additionally, the assignment touches upon tort law principles, illustrating their application in a business context. The provided materials consist of both books and journal articles, offering diverse perspectives on these legal topics.

Further Aspects
of Contracts and
tort law
1

TABLE OF CONTENTS
Introduction......................................................................................................................................3
Task 1...............................................................................................................................................3
Explanation of vitiating factors....................................................................................................3
Remedies available for vitiating factors......................................................................................5
Legal consequences of discharge of contract .............................................................................6
Description of appropriate remedies to contracts which have been discharged by breach.........6
Task 2...............................................................................................................................................6
Case 1...........................................................................................................................................6
Case 2...........................................................................................................................................6
Case 3...........................................................................................................................................6
Case 4...............................................................................................................................................8
Task 1...........................................................................................................................................8
Task 2.........................................................................................................................................10
Conclusion.....................................................................................................................................10
References......................................................................................................................................12
2

INTRODUCTION
Contract and tort law is developed by the British parliament in order to assure fairness
and transparency in society. For this aspect, they had described guidelines that are required to be
followed by the party in their daily act (Adams, 2010). Present study is focused on the evaluation
of legal provisions that are linked to the contract and negligence. For this aspect, description of
vitiating factors will be provided along with its remedies and applications on the given case
scenarios. Further, tort provisions will be explained with its defences.
TASK 1
Explanation of vitiating factors
There are several situations in the contract in which parties have reached to the agreement
but still there are some existing or non-existing facts (vitiating factors) that have potential to
destroy the consent of parties (Appleman, 2014). Vitiating factors can be defined as clause,
provision or term that impairs a full or partial contract and makes it void or voidable. Description
of factors covered in this provision is as follows:
Misrepresentation
Misrepresentation can be defined as the false statement of law or fact that influences
party for the formation of contract. Generally, these statements are made prior to the formation
of contract. By considering this aspect, action against the misrepresentation is considered to be
valid if the statement is purport to the statement of law or fact. In addition to this, stated false
term must influence the party for the creation of contractual agreement. In this aspect, statement
of opinion or intention is not considered to be misrepresentation until and unless it is genuinely
cited by the party (Desai, 2008). Further, silence is also treated as misrepresentation if it makes
statement half truth, make vital changes in circumstances, in contract of Ubermaie Fidei or if
there is fiduciary relationship between parties. For the successful claim of misrepresentation,
following facts are required to be satisfied:
 Representation was of fact or law
 Provided representation by the party was false
 Statement termed as misrepresentation is material
 It was used to mislead the party
3

 Intention of statement was to induce the party.
Mistake
Provisions of mistake can be bifurcated into two parts i.e. statements that makes
agreement completely nullified (common mistake) and statement that negate the agreement
(mutual mistake). In accordance with the provisions of contract law, common mistake makes
contract void ab initio (DiMatteo, 2012). Further, in unilateral mistake, innocent party is in
position to held agreement void but in mutual mistake, contract will be cancelled as there will be
provision of absence of consensus ad idem.
Duress
Duress is considered to be present in contractual agreement where parties had provided
their consent but this consent is supported by threat of violence. Agreement formed under
durable is considered to be voidable at the part of threatened party. In accordance with the case
of Cumming v Ince (1847), there should be real threat to the party. Duress can be occurred to the
person (Barton v Armstrong [1976] AC 104) as well as to the goods (Skeate v Beale [1840] 11
Ad & El 983).
Undue influence
In accordance with the provision of English law, an agreement between parties is said to
be valid if it is supported by mutual consent. In this aspect, equity had stated that consent must
not be supported by undue influence. For this aspect, both actual and presumed undue influence
is considered (Keenan, 2012). Presumed undue influence is said to be present in certain
relationships such as parent and child, doctor or patient, husband or wife, etc.
Illegality
By considering the provision of public policy, illegal contracts are always considered to
be unenforceable. In addition to this, court of law is not entitled to provide enforceability to the
agreement that is supported by illegal purpose. In accordance with the case of Bigos v Boustead
(1951), contract for criminal actions was always unenforceable by court of law. However, in
civil wrong, contracts are said to be unenforceable if tort or breach of contract is deliberate.
Remedies available for vitiating factors
Misrepresentation
4

