Business Law Case Analysis: Remedies for Breach of Contract

This assignment presents an analysis of several business law cases, addressing key legal concepts. The first case examines the distinction between representations and terms in contracts, discussing the remedies available for breach or misrepresentation. The second case focuses on exclusion clauses and whether a hotel can avoid liability for negligence. The third case explores negligent misstatements and the circumstances under which compensation for pure economic loss is possible even without a contractual relationship. The final case considers the duty of care and compensation in the context of governmental negligence. Each case includes a statement of the issue, relevant rules of law, analysis, and a conclusion, providing a comprehensive overview of the legal principles involved.

Running head: BUSINESS LAW
IRAC ON BUSINESS LAW
Name of the Student
Name of the University
Authors Note

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Answer- 1
Issue
In this paper, the issue to be discussed is whether the distinction between representations
and terms is important for obtaining different remedies which are available concerning breach of
a term as opposed to a misrepresentation.
Rule
In case of a valid and enforceable contract, the first question which comes to the minds of
people is what are the terms and conditions of a contract. In case of violation of those contractual
terms, the injured party can withdraw the contract and also claim compensation from the
defendant. Generally, a contract can be made either verbally or in writing or by behaviour to
perform certain duties. A verbal contract also becomes a valid and enforceable contract but
certain contracts must be made in writing because it is difficult to prove the terms of a verbal
contract. In the case of business practices, it is therefore very common to make a contract partly
in writing and partly through verbal communication. Some verbal or written declarations or
agreements may be meant by parties as contractual terms while others may intent the contract to
be made, but may not be contractual terms. These are called representations. If a representation
becomes untrue, the injured party may obtain redress by proving that this is a misrepresentation
(Osei-Kyei and Chan 2017).
As it is difficult to prove misrepresentation in comparison to breach of terms of the
contract, therefore very important to decide contractual terms and representations, specifically
for those contracts which are concluded partly in writing and partly through verbal
communication. However, but with the help of three tests it becomes helpful to distinguish
between representation and contractual terms. These tests include:
 The stage of the transaction when the crucial declaration has been made;
 Whether the verbal declaration reduced to be made in writing; and
 Whether the maker of a declaration has exclusive knowledge or ability in comparison to
other parties.

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According to the provisions of Section16 of the Sale of Goods Ordinance (SOGO)
specifies that in each contract of sale of goods the products submitted under the contract must of
merchantable quality in the course of business and that the products are appropriate for the intent
that the seller has notified (Ngok 2016).
In Joscelyne vs. Nissen [1970] 2 QB 86 case a father handed over his business to her
daughter who agreed to pay the household bills but her verbal promise was not clearly stated in
the written declaration and thus she refused to pay. The court ruled that to include the
responsibility for these costs, the contractual record must be rectified.
Analysis
Terms and conditions are considered to be one of the most vital feature of a contract. A
contract can be divided into two categories oral and written. The oral terms of a contract is also
valid but for the purpose of enforceability written contracts are helpful.
It is a fact that in reality often it is difficult to differentiate between representation and
terms of a contract. Moreover, at the time of determining whether a declaration is a term of the
contract or representation depends upon whether the parties agree that the quality of the
document will be subject to a contractual obligation.
By applying the three existing tests a distinction can be made between representation and
contractual terms.
As per section 16 of the SOGO the products must be sold at merchantable quality.
By applying the rule of Joscelyne vs. Nissen [1970] 2 QB 86 case it can be the terms of
the contract must be stated clearly.
Conclusion
Therefore, from the above discussion, it can be said that distinction between
representations and terms is important for obtaining different remedies which are available
concerning breach of a term as opposed to a misrepresentation because a breach of the term is
difficult to prove.

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Answer- 2
Issue
In this paper, the issue to be discussed is whether Ken is entitled to claim compensation
from the Grand Hotel.
Rule
The intention of using an exclusion provision is to exclude or restrict responsibility for
contract violation. Therefore, different expressions have been found in the contractual agreement
to reduce contractual liability which includes ‘exemption clause’ or ‘limitation clause’ or
‘disclaimer clause’ (Hodgson 2015). For this purpose, the Control of Exemption Clauses
Ordinances (CECO) [Cap. 7] protects the rights and interests of the individuals and business
persons from unreasonable exemption clauses. It also states that an effective exclusion clause
needs to satisfy the following criteria which include:
 It needs to be included in the contract;
 Its needs to be clear and explicit; and
 No rules of the CECO must be infringed by these clauses.
An individual shall be bound by all terms and conditions if a contract is signed. The
signatories are considered to be told a notice constructively whether they have read it or not. The
party that depends on the exclusion clause must show that appropriate steps have been taken by it
to notify the other party of this exclusion clause (Ho 2017).
In Olley vs. Marlborough Court Hotel [1949] 1 KB 532 case a notice had been
observed by Olley in the bedroom stating that the proprietor would not be held responsible for
the theft of guest’s belongings. However, the court ruled that this exclusion clause has not
incorporated into the contractual agreement because it was informed to Olley after concluding
the contract and these types of notices must be placed in the reception at the time of making
contract and not in the bedroom.
On the other hand, according to the Law of Torts the master or employer, though he has
no personal liability on his part, is responsible if the servant or employee is liable to tort while
performing his duties in the office premises. This rule is known as vicarious liability. However,

