Business Law Case Study: Contractual Issues and Remedies

This business law case study examines a scenario involving a contract for a dance performance. The case explores issues such as whether an oral assurance constitutes a contractual term, the application of the parole evidence rule, and the distinction between conditions and warranties. It analyzes the importance of the statement and reliance, expertise, and timing of the statement. The study further delves into the breach of contract, determining whether the term 'traditional dance' forms a condition of the contract, and the remedies available to the affected party. The analysis draws upon relevant case laws like Van den Esschert v Chappell, Dick Bentley v Harold Smith Motors, Schawel v Reade, Poussard v Spiers, and Hadley v Baxendale to support its arguments and conclusions. The case concludes that the oral assurance is effective, the term 'traditional dance' is a condition, and remedies are available for the breach of contract.

Running Head: BUSNESS LAW
BUSNESS LAW
Name of the Student:
Name of the University:
Author Note

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Question 1:
Issue:
In the given set of circumstances the first issue that has been identified is whether the oral
assurance provided to Rafia by Kalpana would have any effect in the contract signed between the
parties
Rule:
It can be stated that the courts generally consider the following factors while assessing whether
any statement can be called a term or a representation in a contract.
Parole evidence rule
In written contracts which is signed by the parties the courts generally do not take into
consideration any other terms apart from what has been clearly written and agreed upon by the
parties. This doctrine can be defined as the parole evidence rule. It has been opined by
McKendrick (2014) that due to the parole evidence rule the courts generally do not take into
consideration any verbal statements given by the parties in case of written contracts which have
been signed between the parties.
However there are several exceptions to the parole evidence rule. In the case Van den Esschert
v Chappell [1960] WAR 114, it had been held that by the court that that the party had relied on
the on a statement that had been given by the other party even though such statement had not
been expressly mentioned in the written contract. Thus, it was assessed by the courts that such
statement constituted a term and not a representation.
Relative expertise:

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In case of a contract in which a statement has been given by either of the parties who has greater
knowledge, such statement is usually considered to be a contractual term rather than
representation. This had been held in the case of Dick Bentley v Harold Smith Motors [1965] 1
WLR 623. However, in case the person who receives the information has more knowledge and
expertise such statement in the contract would be considered to be a representation. In the
aforementioned case the defendant was a car trader. He had been asked to find a vetted Bentley
for the plaintiff. He did so and stated that the car he was providing to the plaintiff had only been
driven for 2000 miles however, it was later revealed that the car had been driven for 100000
miles after the engine had been refitted. Thus, in this case the court had stated that the defendant
more knowledge about cars than the plaintiff.
Importance of the Statement and Reliance:
It can be stated that in case a representee indicates to the person making such representation the
importance of the statement, the courts will assess such statement to be a term rather than a
misrepresentation. This had been established in the case Schawel v Reade [1913] 2 IR 81. In
this case the plaintiff had purchased a horse from the defendant. The plaintiff had mentioned to
the defendant that he wished to use the horse for stud purposes. The defendant reassured the
plaintiff that the horse was fit and perfectly sound and that there was nothing wrong with the
horse. The plaintiff relied on the statement given by the defendant and did not get a vet to check
the horse. However, it was later discovered by the plaintiff that the horse had been suffering from
hereditary eye diseases and was not fit to be used as a stud. The court held in this case that the
statement given by the defendant was to be treated as a contractual term rather than a
representation as the plaintiff had mentioned to the defendant the purpose for which he wished
to purchase the horse and had blindly relied on the statement provided by the defendant.

