Introduction to Business Law and Ethics Common Law Assignment - LST2BS

This assignment solution addresses key concepts in business law and ethics through a case study involving a furniture purchase. The solution examines whether statements about an office chair's quality constitute terms of a contract, considering factors like timing, importance, and the expertise of the parties involved. It differentiates between express and implied terms, analyzes the impact of exclusion clauses, and assesses the consequences of fraudulent misrepresentation. The assignment explores the legal implications of a chair's failure to provide adequate back support, focusing on breach of contract and the enforceability of exclusion clauses. The analysis relies on established legal principles and case law to determine the rights and liabilities of the parties involved, providing a comprehensive understanding of contract law principles and ethical considerations in a business context.

LST2BS Introduction to Business Law and Ethics
Common Law Assignment
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Question 1
Issue
The issue is to determine whether the nature of OFFICE PRO X9 chair being an amazing chair
and/or best on the market is considered to be a term of the contract enacted between Peter and
Forever Furniture.
Rule
A term is considered to be an imperative aspect which is a statement offered by one party to
another party in the pre-contractual (negotiation) phase. A statement is classified as term when
the decision of the party to enter into the contract depends on accuracy of statement. The leading
case is Heilbut, Symons & Co v Buckleton1. The enactment of the contract relies on the
correctness of the underlying terms and therefore, it is essential that the party does not make
fraudulent representation to the other party. It is because if the term is breached, then the
innocent party has legal right to sue and recover the damages. Hence, it would be pivotal to find
that which of the statement are considered as a term for the contract. The relevant factors
associated with the aspect are listed below:
 Timing
As per the verdict announced in Routledge v McKay2 case, if the time lag between offering the
statement and acceptance of the party to enter into contract is minimal, then the statement would
be term of the contract .
1 Heilbut, Symons & Co v Buckleton [1913] AC 30
2 Routledge v Mckay [1954] 1 WLR 615
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 Importance of statement
When the statement represents a significantly pivotal element for the party to enter into contract,
then the statement is recognized as term of contract. The leading case in this regards is
Counchman v Hill3 case.
 Form of statement (Parole evidence rule)
According to the judgment given in Birch v Paramount Estates4 case, the statements which are
listed in written contract would be considered as term of contract while the oral ones would be
representations.
 Expertise of party
The honorable court would check whether the representing party is having the requisite
knowledge to test the precision of the offered statement or not. The verdict of Oscar Chess v
Williams5 case is the testimony of this.
Application
It is apparent from the given case facts that Peter who is having serious back problem has clearly
told Samantha (representative of Forever Furniture) about this problem. He also stated that he
requires an office chair that would support his back and would be comfortable to work whole
day. Samantha has stated that the OFFICE PROX9 is best suitable chair for him as per his
requirement. It would be fair to conclude that statement stated by Samantha would be term of
the contract as highlighted below:
3 Counchman v Hill [1947] 1 All ER 103
4 Birch v Paramount Estates (1956) 167
5 Oscar Chess v Williams [1957] 1 All ER 325
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 Samantha is working in a furniture shop and hence, it can be said that she must have
sufficient expertise knowledge to decide the quality of chair and also the suitability as per
Peter’s requirement.
 Further, the time lag between offering the representation about nature of chair and the
acceptance to create contract is very minimal.
Hence, it can be concluded that the nature of OFFICE PRO X9 being an amazing chair and/or
best on the market is a term of the contract.
Conclusion
It can be concluded that of OFFICE PRO X9 being an amazing chair and/or best on the market is
a term of the contract.
Question 2
Issue
The central issue is to comment whether the statement that OFFICE PRO X9 provides sufficient
lower-back support and allows Peter to work comfortably the whole day is considered as term of
the contract.
Rule
The innocent party can sue and/or claim for the damages from the representing party only if the
term has been breached. Hence, it is critical to determine that whether the given statement is a
term of contract or mere representation to invite the party to enact the contract. The main four
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criteria have been discussed in the above part and the key significant features are furnished
below:
 Overall importance of the representation
 Reliance of the representee party
According to the judgment in Bannerman v White6 case, one party specifically asked for the hops
for beer production from the seller. Also, he stated that he would purchase the hops only when
the hops were treated with sulfur. Seller agreed with this aspect and stated that their hops are
sulfur treated. After getting this confirmation from seller, the party enacted the contract and
ordered hops. However, in reality the hops were not sulfur treated. It can be said that sulfur
treated hops were essential aspect for the party to enter into contract and hence, it is a term of
contract. Moreover, it is apparent that the term was fraudulently represented by the seller and
hence, the innocent party sued the respective seller and recovered the damages7.
