Commercial Law Assignment: Contract Disputes Case Study Analysis

This case study analyzes a commercial law scenario involving contract formation, breach, and misrepresentation. The assignment examines the elements of a valid contract, including offer, acceptance, and consideration, and applies these principles to the interactions between Alan, Bernard, Charleen, and Damien. The analysis addresses whether contracts were formed between each party, considering issues such as counter-offers, the postal rule, and the capacity to contract. Furthermore, the case study explores the consequences of a breach of contract, including the right to claim damages and misrepresentation, focusing on the rights of Bernard and Damien. The assignment also includes an overview of Alternative Dispute Resolution (ADR) methods like mediation, arbitration, and conciliation, discussing their advantages and disadvantages in resolving contractual disputes. The student concludes that there were contracts between Alan and Bernard and Alan and Damien, but not between Alan and Charleen, and explains the rights of each party involved.

Running Head: CASE STUDY

2
CASE STUDY
Introduction
When two or more parties come together and promise each other, where one side holds
the promise of doing something and the other side promises to pay the consideration amount to
the other party for doing this thing, a contract is formed (Clarke & Clarke, 2016). However, apart
from a mere promise, there are certain ‘components’ which have to be present for giving the
legal validity to this contract, and these are the offer being made, which has to be given an
acceptance, where the promise needs to have a value of consideration, there has to be clarity in
terms of contract, intention of the parties and lastly, their contractual capacity to result in
contract formation. Where the promise on which the contract had been made is not upheld, the
contract is deemed to be breached. When a dispute is caused due to such breach, the parties can
refer the matter to be solved through an alternative dispute redressal method (Treitel & Peel,
2015). Here, these very facets would be discussed, particularly in context of the case study given.
Part i.
Issue:
The key issue of this case revolves around the presence of a contract between the parties
of the case study.
Rule:
In order to create a contract, the first requirement is for the contract to have an offer. An
offer covers certain terms which the party offers to the other party. An offer is different from an
invitation to treat, which comes before an offer and covers the negotiations for the possible
contract. An offer shows the intent of the party to create legal relations, which is not present in

3
CASE STUDY
an invitation to treat. This differentiation is of particular importance in context of the
advertisements (Bonell, 2009). These are deemed as an invitation to treat in general and in
Partridge v Crittenden [1968] 1 WLR 1204, this rule was upheld by the court of law, as a result
of which the defendant was not held liable. However, in case the wordings of the advertisement
are such that can be accepted through performance, it is deemed as unilateral example and a
leading example of this is Carlill v Carbolic Smoke Ball Company [1893] 1 QB 256, as a result
of which the company had to pay the promised sum to the plaintiff (Latimer, 2012).
The next step in formation of contact relates to an acceptance being garnered on the offer
made. The offer has to be accepted in the exact wordings in which it had been drawn. Where the
communication of acceptance covers any changes in the offered terms, instead of being deemed
as an acceptance, it would be deemed as a counter offer (Carter, 2007). Hyde v. Wrench (1840) 3
Beav 334 dictates that upon such occurrence, the original offer no longer stands (Marson &
Ferris, 2015). The acceptance has to be communicated properly, or else it would be valid;
particularly a silence is not deemed proper acceptance as was held in Felthouse v Bindley (1862)
EWHC CP J35 (Andrews, 2015).
The date of acceptance is a major part of acceptance and is deemed as such date on which
the communication of acceptance sent by the accepting party, reaches the offering party. But,
when it comes to the postal rules of acceptance, they act as a key exception (Elliot, 2011). These
rules provide that the date of acceptance is the date on which the party posts the letter containing
the acceptance. This is because the postal office is given the status of being the agent of the
offering party, when they elect to get the acceptance through mail. The date on which this letter
actually reaches the offering party, is not of importance (Ayres & Klass, 2012). Adams v.

