Contract Law: Elements, Express and Implied Contracts, and Discharge

This report provides a comprehensive overview of contract law, beginning with an introduction to its fundamental principles and importance in regulating agreements. It delves into the core elements of a valid contract, including offer and acceptance, intention to create legal relations, consideration, and legal capacity, illustrated through a case study involving Jane, Miriam, and Bob. The report then examines express and implied contracts, differentiating between them and applying these concepts to a scenario involving Benjamin and Healthy Home Limited. Furthermore, it analyzes the role and implications of exclusion clauses in contracts, determining when a company can rely on such clauses. Finally, the report explains the various ways in which a valid contract can be discharged, along with the remedies available in case of a breach of contract, thereby offering a complete understanding of contract law principles and their practical applications.

INTRODUCTION TO CONTRACT
LAW

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1. Discuss four elements of a contract. ......................................................................................1
TASK 2............................................................................................................................................3
1. Explain express and implied contracts in detailed..................................................................3
2. Analyse whether the company can rely on any of the exclusion clause.................................4
TASK 3............................................................................................................................................5
1. Explain the ways in which valid Contract can be discharged. ...............................................5
2. Explain the remedies available in breach of contract..............................................................7
Conclusions......................................................................................................................................8
REFERENCES..............................................................................................................................10

INTRODUCTION
Law is a system of rules which a country or society recognize as regulating the actions of
citizens and which is enforced by the imposition of penalties. Law is very important part of
country as it helps in resolving disputes, establishing standard, protecting liabilities and right as
well as maintaining orders (Pound and DeRosa, 2017). It is a guide post which helps in
maintaining stability in society. Law is a system of rules and regulations that is created to deal
with crime, agreement of business and social relationship. This present report will outline
contract law which is a type of business law and set of possibilities that are legally enforced. It
governs and recognises the rights and duties arising from agreements. This report identifies the
meaning of contract and its elements regarding the Jane and Bob case study. Further, this report
will also include ways in which valid contract can be discharged. Thus, it will summarize
discussion of different scenario which will help in deriving necessity of complying with legal
system.
TASK 1
1. Discuss four elements of a contract.
Contract is a legal agreement that is made or form in between two companies or between
an employer or employee. In UK, contract law that is regulated through sale and supply of Goods
Act. Contract Act provides protection to buyer and seller from any fraud or misconduct. There is
law of contract that has been formed by government of United Kingdom to safeguard people
from fraud.
In order to enforce the agreement between two parties, law of contract is very useful. Any
person who wants to do any business comply with guidelines provided by contract law. There are
four type of contract which are valid, void, voidable and illegal. In selling or buying of any
goods and services, contract law is very helpful. By contract law, transactions happen more
smoothly and without any misunderstanding (McKendrick, 2014). They allow parties to conduct
the affairs confidentially. As per the case scenario, Jane, Miriam and Bob. Jane wants to sell her
catering business as she was leaving to Spain with her husband. She has placed an advertisement
to sell her business. All the elements of contracts are considered in this case scenario. There four
elements of contract which are as follows:
 Offer and Acceptance
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 Intention to create a legal relationship
 Consideration
 Legal Capacity
These four elements make the contract valid are enforced by law. The constitution of UK has
followed all these laws.
Offer and Acceptance- It is the first element of valid contract. It is very essential that
proper acceptance and offer should be there to make the contract valid. Without offer and
acceptance contract cannot be formed. Offer and Acceptance both can be expressed by words,
performance and deeds. Acceptance is just opposite of offer. Acceptance are of two types which
either can be rejected or it can be a counter offer (formation of new contract). Thus, any person
who wants to sell his/her business or any things, he/she has to make certain offer. In the present
case scenario, Jane has make offer publicly to sell her business in £500000 (Polinsky, 2018). She
gave add in magazine. The offer she has made is open offer. Miriam had come to make contract
with Jane therefore Miriam put next offer in-front of her that, she wants to buy business in
£350000. Jane accepts the offer of Miriam and agreed to sell her business in £350000.
Intention to create a legal relationship- This is also one of the major of a valid contract.
In accordance with this, when entering in a contract both parties must have intention to create a
legal relationship. A contract is only valid if parties agree for all legal considerations. At the time
of contract between two parties there should be judicial relationship. If there is no such intention
to create lawful relationship between parties than it will not be considered as contract. In this
present scenario, Jane wants to create a judicial relationship with Miriam and Bob. But in this
present case, no relationship has been formulated and also Miriam does not checked her mail
which resulted in no agreement in between them. No agreement means no contract. But in case
of Bob and Jane, there was a legal relationship when Bob agreed and made payment to Jane.
