Contractual Relationships and Remedies: Business Law Report

This report delves into the intricacies of contractual relationships within the realm of business law, exploring the essential elements required for a legally binding contract, including offer, acceptance, intention to create legal relations, and consideration. It outlines various scenarios where contracts can be terminated, such as expiration, termination, vitiation, and frustration. Furthermore, the report examines the remedies available to parties when a contract is breached, including damages, specific performance, and injunctions, using a case study involving Raymond and Samantha to illustrate these concepts. It also discusses counteroffers and the doctrine of promissory estoppel, analyzing how they impact contractual obligations and potential remedies. The report concludes by emphasizing the importance of the four essential elements for a valid contract and highlights how the law provides remedies for breaches, ensuring justice and safeguarding the interests of parties involved in business activities.

Breach of Contractual
Relationships and
Remedies

Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK ..............................................................................................................................................3
CONCLUSION ...............................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Business law is that branch of law which looks after all the regulations that govern
business activities of an organisation. Business law is not just confined to to business of an
individual or an organisation. It consist of many acts and laws which are needed to run business
and manage the relationships of the people which can be between sellers, buyers, consumers,
manufacturers, etc. the laws that comes under the ambit of business laws are: insurance law,
contracts law, negotiable instruments, employment law, data protection laws, etc. The laws along
with providing rules and regulations to function properly also provides with the remedies. The
law also safeguard the interest of the innocent party and punish the wrongdoer (Whittaker, 2019).
This report explain the contractual relationships between the parties to the contract. It also gives
understanding of the counter offer and doctrine of promissory estoppel.
TASK
Laws that governs the contractual relationships between the parties who are part of the
contract is commonly known as contracts law. This law regulate the relationships between the
parties who are part of the contract and gives them certain rules to which they are obliged. Any
party to the contract are bound by the rules of the contract law and the law also create certain
obligations upon the parties which are binding in nature (Pédamon, 2018). For a contract to be
legally binding it is very important that the contract formed between the parties should be valid
and legal. There are four essentials given under the contract act which are to be fulfilled to make
the contract valid and legally binding on the parties. The four essentials are: offer, acceptance,
intention of the parties to create legal relationship and consideration.
The first and the most important part to create a relationship between the parties based on
the contracts starts with an offer in which one party makes an offer to other party and that other
party either accepts it or reject it. If the offer is denied there is no contract but if an offer is
accepted then this 'offer and acceptance' together forms an agreement between the parties. This
is the most important step in the creation of the contractual relationship between the parties
(Bernhardt, 2017). After the formation of an agreement between the parties it is important to
have existence of an intention to create legal relationship. The parties must both have clear
intension to create the legal relationship between them. Agreement must not be made under
influence or any false misrepresentation or interpretation. The last and very important essential

of a contract is consideration. It can be in form of money or any other thing. It totally depends on
the understanding of the parties to the contract. Consideration is must in the contract otherwise
absence of it would make the contract invalid.
Contracts makes legal relationship between the parties entering into it. But sometimes
these relationship comes to end due to non fulfilment of the obligations mentioned under the
contract or breach of the duties by either of the parties (Twigg-Flesner, 2017). There are four
ways in which the parties can put an end to the contract. They are: expiration, termination,
vitiation and frustration. Expiration means the date of expiry mentioned in the contract on which
the contract is suppose to be ended. This is decided by the parties at the starting of the formation
of the contract. Termination is when any party to the contract fails or do not perform the duties
or obligations given under the contractual terms and conditions. Next is vitiation of the contract
where the parties have different interpretation relating to the facts of the cases and both the
parties disagree with each other and cant come to any conclusion. The last way in which the
contract can come to an end is by way of frustration. This is the situation when either of the
parties fails to perform the duties mentioned in the contracts and do not fulfil the contractual
obligations. Under this, the parties may seek help from the court and get compensation or
damages for the breach of the contractual terms and conditions. Court provide the innocent party
under the contract act with few remedies too which they can claim where there exist breach of
contractual obligations.
The given case scenario highlights the contractual relationship between Raymond an
Samantha. Raymond works in a tax department of an accountant firm and also he is a sole
proprietor at his own small scale business in which he gives personal advise on taxes. Samantha
was struggling as an artist. They both entered into contractual relationship where Raymond
agreed to prepare draft for Samantha's business for £800. After completion of the work Raymond
asked for the money to which Samantha told him that she can pay only £200. After all the
arguments, Raymond accepted the cheque of £200 as full and final payment. After a month or so,
Raymond read in the news paper that Samantha has turned famous and is selling paintings worth
£20,000. Now Raymond want to claim the remaining amount of £600.
Any contract to have the binding force over the parties it is important to see that all the
essentials of a valid contract are fulfilled by the parties (Dolan, 2017). In the given case, offer
was made and was accepted by the other. There was an intention to create legal relationship and