4
CASE STUDY
Lindsell (1818) 106 ER 250 resulted in the contract being deemed as valid, owing to the
formation of contract (E-Law Resources, 2017).
The third requirement in formation of contract relates to consideration. This requirement
presents that the contract needs to have a valid consideration, in terms of having economic value
and can be mutually decided between the parties (Paterson, Robertson & Duke, 2012). Even
though wrappers do not have economic value in general and are treated as garbage, in Chappel &
Co Ltd v Nestle Co Ltd [1960] AC 87 these were deemed as valid consideration owing to
condition precedent (Australian Contract Law, 2010a). The contracting parties also need to have
the capacity to created legal relations and need to have attained majority and be of sound mind.
There is a need for the terms of contract to be clear and the parties to have the intent of entering
in legal relation (Frey & Frey, 2005).
Application:
This case depicts that through a post on facebook, Alan had made an offer to the students
of Kaplan and to his friends and the date of offer was November 01. The reason for treating this
as an offer was that by paying the asked sum, a person could accept the offer, as per Carlill v
Carbolic Smoke Ball Company.
The reply made by Bernard on this facebook post has to be taken as a counter offer. The
reason for this lies in the changes being demanded in the original offer posted on the facebook.
And Hyde v. Wrench would state that the earlier offer expired when this comment was posted,
for Bernard. Another counter offer was made by Alan to Bernard reiterating the original offer.
This offer was accepted by Bernard through post on November 04, through post, making it the
date of acceptance, instead of November 05 when Alan got the letter. Alan had the intent of

5
CASE STUDY
getting in a contract as he looked out for money. As nothing to prove the contrary is present, the
other elements of contract are assumed to be fulfilled, resulting in the contract being formed
between the two.
In the case of Charleen, an offer had not been made, since she was not a friend of Alan,
instead was her sister; and also did not study at Kaplan yet. When Charleen made the offer to
Alan to purchase the book, he did not give his acceptance as Felthouse v Bindley dictates that
silence is not acceptance. So, a contract was not formed.
When it comes to Damien, as he was Kaplan student, the offer was made to him. He
accepted the same on evening of November 04 by handing the cash to Alan, resulting in a
contract being formed.
Conclusion:
Thus, the issue highlighted earlier has been solved and it is presented that there was a
contract between Alan and Bernard, and also between Alan and Damien, but never between Alan
and Charleen.
Part ii.
Issue:
The key issue of this case revolves around the presence of a contract between Alan and
Bernard, giving Bernard certain rights.
Rule:

6
CASE STUDY
When a contract is formed, it is important that the terms covered under it, particularly the
promise made, is upheld. When this is not done, a breach of contract takes place and this result in
the aggrieved party getting certain rights in terms of breach of contract (McKendrick, 2014).
One of the vitiating factors in a contract is misrepresentation, which refers to a false
statement, particularly of fact, being made by one party, just so that the other party gets induced
to enter the contract. The presence of misrepresentation gives the aggrieved party the right to get
the contract rescinded as misrepresentation results in voidable contracts (McKendrick & Liu,
2015).
Application:
In this case, Alan had promised Bernard under the drawn contract that he would give
Bernard the notes and his book. Though, this promise was not met, which meant that the contract
was breached. This gives Bernard the right to claim damages from Alan. He can also make a
claim for misrepresentation against Alan for stating falsely that he would be given handwritten
notes.
Conclusion:
Thus, the issue highlighted earlier has been solved and it is presented that Bernard has the
right of making a claim of misrepresentation and breach of contract.
Part iii.
Issue:

7
CASE STUDY
The key issue of this case revolves around the presence of a contract between Alan and
Charleen, giving Charleen certain rights.
Rule:
Nash v Inman [1908] 2 KB 1 was a case in which the defendant was an undergrad
student and ordered 11 items from tailor who was the plaintiff. The defendant pleaded lack of
capacity when he was sued for payment. The court held that as the items were not provided to
the defendant, the contract cannot be enforced (Australian Contract Law, 2010b).
Application:
Applying Nash v Inman, the contract cannot be enforced between Alan and Charleen.
And without a contract, no right is available with Charleen.
Conclusion:
Thus, the issue highlighted earlier has been solved and it is presented that Charleen has
no rights in this case.
Part iv.
Issue:
The key issue of this case revolves around the presence of a contract between Alan and,
Damien giving Damien certain rights.
Rule:
Similar as that of Bernard, discussed in Part ii.

8
CASE STUDY
Application:
In this case, Alan had promised Damien under the drawn contract that he would give
Damien the notes and his book. Though, this promise was not met, which meant that the contract
was breached. This gives Damien the right to claim damages from Alan. He can also make a
claim for misrepresentation against Alan for stating falsely that he would be given the university
book, instead of a store bought book.
Conclusion:
Thus, the issue highlighted earlier has been solved and it is presented that there Damien
has the right of making a claim of misrepresentation and breach of contract.
Part v.
Alternative dispute resolution or ADR is the alternative manner in which the dispute can
be resolved and this is an alternative to litigation method. There are three common types of
ADRs and these include arbitration, conciliation and mediation (Ware, 2016).
In mediation, the disputing parties make a selection of a mediator, who presides over the
dispute and after listening to the contentions made by each party, tries to ‘mediate’ the matter
and in this regard, different techniques of negotiations are applied. The key advantage of
mediation is that the matter remains private and also confidential, as the proceedings of
mediations are kept out of purview of general public. Another advantage lies in the fact that this
method is a cost effective method, when it is compared to litigation. This is in terms of the time
and money spent by the disputing parties and even the court (Kramer, 2016).