Consideration- Consideration means something in return. In order to make the contract
valid, it is very important to have enough consideration. It is not necessary that consideration is
related to money, it can be a promise made in exchange for another promise. To induces the
parties to enter into the contract it is the value which is called as Consideration. Consideration
may be in the past, present and future. If parties do not pay decided amount in return than it is
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not contract, it is considered as breach of contract. In this present case scenario, Bob has paid the
full amount £500000 in return which is an enough consideration.
Legal Capacity- Legal capacity is another most essential element that it represents that
who can or cannot enter in the contract. There are some people who are not capable to enter into
the contract such as people who are insolvent, minors, by undue-influence or by cohesion. Thus,
a person who does not fall in these categories can enter into contract. In this present scenario, all
are capable to enter into the contract.
These are all the elements of contract that makes the contract valid. In this present
scenario, there is breach of contract on the basis of fraud. Jane was misleading buying parties by
charging high prices like, she was charging £300000 more. The price of her business is only
£50000 and she is charging very high amount which is fraud and if any party conducted fraud
than it leads to breach of contract (Knapp, Crystal, and Prince, 2016).
TASK 2
1. Explain express and implied contracts in detailed.
Express and Implied are two terms that are very popular in contract act. In the case
scenario, both express and implied terms are applicable. The present case scenario is based on
Sales of Goods Act. There is slogan given by law in Sales of Good Act “buyer be aware”.
Benjamin is a buyer in this case and he receives a call from Healthy Home Limited and
buy purifier. He purchases purifier from Healthy Home Limited. After two months, he finds that
it is not the same which he asked for purchased and he was also injured, as the purifier exploded.
Thus, here in this case both the terms of contract are applicable which are as follows-
Express Contract- It is a contract that expresses and formed by the interaction between
both the parties. Both the parties discuss the terms and condition and make agreement. Express
contract does not have any legal evidence as it may be oral or in writing. It does not seem to a
formal contract (Hutchison, 2017). But still it is a legal contract as per the law it is intention to
create a legal relationship. In this present case scenario, Benjamin made express contract with
Healthy Home Limited on a phone call. After the order placed by Benjamin, sales man has come
and give details of the purifier. Here are elements of Express contracts
Offer and Acceptance.
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 Consideration.
 Mutual Assent.
 Capacity.
 Legal acceptance terms.
Implied Contract- It is contract that is implied in fact and in this type, contract is formed
by the conduct of parties not by words. In this present case scenario, contract is made by
expressing terms but it is implied that Benjamin is also responsible for not checking the purifier
before purchase and should have read all the terms and condition before purchase or within in 48
hours (Bridge, 2017). It is the responsibility of Benjamin that he should read all the clauses. Here
are two types of implied contracts
Implied in fact.
 Implied in law.
Difference in between Express and Implied Contract.
Express Contract Implied Contract
 It is a contract in which the offer and
acceptance results in an agreement.
 Contract is created by words, oral or
written -presentation.
 For example- Agreement of leasing
(Von Glahn and Taulbee, 2017).
 It is a contract where offer and
acceptance is expresses non verbally.
 Contract is not created by words as it is
created by behaviour or conduct
(McKendrick, 2014).
 For example- In auction sale, sale by
fall of hammer
2. Analyse whether the company can rely on any of the exclusion clause.
Exclusion clause in a contract is most important term in a written agreement. In this
clause it is clearly written that one of the party intends to exclude contractor from liability to
specific circumstances, situation or conditions. For instance, any injury to during exercise in
gym, gym owner will not be responsible according to this exclusion clause (Stone and Devenney,
2017). Apart from this, exclusion clause commonly called as indemnity clause. During the
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execution of contract, a particular party promises to indemnify the other from all the obligations.
The main intention of this clause is to limit the liability occurring by a contract. In simple words,
it means one party is not responsible for certain happenings (Exclusion Clause, 2017). Even so,
company or party is not relied on such clause if:
 Contract has been incorporated.
 If each and every terms and condition are clear.
