La Trobe University LST2BSL Common Law Assignment - December 2019

This document presents a comprehensive solution to a common law assignment focusing on contract law principles. The assignment addresses four key issues: whether a discussion about gluten-free almond flour constitutes a contractual term, whether an implied condition existed regarding gluten-free cupcakes, the classification of icing color as a warranty or condition, and the impact of an exclusion clause on liability for incorrect icing color. The solution analyzes each issue by applying relevant legal principles and case law, such as Birch v Paramount Estates, Heilbut, Symons & Co v Buckleton, Southern Foundries (1926) Ltd v Shirlaw, Poussard v Spiers, and Bettini v Gye. The analysis considers the intention of the parties, the presence of implied terms, the distinction between conditions and warranties, and the effect of exclusion clauses on liability for breach of contract. The assignment provides a detailed examination of contract formation, terms, and remedies, offering a valuable resource for students studying business law and related fields.

Running Head: Common Law Assignment 0
LST2BSL
Common Law Assignment
Student’s Name
12/20/2019

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Contents
Issue 1..............................................................................................................................................1
Rules 1.............................................................................................................................................1
Application 1...................................................................................................................................2
Conclusion 1....................................................................................................................................2
Issue 2..............................................................................................................................................2
Rules 2.............................................................................................................................................3
Application 2...................................................................................................................................3
Conclusion 2....................................................................................................................................4
Issue 3..............................................................................................................................................4
Rules 3.............................................................................................................................................4
Application 3...................................................................................................................................5
Conclusion 3....................................................................................................................................5
Issue 4..............................................................................................................................................5
Rules 4.............................................................................................................................................5
Application 4...................................................................................................................................6
Conclusion 4....................................................................................................................................6
References........................................................................................................................................7

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Issue 1
The issue here is to check that whether the discussion happened between Mary and Five Start
Flour regarding the gluten-free quality of almond flour is a term of the contract or not.
Rules 1
A contract gives rise to legal rights and responsibilities to the parties and in case of breach of any
such obligation, attracts liability. A contract can be developed either way i.e. oral or written
manner. Usually, before making a formal contract, parties often do some negotiations and
discussions regarding various aspects of contract such as in relation to the subject matter, pricing
and so on and later enters into a formal contract. Such negotiations are considered only puffs and
not the terms of the contract due to the absence of intention to bind each other. It means, in
general, the discussion that happened between the parties is not regarded as terms of the contract.
Nevertheless, in some of the situations, the exception can be allowed. The decision was given in
the case of “Birch v Paramount Estates (1956) 167 EG 196” is necessary to have a look upon. In
this case, the court has allowed oral statements as a term of the contract as parties were aware of
specific knowledge, even though the written contract did not contain any such term (Furmston,
2017). This decision is a crucial one that has made a difference between representation and terms
of the contract. In the reasoning of the case, the focus has been made on the intention of parties
in relation to the oral negotiations made before the contract. “Heilbut, Symons & Co v Buckleton
[1912] UKHL 2”, is another important case where the court provided that if the main reason for
developing the contract is a particular statement then the same should be considered as a term or

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the contract rather than merely a representation. This case focused on the factor of the meeting of
the minds of parties.
Application 1
In the case presented hereby, the contract has been developed between Mary and Five Stars Flour
where before placing an order Mary clearly stated that she wants gluten-free almond flour and
Five Starts Flour also confirmed that that the almond flour they used to sell is gluten-free. Later
on, a contract has been developed between these parties by way of email whereas nothing was
mentioned regarding the element gluten. Here this is to state that although the written contract
did not contain such term, however, it was very crucial, significant and specified by Mary.
Applying the provisions of “Birch v Paramount Estates Ltd”, this is to state that it was a key
element of the contract that has orally been agreed by the parties. Further Five Stars Flour has
also been agreed on the same. Further as decided in the case of “Heilbut, Symons & Co v
Buckleton”, in the given case both of the parties had a meeting of minds where they knew what
is crucial. Also, parties have entered into a contract due to the statement made by them with
respect to gluten-free flour.
Conclusion 1
Cause of intention of the parties and meeting of minds, it was a contractual term that the almond
flour would be gluten-free.

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Issue 2
Whether the contract of Danny and Janet developed with Mary had an implied condition that the
cupcakes provided to them would be gluten-free.
Rules 2
The common law of contract prescribes two types of contractual terms namely express term and
implied a term. An implied term is the one, which is not decided between the parties expressly
but exists in a contract due to the intention of the parties where the same was brought into
consideration of each party during the negotiation before the contract. The case of “Southern
Foundries (1926) Ltd v Shirlaw [1940] AC 701” has provided important cases that can be used to
check the implied term. According to this test, a term seems to be implied term wherein the view
of a reasonable person the same could be adopted as an expressed term. “Trollope and Colls
Limited v North West Metropolitan Regional Hospital Board [1973] 1 WLR 601” is also an
important case. It was given that where something is necessary to meet the intention of the
parties or without which a contract cannot be successful then such term is treated as an implied
term and mentioning the same in an expressed way does not remain necessary. In addition to
this, a term is also considered as implied where the same fall in the common practice of the
business. Lastly, in the case of “The Moorcock 14 PD 64”, business efficiency rule was given in
case that if something is necessary to operate efficiently then doing such an act will be
considered as an implied term.

