Introduction to Contract Law

This assignment provides a comprehensive overview of contract law, covering its essential elements, types of terms, methods of discharge, and remedies for breach. It uses case studies to illustrate key concepts and legal implications.

INTRODUCTION TO CONTRACT
LAW

TABLE OF CONTENTS
INTRODUCTION ..........................................................................................................................1
TASK 1............................................................................................................................................1
Discussing elements of contracts and their implication.........................................................1
TASK 2............................................................................................................................................3
1. Identification of expressed and implied terms of contract.................................................3
2. Implication of exclusion clause..........................................................................................4
TASK 3 ...........................................................................................................................................5
1. Ways in which a valid contract can be discharged.............................................................5
2. Remedies available in case of breach of contract...............................................................6
CONCLUSION................................................................................................................................8
REFERENCES..............................................................................................................................10

INTRODUCTION
A contract is a written agreement between two or more parties, which is
enforceable by law. A contract can be oral but it does not have any legal binding effect. The
written agreement can be entered for sale, lease, tenancy, employments etc. Legal implication
provides rights and duties to parties related with it. With legal binding effect of contact through
Contract-law, parties are bound to perform activity specified in agreement. The law also provides
remedies to parties in case another party refuses to perform its obligation. In present report,
element of a valid-contract is presented along with their implication on case laws. Implied and
express terms in contract law are discussed. Report also presents manners in which it can be
discharged and remedies available in case of breach of contract.
TASK 1
Discussing elements of contracts and their implication
Constitution of a contract: This is a written agreement, which lays down obligations
recognised and enforceable through law. According to common law, a valid contract has
generally three content: - (I) agreement, (II) contractual intention and (III) consideration. For a
contract, main requirement is that concerned parties must reach to an agreement. A party makes
an offer which is accepted by another party to check whether parties have reached to an
agreement or not and for this, court may apply an objective test.
Four main elements of a valid-contract:
A. Offer: An offer can be defined as an expression of willingness to enter into a contract
on certain specified mutual terms. The intention of making an offer is that once an offer is
accepted by party to whom it is addressed as it will create a legal binding effect on such party.
An offer shall be made by offerer with an objective and a purpose that he/she will be bound, if
offer is accepted by other party (Giliker, 2017). Therefore, an offerer can get bound if his/her
words expressly induce other party to believe that an offer is made with an intention of getting
bound. With this, it can be clearly stated that an offer shall be made with a purpose of getting
into an agreement with other party. A conduct of party can also influence or induce other party
when an offer was made to them.
An offer can be made in the written form or by orally conducting it. It can be addressed
to a single individual, to a particular group of people or to the society as a whole e.g.- a reward
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assured for finding a lost pet. An invitation to a party can also be considered as an offer but it is
distinct from an offer in contract because intention of party is important. In case of a party
invitation, this cannot be considered as a valid offer intention that does not enter into a contract.
B. Acceptance: it can be expressed as final and unconditional assent in terms of offer by
party to whom offer is made. Recipient of offers must have an intention to be bound by terms of
offer once accepted (Twigg-Flesner, 2015). An offer shall be accepted with its explicit terms
only without any modification for purpose of entering into an agreement. Terms in an agreement
shall precisely match with terms in offer and all of them must be accepted as it is. This means in
acceptance of an offer, all terms mentioned in it must be agreed upon without any alteration.
Another important aspect of acceptance is that it must be communicated to offerer that an
assent is given to offer. An offer can be revoked at any time before communication of acceptance
by other party. With acceptance of offer parties have an agreement, which is a base for formation
of a contract. An agreement between parties do no create legal obligation.
C. Consideration: An agreement or a promise will not have a binding effect unless there
is a consideration. A consideration means something of value in return that is given for a promise
and make a contract legally enforceable. Considerations shall be sufficient but it might not be
adequate e.g. for a sale of house, and the amount paid by the party for buying house shall be
sufficient with relevance to market price of house (Lievens, 2017). The consideration must move
for promise made by offer and acceptance. The movement of consideration must be from
promisee/accepter but it is not necessary that it shall move to promisor /offerer. It can move to
the third party on the behalf of promisor. With considerations, an agreement finds the base for a
contact with a scope of its legal enforceability.
