Introduction to Business Law: Contractual Issues and Analysis Report

This report delves into key aspects of business and corporation law, examining contract formation, mistakes, and breach of contract. It begins by analyzing the elements of a valid contract, including offer, acceptance, and consideration, using the case of Li and the Lame Duck restaurant to illustrate these principles. The report then explores the concept of mistake, differentiating between unilateral and bilateral mistakes, and determining whether a mistake occurred in the given scenario. Finally, it addresses the consequences of a breach of contract, specifically if the restaurant fails to provide the premises for a wedding, outlining the rights and obligations of the parties involved, including potential remedies such as repudiation and damages. The analysis incorporates relevant case law to support the arguments presented.

Running Head: BUSINESS AND CORPORATION LAW 0
Introduction to Business Law
9/28/2019
Student’s Name

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Contents
(a).....................................................................................................................................................2
Issue 2
Rules 2
Application 3
Conclusion 4
(b).....................................................................................................................................................4
Issue 4
Rules 4
Application 5
Conclusion 5
(c).....................................................................................................................................................5
Issue 5
Rules 6
Application 7
Conclusion 7
References........................................................................................................................................8

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(a)
Issue
Does any contract exist between Li and the Lame Duck restaurant?
Rules
A valid contract leads many rights and obligations to parties. Every contract carries a certain
element, presences of which are mandatory. All these elements are essential and in the absence
of any of them, an agreement cannot turn into a contract. Firstly, an offer comes in an agreement
where the person who makes offer present a proposal of doing or not doing a particular task. The
offer is addressed to one specific person, whose acceptance is required. Similar to an offer,
another term also exist in certain cases which commonly known as an invitation to treat. The
same is different from the offer, comes before the same, and demands invite for offers. It means
whenever an invitation to treat exists, other parties have to make an offer in reply to the same.
The case Pharmaceutical Society of Great Britain v Boots [1953] 1 QB 401 has huge
significance here. In the decision of this case, it was provided that goods which are showed in a
shop with their rate tags are considered as an invitation to treat and the customer has to make the
offer to purchase them (Marson, 2013). Then after when shopkeeper accepts such offer, a
contract comes into existence between the parties.
When an offer is made to the offeree, such offeree needs to accept the offer according to the
rules provided in contract law to form an agreement (Legalvision.com.au, 2017). Consent can be
provided through conduct. It was given in the case of Hyde v Wrench (1840) 49 ER 132 that
terms of offer and consent must match with each other. It means consent is required to be

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provided for the same terms given under the given offer without making any changes (Taylor and
Taylor, 2019). The third element is a consideration, which can be anything that has some legal
values. A sufficient consideration seems to be a valid one as given in the case of Chappell & Co
Ltd v Nestle Co Ltd [1959] UKHL. Further, parties to the contract required to have the proper
capacity and intention to enter into legal relations with each other (Finch and Fafinski, 2014).
Capacity does not seem to be there where parties are mentally disabled, insolvent, minor or
incapable in another way to understand the law or fulfill their promises under a contract
(Australiancontractlaw.com, 2019). In those cases where parties do not have any social or
domestic relationship in mutual then an intention to develop legal relationship seems to be there
as decided in the decision of the case titled Esso Petroleum v Commissioners of Customs &
Excise [1976] 1 WLR 1. In this manner, if all, these elements present in a transaction then a
contract exist between the parties.
Application
In the presented case, the placement of the menu card on the table was an invitation to treat
applying the provisions of the Pharmaceutical Society of Great Britain v Boots. To form
contracts, customers were required to make an offer. Li made an offer to the lame duck
restaurant by offering deposit amount. Every element of a contract was presented in the case.
Applying Chappell & Co Ltd v Nestle Co Ltd, the decided consideration i.e. which was
mentioned on menu card was valid consideration due to its sufficiency. No party seems to be
incapable to form a contract as none of them was minor, insolvent or mentally disabled or
incapable in any other way.
Further, no social relationship has existed between Li and restaurant hence applying Esso
Petroleum v Commissioners of Customs & Excise, the intention to develop legal relationship

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seems to be there. Restaurant accepted the offer made by Li by accepting deposit offered by him.
At this moment, a contract came into existence between Li and restaurant.
Conclusion
Due to the existence of all the contractual elements, a contract was there.
(b)
Issue
Does any mistake exist there? In case the answer is yes, then the issue is to identify the kind of
mistake.
Rules
For a valid contract meeting of mind of parties is required to be there. It means parties must be
clear regarding terms of the contract and there must not be any confusion in respect to the same.
Nevertheless, there are certain situations where parties to the contact think differently with
respect to the duration of the contract, the subject matter of the same or any other term. This
misunderstanding is known as mistake under contract law. A mistake can be unilateral as well as
bilateral. As the name implies in unilateral mistake only one of the party is mistaken. Other type
of mistake are bilateral where both of the parties remain on a mistake.
Unilateral mistakes can be divided into two parts such as mistake as to identity and mistake
related to terms of the contract. In the situation of unilateral mistake, the mistaken party has no
option to cancel the contract if could check the facts. The reason behind the same is that since
only one party remain on the mistake, there are chances that such a party can take unfair
advantage of bargain power. Contract rescission and reformation are two of the lead remedy that