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Application 2
In the case presented hereby, the contract in question has been developed between Danny, Janet,
and Mary where expressly nothing has been decided. Nevertheless, considering the provisions of
implied terms and cases discussed above, it seems that to provide gluten-free cupcakes was an
implied term of the subjective contract. As per the facts of the case, providing gluten-free
cupcakes seems to be necessary to attract new customers and satisfaction of existing customers.
Applying the provisions of “Southern Foundries (1926) Ltd v Shirlaw” it is to state that in the
given case a reasonable person had reason to believe that Mary would use gluten-free products in
cake making. Lastly applying the business efficiency rule also, providing gluten-free cupcakes
seems to be an implied term.
Conclusion 2
It was an implied term that the cupcakes served in the party of Danny and Janet would be gluten-
free.
Issue 3
Whether the color of icing should be considered as a warranty or condition of the contract?
Rules 3
The terms of the contract can be divided into two parts namely condition and warranty. The
condition is more significant for a contract, which goes to the root of the same. The importance
of a condition can be understood by the fact that breach of the same lead to termination of the
contract as given in the case of “Poussard v Spiers (1876) 1 QBD 410”. To discuss facts of this

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case this is to state that a singer contracted with another party to perform as opera singer over a
particular period but later on, just after five days of performance denied to carry the contract due
to illness (E-lawresources.co.uk, 2019). It was a breach of contract as a performance by that
singer was a condition of the contract. Further, since the warranty is not as serious therefore a
breach of the same does not give parties an option to cancel the contract as given in the case of
“Bettini v Gye 1876 QBD 183”.
Application 3
If to review, the contract developed between parties contained a condition that was to prepare the
cupcakes by Mary for Kym. Further, the color of the icing was nothing that could be held
essential for Kym but it was merely an additional instruction as it was related to the decoration of
the cake.
Conclusion 3
The color of the icing was a warranty and not the condition.
Issue 4
Whether Mary is still responsible for icing of the wrong color considering the presence of the
exclusion clause.
Rules 4
In general, parties under a contract seem liable for breaching terms under the contract but can
escape from this liability by way of the exclusion clause. In other words, this can be stated that

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this is a way by adopting which parties can minimize or exclude their liabilities. It is basically a
statement where parties limit their obligation regarding some of the aspects of the contract. Some
rules related to the validity of the contract are given under contract law. These rules have been
set under the decision of various cases. One such rule has been given in the case of “Chapelton v
Barry UDC (1940) 1 KB 532”, according to which maker of the clause should bring the same in
the attention of another party. However, in case of written agreements where parties signed the
same, it is assumed that the same has been read by them as decided in the case of “L'Estrange v
Graucob [1934] 2 KB 394”.
Application 4
In the case given hereby, Mary only breached the warranty of the contract by not providing the
demanded color of icing. Applying the provisions of “Bettini v Gye”, Kym cannot terminate the
contract and can only ask for damages. Nevertheless, in this situation, a properly inserted
exclusion clause has developed by Mary that also brought into the notice of Kym. Hence, due to
the presence of the exclusion clause, Mary does not seem to be held responsible for paying any
damages.
Conclusion 4
Due to the application of the exclusion clause, Mary is not liable for the wrong color of icing on
cupcakes provided by Kym.

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References
Bettini v Gye 1876 QBD 183
Birch v Paramount Estates (1956) 167 EG 196
Chapelton v Barry UDC (1940) 1 KB 532
E-lawresources.co.uk. (2019) Conditions, warranties & innominate terms. [online] Available
from:http://e-lawresources.co.uk/Conditions%2C-warranties-and-innominate-terms.php
[Accessed on 20/12/2019]
Furmston, M., P. (2017) Cheshire, Fifoot, and Furmston's Law of Contract. UK: Oxford
University Press.
Heilbut, Symons & Co v Buckleton [1912] UKHL 2
L'Estrange v Graucob [1934] 2 KB 394
Poussard v Spiers (1876) 1 QBD 410
Southern Foundries (1926) Ltd v Shirlaw [1940] AC 701
The Moorcock 14 PD 64
Trollope and Colls Limited v North West Metropolitan Regional Hospital Board [1973] 1 WLR
601