Contract Law Case Study: Seed Store Ltd. v. Print Fast Ltd

Desklib provides past papers and solved assignments for students. This case study explores contract law principles.

Assignment 1
1

Table of Contents
Introduction..............................................................................................................................3
Assignment 1: a Case study.....................................................................................................4
Q1: A report on the nature of the statute and case law explaining their applicability
in both criminal and civil cases and clearly explain how the court system operates.....4
Q2: Report on Seed’s legal position:..................................................................................8
2.1: How a contract is made?.............................................................................................8
2.2: The difference between an offer and an invitation to treat.........................................8
2.3: The offer and acceptance position when buying using electronic media...................9
2.4: The factors which would have persuaded the court that there was an intention to
create a legal business relationship..................................................................................10
2.5: The conditions under which your client can terminate the contract.........................10
2.6: Under what circumstance the contract could become unenforceable?.....................11
Conclusion...............................................................................................................................11
References...............................................................................................................................12
2

Introduction
Contract law is the enacted legislation and, in some countries, a codified statute which
governs the sales and purchase of goods and services among individuals and organizations.
The English contract law is governed by the codified statute enacted as the Act for sale and
supply of goods in 1994. This Act protects the rights and interest of buyers as well as sellers
and also lays down their obligation in the contract entered by them. If the agreement meets all
the requirements of a valid contract the agreement can be enforced by the court. So, the
enactment of this Act is to govern the transaction taking place between companies and
individuals. Hence, as per the theory, the English law attempts to focus on the principle that
an individual is bound and can only be held liable if he has given his free and true consent to
contract.
3

Assignment 1: A Case study
Q1: A report on the nature of the statute and case law explaining their
applicability in both criminal and civil cases and clearly explain how the court
system operates.
It is very important to be assured that the business transactions done between professionals
leave no loopholes. This is because it is essential that both the parties understand the
conditions and terms of the contract and have knowledge regarding their rights and liabilities
as per the contract (Ulldemolins and Arostegui, 2013). Business contracts are done as part of
business transactions which includes the following areas:
 Terms and conditions governing purchase and sale
 Agreements of trade and distribution
 Agreements of agency and franchise
 Agreement on managing facilities and joint ventures
It is also important to note as to what shall be included in a business contract to make it
valid and enforceable. The business contracts include the following essentials:
 The name and personal details of the parties like address and contact details shall be
mentioned clearly.
 There shall be an explanation in terms of definition and interpretations regarding any
specific term used in a contract.
 There shall also be mention of the exact price which is to be paid for the goods or
services.
 It should also include the specified time under which the contract is to be performed.
And also, there shall be mention of deadline dates if any, in order to execute the
performance of the contract in due time.
 The contract shall contain a clause regarding the resolving of the disputes arrived if
any.
 The contract shall also contain clauses regarding the ownership of intellectual
property rights.
 Indemnity clause shall also be included in the terms of a contract in order to
indemnify the party in cases of any loss or damage.
4

The effect of contract law can be seen in almost every aspect of the business as it is a legal
document which is associated with the sale and purchase of goods or services. And every
company or organization in the market is either engage in the process of selling goods or
rendering services. Further, contract laws also protect organizations from fraudulent means
(Cuniberti, 2013).
If there is a violation of any term of the contract or any provision of the contract law it is
covered under civil cases. The violation of the contract is civil in nature and criminal laws are
only applied to organizations when they commit a crime. Hence, the application of contract
laws is only an aspect of civil cases (Ng, et. al., 2013).
In the United Kingdom there is a hierarchy of court where the cases are heard as per their
nature. The civil cases are heard differently in civil courts having jurisdiction as per
prescribed. And the criminal cases are prosecuted as per different procedure in criminal
courts. The following bodies and entities constitute the court structure in the UK:
 The United Kingdom Supreme Court
 The Appellate court of the civil division
 The High Court of Justice
 The division of Queen’s Bench
 The division of Family Court
 The division of Chancery
 The Courts of County
 The Tribunals
5

Source: (Hierarchystructure.com, 2018)
The Supreme Court of the UK is the highest civil as well as criminal judicial body. It is the
final appeal court in civil cases.
The Court of Appeal is the appellate body which hears an appeal from the High Court and the
tribunals. In some exceptional cases, it also hears an appeal from the county courts. Its
decision is binding on it except on the Supreme Court which can amend its decision
(Judiciary.uk, 2019).
The High Court of the UK has three divisions namely:
 The division of Queen's Bench: This division deals with cases relating to tortious
liability and contract. The courts and entities falling under its scope include labour
court, commercial court and court relating to technology.
 The division of Family Court: This court deals with family and matrimony matters
and resolves disputes regarding family law.
 The division of Chancery: This court deals with matters related to patents and
company law.
An appeal can be filed for the decision of this division in the court of Appeal (Cuniberti,
2013).
6