Application
From the given case facts, it is apparent that Peter is severely suffering from lower back pain and
wants a chair which provides him comfort to sit whole day. He also communicates the same to
Samantha and also, he would not have enacted a contract to purchase the chair if the chair was
not competent enough to provide the necessary support to the back. Therefore, it can be cited that
the nature of chair being supportive is a term of contract.
Conclusion
6 Bannerman v White 1861 CBNS 844 CP
7 Ewan McKendrick, Contract Law: Text, Cases, and Materials (Oxford University Press, 4th ed, 2014) 12-17
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Based on the above, it can be concluded that nature of chair (OFFICE PRO X9) being supportive
for his lower- back is considered as term of the contract.
Question 3
Issue
The issue is to comment on the nature of the term that the OFFICE PRO X9 chair is being
comfortable and would support the back so that Peter can work whole day.
Rule
Implied term and express terms are the two main types of terms of contract. Express terms are
the terms which are directly stated and mentioned in the contract and are agreed by the
contracting parties. The Bannerman v White8 case is the testimony of the same. On the other
hand, implied terms are those which are not directly expressed by the party but are present due to
custom or mutual underlying. The leading case is Moorcock9 case where the implied term was
present that the river bed is safe for “mooring considering the river Thames”. This aspect is
called as business efficacy test10.
Application
It is apparent that Peter has emphasised on the fact that he needs a chair which can provide him
proper back support and allow him to sit and work for the whole day. After stating this
statement, it can be said that the nature of chair must be supportive and allow Peter to sit for long
8 Ibid. 6.
9 The Moorcock (1889) 14 PD 64
10 Robert Bryan Vermeesch, Kevin Edmund Lindgren, Business Law of Australia (Butterworths, 12th ed. 2011)
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hours to write book which is of business efficacy for Peter. However, this is not highlighted in
the written agreement but present because of the application of business efficacy test and mutual
understanding and requirement of Peter. Hence, it can be said that this statement is classified as
implied term of the contract.
Conclusion
Based on the applicability of business efficacy test, it can said that the nature of OFFICE PRO
X9 being supportive and provide him comfort to work so long is implied term of contract.
Question 4
Issue
The central issue is to determine whether the exclusion clause (clause 10) would prevent Peter to
sue Forever Furniture on the account of breach of contract.
Rule
According to the exclusion clause, the liability of the defendant party would be minimized only
if the respective party has informed the innocent party regarding the particular clauses/terms.
Exclusion clauses would be applicable when the following cases present11.
 Representing party has informed the innocent party about the terms
 The terms has been highlighted in the contractual form and parties has signed the contract
 The exclusion clause is not a way to perpetuate fraudulent conduct and msireprestation.
11 Shayne Davenport, Business and Law in Australia (Thomson Reuters, 4th ed, 2012)
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When the contract contains an exclusion clause and the plaintiff has signed the contract without
reading the same, then also the validity of the exclusion clause would be enforceable on the
plaintiff provided existence of contract terms on the concerned paper was known.12.
However, it is essential to note that when the representing party has made false representation,
then in such cases exclusion clauses would not be applicable. The verdict given in L'Estrange v
Graucob13 case is the testimony of this aspect.
Application
It can be seen that exclusion clause would be enforceable on Peter only if the representation
made by Samantha is correct irrespective of the fact that Peter does not read the agreement
terms. However, Samantha has fraudulently misrepresented the statements because she has
knowledge that the OFFICE PRO X9 chair is not the best chair available on market or for
providing back support. However, she has stated to Peter that the chair is as per his requirement
and would provide support to his lower back and allow him to work for long hours.
Conclusion
It can be concluded that Peter has the rights to sue Forever Furniture for breaching the term. This
is because the exclusion clause is not applicable here due to the fraudulent misrepresentation
made by Samantha.
12 Paul Davies, JC Smith’s the Law of Contract (Oxford University Press, 3rd ed, 2016) 424
13 L'Estrange v Graucob [1934] 2 KB 394
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