Contract Law Assignment - Legal Scenario Analysis and Solutions

This assignment analyzes four scenarios related to contract law. The first scenario examines a case of negligent misrepresentation where a company provided the wrong shock absorbers. The second scenario explores promissory estoppel, where a landlord attempts to collect increased rent despite a prior agreement. The third scenario focuses on offer and acceptance, specifically a counteroffer, and its impact on forming a valid contract. Finally, the fourth scenario addresses past consideration, where an individual seeks to enforce an agreement based on actions taken before the agreement was made. Each scenario includes an issue, relevant rules from case law (e.g., Hedley Byrne, Foakes v Beer, Hyde v Wrench, Re Casey's Patent, and Pao On), an application of the rules to the facts, and a conclusion. The assignment provides detailed legal analysis and application of contract law principles to the given situations.

Running head: CONTRACT LAW
Contract Law
Name of the student
Name of the university
Author note

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First scenario
Issue
Can Richard sue the shock absorber company for the wrong shock absorbers provided to him as
well as the loss incurred by him in relation to the Jeep.
Rule
According to Latimer (2010, p. 112) a misrepresentation is a false statement which is made by a
party to a contract through which the innocent party is persuaded to get into the contract. There
are three types of Misrepresentations, namely innocent, fraudulent and negligent
misrepresentation. A misrepresentation is innocent where the party making it does not have
knowledge about it. A fraudulent misrepresentation takes place when a party deliberately
indulges in misrepresentation. A negligent misrepresentation is triggered when the party
unknowingly makes a false presentation but if it took reasonable steps, the mistake could have
been avoided. In the case of Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465 it
had been ruled by the court that the aggrieved party has the right to recession as well as damages
for any losses incurred by him in relation to a negligent misrepresentation.
Application
Richard has entered into a contract with Emma (agent of Shocks Are Us) for purchasing shock
absorbers required to restore his jeeps and enable it to operate on rough rods. He has been
provided with wrong absorbers. He relied on the advice of Emma to purchase them and Emma
had reasonable chance to ensure that he provides Richard with correct advice. Therefore

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negligent misrepresentation has been done by Emma and as per Hedley Byrne & Co Ltd v Heller
& Partners Ltd Richard can opt for recession and also claim losses incurred by him.
Conclusion
Richard can sue Shocks Are Us to rescind the contract and consequential damages.
Second Scenario
Issue
Can George successfully sue Richard for the amount of rent unpaid by him as per George’s
promise?
Rule
When a person paid a less payment in relation to an already existing contractual duty he cannot
rely on the fact that the balance had been forgiven by the other party unless an additional
consideration was provided by him and is liable to pay the full amount. These provisions have
been discussed by the court in relation to addressing the issue in the case of Foakes v Beer
(1883-84) L.R. 9 App. Cas. 605.
On the other hand it had been ruled by the court in the case of Woodhouse A.C. Israel Cocoa Ltd.
v. Nigerian Product Marketing Co. Ltd. [1972] AC 741 that a party can uses the doctrine of
promissory estoppels as a “defense” against a claim but not as a claim itself where there has been
a change in the initial contractual duty and the position of the party due to the a unambiguous
and clear promise made by the other party.
Application

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The scenario depicts that a clear and unambiguous agreement has been made between Richard
and George for paying only the actual rent and not the increased rent. However George does not
recognize the promise and claims that no contracts have been formed between them. The claim
made by George is a valid claim under the provisions of contract law and the rules provided the
Foakes v Beer case. However, Richard has the right to make a claim under the principles of
equity to enforce the promise of George. He has a very strong claim under the rules of
promissory estoppels as provided by the case of Woodhouse. This is because there has been a
change in the initial contractual duty of Richard and his financial position as well (spent money
for tools) due to an unambiguous and clear promise made by George.
Conclusion
Although George can make a claim for the Rent under contract law the claim can be defended by
Richard under the equitable doctrine.
Scenario 3
Issue
Can Richard make a claim that he has a valid legal agreement with Tom to sell his car at
$18500?
Rule
The primary case which deals with the issue is the landmark English case of Hyde v Wrench
(1840) 49 ER 132. The case dealt with several issues such as an unequivocal acceptance, a
counter offer and the rejection of an offer. The primary ruling of this case was that an offer is

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liable to be rejected (ended and not eligible for acceptance any longer) when a counter offer or
an unequivocal acceptance has been made against it.
Application
Tom made offer to Richard to purchase a Mercedes which had been advertised by Richard to be
sold at $20000. The offer price of Tom is only $18500 and thus Richard did not accept the offer
and proposed to sell the car at $19000. This means that as the acceptances is not unequivocal it is
a counter offer and evidently as per the rules provided by the Hyde v Wrench case it defeats the
offer of Tom to purchase the car at $18500. Now unless Tom makes a fresh offer to purchase the
car he is under no liability to purchase the car as the offer for $18500 has already been ended.
Conclusion
Tom has no contractual obligation of purchasing the car from Richard
Scenario 4
Issue
Can martin enforce the agreement he had with Richard to rent his car under contract law?
Rule
There are certain situation in which a consideration cannot be considered as a valid
consideration. One of such conditions is that if an activity has been done before a offer was made
by the other party then the activity is not a valid consideration and is also known as past
consideration. The rule was provided by Re Casey's Patent (1892)

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A past consideration may however be valid under certain circumstances including a situation
where the act or omission was due to the request of the promisor and where it was clear that a
compensation is to be provided for the activity. This rule was provided by Pao On v Lau Yiu
Long [1980] AC 614
Application
The activity of martin to care for the garage belonging to Richard did not arise out of a request
which has been made by Richard to him. In addition the act was done before the promise of
providing the Car for free had been made. Thus the act falls under the scope of rules relating to
past consideration. In addition the exception is also not valid in the situation.
Conclusion
Martin has no legal claim against Richard

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Bibliography
Foakes v Beer (1883-84) L.R. 9 App. Cas. 605.
Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465
Hyde v Wrench (1840) 49 ER 132.
Latimer, P (2010). Australian Business Law, 29th ed, North Ryde: CCH
Pao On v Lau Yiu Long [1980] AC 614
Re Casey's Patent (1892)
Woodhouse A.C. Israel Cocoa Ltd. v. Nigerian Product Marketing Co. Ltd. [1972] AC 741