In-depth Analysis of Contract Law: Case Studies and Applications

This assignment presents two case studies focusing on contract law. The first case examines a liability clause in a contract between ABC Electrical Engineering and XYZ Storage Company, analyzing whether ABC's liability is limited to the specified amount. The analysis draws parallels with l’Estrange v F Grauconb Ltd [1934] and Estey v. McKenzie Engineering, Inc. (1996), concluding that the liability is limited to the agreed-upon amount. The second case study explores a potential misrepresentation claim by Yul against Zig regarding the sale of an accounting business, focusing on white ant infestation and client accounts. Referencing Bisset v Wilkinson [1927] AC 177 and Balfour and Clark V Hollandia Ravensthorpe, the analysis determines that Zig is not liable due to Yul's failure to properly inspect the property and Zig's lack of awareness of the infestation. Desklib offers a variety of solved assignments and past papers for students.

Contract law

TABLE OF CONTENTS
Case study 1....................................................................................................................................3
Issues............................................................................................................................................3
Rules and provision.....................................................................................................................3
Analysis.......................................................................................................................................3
Conclusion...................................................................................................................................4
Case study 2....................................................................................................................................4
Issues............................................................................................................................................4
Rules and provision.....................................................................................................................4
Analysis.......................................................................................................................................5
Conclusion...................................................................................................................................6
References.......................................................................................................................................7

Case study 1
Issues
The issue in present case is whether the claim made against ABC will be limited to specified
amount in clause of contract or exceeding the specified amount i.e. the total loss incurred by the
claimant?
Rules and provision
A clause in not enforceable, unless the same is incorporated in contract or agreement and
comprises the details relating to liability have been covered by the clause (Fitzpatrick and et.al.
2017). Express terms can be referred as clause which are specifically stated in written or oral
form in the agreement which legally bind both the parties to comply same. Usually, in case
where a clause does not explicitly provide the type of liability or damage the parties wants to
exclude, the decision is made by court in favor of customer and does not allow the clause to be
complied by them (Fitzpatrick and et.al. 2017).
Analysis
In the present case study there are two companies ABC Electrical Engineering Company and
XYZ Storage Company Ltd those are in a binding contract. ABC provides its services in building
the warehouse to XYZ Company. There were some of the clauses in the contract in which ABC
take on to perform all services with due care and diligence, the liability of ABC Electrical
Engineering Co Ltd to the client arising out of the performance or non-performance of the said
services shall be limited to a maximum of $150,000. The facts of the case can be related to case
of l’Estrange v F Grauconb Ltd [1934] in which Mrs. L’Estranse purchased a vending machine
from Graucob and signed the agreement. The purchaser did not read certain clauses of agreement
in which one was waiver of her right as per Sales of Goods Act 1893 (UK). Moreover, it was
also stated that she agree with all the terms and conditions specified above. In this case it was
held by the court that the purchaser is required to company with the specific clause which has
been agreed by her while signing the contract. The exemption to such clause is case relating to
fraud or misrepresentation. The same was concluded in case of Curtis v Chemical Cleanign &
Dyeing Co (Fitzpatrick and et.al. 2017).

In various cases if the clause is not clearly defined than the kind of liability or harm that is
needed to be exclude, in that situation it was not applicable by the law that such clauses are
binding on the clientele. Moreover, in case where a person claims another for negligence, than
that person will be seeking financial recompense for damages or loss borne by him (Fitzpatrick
and et.al. 2017). Persons are seeking to be put in the situation where they might have been in; but
the negligence had not taken place. General situations where negligence might be supposed
comprise car accidents where there is personal injury, accidents on private or public land,
property damage and professional negligence such as medical negligence. It can be stated in
other words that in case client wants to exclude liability in tort relating to indirect loss or
substantial damages, it require specifying the same in clause. However it if company want to get
liability back such clause should be mentioned in the contract (Fitzpatrick and et.al. 2017).
Conclusion
As per the judgment made in case of Estey v. McKenzie Engineering, Inc. (1996), it can be
concluded that clause relating to limitation of liability can be enforced if the amount specified in
same is adequate as per the scenario and it depends on specific case. Thus, in present case it has
been concluded that ABC Company is liable to pay damaged amount that is already mentioned
in the clause. If any details are not mentioned in an agreement than the amount which is
determined will only be a liable amount.ABC company is not enforceable to pay exceeding
amount of damages as no other clauses were made while making an agreement. However ABC
will pay the certain amount that is mentioned in the clause only.
Case study 2
Issues
Can Yul claim that Zig had done fraud with him because of which he is liable to compensate for
the losses?
Rules and provision
In accordance with English law, misrepresentation can be referred as an untrue or misleading
statement of fact which has been made while negotiating contract by one party to another
(Fitzpatrick and et.al. 2017). The statement has been made to induce the other party to make the
contract is also considered as misrepresentation. Even non- disclosure of a statement leads to

