University Business Law Case Study: BUS2010 Charlie and Nell Analysis

This case study examines a business law scenario involving Charlie Martin and PHOOCI, focusing on a franchise agreement. The analysis addresses key legal concepts such as contract formation, including offer, acceptance, and mutual consent. It explores the validity of the contract, considering potential misrepresentation of terms and the use of a standard form contract. The study also evaluates a potential breach of contract by Charlie, analyzing the concept of material breach and its consequences. Furthermore, the analysis considers the importance of specific contract terms and the burden of proof in breach of contract actions. The case study also briefly touches upon an agreement between Charlie and his sibling, and the implications of time extensions and entire agreement clauses. The conclusion suggests potential resolutions and emphasizes the importance of responsible actions by all parties to avoid litigation.

Running head: BUSINESS LAW
Business Law
Name of the Student
Name of the University
Author Note

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Answer to Question No 1
A contract is an agreement which in intended to be made enforceable by law between
the parties and bind them with contractual obligations. The parties must agree to the terms of
the contract before entering into the contract (Knapp, Crystal and Prince 2016). Charlie
Martin did not understood and agreed to the terms of the contract as the terms that were
explained to him prior to enter into the contract, were totally different. Charlie would not
entered into the franchise agreement, if he had a proper knowledge about the terms of the
agreement he was entering into. It was observed in the case of Bannerman v White that if a
term to contract is of so importance that one of the parties would not have entered into the
contract otherwise, then the term should be treated as an essential term and must be included
in the contract after being agreed by the parties.
Answer to Question No 2
Where a contract includes terms and conditions that are decided by one party and little
or no capacity is given to the other party to negotiate with the terms of the contract, this is
said to be a standard form of contract. It can be referred to as take it as it is or leave it
contract. To avoid any kind of conflict of interest, the standard form of contract might be
used. In this case, the terms Nell explained to Charlie was not incorporated in the actual
contract, and no capacity was given to Charlie to negotiate with the terms as the actual
contract stated that it would override any other contract entered into by the parties before. To
avoid any conflict of interest PHOOCI had drafted the standard form of contract.
Answer to Question No 3
To form a valid contract, there needs to be an offer and acceptance, free and mutual
consent of the parties, a valid meaning of the agreement and an intention to enter into a legal

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relation (Poole 2016). In this present scenario, the contract that existed between Charlie
Martin and PHOOCI, was not valid. The essentials of a valid contract was not fulfilled in this
case. The terms that PHOOCI explained to Charlie prior to enter into the contract was
different than that of the terms stated in the actual contract, was different. The terms and
obligations were stated to Charlie in a deceptive way to make him believe that the contract
would be beneficial to him. The terms were essential to the contract as Charlie would not
have entered into the franchise agreement if he had an actual knowledge about the terms,
which were specified in the contract.
Answer to Question No 4
Assuming that the contract between PHOOCI and Charlie Martin was valid, it can be
argued that there was a breach of contract by Charlie Martin. Charlie, in this case, had failed
to pay the service fund payment committing a material breach. Material breach of a contract
vitiates the terms of the contract, and the party committing the breach shall be liable to pay
damages for the loss suffered by the other party for such non-performance or to specific
performance. In the case of Fletcher-Harlee Corp. v. Pote Concrete Contractors Inc, it was
held that breach of an essential term of a contract shall be treated as a material breach, which
makes the party at fault, liable for the payment of damages or specific performance.
Answer to Question No 5
In this case, to succeed in an action for the breach of contract, it has to be proved in
the Court that the terms of the contract, which was breached by the defendant, was an
essential term in that contract. It has to be proved by the plaintiff that the term was of such
significance to the contract that its breach would left the purpose of the contract meaningless.
The burden of proof shall lie on PHOOCI to demonstrate that in the absence of the term to
make payment under this agreement by Charlie, the contract would not have constituted.

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Answer to Question No 6
A valid contract was there between Charlie Martin and his younger sibling. His
sibling agreed to pay $50000 in the consideration of 10% of the ownership in his business.
This condition was understood and accepted by Charlie and his sibling and it was intended by
both of them create and observe their obligation arising out of it.
Answer to Question No 7
The Court may grant an extension of time to suffice the party to be able to pay their
due accounts. Mostly a standard form of contract, contains such provision to allow a party to
apply for time extension. When a party has committed a material breach of contract and has
been ordered for specific performance, the party may apply for extension of time and the
other party may allow an extension to him to make the due payment prior to take a legal
action.
Answer to Question No 8
An entire agreement clause is a contractual provision which states that the contract is
representing the complete and final agreement between the parties and shall supersede every
other agreement relating to the subject matter between the parties (McKendrick 2014). The
objective of the clause is to make clear the conditions of the document. In AXA Sun Life
Services Plc v. Campbell Martin Ltd and Others, the Court held that it is required in a
contract that the parties make a clear statement in regard to the entire agreement to exclude
the liabilities of a party arising out of that. In this case, the clause stating entire agreement,
would supersede any other term relating to the subject matter, which was explained to
Charlie.

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Answer to Question No 9
Nell Madison misinterpreted the terms of the contract in a deceptive way to Charlie.
The terms of the actual contract were different than the terms which were explained to
Charlie prior to the contract, which made him to believe that the contract would be beneficial
to him. There was a contributory negligence by Charlie that he signed the contract without
understanding the terms. If the parties had acted with responsibilities, the situation could have
been avoided. To avoid litigation, it would be suggested that they arrive at a mutual decision
to fix the terms. PHOOCI needs to consider the payment clause as terms were misrepresented
by them prior to the contract.

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References:
AXA Sun Life Services Plc v Campbell Martine Ltd [2011] EWCA Civ 133
Bannerman v White (1861) 10 CB NS 844
Fletcher-Harlee Corp v. Pote Concrete Contractors, Inc., 482 F. 3d 247 (3d Cir 2007)
Knapp, C.L., Crystal, N.M. and Prince, H.G., 2016. Problems in Contract Law: cases and
materials. Wolters Kluwer Law & Business.
McKendrick, E., 2014. Contract law: text, cases, and materials. Oxford University Press
(UK).
Poole, J., 2016. Textbook on contract law. Oxford University Press.