Business Law - First Assessment: Contract and Tort Law Analysis

This report presents a legal analysis of two scenarios in business law, addressing issues of contract and tort law. Part 1 examines a contract dispute between Ira and Make an Impression Ltd, focusing on the validity of an exclusion clause. The analysis considers relevant case law, including Olley v Marlborough Court and L'Estrange v Graucob, to determine whether the exclusion clause is enforceable. Part 2 explores a negligence claim by Mustafa against a bus driver following an accident. The analysis evaluates the elements of negligence, including duty of care, breach, causation, and remoteness, referencing cases like Donoghue v Stevenson and Nettleship v Weston. The report concludes with legal advice on the potential outcomes of each case.

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Business Law Assignment

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Part 1
Introduction
The objective of this paper is to provide legal advice to Ira and Mustafa regarding whether
they can make any claim under the contract and tort law respectively. The first issue is
whether Ira can hold Make an Impression Ltd liable for not providing right quality service as
promised and whether the term included in the written contract by the company to
eliminate its liability is considered as valid or not.
Law
A contract creates a legally binding relationship between parties which gives them the right
to hold each other liable for violating its terms. The contract protects the right of
contractual parties to ensure that they can hold another party for the loss which they
suffered due to violation of contractual terms. However, the parties of a contract have the
right to terminate this right if they include an exclusion clause in the contract. Exclusion
clause or unfair term is used by parties in order to eliminate their liability which arises under
the contract to ensure that they cannot be held liable for violating the contract. 1 It is
important that the unfair term must be correctly incorporated into the contract. This
principle provides protection to parties of a contract under the common law. As per the
general rule of unfair terms, the clause must be brought to the attention of the parties while
the contract is being formed or before its incorporation.
In case the unfair term is not brought into the attention of the contracting parties, then the
party cannot rely on its protection. This provision was established by the court in the
judgement of Olley v Marlborough Court2 case. In this case, the unfair term was written
behind the door of a hotel, and the contract was formed at the reception based on which
the unfair term was not considered as valid. Moreover, this element was established by the
court in the judgement of Thornton v Shoe Lane Parking3 case. In this case, the court
provided that an exclusion clause which is brought to the attention of the contractual party
after formation of the contract cannot protect the parties. However, an exception was
1 Ewan McKendrick, Contract law: text, cases, and materials (Oxford University Press 2014).
2 [1949] 1 K.B. 532
3 [1971] 2 WLR 585

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provided by the court in case of L'Estrange v Graucob.4 It this case, the court provided that if
the exclusion clause is included in the written contract, then the parties did not have to
bring it to the attention of each other.
Application
In the present scenario, a written contract was formed between Ira and Make an Impression
Ltd, and Ira purchased a specific advertisement from Make an Impression Ltd. However,
after the delivery, Ira found that the advertisement was not as promised by the company.
The liability of the company was excluded by including an exclusion clause in the contract.
Ira can argue that the general rule of unfair term is not fulfilled by the company since this
clause was not brought into her attention while the contract was being formed or before its
formation as provided in the judgement of Olley v Marlborough Court and Thornton v Shoe
Lane Parking case. However, as per the exception given in the judgement of L'Estrange v
Graucob case, the exclusion clause is valid since it is included in the written contract. The
company did not have to bring it into the attention of Ira.
Conclusion
To conclude, Ira cannot hold Make an Impression Ltd liable for violating the contract since
the company eliminated its liability based on the unfair term which is valid since it is
included in the written contract.
4 [1934] 2 KB 394

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Part 2
Introduction
Mustafa suffered a serious accident after he was overtaking a bus which pulled out without
any indication or warning. The bike and smartphone of Mustafa are beyond repair as well.
The issue is whether Mustafa can hold the bus driver liable for the personal injury and loss
suffered by him?
Law
Negligence is referred as a person’s failure to ensure that a standard is maintained which is
expected in a particular situation to avoid causing harm to another person. In order to hold a
party liable for negligence, there are certain elements which must be present. In the case of
Donoghue v Stevenson5, the court provided a duty must be owed by a party in order to hold
the party liable for negligence. The duty can be determined based on neighbour test which
provides that the parties must have a proximity relationship and a reasonable foresight of
harm.6 The second element is that the duty must be violated by the party. The court uses an
objective test in order to determine whether a party has breached the duty or not as
provided in the case of Vaughan v Menlove.7
As per this objective test, the court determines whether a reasonable standard of care is
maintained by the party or not which is expected in a particular situation. The third element
is causation which provides that the injury which is suffered by a party must directly cause
due to the breach of a standard of care.8 This element was defined by the court in the
judgment of Barnett v Chelsea & Kensington Hospital9 case. Lastly, the injury suffered by the
party must not be too remote since it terminates the right of a party to claim damages for
the loss as given in The Wagon Mound no 110 case. Moreover, contributory negligence is a
partial defence in a suit for negligence. As per this defence, the amount of damages can be
5 [1932] AC 562
6 Christian Twigg-Flesner, Consumer product guarantees (Routledge 2017).
7 (1837) 3 Bing. N.C. 467
8 Jonathan Herring, Q&A Medical Law (Routledge 2015).
9 [1969] 1 QB 428
10 [1961] AC 388

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reduced if the party who suffered a loss failed to ensure that a standard is maintained to
protect themselves from the injury as given in Nettleship v Weston11 case.
Application
In the given scenario, a duty was owed by the bus driver to ensure that a standard is
maintained to protect others who were on the road. There was reasonable foresight of
harm and proximity relationship between Mustafa and the bus driver (Donoghue v
Stevenson). This duty was violated by the bus driver as per the objective test because the
bus moved without any indication or warning (Vaughan v Menlove). The element of
causation was present because the injury suffered by Mustafa was the result of the failure
of the bus driver to maintain a standard of care (Barnett v Chelsea & Kensington Hospital).
Lastly, the damages were not too remote since they were foreseeable (The Wagon Mound
no 1). Thus, a suit for negligence is valid; however, Mustafa was overtaking the bus and
nobody is allowed to move past a stationary vehicle without accepting the responsibility for
contributory negligence. Therefore, the amount of damages paid to Mustafa can be reduced
as per his failure to ensure that duty is maintained (Nettleship v Weston).
Conclusion
To conclude, Mustafa has the right to hold the bus driver liable for negligence for his
personal injury and loss of bike and smartphone. However, the bus driver can reduce the
amount of damages based on the contributory negligence of Mustafa.
11 [1971] 3 WLR 370

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Bibliography
Barnett v Chelsea & Kensington Hospital [1969] 1 QB 428
Donoghue v Stevenson [1932] AC 562
Herring J, Q&A Medical Law (Routledge 2015)
L'Estrange v Graucob [1934] 2 KB 394
McKendrick E, Contract law: text, cases, and materials (OUP 2014)
Nettleship v Weston [1971] 3 WLR 370
Olley v Marlborough Court [1949] 1 K.B. 532
The Wagon Mound no 1 [1961] AC 388
Thornton v Shoe Lane Parking [1971] 2 WLR 585
Twigg-Flesner C, Consumer product guarantees (Routledge 2017)
Vaughan v Menlove (1837) 3 Bing. N.C. 467