The County Courts are designed to deal with cases which are purely civil in nature. The
presiding judges in this court are civil judges and they solve cases on which only civil laws
apply.
The Tribunals are set up for specialized cases like dealing with cases relating to the welfare
of children, cases relating to employment, etc. There are separate tribunals for separate areas
which are set up all across the country (Delaney, 2013).
The Ministry of Justice in the UK administers the judicial system in the country. It has an
executive agency which regulates the functioning of the criminal courts in the UK. The
United Kingdom criminal justice system is as follows:
 The Supreme Court
 Senior courts
 The high court
 The Court of Appeal
 The Crown Court
 Subsidiary Courts
 Family Courts
 The Court of County
 Youth and Magistrate Court
 Special Courts including tribunals
 Military tribunals
 Other courts
The Supreme Court is the highest judicial body in all cases whether civil or criminal. This
function was initially performed by the Lord’s House.
The senior court includes the high court, the court of appeal and the crown court. The appeal
of any criminal case is done in the appellate court and its decision is binding on every court
including itself but except the supreme court. The decision of the high court is also binding
upon the subordinate court except for the supreme court (Judiciary.uk, 2019).
Further, the crown court has original as well as appellate jurisdiction. This is the only court in
the country which has jurisdiction to try cases of the indictment and serious offences. In cases
of hearing other matters like appeals from tribunals, it acts as an inferior court. The
subsidiary courts include family courts, county courts and magistrate courts. The magistrate
7

court prosecutes criminal cases and passes sentence. And special courts are established for
special bodies to resolve issues of a particular nature like consumer forum, military courts,
etc. (Delaney, 2013).
Q2: Report on Seed’s legal position:
Seed Store Ltd has entered into an informal contract with Print Fast ltd regarding the availing
of service of printing fabrics. Though there is no formation of a formal agreement there are
some negotiations which took place between both the companies via letters, fax and email.
2.1: How a contract is made?
There are certain essentials which are to be fulfilled in order to form a legal and a valid
contract for any business transaction. These essentials are the following:
1. Competence of the parties: The parties contracting must be competent to enter into
the contract. The competency is having attained the age of majority, having a sound
mind, and not declared as incompetent by any court having jurisdiction.
2. Offer made and accepted: There shall be a valid offer made by one party which shall
be either expressly or impliedly be accepted by the other party. The offer may be for
doing something or for abstaining from doing anything. Without acceptance, the
contract is not complete.
3. Intention to create a legal relationship: The parties shall be willing to enter into a
legal relationship and perform their part of the contract.
4. Consideration to be lawful: Every contract is done in return of consideration which
may be in the form of money, goods or services. This consideration is to be lawful for
every contract. And in cases in unlawful consideration, the contract becomes null and
void.
5. Free consent: The parties must have entered into the contract with their free consent.
There shall be no coercion or wrong influence or any other type of misinterpretation.
6. Certainty: The contract must be certain in nature free from ambiguous element and
vagueness. The contract must with certainty state every clause regarding the element
of contract (Cuniberti, 2013).
2.2: The difference between an offer and an invitation to treat.
Offer and invitation to offer or treat are two different terms on which the formation of the
contract depends. Offer is an essential element for a valid contract but an invitation to treat is
not essential for the same (Stone, 2012).
8

The following table defines the offer and invitation to treat:
Differentiation Offer Invitation to treat
Terminology When a person approaches
another and express his will
to do or not to do anything
and to take the latter's
approval, it is called an
offer.
When a person expresses his
will to another person with
an intention that the latter
makes an offer, it is called
an invitation to treat.
Purpose To form a valid contract To invite offers from other
then enter into a contract
Essentiality Offer is an essential element
for entering into a contract.
Invitation to offer is not an
essential element for a
contract.
Result When an offer is accepted it
becomes an agreement.
When an invitation to offer
is accepted it becomes an
offer for the contract.
2.3: The offer and acceptance position when buying using electronic media
An offer when accepted becomes an agreement but before accepting the offer it is important
that the general rules of acceptance be taken into consideration. These rules of acceptance are
important because the offeror may experience hardships if he gets bound by the expressed
terms of contracts without having the knowledge that the offer is being accepted by the
offeree or not. Further, the court also needs some external manifestations in order to see
whether a valid contract actually exists or not (Stone, 2012).
In the world where there is the use of technology at every step, the offer can be accepted
using electronic media as well. But sometimes due to technical failure, the acceptance is not
communicated to the offeror. Hence, the offeror remains in a dilemma whether the offer is
accepted or not. In order to protect the rights and interests of the offeror, there are certain
rules regarding acceptance via post. For example, the offer is deemed to have been accepted
as soon as it is posted rather than when it is received.
9

