Business Law Assignment: Analysis of Contract Law and Legal Principles

This Business Law assignment provides a detailed analysis of six different legal problems related to contract law. The assignment examines issues such as the formation of contracts between family members, the enforceability of agreements, and breach of contract. It also delves into considerations of public duty, part payment of debts, implied terms in contracts, and exclusion clauses. Each problem is presented with an issue, relevant rules, and supporting case law, including cases like Balfour v Balfour, Stilk v Myrick, and L'Estrange V Graucob. The assignment concludes with a conclusion for each problem, determining the legal outcomes based on the application of contract law principles and relevant case precedents. The assignment covers a range of topics from contractual obligations to implied warranties, providing a comprehensive overview of key concepts in business law.

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

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Problem 1
Issue
The relevant issue in the present factual scenario is whether Charlie and Ali are legally bound or
not. Charlie and Ali are not legally bound as they are brother and sisters and hence they cannot
be held to be legally bound in law. Charlie and Ali have mutually agreed to the terms of the
contract whereby Charlie is prohibited from opening another flower shop. Therefore, it can be
said that they have a contractual obligation towards each other. Another issue to be considered is
whether Ali can sue Charlie for breach of contract.
Rule
In contract law, the most important thing to consider is whether the parties had the intention to
create legal relations and if they had the intention to be legally bound by the terms of the
contract. in cases where it is found that the parties did not have a legally binding contract, the
contract will get the color of a domestic agreement (Nijland 2016). Domestic agreements are
entered into between relatives and family members and they are not used for commercial
transactions. For a court to adjudge if there existed a contract between the parties and whether
they are bound by the terms of the contract, it is imperative for the parties to have a written
agreement. If there is a written agreement, it is easy for the court to declare that the parties were
bound by the contract.
Cases
A relevant case in the present scenario is Balfour v Balfour [1919] 2 KB 571, where the husband
was sued by his wife for not keeping his promise. The husband had orally promised and the court

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found that the oral agreement was not enforceable and the agreement between the husband and
wife is a domestic agreement and therefore it could not be enforced. Again, in the case of Todd v
Nicol [1957] SASR 72, the court held that the written agreement between the parties was
enforceable and they had the legal intention to enter into a contract (Ibrahim et al 2015). The
letter inviting one party to stay at another party’s place is a written agreement and the parties had
the intention to create legal relations. In this case, the court held that the domestic agreement
between the parties was enforceable and is administered by contract law.
Conclusion: Breach of contract
In the present case, Charlie is found to be in violation of his contractual obligations. He has
breached the contract by setting up another flower shop against the decided agreement between
the parties. In this case, the principle of Todd v Nicol [1957] SASR 72 will apply wherein it will
be held that the parties are bound even though it is a domestic agreement.
Problem 2
Issue
The issue in the present case is whether Nick has to pay the extra charges to the Police
Department for the service they have provided. The issue identified in the case is if Nick is liable
to pay in the backdrop that the Police have done his job as a protector.
Rule
In a contract entered between the parties, consideration is the sum that is paid by one party to the
other to make the contract legally enforceable. A contract is valid if there is no consideration.
Australia follows common law and under common law consideration is given emphasis (Brewer

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et al 2016). In cases when the consideration is made by a police officer, it will not be held to be
a valid consideration because the police is executing his own duties and in cases of execution of
public duty, a consideration is not counted. In cases when the police provide duty in excess of its
prescribed duties, it will be an exception to the rule of consideration in public duty. In those
cases when the duty has exceeded, it will considered a valid consideration.
Cases
Stilk v Myrick [1809] EWHC KB J58 is an important case dealing with consideration. ,this
English Contract Case deals with the essentiality of consideration. In this case, the court held that
the service executed by the crewmen demanded a consideration and since the agreement did not
have any consideration, it was held that the agreement was void of consideration (Shatritz,
Borick and Russell 2016). In the case of Glasbrook v Glamorgan CC (1925) the police executed
service in excess of its prescribed service and mounted service guards in the belief that the
company shall the consideration for the extra service provided. Breach of contact occurs when
one party fails to hold his side of the bargain (Rushin 2016)
Conclusion: Breach
Nick will not succeed in his claims against the police department because even though the
police has exercised his duties to protect him, he has been made to work in excess of his duty and
in such cases, the consideration needs to be paid. Applying the principles of Glasbrook v
Glamorgan CC (1925) and Ward v Byham, that asking police to work in excess od his public
duty needs extra effort and therefore he deserves to be paid extra. Asking the police to guard him
at night was within the duties of the police but the extra duty was in excess of his services and
therefore he had to be paid for the services he provided.

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Problem 3
Issue
The issue in this case is whether part payment a legal way to give effect to a contract and make it
valid. The issue to be considered in this case is will Helen sue Mike for the outstanding amount
even though she has asked Mike to check the steering wheel of her car in return of the non
payment of the debt.
Relevant rule to be considered
Going by the rules of part payments of debts, if a part of a debt is paid as settlement, then the
part payment shall not be considered valid in law. In cases when the part payment is associated
with any other payment which is done by one party to the other before the due date approaches,
it shall be considered a valid consideration (Collins 2017).
Relevant Cases
In the case of Pinnel (1602) 77 ER 237, it was held by the court that there was a part payment
and it had been executed in favour of the party. The Court considered that the part payment will
be held to be valid consideration only if the part payment has been done and the rest can be paid
with the help of additional fixtures before the due date passes. Another similar situation arose in
the case of Foakes v Beer [1881–5] All ER Rep 106 where the pre-existing duty rule was
considered in cases of part payment of debts (Ajzerle 2015).

