Contract Law Case Study Problem Questions and Answers

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Task: Richard has a specialist car dealership. He buys old cars, refurbishes them and then sells them. He also hires out cars.

Richard is restoring an old jeep. It requires a special type of shock-absorber to enable it to travel over rough ground. Richard phones Shocks Are Us. He says to Emma, the manager: “I need four shock absorbers which can be used for off-road driving” Emma consults a brochure published by the shock absorber manufacturer and “Says the D200 shock absorber can be used for off-road driving.”. Richard then agrees to buy four D200 shock absorbers for $ 120 each. When he installs them on the jeep and takes it for a test drive over rough country, the shock absorbers give way and the jeep crashes down, causing $ 2 000 worth of damage to its body. It turns out that when Emma gave Richard the information over the phone, she had been looking at the wrong page of the brochure. Had she looked at the correct page, she would have seen that the D200 is not suitable for off-road driving.

Richard operates his business from a premises which he has leased from George for $ 5 000 per month since January 2016. The lease specifies that the rent is to be paid to George every six months and that it will increase every year by 10%. Richard pays George $ 30 000 in June 2016 and December 2016, but then tells George that he is having financial difficulties and needs every dollar he can to buy equipment. George says “OK, I will let you off paying the increase this year”. Richard is pleased with this, and uses the money he would have had to spend on the rent increase to buy new tools. In June 2017, Richard pays $ 30 000 to George, but George contacts him demanding an additional $ 3 000. When Richard refers to their earlier conversation, George says “Whatever I said, the lease you signed specifies that the rent will go up by 10% each year”.

Tom is a collector of vintage cars. He sees that Richard has a 1979 Mercedes 450SEL for sale on his website, priced at $ 20 000. Tom sends Richard an email saying “I offer to buy the 1979 Mercedes 450SEL for $ 18 500”. Richard sends an email back saying “Sorry, that is not enough, but I will sell it to you for $ 19 000”. Tom sends an email back saying “No, I can’t pay that”. Richard then sends an email saying “OK, I accept your original offer of $ 18 500”, but when he brings the car to Tom’s house, Tom refuses to accept it or to pay the money.

When Richard goes on holiday, Martin looks after his car lot. Martin doesn’t have a car. However, a friend of Martin’s is about to visit town and he wants to be able to drive her around. Martin goes to Richard and says “Can I hire one of your cars?” Richard says “The usual price is $ 50 per day, but because you looked after my car lot in August, you can hire it at no cost. You can pick it up on Monday”. Martin is very pleased and readily agrees, but when he comes to pick up the car, Richard says that he has hired it out to a customer. Martin says that Richard has breached their agreement.

Advise Richard of his legal position in relation to each of these four scenarios. You should assume that all facts given would be provable if the matters came to court. You should also assume that when any of the people mentioned conduct business, they do so as sole traders, not through corporations.


A. Issue
Issue 1: On the advice of Emma, the manager of Shocks Are Us, Richard spent $480 on 4 off-road-ready shock absorbers for his jeep. However, the shock absorber broke when he went for a test drive, and the car rolled. Damages totaled $2,000 dollars. Who is now responsible for covering the loss is the question. Another problem is whether Richard is entitled to compensation at all.

Problem 2: Richard has been paying George $5000 in rent each month to use his facilities. Every six months, the rent is set to increase by 10%. Richard admitted in June that he wouldn't be able to pay the raise because of complications with his business, but George still waived the fee. George called Richard in June 2017 and requested an additional 4300, though. He refused to ratify any verbal agreements and insisted that the terms of the lease paper would hold. This can be a contract violation.

Issue 3: In the third instance, Richard first rejects Tom's $18500 initial offer. He expects $19000 in return. However, Richard decides to accept Tom's earlier offer after he admits that he is unable to pay the sum. So, he drives the car over to Tom's house. Tom, however, turns down the car at that point and declines to pay anything.


4: Richard gave Martin a car loan without charging him because Martin was in charge of maintaining his car lot in August. Martin goes to pick up the automobile, but Richard informs him that it has been hired out. Martin believes there has been a breach of contract. 1. B. Laws

Word of mouth may qualify as a contract under the Contracts Act of 1999's Section 18A and the Sale of Goods Act of 1979's Section 14. Contractual violations are subject to the same penalties as violations of written agreements. The lost amount is owed by the Shocks on Us business, as is clear from the Air Studios (Lyndhurst) Limited T/A Entertainment Group v. Lombard North Central PLC (2012) case. Richard is eligible to collect the compensation amount under the Word of Mouth Law's oral modification provision if he can demonstrate his loss through written documentation. 2 .

The Thomas KELLOGG v. Cindy SHUSHEREBA (2013) case may once more be cited in the second instance. In that instance, Oren was compelled to pay the stated sum. If George goes the court and objects to any wave off arrangement, Richard is obligated to pay an additional $3000 according to the Landlord and Tenant Act of 1985 (Section 18) guidelines. However, if Richard can show a witness to George's verbal assurance, the amount owed to him may be reduced.

 3. Thirdly, the Uber v. Aslam case may be used as an example. The Uber drivers' appeal was rejected by the labour tribunal. The question of refusing to accept the pre-booked product may be taken into consideration in this scenario. The problem is that Tom and Richard did not sign a buy agreement. A contract must be signed with a buyer at the time of the confirmation of the purchase in accordance with the Product Liability and Safety Act. If Richard calls the court, the judge is more likely to dismiss his appeal because this wasn't done4.

The Bolton v. Mahadeva [1972] case may be taken into consideration in order to clarify the ultimate case. In this instance, the appellant was paid the stipulated value less the cost of deficiencies. Martin may likewise argue that Richard hasn't kept his word in this situation, similarly. However, given the absurdity of the case, the judge can request that the appellants and the accused work out their differences before proceeding.

Application C

The Sale of Goods Act of 1979 and the Contracts Law of 1999 may be applied in the first scenario. According to Section 3 of the Contracts Law of 1999, she might be saved by the promissory in this situation. However, a third person, Richard, may claim under Section 2 of the Contract Law of 1999 that Emma, the manager, has sole responsibility for this loss. Additionally, the law's sections 5 and 8 might be relevant. The manager then has a better chance of winning this case. 6.

In the second case, as per the Article 3A of the Landlord and Tenant act 1985, Richard should have given a written notice at least to the house owner stating his financial problem. Since no evidence can be produced in favour of the verbal rent waving, the decision of the court is likely to go in the favour of the landowner7 . Thirdly in the case of Tom’s not accepting the act or paying for it, the word of mouth that he had given will not be considered as unconditional assent as per the Contract Law of UK 8. In this situation, the liability of bringing the car at the doorstep of Tom will completely rest with Richard. Finally, in the case of Martin, the verbal offer may also be accepted as a kind of Contract for consumer credit by the judge. In case if Martin appeals to the court, the verbal contract of Richard with Martin may gain ground. However, since this is s petty case, the court may suggest the mitigation of the case by mutual contract9 .

D. Conclusion
This project highlights four issues which come under various law acts under the jurisdictions of the British court. As such, the law acts that are applicable to this case have been highlighted and verdicts of other similar court cases have been analysed also. Under this circumstance, the primary laws that have been applicable are the English Contracts Law, the Sale of Goods Law and the Consumer Protection laws. The possible scenario if these issues were converted to court cases has been discussed in detail.

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