Business Law Case Study: Contract Breach and Consumer Protection

This assignment presents a comprehensive analysis of a business law case involving Compact Business Systems and its contractual obligations with International Tire Inc. The case examines the validity of contracts, instances of breach of contract, and the potential legal actions and remedies available to the aggrieved parties. It further explores scenarios involving American Tire Corporation, Shawna, and Shady, addressing issues of misrepresentation, overpricing, and consumer protection. The analysis delves into the legal principles of consideration, damages, and vicarious liability, referencing relevant legal precedents and statutes. The assignment covers various aspects of contract law, including offer, acceptance, legality, and consent, providing a detailed examination of the legal implications and potential outcomes of the disputes. Finally, it discusses the actions Shawna and Shady can take against Compact Business Systems, considering consumer protection laws and misrepresentation of facts.

RUNNING HEAD: BUSINESS LAW CASE 1
Business Law Case
Name
Institution

BUSINESS LAW CASE 2
PART ONE
1. A contract is an agreement between two parties which creates legal obligations to be
performed by both parties in accordance to the agreement. The contract between Compact
Business Systems and international Tire Inc. was valid. The agreement conforms to the key
elements of a contract;
i. Offer- Compact Business Systems made an offer to International Tire Inc. to use the
computer repair services.
ii. Acceptance- International Tire Inc. accepted the offer.
iii. Consideration- International Tire Inc. agreed to pay for the services for a 3 year
period in which they would receive services from Compact Business Corporation.
iv. Legality-the agreement between the two parties is legal since they do not intend to
conduct a business that does not conform to the law (Taylor & Taylor, 2017).
v. Consent- both parties in this case voluntarily agreed to sign the contract with
knowledge of its contents.
2. Yes. The contract was breached. Compact Business Systems breached the contract.
On June 1 2017, Compact Business Systems signed a 3 year contract and the terms of the
contract included; Compact Business Systems were required to repair all the computers sent
to it by International Tire Inc. in a timely manner, returning of the equipment was specified to
an average time of 4 business days.
However, in early November the number of days Compact Business Systems took slipped
from 4 business days to 7 or 8 business days. In light of these, Compact Business Systems
were in breach of the contract as they failed to perform their contractual obligations of
delivering the computers within 4 business days as expounded in the contract signed by both
parties. In a contract every party has the duty to meet their contractual obligations failure to
which the aggrieved party can sue for damages or specific performance depending with the

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terms of the contract (Austen-Baker, 2017). In this case International Tire Inc. stopped taking
their computers to Compact Business Systems and can go further to sue Compact for breach
of the terms of the contract.
Once International Tire INC. can prove its claim then it can institute a legal action against
Compact Business Systems for the damages it has suffered as a result of the breach of
contract.
3.
Damages are normally awarded for breach of contract. Usually, the main purpose of grant
of damages for breach of contract is to reinstate the injured party back to their previous
financial status before the transaction (Rowan, 2012). The overall rule states that damages are
intended to place the plaintiff in the same financial position as if the contract had been
completed.
The honourable court would first examine the facts of the case and the nature of the
agreement. The court has to establish whether the contract is valid or not. The court would
seek to find facts that would bring out the damages suffered by the aggrieved party in this
particular case. Since this was a commercial contract, the court could borrow from other
cases in the past having similar facts in helping it to arrive at an amicable decision.
The factors that the court would consider include;
i. Validity of the contract
ii. Parties to the contract
iii. Jurisdiction
iv. The period of the contract
v. The amount involved
vi. Damages and possible remedies
vii. Legality of the contract

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4. The contract between Compact Business Systems and American Tire Corporation is
not valid. This is because the element of consideration is missing, according to the agreement
both parties agreed on $100,000 but later Compact Business Systems discovered that the
contract stated that it was $10,000 as this was an error on the face of the contract rendering it
invalid. Compact will not be able to successfully bill American Tire Corporation $100,000
per year because it contradicts the $10,000 that was indicated in the contract. Compact
Business Systems can claim breach of contract since American Tire Corporation included
wrong figures contradicting their earlier agreement upon which they had believed in.
Therefore Compact Business Systems can seek damages against American Tire Incorporation
(Helewitz, 2010).
5. Shawna can take actions against Compact. The fact that she was overpriced was an
offence and the consumer protection act protects consumers against exploitation. She can sue
Compact for overpricing their products. Shawna can sue Compact’s desk clerk for
misleading her and overpricing a commodity that could have gone at a lower price compared
to what she bought the commodity at. Compact Business Systems in this particular case will
be held vicariously liable for the actions of its employee and shall also be a party in this
particular case in the event Shawna successfully sues them. She can approach a tribunal
dealing with commercial matters; depending with how she puts her case she may be
successful. In the event she approaches the court, given that she is a minor, her parents can
represent her in the case as next friend (Plaintiff) while Compact Business Systems and
Compact’s desk clerk would be the defendants in the case. This matter is expounded in the
case of TELUS Communications Inc. v. Wellman where the issue of overcharging is decided
on similarly as to the case of Shawna since the facts are almost similar (McKendrick, 2012).
6. Shady can successfully sue Compact Business Systems under misrepresentation of
facts act; Shady subscribed to the services of Compact believing that they would solve his

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problem of downloading music for free but instead he was charged double the amount he
previously used. He can sue compact for damages. This is expounded in the case of Barron
vs. Kelly in which the effect of false statement in a contract was examined and further went
ahead to specify that the right to repudiation depends on the facts of the case (Arvind, 2017).
In this matter, Shady agreed to pay on the condition that his expectations would be met but
contrary to this, Compact Business Systems failed to perform their contractual obligations;
based on this ground Shady can sue Compact Business Systems so as to be reinstated to his
previous financial situation before the transaction occurred (Chen-Wishart, Loke &
Ong, 2016).

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References
Austen-Baker, R. (2017). Implied Terms in English Contract Law, Second Edition.
Gloucestershire, England: Edward Elgar Publishing.
Arvind, T. (2017). Contract Law. New York, NY: Oxford University Press
Chen-Wishart, M., Loke, A., & Ong, B. (2016). Studies in the Contract Laws of Asia:
Remedies for Breach of Contract. New York, NY: Oxford University Press.
Helewitz, J. (2010). Basic Contract Law for Paralegals. Aspen Publishers Online.
McKendrick, E. (2012). Contract Law: Text, Cases, and Materials. New York, NY: Oxford
University Press.
Rowan, S. (2012). Remedies for Breach of Contract: A Comparative Analysis of the
Protection of Performance. Oxford, England: Oxford University Press on Demand.
Taylor, R., & Taylor, D. (2017). Contract Law Directions. New York, NY: Oxford University
Press.