Business Law Case Study: Analyzing Contract Terms and Liability

This business law case study analyzes a contract dispute involving Avinash, a customer who sustained an injury at a local café due to a metal piece in a pastry. The analysis covers the formation of the contract, the applicability of an exclusion clause printed on the ticket, and the consumer rights involved. The case study applies the IRAC method, referencing relevant case laws and legislation such as the Unfair Contract Terms Act 1977 and the Consumer Rights Act 2015, to determine whether the café can avoid liability for Avinash's injury. It concludes that the exclusion clause is unlikely to protect the café from liability due to negligence and breach of duty, and that Avinash has the right to pursue compensation for his damages under consumer protection laws. The study also discusses the express and implied terms of the contract, and the importance of lawful object and consideration in contract formation.

Business law
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Table of Contents
Introduction................................................................................................................................3
Question 1..................................................................................................................................4
Question 2..................................................................................................................................8
Conclusion................................................................................................................................10
References................................................................................................................................11
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Introduction
In the present assignment of business law, the provisions of common law, contract law and
consumer protection law are discussed with detail related to the case study. The IRAC format
will be applied to explain the case study and some case laws are also provided. The essential
element of the contract is given with the explanation of exclusion clause and its liability
towards the customer. The express and implied terms of the contract are also discussed
related to the case study. The consumer rights and protection are also applicable to the
parties.
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Question 1
(a)Explain how the contracts Avinash made with the café were formed.
Offer and acceptance: This is the first element of the contract. This is the essential
requirement of the contract if there is no offer than a contract. It makes sure that contract is
legally acceptable or valid. When the offer is accepted it becomes agreement. According to
the definition of contract, the agreement is the primary factor to form the contract. The basis
of agreement is offer and acceptance.
In the given case of Avinash, he is the regular customer of local café, which gives the self -
service facility to select the drink and food products by online method. Avinash placed the
order of coffee and pastry which is considered as an offer to the café. The offer was accepted
by the owner of local café to serve the coffee and pastry as demanded by Avinash.
Mutual consent of parties: There is a requirement of mutual consent of all the parties to
constitute the valid contract. All the parties to the contract must agree on the same point and
same opinion at the same time (Cartwright, 2016).
In the case, both the parties Avinash and local café are agreed and have mutual consent
towards the offer and acceptance.
Creation of legal obligation: There must be the creation of legal obligation under the
agreement rather than offer and acceptance. If parties do not fulfil the promise then they have
a right to go to the court of law. But in case of social agreements there is no right to go to law
and court but in case of commercial agreements, there is a need to go to the court and law.
In the case, parties have right and intention to create the local obligation and go to the court.
Avinash as a customer suffered by the food products of café then he has a right to create the
legal obligation against the café.
According to the case of Meritt v Meritt, court held that there must be legal obligation
towards the agreement made between the parties and it is binding on all.
Free consent: There is no valid contract if the consent of the parties is not free. The consent
is obtained by the force of coercion, undue influence, misrepresentation of facts, fraud and
mistake of true facts then it will not be a valid contract.
In the given case, there is a free consent of both the parties Avinash and café there is no any
undue influence, fraud and misrepresentation of facts etc.
Competency: According to the provisions of contract Act, provides that parties must be
competent if:
 The person must be major,
 Parties are of sound mind,
 He is not disqualified by law and order.
In the given case, Avinash follows the all competent factors of the contract he is a major, of
sound mind, not disqualified by law and order.
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Lawful object: The object of a contract must be legal. If the object is fraudulent, immoral,
against the public policy then the object of contract and agreement not is lawful. Agreement
not is enforceable by law if there is a legal flaw in the agreement.
In the given case, the object of the contract between Avinash and café was lawful because
there was no any immoral, fraudulent and no any policy against the public. This is the
agreement which can be enforceable by the law due to the harm caused to Avinash with the
use of food products of the café.
Lawful consideration: This is also the essential element of the contract. It means something
in return; both the parties to the agreement must get something in exchange for the promise
made. If the consideration is not paid then such promise will be a bare promise and which is
not enforceable by law. The requirement of consideration is real, lawful and not illusory
(Fried, 2015).
In the given case, Avinash paid the amount of consideration with the exchange of
Cappuccino and pastry. By the self - service facility the total cost of food products is $7.50
which was paid by him. Both the parties got something in return to fulfil the promise. The
contract can be enforceable because there was no nay bare promise.
Certainty: Agreement must be certain and there is a capability to make it certain. There will
not be a legally binding obligation for all parties if factors of agreements are uncertain,
vague.
The agreement between Avinash and café was certain because it fulfils all certainty criteria.