But in cases where the acceptance is via electronic media, the offer is accepted when it is
received rather than when it is communicated. This is because sometimes due to failures the
mails and fax are not sent and hence no communication is done to the offeror (Beale, 2012).
2.4: The factors which would have persuaded the court that there was an intention to create a
legal business relationship.
A contract at first is a legal agreement but it becomes binding when it is can be enforced by
the court. Though an offer is accepted by the offeree but it does not turn into a valid contract
unless the parties have an intention to create a legal relationship. Hence, in such cases, the
judiciary uses two legal tools and devices to see whether there is an intention to enter into a
contract or not. They are:
 The test of objective: The court instead of asking the party whether he intends to be
bound or not is an outdated tool and instead of this the court now takes up the
objective test. By this, the court looks whether a reasonable man would presume that
the parties intend to contract or not. If a prudent man with reason believes that the
parties intend to contract the parties are held liable.
 The rebuttal of presumption: This presumption is based on the burden of proof on the
parties. In civil matters, the probabilities are made base whereas in criminal matters
the proof is based beyond doubt. The nature of crime is more severe than that of civil
matters (Ulldemolins and Arostegui, 2013).
2.5: The conditions under which your client can terminate the contract
Under English laws, the termination of a contract is associated with its discharge. It can be
terminated after its service is over and also on occurring of certain events. A termination
without any reasonable cause may also be done but for this, a notice clause shall be
mentioned in the contract giving reasonable time to the party or parties. There are some
events also on the occurrence of which the contract can be terminated. These events are:
 Insolvency of the parties: If the other party is declared insolvent by a competent court
the other party can terminate the contract. Further in cases where contracts are with
corporate entities, if there is a threat of bankruptcy the other party may terminate the
contract.
 Breach of provision: This is also a cause for termination of the contract. If any of the
party breaches any provision of the contract the other party is at the option of either
rectifying it or choosing to terminate the contract.
10

 Renunciation: If any party to a contract refuses to perform its part the other party
may choose to terminate the contract. But in these cases, the party renouncing to
perform has to indemnify the other party for any loses it has incurred (Hg.org, 2019).
2.6: Under what circumstance the contract could become unenforceable?
Contracts are entered and formed by the parties when they are willing to fulfil their part in the
business transaction. But there are certain situations where the parties seek the intervention of
the court in order to indemnify for the loses. In such cases, the court looks the reason for the
contract to be unenforceable. These reasons can be regarding the signature of parties,
happening of events or terms of contracts.
Contracts unenforceable due to signing: The contract may be unenforceable due to signing
when the sign is obtained by coercion or fraud or by use of pressure or influence.
Contracts unenforceable by happening of some events: The contracts also become
unenforceable when there is happening of some events like if the provision of a contract
becomes impossible to fulfil or if the contracts turn illegal and against public policy
(Cuniberti, 2013).
Conclusion:
Hence, corporations and organizations enter into an agreement which when enforced by the
court becomes contracts. These contracts are binding on every party of the contract and in
case of breach by any party, there is civil liability attracted depending upon the gravity of the
breach. In order to avoid monetary penalties, it is important for both the parties to abide by
the provisions mentioned in the consented contract.
11

References
 Beale, H., 2012. A Common European Sales Law (CESL) for business-to-business
contracts: pros and cons. Annales U. Sci. Budapestinensis Rolando Eotvos Nominatae,
53, p.133.
 Cuniberti, G., 2013. The international market for contracts: the most attractive
contract laws. Nw. J. Int'l L. & Bus. Vol. 34. Pp. 455.
 Delaney, E.F., 2013. Judiciary Rising: Constitutional Change in the United Kingdom.
Nw. UL Rev. Vol. 108. Pp. 543.
 Hg.org, 2019. Termination of Commercial Contracts in the UK [Online]. www.hg.org.
Available at: https://www.hg.org/legal-articles/termination-of-commercial-contracts-
in-the-uk-37250. (Accessed on 25th April 2019).
 Hierarchystructure.com, 2018. Hierarchy of Civil Courts in England [Online].
www.hierarchystructure.com. Available at:
https://www.hierarchystructure.com/hierarchy-of-civil-courts-in-england/. (Accessed
on 25th April 2019).
 Judiciary.uk, 2019. Structure of the courts & tribunal system [Online].
www.judiciary.uk, Available at: https://www.judiciary.uk/about-the-judiciary/the-
justice-system/court-structure/. (Accessed on 25th April 2019).
 Ng, I.C., Ding, D.X. and Yip, N., 2013. Outcome-based contracts as a new business
model: The role of partnership and value-driven relational assets. Industrial
Marketing Management Vol. 42(5). Pp. 730-743.
 Stone, R., 2012. Forming contracts without offer and acceptance, Lord Denning and
the harmonisation of English contract law. Web Journal of Current Legal Issues,
2012(4).
 Ulldemolins, J.R. and Arostegui, A.R., 2013. The governance of national cultural
organisations: a comparative study of performance contracts with the main cultural
organisations in England, France and Catalonia (Spain). International Journal of
Cultural Policy Vol. 19(2). Pp. 249-269.
1. 1
2.
3.
12