Remedies provided to the innocent party are based on the nature of misrepresentation. In
accordance with the provisions of English law, misrepresentation can be fraudulent, negligent
(common law in Misrepresentation Act 1967) or wholly innocent. In fraudulent
misrepresentation (deliberately providing false statement), remedy of rescission is provided
along with the damages of tort (Kidner and Richard, 2007). In this nature, all losses are
recoverable without considering the limitation of remoteness. Remedy for negligent
misrepresentation is based on the principles of negligence. In nature of innocent
misrepresentation, no damages are provided.
Mistake
In accordance with the provisions of Equity, remedy of rescission is generally not
provided for the act of mistake which is not considered to be effective as per the common law.
However, intervention via refusal is done in order to assure specific performance or for
rectification (Kidner, 2008).
Duress
In the act of duress, innocent party is in position to held contract void if they are able to
prove that consent was subjected to the threat (Blum, 2007). Duress can revoke the contract if
there is not affirmation in the agreement after its lifting,
Undue influence
In presence of vitiating factor of undue influence, remedy of rescission is provided to the
innocent party. However, benefit of this remedy cannot be attained by the party in situation
where restitution is not possible or contract is affirmed by the party or rights of third party is
affected or there is unreasonable delay in seeking the remedy.
Illegality
Remedies for the illegal contract is provided by court of law by considering the aspect
that contract is illegal at the time of formation or it is illegal through the performance. If the
contract is illegal from very beginning then none of the party is entitled for contractual rights.
Along with this, agreement will be held void ab initio. For this aspect, case of David Taylor &
Son v Barnett Trading Co [1953] can be considered. However, in situation where contract is held
illegal at the time of performance then all remedies are available to the innocent party as per the
situation (in accordance with the case of Colen v Cebrian [2003]).
5

Legal consequences of discharge of contract
Discharge of contract can be done by performance or by breach of contract. Discharge by
performance make contractual obligation accomplished and there is no further obligation of
parties (Discharge by breach, 2015). However, in case of breach of contract faulty party is liable
to provide damages for the injury.
Description of appropriate remedies to contracts which have been discharged by breach
TASK 2
Case 1
In accordance with the provided case scenario, Dora had purchased painting from the
Dan in £250,000. Dan was aware of the fact that it is an antique painting and has higher value
still she sold it in low value due to good relationship. After this contract, Christies had offered
him £710,000 for the business by stating fact that signature is not clear and due to which painting
cannot be considered as original. However, later Dan found that painting has been sold for 7
million. In this case, Christie had made misrepresentation by stating false statement for the
uniqueness of painting. By considering this aspect, action against the misrepresentation is
considered to be valid as the statement is purport to the statement of law or fact. In addition to
this, stated false term had influenced the Dan for the creation of contractual agreement. By
considering this aspect, it can be held that Dan is entitled to claim for the damages due to
presence of vitiating factors.
Case 2
Given case study is based on the provisions of illegality. In the described case situation, a
famous designer Bruce Oldfield had copied the original designs of the Dina. Initial contract
between Bruce Oldfield and Dina is based on the misrepresentation. By considering this aspect
which Dina is entitled to sue the Bruce Oldfield. On this aspect, display of original designs of
Dina by Bruce Oldfield attracts the points of illegality. It is because, there is intentionally civil
wrong by Bruce Oldfield. By considering this provision, further contract by Bruce Oldfield is not
enforceable by law and he is entitled to provide damages for the same.
Case 3
a) Damages for the act of breach
6

By considering the provided case scenario, Lindens is responsible for the discharge of
contract for breach. For this aspect, he will be responsible to provide damages to the claimant fo
the delay occurred in the building of house. For this aspect, he will be required to pay rental
charges or opportunity cost to the proposed tenant or he can make arrangements for the another
house.
b) Two limbs for the test of remoteness described in case of Hadley v Baxendale
In accordance with the case provisions of Hadley v Baxendale, damages available for the
breach of contract include those which may fairly and reasonably occurred from the breach of
contract (Hasen, 2010). In addition to this, occurred damages may reasonably be supposed to
have been in the contemplation of both the parties at the time of formation of contract.
c) Restatement of this rule in Victoria Laundry v Newman Industries
In this case, rule formed in Hadley v Baxendale regarding remoteness of damages had
been modified. In accordance with this case, claimant is only entitled for the damages that were
in reasonable contemplation of the parties. It can include the loss of profits but it will not include
loss of the exceptionally lucrative contract as defendant was not aware of this contract.
d) Appropriate measure of damages and difference between expectation loss and reliance loss
Discharge by breach provides right to the innocent party to either sue immediately or
afterwards. Damages for the compensation for breach is mainly of two types i.e. expectation or
reliance damages. Expectation damages are intended to put the innocent party in position where
performance has been accomplished as it was intended. It is normal measure for the assessment
of damages for breach of contract (Heine and Kerber, 2002). On the other reliance losses are
known as wasted expenditure. These damages compensate the injury of losses suffered by
innocent party by relying on the contract.
e) Damages for mental distress be a relevant reward
Objective of damages is to compensate the injury of plaintiff instead of punishing
defendant (Damages claims and remedies, 2011). By considering this aspect, reward for the
mental distress will be considered relevant as it will make reduction in the injury of innocent
party.
f) Mitigating factors that can be pursued by Lindens for the mitigation of loss
7

