(1a) East Midlands Airways Airbus

A contract is an agreement that is legally binding upon the parties to do it. (ACCA F4, 2009)
The law of contract is mainly about the enforcement of promises. The elements that are
needed to form a valid contract are follows:
Agreement offer and acceptance
Consideration
Intention to create legal relations
Capacity and legality

In this case study, East midlands Airways (EMA) advertised for airbus 321 based on the
principles of an invitation to treat not an offer. Although rather an evidence that the EMA
may wish to either accept or reject any offer. An invitation to treat is an indication that
someone is prepared to the other party to make an offer. (Edexcel/Btec 2004) It is not an offer
and cannot be accepted to form of a valid contract. The types of an invitation to treat are
advertisement, exhibition of goods for sale such as shop window and shelves displays,
auction sales and tenders. Therefore, this airbus advertisement is an attempt to induce offers
that classified as an invitation to treat. See case Patridge v Crittenden(1968)
According to the case study, Phil (the offeror) the chief executive of Zulu Aviation Ltd
made the offer with offeree EMAs managing director Joseph. In relation to the contract law,
an offer is a definite and unequivocal statement of willingness to be bound on specified terms
without further negotiations. An offer can be in any form such as oral, writing or conducts
and an offer can be made to a particular person, to a class of persons or even to the world.
Carlill v Carbolic smoke ball co (1893)
In relation to the case study, there has been acceptance of the offer. Because, offeree joseph
accepts the offeror Phill. In contract law, offer and acceptance making the agreement which is
main elements of binding contract. Acceptance is the unqualified and unconditional
agreement to all the terms of the offer by the form of oral, written or conduct. Inaction does
not imply acceptance. Also, acceptance is not effective until communicated to the offeror.
The offeror may waive the need for communication of acceptance by making an offer to the
entire world. Carlill v Carbolic smoke ball co (1893)

Furthermore, every simple contract must be supported by some form of consideration from
each other. In this case study, Phills consideration is the promise to pay 100,000 and
Josephs consideration is the promise to not to sell the airbus to another buyer for next five
days from 15
th
October 2010. The legal meaning of consideration is and act or promise of it
on the part of one party to a contract as the price of the promise made to him by the other
party to the contract. Dunlop Pneumatic Tyre Co v Selfridge & Co Ltd (1915) (ACCA F4,
2009)

There are two types of consideration in contract law, which are executory consideration is
given where there is an exchange of promise to do something in the future. Executed
consideration means that the consideration is in the form of an act carried out at the time the
contract is made. (ACCA F4, 2009)
In addition, the basic rules of consideration are as follows:
1. Consideration must be sufficient but need not to be adequate. That means, there must
be some monetary value to the consideration and must be capable in law of amounting
to consideration.
2. Past consideration is insufficient. That is consideration is past if the consideration is
an act which has been wholly performed before the other party gives his promise.
3. Performance of an existing duty is not sufficient consideration except the existing
contractual duty is exceeded. (ACCA F4, 2009)

According this case study, the wording of the agreement clearly negated intention to create
legal relations between Phil and Joseph. In all business agreement is presumed that there is
an intention to be legally bound, unless it can be shown otherwise. This is a strong
presumption that can be only be rebutted by clear evidence to the contrary. Jones v Vernons
Pools Ltd (1938) This mean the parties intend that the agreement will be binding with
recourse to court action for its enforceability. There was a business agreement between Phil
and Joseph.
There were no vitiating factors that would affect the validity of the contract between Joseph
and Phil for the purchase of the Airbus.
From the above stages, the agreement legally binding between Joseph and Phil meet all the
elements that are needed to form a valid contract for the sale of the Airbus.