Legal formalities: Contract can be made by spoken, words and in writing. It must be in
writing, attested and registered if there is a need for statutory regulations.
The contract of Avinash and café was formed with words and spoken terms so it can be
enforceable.
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(b) Explain whether the café is legally entitled to rely on the clause printed on the ticket
to avoid liability in relation to Avinash’s injury.
Issue: In the present case there is an issue related to the consumer rights, contract law and
exclusion clause.
Rule: Common law is derived from judicial decisions of the tribunals and courts. This is the
basis of precedent cases when the parties do not agree on some terms of the law then
precedent cases are considered with relevant decisions of the judges. If the similar issue was
solved in the past then court binds the prior decision as a principle of stare decisis. As per the
provisions of common law and regulatory legislation essential elects of the contract must be
fulfilled for making an agreement (Gifis, 2016).
According to the unfair contract terms Act 1977, exclusion clauses means one part of the
contract is not liable for certain happenings. This clause will be valid if such clauses are
included in the terms of the contract and are not contrary to the law. This type of contract can
be illegal in some cases and used in wider scope in other cases. The act provides the limits on
the extension of liability for the breach of contract, breach of duty, negligence made in the
contract. The act further states that employees will not be liable for any loss and damage due
to any breakdown, strike, failure and delay of services unless there was a deliberate or
negligent action. There is a liability in case of death and personal injury to customer and
employee as per common law.
There are certain ways of limiting the liability of exclusion clause which is as follows:
 Various kinds of loss that a party to the contract will not be liable for,
 Contract considers the whole agreement between the parties,
 Set out the limits of loss and damages which is liable to the parties.
 Exclude several remedies of the parties which are not in the breach.
According to the consumer rights act 2015, the consumer has rights in case of:
 When goods and services are faulty
 When there is a mistake in digital content.
 Unfair terms of the contract
 Difference between the agreed and provided services (Teofan and O'Neill, 2016).
The consumer rights are applied to notices and contract between a consumer and trader. A
consumer is a person who consumes the goods and services from outside. The law protects
the consumer right when he buys goods and services. If such wrong conduct happened with
the consumer like store and credit cards, faulty goods, poor services, counterfeit goods, issues
in the contracts, issues with builders and rogue traders etc. in all such cases consumer has
right to enforce the contract and receive the loss and damages incurred to him (Knapp, et. al.,
2016).
Analysis: In the present case, it is analysed that Avinash is the regular customer of the local
cage which provides self - service to the customers to select a food or drink items. There is a
requirement to press the OK button to place the order of food products. This online system is
used to save the time and in peak season and it I very famous. Avinash places the order for
one pastry and cappuccino by the self-service facility. He paid the total cost of $7.50 for both
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the items. As he ate the pastry, there was struck something hard and broke the tooth. After the
examination, one metal piece was in the pastry due to which his tooth was broken.
Avinash informed the management about this incident and demanded the loss and damage
occurred to him as compensation for the dental repair. The manager apologized for the wrong
act and said that there was a clause mentioned on the back side of the ticket that “the café was
not responsible for any injury incurred to the customers by the use of drink and food items”.
According to the case of interfoto picture library v stiletto ltd, the court held that clause is
operational over the rule a liable for the loss and damages incurred by the plaintiff.
As per the case of Curtis v Chemical cleaning Co. held that employer will not escape from
the liability of loss and damages on the basis of exemption clause.
As per the case of British Crane Hire v Ipswich Plant Hire, court held that terms and
conditions are incorporated in the contract but there was a general understanding between the
parties. The terms of the contract must be standard and defendant was liable for any loss and
damages caused to the plaintiff.
According to the principle of exclusion clause, café mentioned the clause in ticket received
by Avinash that there was no responsibility or liability of the café in any injury takes place.
According to the consumer rights law protects the Avinash as a consumer his rights are
infringed due to poor services provided by café and delivery of faulty goods.
Conclusion: It is concluded from the above task that principle of common law and consumer
law will apply. Avinash has incurred loss and damages because of faulty services provided by
the Café and caused harm to his tooth. The exclusion clause will not be applicable in this case
to personal injury take place to the consumer due to negligence and breach of the duty by the
café owner. According to the rights of consumer, Avinash is liable to file the suit against the
café and receive the compensation of loss and damages occurred to him due to faulty goods
and services provided by cafe. The contract is enforceable and Avinash has right to file the
suit as per common law and consumer rights Act, 2015.