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can be provided to parties in case of unilateral mistake. Unilateral mistake is more common in
comparison to other kinds of mistake. Hartog v Colin & Shields [1939] 3 All ER 566 is one of
the leading case in this area where a contract held void for a mistake regarding the price of
subject matter on the part of the claimant.
Application
In the case presented hereby, Li visited the restaurant and looked up to the menu card available
on one of the table. He had reason to believe that the prices mentioned under menu card were the
same as offered by the restaurant and made an offer accordingly. Here Li was not on the mistake
as he was relying on the menu card presented in the restaurant itself. Summer, restaurant
representative was on the mistake as she thought that Li was offering prices mentioned on the
website. Hence, in this manner, it was a one-sided mistake committed by a restaurant
representative.
Conclusion
Conclusively to state that yes, a mistake was there in the contract developed between Li and
lame duck restaurant and the same was a unilateral mistake on the part of the restaurant.
(c)
Issue
To check the consequences in those situations where the restaurant must provide the premises to
Li for the wedding but denied to do so. What will be the rights and obligations of the parties in
such a case?

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Rules
As mentioned above, a valid contract gives rights and obligations to parties against each other.
Each party of the contract is liable to give activities as per the terms of the contract and to
complete the promises mentioned a contract. A contract can be discharged in many ways. The
very first and legal way is the performance of the contract. It can be understood as a situation
when all the parties fulfill their obligation under a contract to each other (Theyagu, 2011). To
avoid all the future legal disputes, the parties should fulfill their promises under a contract.
However, in many of the cases, one or both the parties fail to perform the promises or
deliberately denies to do so. Such cases lead to the issue of breach of contract. In other words, to
say that contract considered as discharge by a breach in those situations where one or more
parties to contract does not fulfill the promises or perform the contract in the manner it was
expected to be. Here it is required to mention that a contract cannot discharge by a breach of
warranty (E-lawresources.co.uk, 2019). It means only because of breach of condition a contract
can be discharge by way of the breach. In all the cases, where a party breaches the contract, the
other party i.e. innocent party gets the entitlement to seek the remedies. Contract law provides,
two remedies to the innocent party in such cases that includes right to repudiate the contract and
right to ask damages. Repudiation of the contract refers to the cancellation of the contract or to
bring the same to an end.
In addition to the normal breach, provisions related to the anticipatory breach are also there. The
anticipatory breach can be understood as a circumstance where one of the parties shows his/her
intention to not to fulfill the promises under a contract or not to perform the same in a decided
manner. In such cases, the other party is not required or liable to wait for an actual breach and

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can sue the defaulted party immediately. If the innocent party wishes so then the same may also
wait for the actual breach to occur or can continue with the contract themselves.
Application
In this case, if lame duck restaurant has liability to provide the premises to Li then the same
must-do son to discharge the contract by way of performance. Further, if the restaurant would
not do so it will lead the issue of breach of condition, as it is the lead requirement of the contract.
Breach of this condition will further bring the issue of breach of contract where being the
innocent party Li would get the remedies. In this manner, Li would have the right to sue the
restaurant for such a breach. If even after this restaurant would not provide the premises, then Li
can repudiate the contract and can also ask for damages.
Conclusion
Conclusively to state that Li can sue the lame duck restaurant in the situation where the same is
obliged to provide the premise but failed to do so. Li can set aside the contract and can also ask
for damages.

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References
Australiancontractlaw.com. (2019) Capacity to contract. [online] Available from:
https://www.australiancontractlaw.com/law/formation-capacity.html [Accessed on 28/09/2019]
Chappell & Co Ltd v Nestle Co Ltd [1959] UKHL
E-lawresources.co.uk. (2019) Discharge by Breach. [online] Available from: http://e-
lawresources.co.uk/Discharge-by-breach.php [Accessed on 28/09/2019]
Finch, E., and Fafinski, S. (2014) Law Express: Contract Law (Revision Guide). UK: Pearson
UK.
Hartog v Colin & Shields [1939] 3 All ER 566
Hyde v Wrench (1840) 49 ER 132
Legalvision.com.au. (2017) What are the Elements of a Contract? [online] Available from:
https://legalvision.com.au/what-are-the-elements-of-a-contract/ [Accessed on 28/09/2019]
Marson, J. (2013) Business Law. UK: OUP Oxford.
Pharmaceutical Society of Great Britain v Boots [1953] 1 QB 401
Taylor, R. and Taylor, D. (2019) Contract Law Directions. UK
Theyagu, D., (2011) Four Ways A Contract Can Be Discharged. [online] Available from:
https://ezinearticles.com/?Four-Ways-A-Contract-Can-Be-Discharged&id=6510051 [Accessed
on 28/09/2019]

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