(1b) Mobile Phone contract
Contractual terms are statements that form part of the contract by word of mouth or in
writing as long as they are sufficiently clear for them to be enforceable.
A statement, written or oral, made during the negotiations leading to a contract, may be a
term of the contract or merely a representation inducing the contract. (ACCA F4, 2009)
A representation is something that is said by the offeror in order to induce the offeree to
enter into the contract. It may or may not become a term of that contract. In the case of
failure by any party, if the representation becomes a term of the contract, the innocent party
has remedies for breach of the term as well as for misrepresentation. However, the
representation does not become a term of the contract, the innocent party will have remedies
only for misrepresentation which are based on equitable remedies. (ACCA F4, 2009)
The types of contractual terms are as follows:
1. Conditions :
Condition is an important term going to the root of the contract. The breach of the
condition can result in damages or discharge or both. Also, breach of condition entitiles
the innocent party the right either to terminate the contract or refuse to perform their part
of it, or to go through the agreement and sue for damages. Poussard v Spiers & Pond
(1876)
2. Warranties :
A warranty is a subsidiary obligation which is not vital to the overall agreement, and in
relation to which failure to perform does not totally destroy the whole purpose of the
contract. The injured party has completed their own part of the agreement, and can only
sue for damages. Bettini v Gye (1876)
3. Innominate terms
An innominate or determinate term is neither a condition nor a warranty. The remedy
depends on the effects of the breach. If trivial, it is a warranty and the remedy is damages
only. If serious is a condition and remedy is either damages, discharged or both. (The
Hansa Nord (1976)

The terms of contract in this case study is innominate, which mean the remedy depends
on the effects of the breach contracts for the purchase of 300 mobile telephones
immediately suitable for use in the U.K.
In the case (i) the use of the telephones supplied was illegal in the UK and the failure to
modify to make legal had been a breach of a condition and the defendant supplier
company was at liberty to treat the contract as discharge and it was treat the contract has
ended. Poussard v Spiers & Pond (1876)
In the case (ii) the telephones supplied required tuning and taking two minutes for each. It
was held that there was only breach of warranty. The supplier (defendant) could not treat
the contract has ended. They were entitled to damage only. Bettini v Gye (1876)
Overall, in case (I) the supplier couldnt modify to use was breach of a condition and the
mobile company can terminate the contract and sue for damage. In case (ii) supplier can
modify to use was breach of warranty and they can claim only for delay or damage.


Case study 2 Brakes Ltd
Exemption clause is a party to a contract may include a term in a contract to exclude or limit
his/her liability in the event of a breach of contract or in any specific circumstances. Also,
exception clause is generally included in a contract to protect the party drafting the contract
from being sued by the other party for damages, negligence or other losses. Exemption
clauses can be split into two parts which are exclusion clause and limitation clause. (ACCA
F4, 2009)
Exclusion clauses excludes liability completely for specific outcomes and limitation clauses
limits a maximum on the amount of damages the party may have to pay if there is a failure of
some part of the contract.
In the case study, when the Cathy took her car to service at Brakes Ltd she had always been
required to sign a contractual document before handling her car. The contract has an
exclusion clause that clearly stated that Brakes Ltd accepts no responsibility for any
consequential loss or injury sustained as a result of any work carried out by the company,
whether as a result of negligence or otherwise.
In the common rules or judicial process, for the exclusion clause to be valid, it has to be
incorporated in the contract by signature, notice and previous dealings or custom. In the
statuary rules, it has to correspond with the unfair contract Terms (UCT) Act 1997 and
Unfair Terms in Consumer Contract Regulations (UTCCR) 1999. (ACCA F4, 2009)
In this case study, the Brakes Ltd gave the receipt which is accepted by Cathy without
reading printed the Brakes Ltd.s usual business terms, including the exclusion clause.
Therefore, the exclusion clause was incorporated in the contract by 3 previous dealings
between Cathy and Brakes Ltd and receipt contains similar clause Brakes Ltd no
responsibility for any loss or injury. J.Spurling Ltd v Bradshaw (1996).

However the Brakes Ltd exclusion clause doesnt satisfy the statutory rules for control of
exclusion clause contain in unfair contract terms (UCTA) 1977, which is void or invalid
clause that exclude liability for negligence causing loss or injury. Holliers v Rambler
Motors 1972
After considering all the aspect of the contract of the law between Brakes Ltd and Cathy, the
garage accepted that their employee was negligent but denies any liability, relying on the
exclusion clause. So, the case is favour of Brakes Ltd, Cathy is not entitled to the any
compensation.