Business Law: Contract Terms, Conditions, and Warranties Analysis

This assignment solution delves into the intricacies of business law, specifically focusing on contract law principles. The analysis begins by addressing the issue of whether an oral assurance constitutes a contract term or a mere representation, examining relevant legal rules like the parole evidence rule, the timing of statements, and the expertise of the parties involved. The solution references key legal cases such as Van den Esschert v Chappell, Oscar Chess v Williams, Dick Bentley v Harold Smith Motors, Bannerman v White, Ecay v Godfrey, and Routledge v Mckay to support its arguments. Applying these principles to a scenario involving a contract for a traditional Indian dance performance, the assignment determines that the assurance of a traditional dance was a term of the contract. Subsequently, the solution explores whether this term was a condition or a warranty, referencing cases like Bettini v Gye, Poussard v Spiers, and Tramways Advertising Pty Ltd v Luna Park to define conditions and warranties and their implications for breach of contract. The analysis concludes that the 'traditional dance' term was a condition of the contract, given its significance to the agreement.

Running head: BUSINESS LAWS
Business Laws
Name of the student
Name of the university
Author note

1
BUSINESS LAWS
Answer 1
Issue 1
Whether the oral assurance which has been provided by kalpana is a term or a mere
representation in relation to the contract with Rafia
Relevant Rule
In order to decide the issue that a statement is to be considered as a representation or a term of
the contract the courts take into consideration a few factors including the parole evidence rule,
the time between the statement and contract formation, relative expertise of the parties and
importance of the statement.
Parole evidence rule
According to McKendrick (2014) the parole evidence rule signifies that when the agreement
between the parties gave been written down than the terms which have been made a party of the
writing only are to be considered as a term or the contract and a verbal statement which was
present becomes a representation
However there is a exception to this rule which had discussed in the case of Van den Esschert v
Chappell [1960] WAR 114. In this case it was stated by the court that when the party has relied
on a statement to get into the contract that it may be considered as a term even if it not mentioned
in the written contract.
Knowledge
In the case of Oscar Chess v Williams [1957] 1 WLR 370 the court came to a conclusion that
in case where the person who is making the representation has more information and knowledge
as compared to the person who receives the representation than such statement is to be regarded
as a term of the contract. On the other hand if it is the person who receives the representation has
more information and knowledge than the statement is held to be a representation.
These provisions had also been discussed by the court on the case of Dick Bentley v Harold
Smith Motors [1965] 1 WLR 62. In this case the plaintiff knew the defendant who was a car

2
BUSINESS LAWS
trader and specialized in prestige market. The defendant had been asked to look for a nicely
vetted Bentley. A Bentley had been obtained and had been recommended to the plaintiff. The
defendant stated that the car has done only 20000 miles after its engines have been replaced.
However the plaintiff discovered that the car had been driven 100000 miles after the refit. The
court had to decided the statement was a representation or term of the contract. The court held
that the statement is to be regarded as a term as the defendant had more expertise in relation to
the car in context.
The importance of the statement and reliance
Where the importance of the statement has been indicated by the representee to the person
making the representation the statement or expression is to be regarded as a term of the
agreement as discussed by the court in the case of Bannerman v White (1861) 10 CBNS 844. In
this case there was an agreement between the plaintiff and the defendant for the purchase of
some hops which were to be used for the purpose of making the beer. He had inquired from the
seller that the hops have been with sulphur or not as he would not buy them if they have been
treated in such a way as he would not be able to make beer using them. It was assured to him that
sulphur had not been used to treat the hops. However the hops in reality were treated with
sulphur. The court in this case held that the hops being not treated with sulphur was a term of the
contract and not a representation as the importance of the term had been communicated to the
defendant and the plaintiff actually relied upon such term to get into the agreement.
The same issue had been discussed in the case of Ecay v Godfrey [1947] 80 Lloyds Rep 286. In
this case the defendant was the seller of a boat to the plaintiff. It has been stated by the defendant
that to the best of his knowledge the boat was sound and free of defect. The boat however turned
out to be defective. The court stated that as the defendant’s statement was not a term and a mere
representation as there was no reliance put upon such term to get into the contract.
Timing
Timing is also on important factor to determine the expression is a term or representation. These
provisions had been discussed through the case of Routledge v Mckay [1954] 1 WLR 615. In
this case the plaintiff had got a motor cycle and a side car by paying $30 and exchanging another
motorcycle. It was stated in the registration document that the transaction is a 142 model but it