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this rule is not applicable if any exclusion clause is applied in this regard (Sharkey 2019).
In Yewen vs. Noakes [1880] 6 QBD 530 case the court held that an employer is held liable to
pay compensation if any damage takes place by the employee.
Analysis
In this scenario, Ken lost his valuable belongings in the hotel and also got injured due to
the negligent behaviour of the employees. However, at the time of making complaints, the hotel
authority refused to entertain complaints by showing disclaimer notice. The notice was displayed
in the check-in counter of the hotel.
Maybe the notice is not observed by Ken but she signed the agreement and therefore it is
not important whether she read the terms or not.
By applying the rule of Olley vs. Marlborough Court Hotel [1949] 1 KB 532 case it can
be observed that Ken is not eligible to claim compensation because the disclaimed was displayed
in the check-in counter and she has signed the agreement which implies that she read all the
terms and conditions.
Similarly, by applying the rule of Yewen vs. Noakes [1880] 6 QBD 530 case Ken is not
eligible to get compensation because the notice was placed at the check-in counter while making
the contract. Moreover, she signed the agreement which implies that she read all the terms and
agreements of the agreement.
Conclusion
Therefore, Ken is not entitled to claim compensation from the Grand Hotel.

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Answer- 3
Issue
In this paper, the issue to be discussed is whether the recipient of negligent advice is
entitled to get compensation for his/her pure economic losses by the advisor without having a
contractual relationship with the adviser.
Rule
As per the law of Torts, if any person suffers any physical loss or property damage due to
the negligent misstatement given by another person, then such person is held liable for the
negligent misstatement and violating the duty of care and such a negligent statement will be
treated as a negligent act (Vinson, Robertson and Cockrell 2018)..
In the well -known case of Hedley Byrne & Co Ltd vs. Heller & Partners Ltd [1964]
AC 465 the court ruled that there exists a special relationship if:
 The party requesting the advice or information trusted that the representative to behave
carefully; and
 The advisor knew or would have known that his/her suggestions or details would be used
by his advisee (Barr-Pulliam, Brown-Liburd and Sanderson 2017).
Even, there exists a special relationship between two individuals without having any
contract if:
 The advisor is either a professional or more knowledgeable person than the advisee;
 The advisee relies on the professional’s advice; and
 The advisor knew or would have known that his/her suggestions or details would be used
by the advisee even if it would amount to misstatement.
In Chaudhry vs. Prabhakar [1989] 1 WLR 29 case the defendant was not a car
mechanic but having some knowledge on cars and relying on his statement a car had been
purchased by the plaintiff which was not in a good condition and faced several accidents.
Compensations had been claimed by the plaintiff on the ground of negligent misrepresentation
and the court held that their relationship has a similarity with a contractual relationship.

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Nevertheless, in reality, no contract has made between them as no amount had been paid by the
plaintiff to the defendant as fees for his advice.
In another landmark case of Caparo Industries PLC vs. Dickman [1990] UKHL
2, based on the defendant firm’s audit report the plaintiff who is also a shareholder to that
company purchased shares and suffered a loss as the defendant firm overvalued the assets of the
company. However, in this case, the court was of the view that there exists no relationship
between the plaintiff and defendant because an audit report is usually made to assist the
shareholders not to assist the probable investor. Thus, no duty of care is owed by the plaintiff to
the defendant.
Analysis
The rule of Hedley Byrne & Co Ltd vs. Heller & Partners Ltd [1964] AC 465 case
stated that an advisor will be held liable for the pure financial loss suffered by a advisee if there
exists a contractual relationship between the advisee and advisor and if the activity and
information of the advisor is trusted and used by the advisee.
However, by applying the rule of Chaudhry vs. Prabhakar [1989] 1 WLR 29 case it
can be said that plaintiff can also claim compensation for pure economic loss from the defendant
if there exists no contractual relationship between them if the advisor knew or would have
known that his/her suggestions or details would be used by the advisee even if it would have
amounted to misstatement.
Conclusion
Therefore, from the above discussion, it can be said that the recipient of negligent advice
is entitled to get compensation for his/her pure economic losses by the advisor without having a
contractual relationship with the adviser.