misrepresentation and it is not necessary that same should be made directly to the injured party.
(Fitzpatrick and et.al. 2017)
Analysis
In the present case study there are negotiating sale and purchase of accounting business of Zig.
Zig is selling its property to Yul, before deal has been finalized Yul asked Zig about the issues in
the property of bad infestation of white ants. Zig replied that it seems fine but you can check the
same if you want for your satisfaction. Further, also asked about the local factory which makes
car mirror on which Yul replied that same is moving to some other place. After, the deal is
finalized and property is owned by the Yul. He experienced the same issues of ants in the
building which damaged all its timber. However huge losses have occurred in the business. Even
while inspecting the accounts, Yul assessed that as they were one of the larger clients of Zig,
which means now same will have negative impact on the profits.
It can be assessed that in the present case there was no misrepresentation by the seller as he
stated that it seems ok and there is no such issue. Moreover, he asked the purchase to reassess for
his assurance. Thus, it was duty of Yul to assess the property before purchasing. Being a
responsible purchase Yul was required to check the property in appropriate manner before
signing the final deal.
As per the case law Bisset v Wilkinson [1927] AC 177 the conclusion was made by thePrivy
Council that there was not any fraud made by the defendant as he was unaware about the
capacity for the sheep farming (Fitzpatrick and et.al. 2017). Therefore purchaser is not liable to
make any claim on the defendant. Moreover, defendant is also not liable for any compensation.
Whereas in present case study there is a same case where Zig was unaware bad infestation of
white ants in the building when purchaser asked about the issue seller just said no as he is not
aware. Thus, the case can be related to present study that as Zig did not know about the fact that
the property does have issue relating to white ants and even he offered the purchase to assess the
same for his own satisfaction. Further after three months issues of ants occurs but in that case
now Zig is not at all liable for the losses. As, while dealing he made clear to Yul to check if he
wants to assess the same personally. Even in case of Balfour and Clark V Hollandia
Ravensthorpe in which an estate agent specified to buyers that they would be able to borrow
amount equal to 90% of the amount the value of land. Though when borrowers were not

successful in same they sued and it was concluded by the court that it is not improper conduct
unless the same has been made to induce the sale.. Moreover, according to the provisions of
common law there are termination rights for the buyers in situation where there are some,
falsification or deceptive or misleading behaviors by the seller or on its behalf regarding subject
matter to the agreement (Fitzpatrick and et.al. 2017). But in present case no facts are available
which prove that Zig intentionally misstated the fact relating to loss due to existence of white
ants. In case any misrepresentations occur due to seller than court has significant power to bind
the seller for damage or loss borne by other part.
Conclusion
In the present case study it has been concluded that there was a lack of consideration of
purchaser, as he avoided the facts and doesn’t examine the property. However on the other hand
seller was unaware about the issue so he is not liable for any claims made by the purchaser. He is
not enforceable to pay the compensation amount.zig has not cheated Yul as there were clearly
made terms before the contact is bind however there was no misrepresentation occurred by the
sellers . It’s a fault of purchaser therefore he is liable to suffer all the losses.

References
Fitzpatrick, Jeffrey F., Symes, Christopher F., Veljanovski, A. & Parker, D. 2017, Business and
corporations law, 3rd edition, LexisNexis Butterworths, Chatswood, NSW