3
BUSINESS LAWS
actually tuned out to be a 1936 model. After using it for a few days the claimant wanted to return
the motorcycle. The court stated that this was a representation and not a term of the contract.
Application
In this case it has been provided that there has been a contract between Rafia and Kalpana for the
purpose of organizing “traditional Indian dance” at an event. Before the formation of the contract
between the parties Rafia had notified Kalpana about the importance of the dance being
traditional in nature as if it is no she would not be able to get a deal between USC and the Indian
university and would have not gone into the contract with Kalpana. In the given situation if the
principles of the case of Bannerman v White are applied in the situation than it can be stated that
this would be a term of the contract. This is because where the importance of the statement has
been indicated by the representee to the person making the representation the statement or
expression is to be regarded as a term of the agreement. Here the representee is Rafia and
representor is Kalpana.
Further it has been provided through the scenario that Rafia is an event organizer. In addition it
has been provided that Kalpana is the principal of a dance academy. In this situation it can be
stated that a reasonable person would think that the expertise of Kalpana in mush more that Rafia
in relation to dancing. Where the principles of the Oscar Chess v Williams case are applied in the
given situation it can be stated that the statement which had been made by Kalpana n relation to
the dance being traditional is a term of the contract. This is because where the person who is
making the representation has more information and knowledge as compared to the person who
receives the representation than such statement is to be regarded as a term of the contract. Here
Kalpana being the representor has more knowledge than Rafia.
In addition where the principles of the Routledge v Mckay case is applied in the situation it can
be stated that the statement was term of the contract rather than a representation. This is because
not much time has elapsed since the correspondences between the parties and the formation of
the contract.
However it has been provide through the scenario that the contract has been in written form and
does not have a mention about the type of dance to be formed. As per the parole evidence rule
this would not be regarded as a term because it has not been written down. On the other had of

4
BUSINESS LAWS
the provisions of the case of Van den Esschert v Chappell is applied it can be stated in these
circumstances the parole evidence rule can be excluded because Rafia had relied on such terms
to get into the contract.
Conclusion
Therefore form the application of various legal tests it can be stated that the “traditional dance”
to be performed was term of the contract between Rafia and Kalpana rather than a representation.
Answer 2
Issue 2
Where it is concluded that “the traditional dance” was a term of the contract whether such term
was a condition or warranty
Rule
Conditions of a contract are the fundamental r major terms of the contract and when such term is
breached it goes into the heart of the subject and where there is a failure to perform such term it
will render the remaining part of the contract as different for which it has been formed. These
provisions had been stated by Blackburn J in the case of Bettini v Gye (1876) 1 QBD 183.
Where there is a breach of condition the other party would be entitled to make a claim for
damages as well as repudiate the contract with the party breaching the terms.
According to Knapp, Crystal and Prince (2016) in Australian law warranties are considered as
those terms which are not considered of much importance or which are not as fundamentals as
the conditions of a contract. Where a breach of warranty has occurred it does not in itself make
the parties to the contract entitled to repudiate the contract or terminate while making a claim for
damages otherwise. The only entitlement of the aggrieved party in case of warranty being
breached would be to recover damages as per Poussard v Spiers (1876) 1 QBD 410.
A test of essentiality had been provided by the case of Tramways Advertising Pty Ltd v Luna
Park (N.S.W) Ltd (1938) (SR) (NSW) 632 to determine whether term is a warranty of a
condition of a contract. In this case it had been ruled by the court that the this test is in relation to
the fact that whether from the normal nature of the contract when it is wholly considered, or with

