The Law of Contract - Assignment

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Contents
Solution 1....................................................................................................................................................2
Issue........................................................................................................................................................2
Law..........................................................................................................................................................2
Application..............................................................................................................................................3
Conclusion...............................................................................................................................................4
The rules on intention to create legal relations in agreements..................................................................4
Solution 3....................................................................................................................................................5
Issue........................................................................................................................................................5
Law..........................................................................................................................................................5
Application..............................................................................................................................................6
Conclusion...............................................................................................................................................6
Solution 4....................................................................................................................................................7
How a misrepresentation can affect a contract and the remedies available..............................................7
Solution 5....................................................................................................................................................8
Issue........................................................................................................................................................8
Law..........................................................................................................................................................8
Application..............................................................................................................................................9
Conclusion...............................................................................................................................................9
Solution 6....................................................................................................................................................9
A. Difference amid conditions and warranties......................................................................................9
B. How can terms be implied into contracts?.....................................................................................10
Solution 7..................................................................................................................................................10
Issue......................................................................................................................................................10
Law........................................................................................................................................................10
Application............................................................................................................................................11
Conclusion.............................................................................................................................................11
Reference List...........................................................................................................................................12

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Solution 1
Issue
With whom Darren had a binding contract, Jane or Peter or Rob?
Law
In order to make a valid contract it is necessary that there must be: (Collins, 2003)
An agreement – An agreement is made when an offer is supported by an acceptance.
An offer is a statement made by an offeror to an offeree specifying the acts /omission that the
offeror intends the offeree to comply with and expects an approval from the offeree and is held
in Carlill -v- Carbolic Smoke Ball Co. (1893). In Harvey -v- Facey (1893), it was held that an
offer must be unequivocal in order to be valid.
An invitation to treat is different from an offer. In invitation to treat an inviter invites offers from
the public by displaying a notice, advertisement, tender, auction, display, etc. In Partridge -v-
Crittenden (1968), an advertisement is held to be an invitation and not an offer. Any person who
is interested in the advertisement must make an offer to the inviter and when the invter confirms
the offer then it results in the formation of an agreement and is held in C. A. Norgren Co. and
others -v- Technomarketing and others (1983).
When the offer is confirmed by the offeree then it is an acceptance in law. An acceptance is valid
when the same is made confirming the terms of the offer and is held in Brogden -v- Metropolitan
Railway Co. (1877). If an acceptance is made by changing the terms of the offer then it is a
counter offer which has the capacity to cancel the original offer. It is the counter offer which is
construed as the new offer and if approved results in contract formation and is held in Hyde -V-
Wrench (1840).
An agreement must be supported with Legal intention, Consideration and Capacity to make a
valid contract.
The law is now applied.

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Application
An advertisement was posted by Darren Shaw in a local newspaper according to which:
An 18th Century gentlemen’s chair is for sale @ £300.00and are available in green and gold
color. Any person who is interested must write to D. Shaw, 15 Coggleworth Road,
Monshire, MN8 Z88 or call 07088888.”
It is submitted that as per Partridge -v- Crittenden (1968), an advertisement is an invitation to
treat. Thus, if any person intends to buy the chair then he must make an offer to Darren
Shaw.
Contract with Jane
Jane was interested in the advertisement and writes a letter specifying that he would like to see
the photograph of the chair and offer to accept £250.00 for the chair.
Now, since the advertisement is an invitation, thus, Jane must make an offer to Darren which if
accepted result in contract.
Thus, an offer is made by Jane to Darren to buy the chair @£250.00 along with the intention of
viewing the photograph of the chair.
However, the offer made by Jane is not accepted by Darren.
Contract with Peter
Peter also wrote a letter to Darren on Saturday (6PM) that he intends to buy the chair @ £300.00
and enclosed a cheque of the said amount. He further asked as whether he can come and
pick the chair next weekend.
However, the offer made by Peter is not accepted by Darren.
Contract with Rob
Rob called Darren on Sunday at 2 pm. He submitted that he intends to buy the chair @ £250.00.
Thus, an offer is made by Rob to Darren.

