Business Law: Contract Law Q&A on Formation and Exclusion

This document presents a comprehensive analysis of contract law, addressing key concepts such as contract formation, invitation to treat, and exclusion clauses. The first part of the assignment examines the formation of a contract between Sam and Danny, focusing on the principles of offer and acceptance, and the concept of invitation to treat, with reference to relevant case law like Partridge v Crittenden and Carlill v Carbolic Smoke Ball Company. The second part delves into exclusion clauses, their application, and limitations, using the case of Jane and the laundry service to illustrate the rules surrounding misrepresentation and unfair contract terms, referencing cases like Olley v Marlborough Court and Curtis v Chemical Cleaning. The document highlights the importance of clear communication and the consequences of misrepresentation in contract law, concluding that no contract was formed between Sam and Danny, and that the laundry authority cannot benefit from the exclusion clause due to misrepresentation.

Running head: BUSINESS LAW
Q & A on Contract Law
Name of the student:
Name of the university:
Author note

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Table of Contents
Answer of part 1:........................................................................................................................2
Issue:.......................................................................................................................................2
Rules:......................................................................................................................................2
Application:............................................................................................................................4
Conclusion:.............................................................................................................................4
Answer to part 2.........................................................................................................................5
Reference:..................................................................................................................................8

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Answer of part 1:
Issue:
In this given case, the primary issue is whether any contract has been formed in
between Sam and Danny or not.
The case is based on the formation of contract. Contract is a legally binding
agreement where both the parties are liable to each other to complete the terms of the
contract. Under the Contract Law, it has been mentioned that offer and acceptance are the
two main base of contract and if the offer and acceptance are made legally, the contract will
be formed in between the parties. However, there are certain exceptions to the principle of
offer. These exceptions are classified as invitation to treat, requests for information and
statements of intention (Calavita 2016). These terms are apparently looks like offer but there
are certain differences in between offer and invitation to treat. In this case, a thorough study
will be done on the different aspects of contract and the process of formation of contract as
well. Additionally, certain remarkable case studies have been made to strengthen the base of
the approaches.
Rules:
The main issue of the given case study is based on the principle of invitation to
treat and it is required to be considered whether a contract in between Sam and Danny has
been formed or not. There are certain differences have been present in between offer and
invitation to treat. If the offer has been accepted by the other party, it will form a contract.
However, different situation is being created in case of invitation to treat (Yadav 2016).
According to Andrew Burrow, the term invitation to treat denotes a readiness to negotiate
(Burrows 2016). Therefore, if a person makes an invitation to treat, it does not mean that he is

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willing to sell the product and no contract will form on the basis of that (Hay and Proctor
2015). In Pharmaceutical Society of Great Britain v Boots [1953] 1 QB 401, it has been
observed by the learned Judges that any poster or banner in any shop is a good example of
invitation to treat. The summary of this case reveals that an advertisement or poster cannot be
termed as an offer as such advertisement does not make the customers to purchase the thing,
but invite to take the goods to certain levels of negotiation where the offer or acceptance will
take place. In Partridge v Crittenden [1968] 1 WLR 1204, where it has been observed that an
offering made by a person regarding certain goods or things could not be treated as an offer
and the person who make the statement is not bound to sell the proposed thing. According to
Lord Parker, advertisements are generally cannot be treated as offer except in certain cases
(Poole 2016). Exception to the rule of advertisement has been observed in Carlill v Carbolic
Smoke Ball Company [1893] 1 QB 256, where the company had made a statement in the
newspaper to pay certain amount to the person who will be affected by the smoke balls. In
that case, the court held that the company is bound to pay the amount to the affected person.
In Fisher v Bell [1961] 1 QB 394, it has been observed that if in a shop, a picture of knife has
been displayed for sale, it does not resembles that the shop is contravening the legislation for
not to sale offensive weapon. In Payne v Cave [1789] it has been stated that a call for bid is
an invitation to treat and not an offer. In Australia, there are certain rules provided to make an
advertisement through electronic transmitted mediums such as email or message. However, it
has been stated that the advertisement or mere statements made by the person could not be
termed as an offer, but invitation to treat and the maker will not be liable to sell the products
to the other interested persons. Under the Electronic Transaction Act 1999, it has been stated
that contract can also be made through email, but such contract should have to maintain all
the essentials of the contract such as there should be an offer and acceptance to the offer
taken place (Grigsby 2016). Further, an intention to create legal relationship should be