In this present case scenario, Benjamin suffers heavy damages from the purifier that he
purchased from the company. But as per this clause, company is not liable for any damages that
is suffered by Benjamin, because it is duty of Benjamin to ask for each and every instruction. In
the law of UK, it is clearly stated that “Buyer be aware” (Chung, 2018). According to the slogal
or law “ Buyer be aware” states that it the duty of buyer that he/she should make all the enquiry
of the product they are purchasing because as per the law it is the duty of buyer to ask questions
about the products. In this case scenario, it is duty of Benjamin that he should ask each and every
thing during the purchase of purifier. He should check the product in given time (48 hours).
TASK 3
1. Explain the ways in which valid Contract can be discharged.
Valid Contract is expressed or written agreement which is in between two parties to
provide a goods and services. A contract is valid only if all the factors forming a legal contract
are present. It is very important that the terms and condition of contract must be fulfilled to make
the contract a legal contract. Only valid contract are enforceable by law (Valid Contract, 2016).
Valid contract is formed in written form that protect the interest of both the parties. Illegal and
void contract cannot be enforceable by law as there is not fulfilment of legal terms and
conditions.
There are various advantages and disadvantages of valid contract which are as follows-
Advantages Disadvantages
 It can be enforceable by law or in court.
 Valid contract is in written form that
saves the interest more effectively as
compare to verbal contract.
 It is very time consuming process as it
makes the process very slow (Pound
and DeRosa, 2017).
 Sometimes, it creates confusion.
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 By forming the communication in
written form it clearly spells out duties,
commitments and responsibilities for
each and every part involved.
 It limits the flexibility of both the
parties (Maine and Scala, 2017).
 It is very lengthy process.
There are some situations or conditions arise where there is need to discharge the contract. Here
are some ways by that contract can be discharged are as follows-
 By Performance.
 By agreement or consent
 By impossibility of performance
 By Lapse of time-frame
 By operation of law
 By breach of contract.
By Performance- This is one of the most common and natural way to discharge the
contract by performance. In this method, a contract is discharge when both parties perform their
respective performance. Addition to this, a contract can also be discharge by performance
attempts. When promisee performs and if it is not as per the promiser offer than performance can
be discharge (Potter, 2017).
Discharge by Breach- Breach of contract means when contract is discharged by breaking
of obligations. It happens when one party without any law full excuse does not fulfil their written
agreement obligations. Addition to this, breach of contract is also arisen when one party by
his/her own mistake makes the contract impossible to perform. Both are the conditions where
contract is discharge by breach of contract.
Discharge by Mutual Consent- This is also the way to discharge the contract by mutual
agreement or consent. When both parties are agreed on some condition to discharge the contract
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than it is called contract is discharge by mutual consent. There are some elements of discharging
of contract by mutual agreement are as follows-
Novation- Novation means making of new contract by removing older one in between
the same parties or one party is replaced by other party.
Alteration- Alteration means bringing change in the terms and conditions of contract.
Alteration happen when both the parties agree to bring some alteration or changes than at that
time old contract is discharge by mutual contract (d'Entreves, 2017).
Rescission- Rescission means when some terms of the contract get cancelled by both the
parties. It may arise when one party fails to perform its duties and obligations.
Discharge by Impossibility- This is also one of the most common way to discharge the
contract. Impossibility occurs when there is no possibility to occur to complete the contract. Here
is some impossibility where contract can be discharge are death, natural calamities, commercial
impossibility, performance difficulty, changes in regulations and laws and impossibility due to
failure of third person. In this contract cannot be executed in any manner (Poole, 2016).
Discharge by lapse of Time- Time is the backbone of contract. In this way contract is
discharge by lapse of time. While formulating the contract it happens when there is a deadline in
performing the contract and if contract is not performed under the time limit than contract is
discharge. It comes to an end.
Discharge by Operation of law- This is one of the legal way when contract comes to an
end. Contract is discharge by law of operations. It is the situation arise when there is death of
promisor. Addition to this, when an inferior right contract merges into a superior right. The
contract discharge automatically. Beside this, a contract is also discharge by operations when one
party is declared insolvent.
2. Explain the remedies available in breach of contract.
Breach of contract means when contract is discharged by breaking of duties and
obligation. It happens when one party without any law full excuse does not fulfil their written
agreement obligations. Addition to this, breach of contract also arises when one party by his/her
own mistake makes the contract impossible to perform. Both are the conditions where contract is
discharge by breach of contract. Breach of contract is good only when it is break by mutual
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agreement. There is law regarding remedies to breach of contract and that law states that
remedies mean money damages. There are some remedies available in breach of contract such as
money damages, restitution, reformation, specific performance and rescission. Money damages
award includes a sum of money that is given as compensation for financial losses that is caused
by breach of contract (Field, 2016).