For the mitigation of the loss of tenant, Lindens can provide another house to the party
till the time of completion of construction work. In addition to this, they can pay for the damages
to the plaintiff for the delay occurred.
g) Possibility of issue of frustration if project manager of Hogarths is sick for long term
In situation where project manager of Hogarths is sick for long term than issue of
frustration can be raised by the Lindens. It is because, defendant had justified reason for the
delay.
CASE 4
Task 1
1. Element of Ryland v Fletcher and assessment of successful claim by Haley
In accordance with the case of Ryland v Fletcher, following elements are required to be
present in any case to get relief:
 Defendant must have used land in a non-natural manner.
 Actions are taken by defendant to escape from the liability.
 Defendant has put material on the land which is hazardous, natural presence of the
material would not give rise to any liability.
 Damages should be identifiable (Faure, 2009).
In the given case, Haley runs a kennels and cattery in the countryside. Haley had spent
considerable amount on upgrading kennels and cattery. Researchz Ltd have started fracking of
gas on a waste land near to Haley's cattery. Work carried on by Researchz causing too much
noise pollution, fumes and also carbon monoxide in their working process poisoning Haley's
Samoyeds, cats also are not breeding due to noise and dust coming from waste ground. Haley
can sue Researchz as per rule of Ryland v Fretcher because work carried by Researchz is causing
damage to nature as well Haley. Noise pollution is caused and also carbon monoxide gas is
poisoning Haley's cats and dogs. To escape from protestors, Researchz workers continue work
early in morning and late in dark.
2. Type of damages recoverable under this rule
Researchz is liable to pay damages to Haley. Damages can also be identified in terms of
expenditure incurred by Haley on cats and dogs as well as at price at which they are generally
sold.
8

3. Elements of private nuisance and its applicability in the described case
Private nuisance is when a person interferes in enjoyment of rights and property (land) of
another person. The important element of private nuisance consists of :
Interference
Interference in another persons rights or property should be substantial i.e affects interest
of another person.
Fault
Defendant had interfered either intentionally or has exercised negligence with the interest
of another person's property and rights, and continuing interfering even after knowing harm
caused to other due to his actions (Ramanathan, 2014).
In accordance with case of Donoghue v Stevenson, principle of neighbour was developed
by lord Atkin which states that a person should not take any action which will cause harm to its
neighbours (related parties to it) in any way. Reasonable care should be exercised so that actions
and omissions can be avoided which may injure our neighbours.
In the given scenario, Haley had a good possibility in being successful in this cause of
action being a neighbour of Researchz, as she is harmed by the actions taken by Researchz on his
land.
4. Remedies in Private Nuisance
Situation where injury is caused to a person due to private nuisance then following
damages can be recovered by him :
 Money Damages - Money damages includes damages recovered from the faulty party in
money terms for the loss incurred to claimant party.
 Injunction- Injunction refers to situation where claimant legally sue the defendant party
either because the claimant was injured much due to actions of defendant or he is not able
to identify the amount of damages incurred to him but loss is substantial (Clarkson and
et.al., 2010). Self-Help- Self help means where claimant is allowing defendant to remove the nuisance
caused by him without paying money damages or injunction (Bogoroch, 2005). Generally
this type of remedy taken by the claimant where either damages are few or are not
9