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present and the terms and conditions of the contract should be legal in nature (Whish and
Bailey 2015). In the absence of any elements, the process could not be regarded as contract.
Application:
In this present case, it has been observed that Sam has a laptop which he wants to
sell. He has made an advertisement through the online sale and made an advertisement.
Danny was interested and replied it back to Sam and wanted to inspect the proposed laptop of
Sam. Therefore, it can be cleared from the above mentioned topic that Sam had no intention
to place the offer to Danny as he had posted a general advertisement in internet. After the
inspection, Danny found certain scratches but willing to buy the product because of its
affordable price. However, it has been observed that Sam had sold the product to other in lieu
of Danny.
According to the principle of Partridge’s case, it can be stated that Sam had no
intention to sell the laptop to Danny and he had not made any promise regarding the said
product to Danny. Sam had made a general post in the internet and Danny was one of the
interested parties. The same thing has also been mentioned by Sam in the given case.
Therefore, the elements of contract have not been followed in this case. Further, no promise
has been made to Danny by Sam regarding the sale of laptop.
Conclusion:
On the basis of above mentioned rules, it can be stated that no contract was formed
in between Sam and Danny.

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Answer to part 2
(a)
In the given case, the docket given to Jane has certain exclusion clauses prescribed
in the backside of it. Exclusion clause is a term that restricts a party to the contract to claim
damage from the others. Exclusion clause is an example of unfair term and it helps a party to
the contract to get rid of their liability (Howells and Weatherill 2017). Under the common
law system, these clauses are included under the provision of Unfair Contract Terms Act.
(b)
There are certain rules prescribed for the application of exclusion clause. In Olley v
Marlborough Court [1949] 1 K.B. 532, it has been observed that the terms of the clauses
should be brought into the notice of the other party at the time of making the contract. If one
party did not inform about the task to other, such terms should not be a part of the contract
and could not be regarded as an accepted term. In Box 3 L’Estrange v F Graucob Ltd [1934]
2 KB 394, it has been observed that if a party has signed a document, whether or not come
across the terms of the clauses, will be held liable. However, in Curtis v Chemical
Cleaning [1951] 1 KB 805, it has been stated that if the authority had misrepresented the
facts regarding exclusion clauses, the matter should not be treated as an effective clause in
spite of the other party put his consent over the matter. In case of Thompson v LMS Railway
[1930] 1 KB 41, it has been determined by the court that if the parties do not act prudently
regarding the unfair terms and did not serve proper notice to the other party regarding the
clauses, the benefits of the clause cannot be exercised.
In this case, Jane had put her signature on the docket, but legally the document is
ineffective as the authority had misrepresented the facts in order to gain the consent of Jane.