5
BUSINESS LAWS
reference to any specific term or terms, that the term is of such significance to the person to
whom the promise is made that without that he would have not got in the contract unless it was
assured to him that such term would be strictly performed and such must have been apparent to
the person making the promise.
Application
In the given situation the term related to the dance being traditional would be a condition to the
contract if it was one of the primary term because of which Rafia had got into a contract and if
assurance would not have been provided to Rafia about the performance of the term than she
would have not got into the contract as per Bettini v Gye. The term will be considered as a
warranty of it was not the primary purpose for which the contract between Rafia and Kalpana
had been formed as per Poussard v Spiers
In this case it has been provided that there has been a contract between Rafia and Kalpana for the
purpose of organizing “traditional Indian dance” at an event. Before the formation of the contract
between the parties Rafia had notified Kalpana about the importance of the dance being
traditional in nature as if it is no she would not be able to get a deal between USC and the Indian
university and would have not gone into the contract with Kalpana. Through the application of
the test which have been provided in the case of Tramways Advertising Pty Ltd v Luna Park it
can be stated that this was a condition of the contract. This is because when the contract between
Kalpana and Rafia is analyzed as a whole it can be considered that without the assurance of the
promise that the dance would traditional Rafia would not have got into the contract. In addition
this situation was also apparent to Kalpana. Thus it can be stated that this term is a condition
rather than a warranty of the contract between Rafia and Kalpana in the light of the importance
associated with the term.
Conclusion
It can be concluded for the above discussion that the “traditional dance” being performed was a
term of the contract between Rafia and Kalpana.
Answer 3
Issue 3

6
BUSINESS LAWS
What are the remedies which can be claimed by USC in relation to the breach of contract?
Rule
The rules in relation to remedy for the breach of contract are reliant upon the circumstances in
which the breach has taken place.
The type of remedies which may be invoked in case of a breach of contract include the following
1. Rescission
2. Injunction
3. Specific performance
4. Restitutionary awards
5. Damages
The primary remedies which needs to be discussed for the purpose of addressing the issue in
context is that of Damages and rescission.
It has already been discussed through the above mentioned case of Bettini v Gye that in the event
of a breach of condition the innocent party is made entitled to compensatory damages and also
discharge the contract.
The rules in regarding damages as a remedy of contract law have been discussed by the court in
the case of Addis v Gramophone [1909] AC 488. The court has the role of positioning the
innocent party in a situation in which it would be when the contract had been performed rather
than breached.
Further in the case of The Monarch Steamship v Karlshamns Oljefabrika [1949] AC 196 it
had been clarified by the court that damages may only result out of a situation where a breach of
contractual terms is the reason why which the loss gave been caused to the innocent party. It is
also the duty of the innocent party to mitigate any loss cased.
In addition as stated via Hadley v Baxendale (1854) 9 Ex Ch 341 that only those damages
which are reasonably foreseeable or the damages which have been contemplated between the
parties prior to getting into the contract can be claimed by the parties.

7
BUSINESS LAWS
In case of rescinding the contract the innocent party will be placed in the position as if there was
no contract formed as per Car & Universal Credit v Caldwell [1964] 2 WLR 600
Application
In the given situation it has already been established that the condition of a contract has been
breached by Kalpana in relation to the contract with UCS. Thus USC have claim for damages
and recession or repudiation. As per the case of Addis v Gramophone The court has the role of
positioning the innocent party in a situation in which it would be when the contract had been
performed rather than breached and thus the court will provide USC losses in relation to
advertisement cost, and in relation to the deal with the Indian university. This can be further
asserted through the application of the case of Hadley v Baxendale where the damages had
already been contemplated between the parties prior to formation of the contract in relation to the
importance of the traditional dance to the deal with the Indian university. Thus it can be stated
that USC would be entitled to the damages as well as of the contract would not have breached
there would not have any losses caused to USC and the deal would have gone through with the
Indian university.
In relation to the remedy of recession USC does not have to pay Kalpana
Conclusion
Thus in this case USC can claim Damages and recession as a remedy for contract breach

8
BUSINESS LAWS
References
Addis v Gramophone [1909] AC 488
Bannerman v White (1861) 10 CBNS 844
Bettini v Gye (1876) 1 QBD 183
Car & Universal Credit v Caldwell [1964] 2 WLR 600
Dick Bentley v Harold Smith Motors [1965] 1 WLR 62
Ecay v Godfrey [1947] 80 Lloyds Rep 286
Hadley v Baxendale (1854) 9 Ex Ch 341
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).
Oscar Chess v Williams [1957] 1 WLR 370
Poussard v Spiers (1876) 1 QBD 410
Routledge v Mckay [1954] 1 WLR 615
The Monarch Steamship v Karlshamns Oljefabrika [1949] AC 196
Tramways Advertising Pty Ltd v Luna Park (N.S.W) Ltd (1938) (SR) (NSW) 632
Van den Esschert v Chappell [1960] WAR 114