D. Contractual intention: An agreement with a consideration will not attain legality
unless it is entered with a purpose of creating legal obligations by law. The parties must have an
intention for making their agreement legally binding. In case of commercial transaction, it is pre
assumed that parties have an intention of creating legal enforceability. An agreement created as
“subject to contract or “letter of comfort” is not enforceable by law. The parties are not bound
until a formal contract is exchanged between parties and a legal enforceability is created.
Therefore, an invitation to a party is not a valid contract as it has an offer and acceptance which
may or may not include considerations but it certainly does not have an intention of creating
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legal obligations as one cannot be forced legally to attain a party. It depends on the discrepancy
of a person.
Hence, it can be stated that for a valid contract, an offer shall be made and it must be accepted by
other party with all its terms without any modifications (Singh, 2015). There shall be sufficient
consideration and parties to agree for creating legal foundation.
Case law: in the present case study, Jane offered to sell her catering business for 500000 euros.
Implication of contract law between Jane and Miriam: Miriam accepted the offer to
purchase business for 350000 euros. In this case, there is an offer and consideration but not a
valid acceptance as it was accepted by Miriam with modification. According to contract-law for
a valid contract, offer shall be accepted with original terms only. In this case, Miriam accepted
the offer but with a modification in purchase amount, so it can be stated that there was not a valid
agreement between Jane and Miriam.
Implication of contract law between Jane and Bob: in this, Bob accepted the offer to
purchase business for 50000 euros and deposited same in account of Jane. Here an offer was
made by Jane and accepted by Bob who was also unqualified as he agreed to pay the same
amount as quoted by Jane. This insinuated a valid agreement between Jane and Bob as
consideration was 500000 Euros and it cannot be considered as sufficient as there is a huge
difference between price quoted by Jane and market price of business. Though there was a valid
agreement between Jane and Bob and also the legal enforceability will not rise as consideration
was not sufficient.
In both the cases, there was not a legal contract between parties, hence it has no legal
enforceability.
TASK 2
1. Identification of expressed and implied terms of contract
Expressed term: this can be explained as terms and conditions set out and agreed by
parties to a contract. Parties record their agreement so that it becomes a valid contract (Cowling,
Liu, Ledger, and Zhang, 2015). Once express terms are set out, their interpretation is carried out.
This is done to avoid any ambiguity in rendering those terms for the future.
Implied terms: these are silent terms in a contract which not explicitly expressed. In a
contract, these terms can be implied through law, facts and custom. Court have adopted two tests
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to check whether terms can be implied or not. First is officious bystanders and second is business
efficacy. Through operations of law, certain terms are implied in contract in which a good and
certain quality will only be delivered as sales of goods contract.
Difference between expressed and implied terms:
Expressed terms Implied terms
These terms are set out by parties. Terms are not expressly stated but are implied.
These terms are declared in written form. Terms are understood by behaviour and
actions.
Documents which set out agreements are
interpreted clearly.
Implied term can in facts, in law and by
custom.
All parties agreed to contractual terms then it is
included in agreement.
These terms are not discussed and disclosed as
they are silent terms of contract.
Case study: Health Home Ltd Vs Benjamin
Expressed terms
1. Company Healthy Home Ltd will not accept any liability for personal injury.
2. The maximum damage liability that a person can claim is $50.
3. in case of any conflicts between provision of company and statutory law, provision of
Health Home Ltd shall prevail.
4. The air purifies will be red.
5. The air purifies will be suitable for a room of 200 sq. feet.
Implied terms
1. One year supply of filers at a rate of $199.99.
2. Order will be confirmed after 48 hours from placing it.
3. Order confirmation is done through mail only.
4. Conformity on delivery of goods as described by salesperson.
5. Here, a sales contract is executed and all the provision of related law are applicable.
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2. Implication of exclusion clause
This can be defined as a term that have an intention to limit the liability of a party to
contract for certain specified conditions (Ederer, 2016). This is included in terms of contract to
limit liability in case of breach of contract or negligence. A trust on these conditions can be done
only if:
1. conditions are incorporated in contract
2. there is no ambiguity about those conditions,
3. they adhere to unfair contract terms act,1977 (UCAT)
An exclusion clause can be incorporated in a contract through:
 By signature
 By providing notice
 By course of dealing
Article 4 of sales of goods act stats that warranty, liabilities and obligations of seller and
rights and remedies to buyer in an agreement are exclusive (Arruñada, 2017). Seller cannot be
held liable for any indirect, consequential or incidental damages of any kind under any
circumstances or lack in use of ant aircraft, equipment or any accessory.