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(c)
It can be learnt from the facts of the case that before put her sign on the document,
Jane had come across the clauses mentioned at the back of the docket. Therefore, she was
aware of the facts that in case of any loss, the laundry will not be held responsible. Therefore,
according to the general rule, the signing party know the facts regarding the exclusion clauses
and in case of any adverse situation, that party could not able to claim any damage. However,
there are certain exceptions to the rule. It has been observed that on asking about the validity
of the clauses, the laundry authority had misrepresented about the facts and stated that the
clauses are not applicable on the colour of the product but on the button of the dress. Jane
was satisfied after hearing the insurance given by the authority and put signature on the
docket. However, on the returning day, it has been observed that the colour of the dress has
been fade away. According to the decision of Curtis v Chemical Cleaning [1951] 1 KB 805,
it can be stated that the terms of the exclusion clauses will not be applied in this case as the
facts were misrepresented to the party by the authority (Lando 2016).
Further, according to the provision of Unfair Contract Terms, the clauses of
exclusion will be imposed if they are reasonable in nature. However, there is no specific
definition of reasonable grounds. It is depending on circumstances. If the clauses are not
clearly mentioned, the provision of exclusion clause will not be applied. Therefore, it can be
stated that in case of any vague terms and conditions, the clause will not be applied.
(d)
The words printed on the back of the docket were not clear in nature. When Jane
was attempted to put her signature on the docket, she found certain clauses mentioned at the
back side of the docket. It was mentioned that the employees will not be held liable for any
losses or damages regarding the cloth. Such wordings are vague as what types of losses were

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not mentioned there. As a result, Jane did not understand what kinds of losses are being
included under the clause and a complex situation has been cropped up therefore. In Kudos
Catering (UK) Ltd v Manchester Central Convention Complex Ltd, it has been observed
that the wordings of exclusion clauses should be clear.
(e)
Jane has certain rights regarding the colour fade of her dress. There are certain
conditions mentioned behind the docket and as the terms are ambiguous in nature, Jane did
not understand the terms. She had asked the employee and the employee told that the
exclusion clauses are applied in case of the button and not in case of colour or any other
cases. However, the dress had been handed over to her; she noticed that the colour of the
dress had been faded away. At this situation, Jane has certain rights that can be applied
against the laundry:
 Jane can file a case against the laundry for spoiling her cloths;
 Jane can claim damage from the authority;
 Jane can file case under misrepresentation.
(f)
In the given case, Jane had to sign the docket where the exclusion clauses were
prescribed and as per the case of Curtis, the laundry authority cannot enjoy the benefits of the
exclusion clause as the wordings of the clauses were not clear and Jane was victim of
misrepresentation of facts. However, in case she did not sign any docket, the authority can
take the plea of exclusion clause if sufficient notice regarding the clauses will serve to her.
Therefore, the terms of the clauses were needed to be cleared and specified (Lawson 2017).

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Reference:
Barton, R.J., 2016. Drowning in a Sea of Contract: Application of the Economic Loss Rule to
Fraud and Negligent Misrepresentation Claims. Wm. & Mary L. Rev., 41, p.1789.
Burrows, A., 2016. A restatement of the English law of contract. Oxford University Press.
Calavita, K., 2016. Invitation to law and society: An introduction to the study of real law.
University of Chicago Press.
Grigsby, L.L. ed., 2016. Electric power generation, transmission, and distribution. CRC
press.
Hay, D.B. and Proctor, M., 2015. Concept maps which visualise the artifice of teaching
sequence: Cognition, linguistic and problem-based views on a common teaching
problem. Knowledge Management & E-Learning: An International Journal (KM&EL), 7(1),
pp.36-55.
Howells, G. and Weatherill, S., 2017. Consumer protection law. Routledge.
Lando, H., 2016. Optimal rules of negligent misrepresentation in insurance contract
law. International Review of Law and Economics, 46, pp.70-77.
Lawson, R.G., 2017. Exclusion clauses and unfair contract terms. Sweet & Maxwell.
Mcdermott, P.A., 2017. Contract law. Bloomsbury Publishing.
Poole, J., 2016. Textbook on contract law. Oxford University Press.
Whish, R. and Bailey, D., 2015. Competition law. Oxford University Press, USA.

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Wilkinson-Ryan, T. and Hoffman, D.A., 2015. The common sense of contract
formation. Stan. L. Rev., 67, p.1269.
Yadav, P.K., 2016. Formation of Contract: A Comparative Study of India and USA.
Young, N., Lewis, J.R. and Lee, J.F., 2015. Insurance Contract Interpretation: Issues and
Trends. Ins. Lj, p.71.