Business Law and Ethics: Contract Law Analysis and Case Study

This assignment analyzes a business law case study involving a contract for an office chair. The student examines whether statements about the chair's qualities constitute contractual terms, specifically addressing the concept of puffery and its legal implications. The analysis delves into whether the chair's features, such as lower back support, are considered conditions or warranties, and the consequences of their breach. Furthermore, the assignment explores the validity of an exclusion clause in the contract, determining if it prevents legal action based on the chair's failure to meet the promised specifications. The student applies legal principles from various cases to determine the rights and obligations of the parties involved, providing a comprehensive understanding of contract law concepts.

Running head: INTRODUCTION TO BUSINESS LAW AND ETHICS
Introduction to Business Law and Ethics
Name of the Student
Name of the University
Author Note

1INTRODUCTION TO BUSINESS LAW AND ETHICS
Table of Contents
Question 1........................................................................................................................................2
Question 2........................................................................................................................................3
Question 3........................................................................................................................................4
Question 4........................................................................................................................................6
Reference list...................................................................................................................................8

2INTRODUCTION TO BUSINESS LAW AND ETHICS
Question 1
Issue
Whether OFFICE PRO X9 is an amazing chair and/or best in the market forms a contractual
term of the contract
Rule
The terms of a contract may be defined as the statements that have been agreed between
the parties to the contract that is, it forms the content of an agreement. The terms of a contract
must be promissory and certain in nature. Puffer, opinions or representation are not considered as
terms of a contract. In law of contract, puffery refers to a promotional claim or statement that
expresses subjective instead of an objective view, which is not literally considered by, and
prudent person as was observed in REA Group Limited v Fairfax Media Limited1.
Further, in Carlill v Carbolic Smoke Ball Company [1892]2, the respondent in their
contentions argued that their actions were mere puffs but the court had other reasons to believe
otherwise. The court held that when an act of puffery is convincing to the extent that any prudent
person would be convinced to enter into a contract, it might be considered as a contractual term.
If the principles discussed in the Carbolic case is applied, it is convenient to determine whether a
clause can be considered as puff in Australia. If any term is convincing enough to make any
reasonable person to enter into a contract, it shall be considered as a contractual term.
Application
1 [2017] FCA 9
2 [1892] EWCA Civ 1

3INTRODUCTION TO BUSINESS LAW AND ETHICS
In the given scenario, if the principle related to puffery is applied, it can be observed that
Samantha did not mention anything more than that the chair OFFICE PRO X9 is an amazing
chair and the best in the market. It is apparent from the words of Samantha that she herself finds
the chair amazing and there is no rule that if one thing appeals to an individual, it shall be
appealable to another person as well. The praising about the chair being amazing can be
considered as puff. Further, she exclaimed that she personally feels the chair to be amazing
which implies it is her personal opinion; hence, it is not a valid term.
However, though the statements made by Samantha, amounts to puffery but it convinced
Peter to purchase the chair, which makes the statement misrepresentation and the puff becomes a
contractual term of the contract.
Conclusion
The statement that the chair is amazing and best in the market is a clear instance of
puffery but since it convinced peter to purchase the chair, it transforms the puff into a contractual
term.
Question 2
Issue
Whether the statement OFFICE PRO X9 provides sufficient lower-back support to enable Peter
work comfortably whole day
Rule

4INTRODUCTION TO BUSINESS LAW AND ETHICS
As per the law of contract, the objective and purpose make the parties to the contract
legally bound by the contract and not the subject intention. In order to determine whether any
reasonable person would enter into a contract merely on representation, the simple objective test
may be applied. As discussed in the Carbolic Smoke Ball’s case, if a puff is convincing enough
to induce any reasonable person enter into a contract, it shall be considered as a contractual term.
In Harling v Eddy [1951] 3, if the buyer is unaware of a particular feature of the product
about which he was not notified at the time of purchasing such product, then such features shall
be considered as contractual terms.
Application
In the given scenario, Peter wanted a chair that he has a serious back problem and
requires a chair that would be comforting for his back and allow him to work whole day without
developing back pain. Peter purchased the chair so that he can comfortably sit on the chair
without suffering from back pain and before purchasing the chair, he ensured that his demands
are satisfied. At the time of purchasing, he clearly stated that he wants a chair that provides a
lower back support. Hence, these features may be considered as contractual terms of the contract.
Conclusion
The statement that OFFICE PRO 9X would provide best lower back support and help
Peter to write without developing any lower back pain shall be considered as contractual terms.
Question 3
Issue
3 [1951] 2 KB 739