Case law: in the present case, Healthy Home Ltd delivered an air purifier of different
colour which was suitable for a room capacity of 150 sq. feet in contradiction with description
given by sales person of company. The air purifier was described as red with suitability for a
room of 200 sq. feet. Benjamin did not take any action rather he started using the product. With a
lower capacity product in a larger room, the purifier exploded and Benjamin got severely injured.
With the implication of relevant laws and exclusion clause, it can be stated that Health
Home Ltd cannot be held liable now for this incident. Benjamin can make a claim for 50 pounds
as expressed in sales terms. The exclusion clause limits obligation of a company, as Benjamin
would have taken an action when air purifier was delivered to him. Now, with restriction of
exclusion clause his rights got constricted.
TASK 3
1. Ways in which a valid contract can be discharged
In a situation, when a valid written agreement is entered by parties become unachievable
due to uncertainties and this is called as frustrated contract. It can be discharged through doctrine
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of frustration where after formation, it becomes impossible to perform the obligation.
Regulations related to it are defined in Law reform (Frustrated contracts) Act 1943. An
occurrence of unforeseen events makes it impossible to perform a contract. Circumstances also
makes it impossible for both or one of the parties to contractual agreement to perform the
obligations under it (Agboola, Scofield and Amidu, 2017). The law of frustration discharges
liabilities and obligations of parties to written agreement. This ends legal enforceability so no
one can be sued or face legal proceedings. Frustration discharges parties from duties of future
performance and rights which accrued before frustration are enforceable by law but rights that
have not accrued yet could not be arise in the future.
The law provides regulation for adjustment of liabilities and rights of frustrated parties:
when a contract is governed by the English law that becomes impassable to perform or
frustrated, parties are being discharged from future performance.
The provisions are stated below:
1. All the sums (consideration) paid or payable by any party for execution of contract which
are already paid can be recovered and are payable in future so that it will not accrued as
contract is discharged.
2. An amount was paid to a party for its performance and party incurred expenses with same
amount for its execution (Crosby and Henneberry, 2016). In such a case, it is the
decision of court that it can order recovery of full or partial amount from party who
incurred such expenses or will be allowed to retain such sum.
3. Any party who receives a significant benefit before discharge of a contractual agreement
shall be recoverable from party.
This can be stated that in case when the performance of a contract seems to be unfeasible
by both or one of the parties to contract and obligation for future performances are discharged.
This means that parties are liberalized from their obligation to perform their duties. The law
reform contract-act also provided that parties can enforce their rights up to the time of discharge
of contractual agreement. Circumstances for discharging a contract can be death of a party,
natural calamities, cessation of facts on basis of which contracts was formulated. The sums paid
before dates are recoverable, amount payables are ceases to exist. With partial performance,
parties may recover partial expenses incurred for carrying out contractual activities.
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2. Remedies available in case of breach of contract
Breach of contract: it is an act committed by a party to contractual agreement in which a
party fails or under this refuses to perform an act. Breach means defective performance or
disability by a party from performance. This means non-performance, faulty-performance or
intentional not execution of activities which a party is obliged to perform under a contractual
agreement.
Breach of contract can be divided into following:
1. Failure or refusal to performance: a clear refusal to perform a contract is prima facie a
breach.
2. Defective performance: this is a case where a party promises to perform one act but
does carry out same activity which is not up to the mark or performance and lacks certain
key material facts (Cifrino, 2014). All these results in faulty performance and as a result,
there is a breach. e.g. a person entered in to a contract to construct 10 duplex houses, he
built 5 duplex and 5 single storey houses which is a breach of contract.
3. Incapacitating oneself: Here, party contract disables himself from performance of his
duty. For example: a seller entered into a contract to sale certain good to a party and
instead he sold same goods to third party for higher amount. This is a case of breach as
seller had a valid contract with former party.
Anticipatory breach: This is a situation, where a party to a contract, before performance
refuses or disables himself/herself. This is state where breach is done before performance. The
execution of which have not yet commenced.
A) Repudiation: In this, a party absolutely refuses to perform its contractual obligation
which shows his unwillingness though he/she is capable to perform. A person who is capable for
carrying out an activity under a contract willingly refuses to perform.