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Answer- 4
Issue
In this paper, the issue to be discussed is whether Amy’s mother is entitled to get
compensation from Hong Kong Correctional Services of the HKSAR Government.
Rule
A man is held only responsible for those acts for which he or she has a duty of care. The
duty of care is also a monitoring system to assess whether negligence is the product of a
particular circumstance (Sugarman, 2015).
As per the neighbour principle, an individual has to take good precautions to prevent acts
or omissions that are likely to harm his/her neighbour (persons are directly impacted by the acts
or omissions) that he/she can fairly anticipate. The theory of neighbourhood is seen as suggesting
a duty of care if the following three elements are complied with:
 Foreseeability of danger;
 Proximity; and
 Equity, justice and fairness.
In Donoghue vs. Stevenson [1932] AC 562 case the contemporary negligence law was
presented. Which stated that negligence comprises the harm arising from a violation of
responsibility leading to damage or harm of the party to which this accountability is to be owed.
To claim a successful compensation arising out of negligence, four conditions need to prove:
i) The accountable party or defendant has a responsibility of care towards the plaintiff;
ii) That responsibility of care has been infringed by the defendant;
iii) The damage occurs out of this infringement of duty; and
iv) That damage is not too remote (Cassel, 2016).
In Home Office vs. Dorset Yacht Co Ltd [1970] UKHL 2 case a group of young
lawbreakers that had been placed on an island under three prison officers’ supervision. Such
young criminals had histories of crime and some of them had histories of prior escapes. The
plaintiff's yacht was damaged by seven of the boys who escaped. In the case of these adolescent

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criminals, the plaintiff charged the Home Office with the charges of vicarious liability. The court
rules that a duty of care had been owed by the Home Office towards the plaintiff as it was
predictable that if the wrongdoers escaped then the plaintiff would duffer damage of this kind.
Analysis
In this given scenario, a young offender has escaped from Hong Kong Correctional
Services of the Government of HKSAR Government because of the carelessness of the guards.
While escape he stole some controlled drugs, stole a car and by reckless driving hit Amy, a 6
years child who died immediately.
Here the guards of the Hong Kong Correctional Services has a duty of care towards the
people of the society. As the dangerous behavior of the offender is known, therefore the danger
can also be predictable.
By applying the rule of Donoghue vs. Stevenson [1932] AC 562 case it can be observed
that the guards have a duty of care towards the plaintiff which has been violated, a damage
occurs which has injured the plaintiff and the damage is predictable.
By applying the rule of Home Office vs. Dorset Yacht Co Ltd [1970] UKHL 2 case a
duty of care has been owed by the Hong Kong Correctional Home towards the plaintiff as it was
predictable that if the wrongdoer escaped then the plaintiff would duffer damage of this kind.
Conclusion
Therefore, Amy’s mother is entitled to get compensation from Hong Kong Correctional
Services of the HKSAR Government.

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Answer- 5
Issue
In this paper, the issue to be discussed is, whether Adrian could cancel the booking and
get back all the deposit.
Rule
According to the general rule of law, a contract can be made between two or more
persons or organization for a specific reason where both the parties of a contract have an
intention to create a contract. For the purpose of enforceability, a contract needs to be valid. A
contract is said to be valid if it contains all the essential elements, such as offer, acceptance,
consideration and intention to create a lawful contract. According to the law, the parties of a
contract must perform their duties appropriately. If the duties of the contractual parties are not
performed properly a contract is said to be violated.
Both violations of contract and tort are considered to be a civil wrong. Contractual
obligations are nevertheless determined by the contracting parties and are generally due to each
party. Liability for misconduct is not dependent on a relationship that pre-exists. Tortious
obligations are legally enforced and are usually owed to all citizens in society (Rai 2019).
However, there exists such a situation where violation of contract not amounts to a civil wrong.
Sometimes this is so unpredictable in its effects in nature that fair safeguards may not have
stopped this. This situation is called Act of God which includes, heavy rainfall, earthquake, fire,
and theft (Dodds 2015).
In Vaughan vs. The Taff Vale Railway Company [1860] Engr 749 case the court held
that the defendant was not responsible for the fire accident as the accident caused due to fire
sparks from engines and they are bound to operate engines which are constructed with proper
care.
Analysis
In this scenario, Adrian booked a hotel and paid an advance for his marriage ceremony.
Unfortunately the ballroom which has been booked by him was destroyed by fire and the duty of
contract cannot be performed by the hotel authority. The authority to compensate him arranged

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another hotel which is small in size. Adrian demanded the deposit amount which has been
rejected by the hotel authority.
By applying the rule of Vaughan vs. The Taff Vale Railway Company [1860] Engr
749 defendant can refuse to pay back the deposit by using the defence of Act of God.
Conclusion
Thus, Adrian could not cancel the booking and get back all the deposit.

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Reference
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human rights due diligence. Business and Human Rights Journal, 1(2), pp.179-202.
Dodds, G.G., 2015. “This Was No Act of God:” Disaster, Causality, and Politics. Risk, Hazards
& Crisis in Public Policy, 6(1), pp.44-68.
Ho, T., 2017. Whether exclusion clauses practically limit the liability of the carriers of goods by
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Hodgson, M., 2015. To err is human: Negligence and how to avoid it. Journal of Building
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