consideration amount was also present. Therefore there was a valid contract between Raymond
an Samantha.
To safeguard the interest of the parties entering into the contract the law of contracts
gives remedies to the parties in case the contract is breached. The remedies available are
damages, injunction or specific performance. Damages are the compensation in form of money
which an innocent party claim as a substitute to the wrong done by the other party. The next is
the remedy of specific performance in which court compel and order the wrongdoer to fulfil the
obligations mandatory in the contract (Li, 2017). The last is injunction in which court may either
order party to do or either restrict the parties from doing certain act or activity. From all the
above explained remedies, Raymond may take advantage of the specific performance as the
remedy.
In the given case, if Samantha paid £200 three weeks prior, it would be called as counter
offer. In this situation Raymond would have an option to either accept or reject the counter offer
made. Any offer made on an offer already made by some other party is termed as counter offer
(Monateri, 2017). In this situation the offerer comes in the position where he has to accept of
reject any offer. The counter offer destroys the whole offer which was originally made by the
offerer. This was held in the case of Hyde v Wrench.
In the given case, if Raymond had made an offer of £400 as the new offer after the
counter offer already made by the Samantha of £200 then, all the previous offer made by both
Raymond and Samantha will be held invalid and the new offer of £400 will be treated as the
valid one. If Samantha agrees to pay £400 as full and final settlement there exist contract
between them but in case if she refuses then, Raymond has right under the act to sue Samantha
for breach of the contractual obligations which were earlier decided by the parties before
entering into contractual relationship.
In the given case, Raymond wants to claim the remaining amount which Samantha did
not pay to Raymond. The offer was first made by Raymond to which Samantha made a counter
offer to which Raymond agreed and accepted the cheque. This whole situation imposes no legal
obligations on Samantha to pay the remaining amount of £600 to Raymond as while accepting
the cheque Raymond agreed to the payment. Doctrine of Promissory Estoppel states that once
there exist contractual relationship between the parties and promise has been made then the
parties and bound by the obligations to fulfil the said promise (Skelton, 2020). If there is an

existence of promise between the contracting parties then even small amount of consideration
earlier decided could not be changed and the person is under legal obligations to pay and to
receive, this was held in Central London Property Trust v High Tree House. Therefore, after
applying this doctrine, Samantha have no obligatory duty towards Raymond to pay the remaining
amount of £600 as the cheque was already accepted by the Raymond and now no liability
remains on Samantha.
CONCLUSION
This is concluded from this report that for any contract to be valid there should be
existence of the four essentials to form the contract legally binding on the parties. The law of
contracts gives duties, obligations and rights to the parties who enters into a contract. The laws
are made to govern the contractual relationships of the people and business activities. The law do
not only provide the laws that govern people or an organisation but also provide remedies
through which a person can seek justice in case of breach of contract.

REFERENCES
Books and Journals
Bernhardt, R., 2017. Contract or Lease?. Available at SSRN 2895798.
Dolan, C.M., 2017. Understanding employment contracts: What to know before you sign. The
Nurse Practitioner, 42(11), pp.44-49.
Li, X.Y., 2017. The legal status of pre-contractual liability: Contrasting responses from German
and English law. NTU L. Rev., 12, p.127.
Monateri, P.G. ed., 2017. Comparative contract law. Edward Elgar Publishing.
Pédamon, C., 2018. The New French Contract Law and Its Impact on Commercial Law: Good
Faith, Unfair Contract Terms and Hardship. In The Future of the Commercial Contract
in Scholarship and Law Reform (pp. 99-126). Springer, Cham.
Skelton, A., 2020. Restitution and contract.
Twigg-Flesner, C., 2017. Legal and Policy Responses to Online Platforms-A UK
Perspective. Platforms–Business Models and Contracts” at the University of Bayreuth
(6/7 July 2017), Forthcoming.
Whittaker, S., 2019. Unfair terms in commercial contracts and the two laws of competition:
French law and english law contrasted. Oxford Journal of Legal Studies, 39(2), pp.404-
434.