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It is necessary that Darren must accept the offer of Rob to make a binding contract.
However, Darren did not accept the offer of Rob and submitted that he would like to sell the
chair at take £275.00. Thus, a counter offer is made by Darren and the offer that is made by Rob
stands nullified by applying the rule under Hyde -V- Wrench (1840). The only offer that is valid
now is the new offer that is made by Darren, that is, to sell the chair @ £275.00.
The offer of Darren was accepted by Rob.
Conclusion
Since the offer of Darren was accepted by Rob thus there is a valid contract amid the two.
The offers made by Jane and Peter were not accepted by Darren and thus there is no contract
with them.
Solution 2
The rules on intention to create legal relations in agreements
Whenever any contract is made then the main elements includes agreement (offer and
acceptance), consideration, capacity and legal intention of the parties.
The legal intention of the parties plays significant role in contract formation. In Air Great Lakes
Pty Ltd v KS Easter (Holdings) Pty Ltd [1989], it was held that any contract without any legal
intention has no relevance and cannot be enforced in law. Legal intention specifies that the
parties to the contract intend to abide by the terms of the contract legally and are willing to go to
court to settle disputes in any arises during the term of the contract.
Now contract can be: (Cheshire and Fifoot, 1984)
i. Domestic in nature: It is a general presumption that when any contract is made amid
the parties who are in the friendly or domestic or social relationship, then, the parties
never intend to abide by the contract legally and is held in Balfour -v- Balfour (1919).
Such contract have no relevance in law and are gratuitous in nature.
But the presumption can be rebutted and it was held in Merritt -v- Merritt (1970) and
Simpkins -v- Pays (1955) that if evidence can be laid which portrays that the parties in

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social relation intend to abide by the contract legally, then, such contract is valid in
law.
ii. Commercial in nature: It is also a general presumption that when any two parties to
the contract are in commercial or business relationship, then, the parties intends to
abide by the contract legally and is held in Jones --v- Vernon's Pools Limited (1938).
However, this presumption is rebuttable and if evidence an be deduced regarding the
same then commercial contract are not enforceable because of lack of legal intention
and is held in Rose and Frank & Co v Crompton [1923].
Thus, these are the two basic rules which must be kept in mind relating to ‘legal
intention’
Solution 3
Issue
Whether Jeff can terminate the contract with the auction house on the ground of mistake?
Law
In common law any contract which suffers from mistake are void contracts. However equity
prevails along with common law in situation to bring justice to the parties. Mistake normally
means any judgment or act that is misguided.
A mistake has the capacity to consider the contract as void when the mistake goes to the root of
the contract. These are three kinds of mistake: (Poole, 2016)
i. Non est Factum – In written contracts, when a party claims that the document signed
by him is not what he intends to sign, then it is a mistake and a contract can be
terminated and is held in UDT Ltd -v- Western (1975).
ii. Unilateral Mistake – When only one of the parties is mistake regarding any term
quantity, term etc then the mistake is unilateral.
iii. Bi-lateral Mistake – When both the parties are mistaken then the mistake is bilateral.
When both the parties are mistaken on two different things that the mutual bilateral
mistake but when both the parties are mistaken on the same thing then it is common
bilateral mistake.

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However, when the mistake is regarding the quality of the product then in Leaf -v- International
Galleries (1950), both the parties are mistaken on a common thing, that is, the quality of the
painting, it was held that the mistake does not fall in any of the category as the mistake is not
about the product itself but about the quality of the product and thus there is no remedy.
However, in equity the bilateral common mistake regarding the quality can be rescinded and is
held in Solle -v- Butcher (1950).
The law is now applied.
Application
A painting was bought by Jeff considering the same to be a Renoir and paid £250,000 for the
same. However after one year it was discovered that the painting was not listed in the artist’s
catalogues. It was found that the painting done by a pupil of Renoir and that it was only worth
£30,000.
It is submitted that when Jeff purchased the painting then he is of the belief that the painting was
by a Renoir. Also, when the painting was sold then the auction house also believed that the same
was made by Renoir. Thus, both of them are mistaken and thus the case fall in bilateral common
mistake.
But as per Leaf -v- International Galleries (1950) the mistake is regarding the quality of the
painting and not the painting itself. Thus, the contract cannot be cancelled.
But, in equity the contract can be rescinded as held in Solle -v- Butcher (1950).
Conclusion
Jeff cannot terminate the contract as the mistake is bilateral common mistake and by applying
the law in Leaf -v- International Galleries (1950) but in equity it can be rescinded by applying
Solle -v- Butcher (1950).