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Question 2
The terms and conditions of the contract are known as clauses. An agreement includes many
terms a contract can be of any form whether express or implied. An express contract means
terms and conditions are expressed with orally. Express terms of the contract are agreed
between all the parties. An implied contract means some of the terms of the contract are not
defined in words. Such terms are put by the statute and courts. When the contract is formed in
an oral manner then it will be difficult to determine which statements are negotiated terms
and which one are representations (McKendrick, 2014).
Express terms of the contract: agreement in which terms are mentioned by the parties to the
contract. An express contract means terms and conditions are expressed with orally, verbally
and writing. Express terms of the contract are agreed between all the parties. If there is an
expresses contact was formed between the parties than the identical subject of the contract
cannot be implied by fact.
Implied terms of the contract:
 terms are implied by facts
 terms implied in law
 terms implied by custom
 terms implied by statute (Austen-Baker, 2017).
In the given case, there was an oral contract made between the Avinash and cafe. Expressed
terms of the contract are agreed between the parties. Parties fulfilled the terms and condition
of contract but there was an issue related to the services provided by the cafe. In such case, if
any condition is not fulfilled in a proper way then innocent party can bring an action for the
breach of contract. Here Avinash is liable to file the suit against the cafe. In the given case
implied terms of the contract are also followed in such cases when a court applies the terms
which are not mentioned in the contract. Avinash is liable to file the suit against the café as
per the provisions of common law and infringement of consumer rights. The implied term has
put the obligation of statute and courts (Whittaker, 2016).
According to the given case, implied terms of the contract are applied by law and facts. The
facts state that there was the intention of the; parties at the time of making the contract. As
per the case of Shell UK v Lostock Garage Ltd, terms will apply by the court if not
mentioned in the contract.
According to the case of Wilson v best travel, terms and conditions of the contract must be
reasonable and of defined manner. There are some contracts which are used on a regular basis
which developed a set of standard terms which are implied the same sort of contract.
As per the case of Esso Petroleum v Mardon, the court of appeal said that claimant was
liable to receive the damages and loss for the breach of common law and warranty.
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In the present case, both terms of the contract are applied as Express and implied. It is
concluded that an oral contract was formed between the parties which were the express term.
The liability was occurred due to the fault of cafe services which caused personal injury to
the Avinash. In such case, exclusion clause was inserted by the café that there was no liability
of the owner if any injury takes place to the customer. In such situation exclusion clause will
not be applied and Avinash has right to file the suit and approach to the court proceedings as
implied terms of the contract. Consumer rights are also applicable to the Avinash so he can
file a suit as a customer (Hughes, et. al., 2015).
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Conclusion
It is to be concluded from the above assignment of business law, that common law and
provision of the legislation are regulated in the country in case of any contract formation.
According to the contract act, all the essential elements of the contracts are must be followed
in the formation of the contract. If any of the elements is not considered then such contract
will not be valid and not be enforceable in the court. The provisions of the consumer rights
are also followed because in the present case Avinash was liable to receive the loss and
damages occurred due to the fault of the cafe. As a consumer, he has right to protect himself
from the fault and mistake incurred by the café. The case studies were also discussed to
elaborate with effective manner.
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References
Case laws
 Merritt v Merritt [1970] EWCA Civ 6 i
 Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd [1987] EWCA Civ 6
 Curtis v Chemical Cleaning [1951] 1 KB 805
 British Crane Hire v Ipswich Plant Hire [1975] QB 303
 Shell UK v Lostock Garage Limited [1976] 1 WLR 1187
 Wilson v Best Travel [1993] 1 All ER 353
 Esso Petroleum Co Ltd v Mardon [1976] EWCA Civ 4
 Austen-Baker, R. (2017). Implied terms in English contract law. Edward Elgar
Publishing.
 Cartwright, J. (2016). Contract law: An introduction to the English law of contract
for the civil lawyer. Bloomsbury Publishing.
 Fried, C. (2015). Contract as promise: A theory of contractual obligation. Oxford
University Press, USA.
 Fried, C. (2015). Contract as promise: A theory of contractual obligation. Oxford
University Press, USA.
 Gifis, S. H. (2016). Dictionary of legal terms. Barron's Educational Series.
 Hughes, W., Champion, R., & Murdoch, J. (2015). Construction contracts: law and
management. Routledge.
 Knapp, C. L., Crystal, N. M., & Prince, H. G. (2016). Problems in Contract Law:
cases and materials. Wolters Kluwer Law & Business.
 McKendrick, E. (2014). Contract law: text, cases, and materials. Oxford University
Press (UK).
 Teofan, V. O., & O'Neill, O. N. E. (2016). Creditor and Consumer Rights. SMU Law
Review, 44(1), 163.
 Whittaker, S. (2016). Distinctive features of the new consumer contract law.
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