9
CASE STUDY
This method is also coupled with different shortfalls. The major one in this is that the
result of mediation is not binding on the parties, as is a court order. So, even after going through
the entire process, the parties may have to opt for litigation, which means additional costs. Also,
a mediator cannot force the parties to present the truth or particular evidence as can be done by
the court. There is also a lack of applicability of precedents, which can result in repetition of
mediation process, even when the facts of two matters are exactly the same (Nolan-Haley, 2013).
Another important ADR is arbitration. In this method, the parties choose an arbitrator
who decides upon the matter. However, where the parties are unable to choose a common
arbitrator, each party chooses one arbitrator and then these chosen arbitrators finalize a common
arbitrator, resulting in the creation of an arbitration panel. The advantages of arbitration are
similar to that of mediation and same is the case with its disadvantages. Even an arbitration
award needs to be confirmed through the court to be compulsorily enforced on the parties
(Gramberg, 2006).
The final ADR in discussion here is conciliation in which the matter is presided over by
the conciliator. This person meets each of the disputing parties in a separate manner and tries to
resolve the raised issue. Apart from the advantages and disadvantages of arbitration and
mediation, conciliation has certain other advantages. This includes that different solutions can be
suggested by the parties regarding the dispute and the damages are less likely to be caused owing
to the mutual consent of the parties on the result (Gramberg, 2006).

10
CASE STUDY
References
Andrews, N. (2015). Contract Law (2nd ed.). UK: Cambridge University Press
Australian Contract Law. (2010a). Chappell & Co Ltd v Nestle Co Ltd [1960] AC 87. Retrieved
from: http://www.australiancontractlaw.com/cases/chappell.html
Australian Contract Law. (2010b). Nash v Inman [1908] 2 KB 1. Retrieved from:
https://www.australiancontractlaw.com/cases/nash.html
Ayres, I. & Klass, G. (2012). Studies in Contract Law (8th ed.). New York: Foundation Press.
Bonell, M.J. (2009). An International Restatement of Contract Law: The Unidroit Principles of
International Commercial Contracts (3rd ed.). New York: Transnational Publishers, Inc.
Carter, J W. (2007). Contract law in Australia (5th ed.). Sydney: LexisNexis Butterworths.
Clarke, P. & Clarke, J (2016). Contract Law: Commentaries, Cases and Perspectives (3rd ed.).
South Melbourne: Oxford University Press.
E-Law Resources. (2017). Adams v Lindsell (1818) 106 ER 250. Retrieved from: http://www.e-
lawresources.co.uk/Adams-v-Lindsell.php
Elliot, C. (2011). Contract Law (8th ed.). London: Pearson.
Frey, H P. & Frey, M A. (2005). Essentials of Contract Law (3rd ed.). Portland: Delmar Cengage
Learning.
Gramberg, G.V. (2006). Managing Workplace Conflict: Alternative Dispute Resolution in
Australia. New South Wales: The Federation Press.

11
CASE STUDY
Kramer, H. S. (2016). Alternative Dispute Resolution in the Work Place. New York: Law Journal
Press.
Latimer, P. (2012). Australian Business Law 2012 (31st ed.). Sydney, NSW: CCH Australia
Limited.
Marson, J., & Ferris, K. (2015). Business Law (4th ed.). Oxford: Oxford University Press.
McKendrick, E. & Liu, Q. (2015). Contract Law: Australian Edition. London: Palgrave
Macmillan
McKendrick, E. (2014). Contract Law: Text, Cases, and Materials (6th ed.). Oxford: Oxford
University Press.
Nolan-Haley, J.M. (2013). Alternative Dispute Resolution in a Nutshell (4th ed.). Minnesota:
West Academic.
Paterson, J.M., Robertson, A., and Duke, A. (2012). Principles of Contract Law. 4th ed. Rozelle,
NSW: Thomson Reuters (Professional) Australia.
Treitel, G H. & Peel, E. (2015). The Law of Contract (14th ed.) London: Sweet & Maxwell.
Ware, S. (2016). Principles of Alternative Dispute Resolution. Minnesota: West Academic.