identifiable and also claimant does not want to sue defendant, then he can exercise self
help.
5. Other torts under which she can sue
In addition to this above described tort, Haley can also claim for intentional tort. This
provision is applied in situation where any act done intentionally by a person in a wrong manner.
Further it had caused damage to another person, all wrong act done under intentional tort are in
civil nature. For example, punching on face of a person is an intentional tort as the person
intended to hit and harm the victim whereas accidentally striking with a person is not an
intentional tort as there is no intention to strike with the other person. The same can said to be a
negligent act as act done carelessly resulting in damages but no intention was present to harm
another is negligence. The faulty person will be liable to pay damages to innocent party to the
amount of loss incurred to him.
6. Effective remedy for Haley
In accordance with the evaluation of all types of tort, it would be beneficial for Haley to
make claim under private nuisance. It is because, under this form of negligence she is entitled for
the monetary damages, injunction and self help.
Task 2
Defences available for the act of negligence
Defendant is not entitled to provide damages in situation where they are entitled to avail
benefit of one of the following defence: Volenti non fit injuria: Defendant is not liable to compensate the injury the individual in
situation where they deliberately put themselves in situation of risk of injury and they are
aware from the risk. In such scenarios, injury is occurred due to the carelessness of
injured party instead of negligence of defendant (Morgan, 2011). Contributory negligence: Benefit of this defence is provided to the party in case where
act of negligence has been occurred by the contribution of injured party. In such
circumstances they are not entitled to make claim of damages as act of negligence can be
prevented if they do not have contributed in it.
10

 Ex turpi causa: This defence is provided to the defendant if their action cannot be
considered as immoral or unjust (Ramanathan, 2014). In such situations, they are not
entitled to pay damages as act of negligence was supported by justified fact.
In the described case scenario, act of Haley and her colleagues will not be obliged for the
act of negligence. It is because, they had protested for the right cause and meanwhile CEO of the
company was found cheating of his wife. By considering this aspect, they are entitled to take
defence of Ex turpi causa and they will not be held responsible for the termination of CEO.
CONCLUSION
In accordance with the present study, conclusion can be drawn that contracting party is
entitled for reasonable damages in situation where there is presence of vitiating factors in the
agreement. However, for the attainment of this benefit they are required to satisfy certain
legislatory provisions. Parties obliged for the discharge of contract for breach will be required to
pay damages to the innocent party in order to compensate their injury. In absence of contractual
relationship they will be liable to take care of their general responsibilities for the prevention of
risk of injury. If defendant failed to do so, they will be held liable to pay damages in order to
compensate the injury of injured party.
11

REFERENCES
Books and journals
Adams, A., 2010. Law For Business Students. 6th ed. Pearson Education Ltd.
Appleman, J. A., 2014. Excuses for Nonpayment and Defenses to Actions for Premiums.
Appleman on Insurance Law and Practice.
Blum, A. B., 2007. Contracts: Examples & Explanations. Aspen Publishers.
Clarkson, W. K. and et.al., 2010. Business Law: Text and Cases: Legal: Text and Cases : Legal,
Ethical, Global, and Corporate Environment, Cengage Learning.
Desai, N., 2008. May. Checking correctness of business contracts via commitments. In
Proceedings of the 7th international joint conference on Autonomous agents and
multiagent systems. 2. pp. 787-794.
DiMatteo, A. L., 2012. False dichotomies in commercial contract interpretation. Journal of
International Trade Law and Policy. 11(1). Pp.27-43.
Faure, M., 2009. Tort law and economics. Edward Elgar publishing.
Hasen, L. R., 2010. Remedies. Aspen Publishers.
Heine, K. and Kerber, W. 2002. European Corporate Laws, Regulatory Competition & Path
Dependence. European Journal of Law and Economics. 13, pp. 43–71.
Keenan, F., 2012. European Corporate Laws, Regulatory Competition & Path Dependence.
European Journal of Law and Economics. 13. pp. 43–71.
Kidner and Richard. 2007. Resiling from the Anns principle: the variable nature of proximity in
negligence. Legal Studies, Blackwell Publishing. 7(3).pp. 69-96
Kidner, R., 2008. Casebook on Torts. Oxford University Press.
Morgan, P., 2011. The Modern Law Review. Wiley0. 74(6). pp.932-946.
Ramanathan, T., 2014. Law as a Tool to Promote Healthcare Safety. Clinical Governance: An
International Journal. 19 (2).
Online
12

Bogoroch, M. R., 2005. DAMAGES FOR EMOTIONAL DISTRESS. [Online]. Available Through
<http://www.bogoroch.com/media/pdf/emotional-distress.pdf/>. [Accessed on 23rd
December 2015].
Damages claims and remedies. 2011. [Online]. Available Through
<http://www.out-law.com/topics/projects—construction/construction-claims/damages-
claims-and-remedies/>. [Accessed on 23rd December 2015].
Discharge by breach. 2015. [Online]. Available Through
<http://e-lawresources.co.uk/Discharge-by-breach.php>. [Accessed on 23rd December
2015].
13