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Is there a breach
In this case, it cannot be said that Mike has breached his contractual obligations. Helen cannot
bring a case of breach of contract against Mike. Mike has already made the aprtial payment of
the debt on time and after taking instructions from Helen, repaired the car according to the
agreement made between the parties. Therefore, working on Helen’s car clears the debt that
Mike owed to Helen and therefore the agreement is such that Mike’s debt is cleared.
Problem 4
Issue
The issue in the present case is whether Lizzie has to pay the extra amount of $20 for keeping the
DVD beyond the stipulated time and whether there was a contract between the DVD shop and
Lizzie.
Relevant Rule
It is a settled principle of contract law that whenever parties try to exempt themselves from any
liability in cases of unsigned contract. Whenever an usual term in included in the contract, the
owner has to take extra precaution so that the other party entering the contract becomes aware of
it.
Cases
Spurling v Bradshaw Ltd in this case it was held that in cases of unsigned contract extra care
needs to be taken to make the other person clearly understand his liabilities. The court in the
landmark judgment upheld the concept of “unreasonable contract” stating in cases of contract
that do not meet the normal eye, the owner has to make it more understandable by marking it

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specially with a red ink (lee and Tang 2015). Therefore those contracts need to be made visible
called the “red hand rule”
Breach
In this case, the DVD shop will not win against Lizzie because lizzie saw the advertisement
giving out the details of the membership but did not mention the unusual terms. The unusual
terms were not explicitly mentioned and therefore there was no breach of contract. the terms
should have been made aware to Lizzie which the owner failed to do.
Problem 5
Issue: the issue in this case is whether Tori has the right to claim damages from the dry cleaner
for the damage done to her dress. Whether the exclusion clause is valid for enforcement of
liability is the issue in the factual case.
Rule
The exclusion clause helps in excluding the liability of a person in a contract. This is a saving
clause that saves the party from incurring liabilities. If the party has signed the exclusion clause,
he cannot claim damaged later. This principle governs the fact that if a party being aware of the
exclusion clause enters into a contract he cannot claim damages.
Cases
In the case of L'Estrange V Graucob [1934] 2 KB 394it was held that after signing the contract,
the parties are bound by the terms of the same and therefore later cannot claim that they were not
aware of it. This principle helps the party from escaping liability (Ahmad and Malkawi 2017).

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Conclusion
Tori cannot win the case against the dry cleaners because there was a contract between the
parties and there is no way the dry cleaners can state that Tori were not made aware of the terms
of the contract. The dry cleaners had explicitly mentioned the exclusion clause in the contract
and therefore there was no misrepresentation. Tori is bound by the terms and cannot sue the dry
cleaners for the damage done to the dress.
Problem 6
Issue
The issue in the present case is whether Mr Smith can be sued by Sandra for giving her wrong
information and whether there was an implied contract between Sandra and Mr Smith regarding
the quality of the product.
Relevant rule
According to section 19 of the Good Act 1958, there is an implied warranty that is attached to
the quality or fitness o a product. In such cases the liability can be fixed. In cases when an expert
gives his opinion based on the requirement of a party and if based on the opinion of the expert,
the buyer buys the product, the expert shall be held liable (Sims 2016). In such cases, it is
important to note whether the buyer has by necessary implications made the expert know the
requirements and has also told that he needs an expert opinion. If the expert makes the buyer
believe that he has specific knowledge and based on that knowledge the buyer buys the product,
he shall be made liable.

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Relevant case
David Jones v Willis (1934) 52 CLR 110 held that if the knowledge of the expert helps the buyer
buy a product and the product does not meet the requirements, the expert shall be made liable.
There shall be a breach of the implied condition that made the buyer believe that the goods were
of a particular quality (Stoop and Taylor 2014).
Conclusion
Sanders will win the case against Mr. Smith because Sanders believed on the expert opinion of
Mr Smith and the quality of the product was not up to the mark. The copier was working slowly
thereby Mr Smith had given wrong information and he had a duty to exercise proper skill and
judgment in giving the opinion. Since Sanders based her buy on the expert opinion of Mr Smith,
he shall be held liable for giving wrong information about the quality of the product.

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Reference
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Ajzerle, S., Brimble, M. and Freudenberg, B., 2015. A (W) hole in the Financial Budget:
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Collins, D.M., 2017. Part-Payment of Debt: A Variation on a Theme?. International Company
and Commercial Law Review, 28(7), pp.253-258.
Ibrahim, N., Asuhaimi, F.A., Abd Ghadas, Z.A. and Zakariah, A.A., 2015. The Application of
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University).
Rushin, S., 2016. Police union contracts. Duke LJ, 66, p.1191.

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Shafritz, J.M., Borick, C., Russell, E.W. and Hyde, A.C., 2016. Introducing public
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