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A similar approach of the court in identifying a statement as a contractual term had been
illustrated in the case Ecay v Godfrey [1947] 80 Lloyds Rep 286.
Timing
It can be stated that any statement given either of the parties to the contract is more likely to be
treated as representation rather than a contractual term if a long time has passed between the
making of the statement and the entering of the contract by the parties. This had been illustrated
in the case Routledge v Mckay [1954] 1 WLR 615. In this case it had been held by the court
that the statement was representation and not a term as the registration document was not prima
facie evidence of a contractual term. Neither of the parties had expertise of the statement and that
the lapse of time between making the statement and entering into the contract gave opportunity
to the claimant to check the validity of the information.
Application:
By analyzing the relevant facts of the case, it can be stated that a written contract had been
formed between the parties Kalpana and Rafia. The contract required Kalpana to perform
‘traditional Indian Dance’ at the event. However, it can be stated that prior to the contract
formation Rafia had notified Kalpana about the importance of the dance to be traditional. She
had stated that it was of utmost importance for the event to be successful as that would help USC
get the deal with the Indian University. It can be inferred that Rafia would not have entered in to
the contract if she had known that the dance to be performed by Kalpana was going to be
‘Bollywood dance’. Therefore, by the application of the findings of the case Schawel v Reade it
can be stated that the oral assurance provided to Rafia by Kalpana can be interpreted as a
contractual term and not representation.

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In the given scenario, it has been provided through the facts that Rafia is an event organizaer and
that Kalpana is the principal of a dance academy.. It can be stated that any reasonable man would
assume that Kalpana had more expertise on the statement given by her, which was te assurance
to perform classical Indian dance. Therefore in this situation the decision of the Dick Bentley v
Harold Smith Motors case can be applied. It can thus be stated in accordance with the decision of
the aforementioned case that the oral assurance given to Rafia would be regarded as a contractual
term rather than a mere representation as Kalpana had more knowledge and expertise.
Further it has been provided that there was not much a time lapse between the making of the
statement and entering into the contract. Therefore by the application of the Routledge v Mckay
case, the statement would be considered to be a term and not representation.
However, in this given scenario, it can be argued that the contract had been signed by the parties
and therefore the parole evidence rule should apply to the contract. In spite of being a written
contract signed between the parties, the parole evidence can be subsided in this given scenario as
Rafia relied on the oral assurance. This can be substantiated by the decision of the Van den
Esschert v Chappell
Conclusion
Thus, to conclude it can be stated that the oral assurance in would be effective in this scenario.
Answer 2
Issue:

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The main subject matter of the case is to determine the issue whether traditional dance is
the terms of the contract and further it is to be decided whether it forms a condition or warranty
to the case.
Rules:
The subject matter of the case evolves with the definition and scope of condition and
warranty in a contract. Conditions of a contract are inevitable part and both the parties to the
contract are required to bind by the conditions mandatorily. According to general rule of
contract, if the conditions of a contract could not maintained properly, the nature and character of
contract will be different. Therefore, if a breach to this provision has been observed, the validity
of the contract can be repudiated. In the case of Poussard v Spiers (1876) 1 QBD 410, it has
been held by the court that the affected parties have all the rights to claim compensation from the
wrongdoer regarding the breach made against the conditions of the contract.
On the other hand, warranties are less important compared to the conditions of the
contractual agreement. The terms of the warranties are not fundamental for the validity of a
contract. Therefore, it can be stated that any breach regarding the warranties of a contract does
not empowered the parties to the contract an ability to repudiate the validity of the contract.
However, the parties to the contract can claim compensation from the wrongdoer. In the case of
Bettini v Gye (1876) 1 QBD 183, the court has held that damage is the only solution for any
breach made against the warranty of any contractual terms.
It is very important to analyze whether a term is condition or warranty so that it can be
understood the effectiveness of the term. An observation made in Schuler AG v Wickman
Machine Tool Sales Ltd [1974] AC 235, where the court has held that breach of condition