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Solution 4
How a misrepresentation can affect a contract and the remedies available
Misrepresentation is the statements of facts which are false in nature and are made by one party
to another inducing the other to establish a contract with the first party. Thus, the main
ingredients to prove misrepresentation are: A Misrepresentation is are: (Cartwright, 2002)
i. False – It is necessary that the statement so made is not true regardless of the fact
whether the same is made fraudulently or not. Thus an honest statements made by the
party which is in fact is false, falls in the category of misrepresentation.
ii. Statement – Any written, verbal or gestures can comprise of statement but must be
made by party to the contract or by his agent. The statement so made must not be
contractual term.
iii. Of fact – the statements o made must be of fact and not law. It is a settled law that
ignorance of law is no defense. Thus, to consider misrepresentation it is necessary
that the statement must be of fact and is held in Solle -v- Butcher (1950). Statements
of intention at times be considered as statements of facts and is held in Edgington -v-
Fitzmaurice (1885). Statements of opinion were not held to be statement of fact in
Bisset -v- Wilkinson (1927).
iv. Made by one party in the course of negotiations – It is necessary that the statement so
made must be made by one of the party to the contract or his agent. It is also
necessary that the statement so made must be at the time of negotiation of the
contract. The statements made after the contract does not amount to
misrepresentation.
v. Inducing the other to enter into the contract – The main intention of the party who is
making the statement is that the statement is made with the intention and inducing the
other party to establish a contract with him.
Compliance of all the elements results in misrepresentation and the remedy depends upon the
kind of misrepresentation:
i. Fraudulent misrepresentation- The contract can be terminated along with damages
(Derry -v- Peek (1889)
ii. Negligent misrepresentation – The contract can be terminated along with damages.

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iii. Innocent misrepresentation – Rescission or damages.
Thus, this is the basic law that deals with misrepresentation.
Solution 5
Issue
Whether Nadine and Sid can sue the hotel for the cancelation of the programme?
Law
The law of frustration is applicable in the given scenario.
When any contract cease to exist amid the parties because of the incurrence of some supervening
event which is out of the control of the parties and it becomes impossible for the parties to the
contract to comply with the terms of the contract then the contract is considered to be frustrated.
When frustration occurs then there is no party who is at fault and thus no party can be imposed
with damages for the termination of the contract. In Parradine -v- Jane (1647), it was held that
because of some supervening event the contract become impossible to perform then the contract
is frustrated relieving the parties from their contractual duties. However, in Taylor -v- Caldwell
(1863) it was held that if the event is already made part of the contract or can be foreseen by the
parties, then, the contract cannot be terminated on account of frustration.
Impossible to perform is different from difficult to perform and no frustration occurs when the
contract is difficult to perform and not impossible to perform and is held in Davis Contractors
Ltd --v- Fareham UDC (1956).
Some of the instances where the contract was terminated on account of frustration includes:
i. When the contract becomes impossible to perform because of some government
intervention or change in law and is held in Avery -v- Bowden (1855) ;
ii. When the contract is for personal services and the party to the contract dies or
becomes ill, etc resulting in non performance of the contract and is held in Condor -v-
The Barron Knights Ltd (1966);

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iii. When the purpose for which the contract is made cease to exist then the contract is
terminated and is held in Codelfa Construction v State Rail Authority of New South
Wales (1982);
iv. When the subject matter to the contract itself is destroyed and I held in Taylor -v-
CaIdwell .
The law is now applied.
Application
The hotel made an advertisement submitting that rooms are “New Year’s Eve, Thames Firework
Rooms” and these rooms were 50% more expensive as compared with other rooms.
A hotel is booked by Nadine and Sid (3 months before the event) with an intention to view the
firework display over the Thames on New Year’s Eve @ £300.00
However, on 30th December, an announcement was made on national television that the firework
display was cancelled due to high storms being forecast.
It is submitted that the main reason for the booking of the room by Nadine and Sid was that they
had to view the firework display over the Thames on New Year’s Eve. However, because of the
government intervention the programme was cancelled. Thus by applying Avery -v- Bowden
(1855) it is submitted that the contract cannot be completed because of the incurrence of some
supervening event and because impossible to perform.
Thus, the contract is frustrated.
Conclusion
Since the contract is rescinded on account of frustration, thus, Nadine and Sid cannot sue for any
damages for cancellation of contract.
Solution 6
A. Difference amid conditions and warranties
When any contract is made then the parties must comply with the contractual terms. Depending
upon the importance of the terms the terms can be divided not:

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i. Conditions – Condition are the terms which are so important to the contract that of
the same are not performed by any of the party to the contract then the essence of the
contract is hampered. These are root terms are necessary for the establishment of the
contract. If the conditions are violated then the aggrieved party has every right to
cancel the contract and seek damages and is held in Poussard v Spiers and Pond
(1876).
ii. Warranties – Warranties are those terms to the contract that cannot be considered to
be the root of the contract, rather, these are the terms which are additional to
conditions and are required for the proper functioning of the contract. if warranties
are violated then the aggrieved party can only ask for damages and is held in Bettini
v Gye (1876).
B. How can terms be implied into contracts?
The terms that are made part of the contract must be complying with by the parties. The terms
are express and implied.
Express are those terms which are made part of the contract expressly by the parties, either in
written form or verbally.
Implied terms are also made part of the contact not by the parties themselves. These are the terms
which are made part of the contract by implication and must be carried on by the parties under
the obligation of law, custom, usage, trend, etc. though parties themselves does not made these
terms as part of contract but the same are still bound upon the parties and must be performed by
them in order for the smooth functioning of the contract.
Solution 7
Issue
Whether the contract amid John and Roger is valid?
Law
In law, there is no relevance that is attributed to illegal contracts in the law of contract.

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A contract is considered to be illegal when the terms of the contract or the intention of the parties
to the contract is to commit any kind of offence civil or criminal) or the contract are immoral in
nature or contracts to commit corruption in public, ect. In Dann --v- Curzon [1911] the parties
enter into contract to commit a criminal wrong is held to be an illegal wrong and thus no
enforceable in law.
The law is now applied.
Application
Jon and Roger meet at a pub and decided to commit a criminal offense together. They together
decided to rob a post office. In order to decide the role they play in the robbery and the amount
of share each of them will get (50/50), John formulated a contract to such effect.
It is submitted that the contract that is made amid John and Roger is to commit a criminal wrong
and which is prohibited in law. it is an illegal act and thus the contract to enforce the same is in
itself is illegal and thus not enforceable.
Conclusion
The contract amid John and Roger is invalid in nature as the same has an illegal object to
enforce.

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Reference List
Books/Articles/Journals
Collins, H. (2003) The Law of Contract. Cambridge University Press.
Cheshire, G and Fifoot, G. (1984) The Law of Contract. Butterworths.
Cartwright, J. (2002). Misrepresentation. Sweet & Maxwell.
Poole, J. (2016) Casebook on Contract Law. Oxford University Press.
Case laws
Air Great Lakes Pty Ltd v KS Easter (Holdings) Pty Ltd [1989] 2 NSWLR 309.
Avery -v- Bowden (1855)
Balfour -v- Balfour (1919);
Bettini v Gye (1876) 1 QBD 183
Brogden -v- Metropolitan Railway Co. (1877).
Bisset -v- Wilkinson (1927).
Condor -v- The Barron Knights Ltd (1966);
Codelfa Construction v State Rail Authority of New South Wales (1982);
Carlill -v- Carbolic Smoke Ball Co. (1893).
C. A. Norgren Co. and others -v- Technomarketing and others (1983);
Davis Contractors Ltd --v- Fareham UDC (1956).
Derry -v- Peek (1889).
Dann --v- Curzon [1911]
Edgington -v- Fitzmaurice (1885).
Harvey -v- Facey (1893),
Hyde -V- Wrench (1840);

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Jones --v- Vernon's Pools Limited (1938)
Leaf -v- International Galleries (1950),
Merritt -v- Merritt (1970):
Poussard v Spiers and Pond (1876) 1 QBD 410
Partridge -v- Crittenden (1968),
Rose and Frank & Co v Crompton [1923] 2 KB 261;
Solle -v- Butcher (1950).
Simpkins -v- Pays (1955).
Taylor -v- Caldwell (1863)
UDT Ltd -v- Western (1975).