Here are the remedies available for contract breach are as follows-
Monetary damages- When there is breach of contract and a party who is responsible for losses
caused by breach. When one party who breaks the contract is liable to pay damages to the other
party to contract. There are several types of monetary damages such as compensatory damages,
restitution, nominal damages, punitive, liquidated damages and quantum meruit.
Compensatory Damages- Compensatory damages is one of the most common remedy to
breach of contract. This type of remedy is awarded when court orders the party who breach the
contract to pay the enough money. For example- Ram hires a boy to clean his car for $50 but he
is not able to do it. Than ram search another boy to clean his car for $100. If it is reasonable cost
than first boy has to pay damages to Ram in compensation.
Restitution- Restitution occurs when court orders a person to pay the money back. For
example, court order first cleaner to pay Ram $50.
Nominal Damages- Nominal damages is when there has been a breach of contract and
court awarded nominal damages when there is any big harm to any party.
Liquidity Damages- It is the type of damages when party who is going to breach the
contract, he liable to pay damages to pay in the event where contract is broken.
Quantum Meruit. This is Latin word that means 'as much as he deserves'. It ascertains the
amount that is to paid for the service when no contract is present. When there is quasi contract
than quantum meruit damages are awarded to make enough compensation to the liable party
(Friedman and Hayden, 2017).
Remedies in Equity- It is type of remedy when court orders a person to do something. It is also
known as injunctive relief. There are some parts of remedies in equity which are as follows-
Cancellation- In cancellation, court enables orders for cancelling the contract and
announce that no party is liable to pay any damages.
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Specific performance- It the remedy that is related to performance and it occurs when
there is breach of contract. This remedy is given when tribunal put pressure on the party who is
breaking the contract to perform the service that was promised in the contract.
CONCLUSIONS
The above report stated that contract law is very important part for country as it helps in
resolving disputes, establishing standard, protecting liabilities and right as well as maintaining
orders. This report also makes understood the meaning, concept and four elements of a contract.
Addition to this, advantages and disadvantages of a valid contract are also included in this report.
Furthermore, this report has also undertaken the way to discharge the contract. Beside this,
assignment also concluded several types of remedies available for breaching of contract.
Moreover, this written report also studied the detailed concept of express and implied contract
along with exclusion clause.
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REFERENCES
Books and Journals
Bridge, M.G., 2017. The international sale of goods. Oxford University Press.
Chung, G., 2018. Book Review: Contract Law: A Comparative Introduction, edited by Jan
Smits. European Review of Private Law, 26(3), pp.449-451.
d'Entreves, A.P., 2017. Natural law: an introduction to legal philosophy. Routledge.
Field, S., 2016. Introduction to the Law of Contract: Formation of a Contract.
Friedman, L.M. and Hayden, G.M., 2017. American law: An introduction. Oxford University
Press.
Hutchison, A., 2017. Decolonising South African Contract Law: An Argument for Synthesis.
In The Constitutional Dimension of Contract Law (pp. 151-184). Springer, Cham.
Knapp, C.L., Crystal, N.M. and Prince, H.G., 2016. Problems in Contract Law: cases and
materials. Wolters Kluwer Law & Business.
Maine, H.S. and Scala, D.J., 2017. Ancient law. Routledge.
McKendrick, E., 2014. Contract law: text, cases, and materials. Oxford University Press (UK).
Polinsky, A.M., 2018. An introduction to law and economics. Wolters Kluwer Law & Business.
Poole, J., 2016. Textbook on contract law. Oxford University Press.
Potter, P.B., 2017. The economic contract law of China: Legitimation and contract autonomy in
the PRC. University of Washington Press.
Pound, R. and DeRosa, M.L., 2017. An introduction to the philosophy of law. Routledge.
Stone, R. and Devenney, J., 2017. The modern law of contract. Routledge.
Von Glahn, G. and Taulbee, J.L., 2017. Law among nations: an introduction to public
international law. Routledge.
Online
Valid Contract. 2016. [Online]. Accessed through: <https://www.quora.com/What-is-a-valid-
contract>.
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Exclusion Clause. 2017. [Online]. Accessed through:
<https://link.springer.com/chapter/10.1007/978-1-349-14657-4_11>.
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