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results in repudiation of the contract. However, condition is not conclusive even where the
parties to the case have expressly designated any particular obligation. Further, in Tramways
Advertising Pty Ltd v Luna Park (N.S.W) Ltd (1938) (SR) (NSW) 632, it has been held that
until the terms of the contract are regarded as strictly followed up, the terms could not be
regarded as condition of the contract.
Application:
According to the present case, it can be stated that traditional dance was the main
intention of the parties. Rafia wanted to perform traditional dance and she had entered into the
contract with the view that the contracting parties are good at traditional dance. Even the other
party has ensured her that they are good at traditional dance. According to the case of Poussard’s,
it can be stated that the terms of the contract that create direct impact on the fundamental
character of the contract will be regarded as condition of the contract. Considering the case, it
has been observed that traditional dance was the primary object of the contract. Therefore, it can
be stated that the term “traditional dance” is the condition of the contract and further the term
should be regarded as the part of the contract. Further, it can be stated that if the contracted
parties were not good at traditional dance, Rafia would not make the contract with them.
Conclusion:
Therefore, it can be stated that the term “traditional dance” forms a part of the contract
and after analysing the effectiveness of the term, it is regarded as the condition of the contract.
Answer 3
Issue:

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The main issue of this case is to determine whether there are any remedies that can be
claimed by the USC regarding the breach of contract or not.
Rule:
The subject matter of the case is based on the remedies available for making breach of the
contract. There are various remedies available under the contract law where the affected parties
are entitled to claim from the wrongdoer. The remedies can be divided into certain forms such as
injunction, rescission, specific performance, restitutionary awards and compensation. The
damages are considered as a legal remedy for making breach against any contractual terms due
to which the parties to the case could suffer losses. It has been observed in the case of The
Monarch Steamship v Karlshamns Oljefabrika [1949] AC 196, that damages for a contractual
violation depend on the causation and remoteness of the damage. Further, it has been held in
Hadley v Baxendale (1854) 9 Ex Ch 341, where the court has held that the affected party can
claim for the damage to that extent he faces loss by the acts of the other party. In Payzu v
Saunders [1919] 2 KB 581, it has held that the parties to the contract, on suffering loss should
try their best to mitigate the problem and they are restricted to mount up the grievance in
between them. Awards can also be asked in case of any future risk as per Dunk v George
Waller [1970] 2 QB 163. Further, the parties can claim for rescission that are equitable remedy
and can be given by the discretion of judge. However, the remedy regarding rescission can be
given where certain voidable grounds are proved in the contractual violation. The principle of
rescission has been established in the case of Long v Lloyd [1958] 1 WLR 753. Another
equitable remedy is specific performance. It is also based on the discretionary power of the
judges. According to Nutbrown v Thornton (1805) 10 Ves 159, it can state that the application
of specific performance is based on whether the damage against the breach has adequately

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compensated or not. Further, according to the case of Page One Records v Britton [1968] 1
WLR 157, it can be stated that remedies can be available in the form of injunction. There are
three types of injunction can be claimed by the parties such as interim, prohibitory and
mandatory injunction.
Application:
In this case, it has been proved that the Kalpana has violated breach regarding the
condition of the contract and it can therefore be stated that the company can claim remedies from
her. However, the types of the remedy are depending on the veracity of the offence. Considering
the terms of the contract, it can be stated that it has been assured by the parties that the contract is
based on the performance of traditional dance and it has been observed that a breach regarding
the same has been happened and it enable the USC to claim damage from Kalpana.
Conclusion:
Therefore, it can be stated that USC can claim damage from Kalpana.

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Reference:
Bettini v Gye (1876) 1 QBD 183
Dunk v George Waller [1970] 2 QB 163.
Hadley v Baxendale (1854) 9 Ex Ch 341
Long v Lloyd [1958] 1 WLR 753
Nutbrown v Thornton (1805) 10 Ves 159
Page One Records v Britton [1968] 1 WLR 157
Payzu v Saunders [1919] 2 KB 581
Poussard v Spiers (1876) 1 QBD 410
Schuler AG v Wickman Machine Tool Sales Ltd [1974] AC 235
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
Dick Bentley v Harold Smith Motors [1965] 1 WLR 623
Schawel v Reade [1913] 2 IR 81
Ecay v Godfrey [1947] 80 Lloyds Rep 286
Routledge v Mckay [1954] 1 WLR 615

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McKendrick, E., 2014. Contract law: text, cases, and materials. Oxford University Press (UK).