5INTRODUCTION TO BUSINESS LAW AND ETHICS
To determine what kind of a term is the statement OFFICE PRO 9X would provide sufficient
lower back support to allow Peter to work comfortably
Rule
In the case of Poussard v Spiers [1] (1876), it was observed that a condition is one of the
essential terms of a contract that is based on the primary subject matter and infringing a
condition would amount to a breach of the words of the contract which is essential. The breach
of contractual terms would entitle the aggrieved party to repudiate the contract immediately and
claim damages sustained by it due to such infringement4. A breach of warranty does not entitle a
party to severe a contract immediately but the aggrieved party may claim damages for the loss
arising out of such infringement as was held in Bettini v Gye [1876]5.
Application
The law of contract states that the contract in question may be categorized into the
following three strategies: Conditions, Intermediaries and warranties. The contractual terms are
essential in a contract in that it reflects the enjoyment or frustration that the parties shall
experience on performing or breaching the terms of the contract. On infringement of a
contractual term, the aggrieved party may repudiate the contract and claim for damages.
In the given scenario, the term that the OFFICE PRO 9X would provide comfort to Peter
and would allow him to write whole day without causing pain in his lower back amounts to a
condition and since the chair did not provide such comfort as was said it would, it amounts to a
breach of a condition.
4 (1876) 1 QBD 410
5 [1876] QBD 183

6INTRODUCTION TO BUSINESS LAW AND ETHICS
Conclusion
Hence, in the absence of the quality desired by Peter at the time of purchasing the chair
defeats the purpose of buying the OFFICE PRO 9X chair for feeling comfortable while writing
without causing lower back pain to Peter as the breach of the condition adversely affected the
satisfaction and enjoyment of Peter.
Question 4
Issue
Whether Peter can be prevented from initiating legal proceeding against Forever
Furniture’s o the ground of breach of exclusion clause stipulated under number 10 of the
OFFICE PRO 9X contract to provide lower back comfort
Rule
In the case of L'Estrange V Graucob [1934], if any party is not informed about any
facts related to the said product and there is no sign of any fraudulent misrepresentation, such
terms shall be binding upon the parties to the contract as well6. In order to incorporate an
exclusion clause in a contract, it requires to be signed by both the parties to the contract as was
stated in Curtis V Chemical Cleaning Co [1951]7. Further, the in case the exclusion clause is
vague or unambiguous, such exclusion clause shall not be considered favorable for the party who
incorporates such clause into the contract.
Application
6 [1934] QBD 183
7 [1951] 1 KB 805

7INTRODUCTION TO BUSINESS LAW AND ETHICS
In the given case, Peter desired for a chair that provides him with lower-back comfort
while he sits and writes for whole day. However, after purchasing the chair, he found that the
chair did not provide any comfort and neither helped him to work all day and disappointed him.
As held in the L’Estrange’s case, Peter did not read the terms that were stipulated in the contract
and as a result was unaware of the terms and facts with respect to the OFFICE PRO 9X chair.
Peter signed the contract without even perusing the contract and its terms; however, he
had to agree with the terms he did not read. This is because in the L’Estrange’s case, if the party
to a contract is not aware of the facts of the contract, and the party is also not subject to any form
of fraudulent misrepresentation, such terms of the contract shall be considered as contractual
terms. Such terms would also have a binding effect upon the parties to the contract.
Nevertheless, there is a difference between a breach of a warranty and a breach of a
condition, which forms an essential part of the contract. Therefore, even if the seller refuses to
consider the terms of the contract, which is actually a condition, and construe it as a warranty, it
shall not be considered valid and legitimate. Since there is ambiguity in the exclusion clause, the
seller cannot use it as a defense for breaching the contract.
Conclusion
Peter is entitled to exercise his rights to initiate legal proceedings.

8INTRODUCTION TO BUSINESS LAW AND ETHICS
Reference list
Bettini v Gye 1876 QBD 183
Carlill v Carbolic Smoke Ball Company [1892] EWCA Civ 1
Curtis V Chemical Cleaning Co [1951] 1 KB 805
Harling v Eddy [1951] 2 KB 739
L'Estrange V Graucob [1934] QBD 183
Poussard v Spiers [1] (1876) 1 QBD 410
REA Group Limited v Fairfax Media Limited [2017] FCA 91