Business Law: Analysis of Contractual Agreements and Legal Obligations

This assignment presents a comprehensive analysis of a business law case study, dissecting complex contractual agreements. It meticulously examines the principles of offer and acceptance, including the postal rule, and assesses scenarios involving breach of contract and exclusion clauses. The analysis delves into the legal positions of various parties, exploring issues of consideration, intention to create legal obligations, and the implications of domestic relationships. Furthermore, it evaluates the validity of exclusion clauses, the concept of implied terms, and the application of past consideration. The case study also touches upon the evolution of contract law in response to technological advancements. The document provides a detailed breakdown of each legal aspect, supported by relevant case law, to offer a clear understanding of the legal principles involved and their application in real-world situations.

Running head: BUSINESS LAW
Business Law
Name of the student
Name of the university
Author note

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Paragraph 1
In the given situation in order to derive the legal position of Liam the rules in relation to
offer and invitation to an offer along with postal rule of acceptance have to be applied. In the
given situation it has been provided that HFC had made an advertisement in relation to selling
the tickets at £700 if the letter of acceptance arrived by 5th May and at £875 if the letter of
acceptance arrived after the date. According to the principles of Partridge v Crittenden (1968)
case an advertisement cannot be accepted by a person as it is an invitation to an offer. However
in the given circumstances there advertisement which has been made by HFC is of a complete
nature and any reasonable person would think the advertisement to be an offer as per the
principles of the case of Carlill v Carbolic Smoke Ball Company [1892] EWCA Civ 1. Thus
the advertisement will be considered as a valid offer which can be accepted.
According to the principles of the case Adam v Lindsell (1818) as soon as the letter for
acceptance is posted the acceptance is made. The rule provided by this case is known as the
postal rule and this applies in situation where an acceptance is made by post. According to the
facts the acceptance by Lian has been made by post therefore the postal rule will be applicable.
In the given situation it can be stated that acceptance has been made by Lian as soon as he posted
the letter whether or not the letters reached HFC. That's where the acceptance was made Liam is
not liable to pay the additional £175 demanded by HFC. This rule is different in case of emails as
and acceptance by email is said to be complete when the Email actually reaches the mailbox of
the seller. In the case of Brogden v Metropolitan Railway Company (1877) it has been stated
by the court that where performance of the consideration has been done by the participants to
acceptance. Therefore the letter which has been sent by Lian would be considered as acceptance.

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Paragraph 2
In order to determine the legal position of HFC rules in relation to breach of contract and
exclusion clause have to be applied. The terms of a contract can be divided into two types which
are condition and warranties. When warranty is breached the party is entitled to damages and
when condition is reached the party can claim damages and repudiate the contract. Breach of
contract takes place when a party to the contract is not able to comply with the terms of the
contract. In the given situation it is provided that where HFC was sure that that would not be able
to complete the work on time they provided him with an additional 15000. However as stated in
the case study the work although completed in time was not up to the mark as there were several
defects. In this case it is an implied term that the work which would be done by Ian should be
free of defects as per the case of Southern Foundries (1926) Ltd v Shirlaw [1940] AC 701
where terms which are necessary to get a contract competed are incorporated as implied terms. A
fundamental breach of contract has been committed by Ian and HFC is entitled to repudiate the
contract and trigger the exclusion clause. They also have the right to claim the damages which
has been incurred by them in order to get the repair work completed by another contractor. This
is because the implied term which has been violated by Ian is a condition of the contract. As per
the case of Schuler AG v Wickman Machine Tool Sales Ltd [1974] AC 235 were condition is
breach both repudiation and damages can be claimed.
According to the principles of consideration as provided by the case of Stilk v Myrick
(1809) in situation where additional fees are provided in relation to completing the work already
promised cannot create a new contract. The additional fees of 15000 which had been promised
by HFC is not entitled to be paid legally as there was no contract formed and the fees was
provided in relation to an existing consideration of completing the work on time.

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In the given situation it can be provided that based on the principles of Regus Ltd v
Epcot Solutions Ltd (2008) case where it had been stated that an exclusion clause was
reasonable and valid in situation where the parties to the contract have equal bargaining power.
Thus the limitation of liability clause incorporated by Ian into the contract is reasonable and
valid because both the parties had equal bargaining power at the time when the contract was
formed. This is one of the most important factors which is considered by the court for the
purpose of determining reasonableness of the term.
Paragraph 3
In order to determine the legal position of John and Kevin in this case the rules in relation
to intention of creating legal obligation has to be applied. In the given situation it has been
provided that John and Kevin are friends. Therefore there is a domestic relationship with exists
between them. In the case of Simpkins V Pays (1955) it had been provided that where there is a
social friendship relationship the agreement which is formed between the parties is presumed not
to have the intention of creating a legal obligation however such presumption can be rebutted.
Here it is clear that there is a social friendship relationship between John and Kevin thus it can be
stated that there was no intention to create legal obligation between them and therefore no
contract has been formed between them. In the given situation Kevin has no right to claim any
form of damages from John under the rules of contract as there was no contract form between
them without the element of intention being present.
In addition it has been provided that the ticket had been provided to Kevin by John after
Kevin hand completed some voluntary plumbing work at John’s house. The rules of past
consideration would be applied in this case. According to the provisions of the Re McArdle

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(1951) case a past consideration is not considered as a good consideration. In this case the court
held that where a party has already done something before an offer was made it cannot be
regarded as a consideration. However as stated in the case of Stewart v Casey (Re Casey’s
Patents) (1892) it had been stated that a past consideration can only be valid if a previous
promise had been made by the offeror. In the given situation no promise had been previously
made by John to Kevin that he completes the plumbing work he would be provided with a match
ticket. Therefore where there was no valid consideration a contract between them cannot be
formed. As there is no contract form between John and Kevin there is no legal right which they
have towards each other. However Kevin can make a claim in relation to equitable remedy or
promissory estoppel for the losses which had been incurred by him due to the promise made by
John as by relying on his promise Kevin had suffered a loss.
Change, adaptation or reforms in the future in law of contract
The law of contract has always been subjected to changes due to the circumstances of
trade and the status quo for example the postal rule and the electronic communication rule. In the
future also the law will be reformed in the same way.

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References
Adam v Lindsell (1818)
Brogden v Metropolitan Railway Company (1877)
Carlill v Carbolic Smoke Ball Company [1892] EWCA Civ 1.
Partridge v Crittenden (1968)
Re McArdle (1951)
Regus Ltd v Epcot Solutions Ltd (2008)
Schuler AG v Wickman Machine Tool Sales Ltd [1974] 235
Simpkins V Pays (1955)
Southern Foundries (1926) Ltd v Shirlaw [1940] AC 701
Stewart v Casey (Re Casey’s Patents) (1892)
Stilk v Myrick (1809)