B) Disablement: The subject matters of a contractual agreement are disposed to someone
other than contracting such as execution of sale-contract and then selling it to a third party.
In case of anticipatory breach by one party, other party to contract can:
 Keeping it active
 Accepting the breach
Here contract is kept active it is considered as actual breach and when it is accepted a right to
claim damages and termination is available.
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In case, when breach is not accepted by injured party, he is liable to perform and retain
the rights available to him under contract to enforce other party to perform and carry out primary
obligation. A breach by one party means that other party is prevented from carrying out their
obligations. The injured party who refused to accept breach must take complete acceptance and it
shall be unambiguous and clearly stated that contract is treated at the end.
A breach can be accepted by giving a notice of intention of its acceptance to party to
breach and an action of damage can be taken. With actual breach, an anticipatory breach also
gives a right of termination contracts. This right is raised immediately in case of anticipatory
breach when there is surety of non-performance of contract.
Remedies available:
Termination for breach:
Termination is a remedy available to injured party in case of breach of contract. In this,
injured party is released from its obligations to perform as other party has refused it or is non
performing. Party has been given an option to choose either to terminate the contract or to affirm
breach and make a claim for further performance (Adjustment of rights and liabilities of parties
to frustrated contracts, 2018). Termination is absolute right available to injured party as
defaulting party shall not rely on injured party to get out form contract.
Three situations when termination for breach can be claimed:
 Repudiation: where a party clearly and absolutely refuses to perform
 Impossibility: where performance is disabled by party to contract
 Substantial failure to perform: for any failed performance, a damage can be claimed
but failure in subsequent performance leads to serious injury, a right for termination
arises.
CONCLUSION
In the present report, importance and validity of contractual agreements is discussed.
Offer, acceptance, consideration and contractual intension are the four major elements of it.
From above assignment, it is concluded that for a valid sales contract, both parties agreed on
same terms of offers. Another finding about the same was that it can be divided into expressed
and implicit terms.
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Expresses terms are set out by parties and implicit terms are the ones which are not expressly
stated but are silent and applicable to a contractual agreement. In case where it becomes
impossible to perform it, remedies are available to parties through Law reform contract Act
1943. For a breach, remedies available are termination or affirmation of breach and claiming
damages.
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REFERENCES
Books and Journals
Agboola, A. O., Scofield, D. and Amidu, A. R., 2017. Understanding property market operations
from a dual institutional perspective: The case of Lagos, Nigeria. Land Use Policy. 68.
pp.89-96.
Arruñada, B., 2017. Property as sequential exchange: The forgotten limits of private contract.
Journal of Institutional Economics. 13(4). pp.753-783.
Cifrino, C. J., 2014. Virtual property, virtual rights: Why contract law, not property law, must be
the governing paradigm in the law of virtual worlds. BCL Rev. 55. p.235.
Cowling, M., Liu, W., Ledger, A. and Zhang, N., 2015. What really happens to small and
medium-sized enterprises in a global economic recession? UK evidence on sales and job
dynamics. International Small Business Journal. 33(5). pp.488-513.
Crosby, N. and Henneberry, J., 2016. Financialisation, the valuation of investment property and
the urban built environment in the UK. Urban Studies. 53(7). pp.1424-1441.
Ederer, N., 2016. The price of rapid offshore wind expansion in the UK: Implications of a
profitability assessment. Renewable energy. 92. pp.357-365.
Giliker, P., 2017. The Consumer Rights Act 2015–a bastion of European consumer rights?. Legal
Studies. 37(1). pp.78-102.
Lievens, E., 2017. 'Content-Wherever-You-Go': Towards Cross-Border Portability of Online
Digital Content. In Digital Content & Distance Sales: New developments at EU Level.
(pp. 283-304). Intersentia.
Singh, L., 2015. The United Nation Convention on Contracts for the International Sales of
Goods 1980 (CISG) An examination of the buyer’s remedy of avoidance under the CISG:
How is the remedy interpreted, exercised and what are the consequences of avoidance?
(Doctoral dissertation, University of the West of England).PP 25412.
Twigg-Flesner, C., 2015. The Consumer Rights Directive, Consumer Sales and English Law–
The Fear of Coherence? Pp 187.
Online
Adjustment of rights and liabilities of parties to frustrated contracts. 2018. [Online]. Available
through:<https://www.legislation.gov.uk/ukpga/Geo6/6-7/40/section/1>.
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