Business Agreement and Requirement to Form a Valid Contract:

Table of content Introduction5 Content6 Task 1:6 1. Business agreement:6 2. Requirement to form a valid contract:9 Claim 1:13 Claim 2:15 Claim 3:19 Task 2: Explain the differences among conditions, warranties and innominate terms with examples to illustrate:22 Task 3: Law on standard form contracts:24 Claim 4:29 Conclusion32 Reference32 Introduction The knowledge of the law of contract is very importance when doing business. Law of contract is a part of Common law which focus on the formation and operation of a business contract. This report will analyze different types of business agreement and the requirement of a valid contract.

In addition, it explain the differences between condition, warranties and innominate term of a contract. Content Task 1 1. Business agreement: Business agreement is a agreement made between two parties which intend to have an exchange of goods or services that are value and make it into a business contract. Business agreement is the first essential element of a business contract which is legally binding. There are various types of business agreement. It can be classified by the purposes, the forms or the obligation binding of the agreement.

1. 1 Consumer contract and non-consumer contract:

Firstly, based on the purpose of the contract, we can divided business agreement into two group which are consumer contract and non-consumer contract,. The consumer contract is an agreement to supply goods or services between the provinders and the consumers in which the consumers purchase goods or services for their own needs only and do not intend to make profit from it. A contract which will be considere as the consumer contract if it meets all three conditions following: * The buyers purchase goods or services for their personal, domestic or household use or consumption.

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For example, the buyer purchases coffee to drink at home. It will be considered the consumer contract. However, if he buys coffee to sell at his coffee shop to make profit, it will not be considered the consumer contract. * The provider supply the products or services for the purposes of ordinary personal, domestic or household use or consumption. For example, if the provider sell table and chair for household used, it can be considered that it is the consumer contract.

Nevertheless, if the provinder sells coffee table and chair to used in a coffee shop, this contract cannot be seen as consumer contract because the furniture is used to made profit. * The goods are of a type ordinarily supplied for private use. For example, if the buyer buys a SUV to drive to the office, it will be the consumer contract. However, if he buys the bus to drive to the office, this contract will not be considered the consumer contract As a result, to become the consumer contract, the contract needs to meet all three conditions above.

If it does not satisfy one of these conditions, it will become non-consumer contract. By contract, the non-consumer contract is the contract between business and business which mean the goods that is exchanged is later used for business purpose or make profit. For example, A restaurent buys vesgetable from wholesale to cook for the customers. Moreover, most of non-consumer contract also has exclusion clause to protect one party. This clause has different effect between consumer contract and non-consumer contract.

For consumer contract, exclusion clause is only valid for warranty term. It is invalid for condition term such as correspondence with description, merchantable quality or fitness of purpose. For non-consumer contract, the exclusion clause would be valid if the contract is reasonable and it is invalid for title in any case for all business agreement. 1. 2. Written agreements and oral agreements: Secondly, the business agreement can be categorized by their forms as oral agreements and written agreements. An oral contract is an agreement that was made verbally.

There is no contract was written or signed when the agreement was made. It is kind of a informal contract. With oral contracts, the terms of the contract will be determined by the words actually used by the parties when the contract was made. Oral contracts are legally binding, but they are harder to prove in court (see Hadley v Kemp 1990). In fact, the oral contract usually used when the subject of the exchange have a small value. For example, when people go shopping for food, they used oral contract. To compare with oral contract, a written contract is more formal.

It is an agreement made on a printed document that has been signed by all off the parties or representative. Written contracts are legally binding and easier to enforce than oral contract. The main view taken with written contracts is that if they are entirely in writing then the document itself contains all of the terms of the contract. This is referred to as the parol evidence rule. The rule operate to restrict the parties to a written contract from providing evidence that contradicts the terms of the contract (see case Mercantile Bank of Sydney v Taylor 1891). . 3. Unilateral contract and bilateral contracts: Lastly, business agreements can be assort depend on the obligation binding of agreement. In general, most contracts are bilateral. It is an agreement in which each of the parties to the contract makes a promise or promises to the other party. For example, Tom promises to sell his old car and Ben agrees to buy it. In A bilateral contract, both sides have duties on both sides, rights and consideration. In a unilateral contract, only one party to the contract makes a promise.

The offeree accepts by performing the condition, and the offeree’s performance is also treated as the price, or consideration, for the offeror’s promise A typical example is the reward contract: A promises to pay a reward to B if B finds A’s dog. B is not obliged to find A’s dog, but A is obliged to pay the reward to B if B finds the dog. And in a unilateral contract, offer can be made to public at large. 2. Requirement to form a valid contract: A legal contract is an agreement between two or more parties in which legally binding or are promise which is enforceable by law.

There are six requirements necessary for a contract to be valid: * An offer * An acceptance of that offer. * Consideration * Capacity, or legal ability to contract. * Certainty of terms, * Intention to create legal relation 2. 1. Offer: * An offer is a definite promise to be bound on specific terms. * An offer may be made to another person or it may be made to the world at large (see Carlill v Carbolic Smoke Ball Co 1893) * Offer must be communicated to offeree. * An invitation to treat is not an offer because it is not legally binding. Offer can be withdrawed or revoked (see Payne v Cave 1789) by the offeror; rejected or accepted by the offeree. In addition, offer may lapse due to passing time (see Ramsgate Victoria Hotel Co v Montefiore 1866). 2. 2. Acceptance of the offer: * Acceptance of the offer is a final and unqualified agreement to all the terms of the offer while the offer is still in force. * Only the offeree may accept the offer. * The acceptance must be final and unconditional. An acceptance which introduce any new terms is a counter-offer (Butler Machine Tool Co v Ex-cell-O Corp (England) 1979. * Acceptance must be communicated to the offeror and it can be in writing, verbal or by conduct. * Silence does not constitute an acceptance. 2. 3 Consideration: * Consideration is something value which pass from a party to another in return of a promise. * Consideration must move from the promisee. * There are three main categories of consideration which are future consideration “a promise for a promise”, present consideration “an act for a promise” and forbearance. * Consideration must not be past (see Re McArdle 1951) * Consideration does not have to be adequate but must be sufficient (see Chappel Co v Nestle Co Ltd) 2. Intention to create legal relations: * Intention to create legal relations is normally defined as the willingness to be bound by the term of the contract of parties (BPP, p. 73). * Domestic or social agreement and commercial agreements are two kinds of agreement. * Firstly, domestic agreement is presumed that there is no intention to create legal relation. For example, relation between husband and wife (see Balfour v Balfour 1910. ) However, if there is any commercial substance then there is intention to create legal relations (see Merritt v Merritt 1970) Secondly, business or commercial agreement is presumed that there always is intention to create legal relation (see Rose and Frank v JR Compton v Bros 1923) However, if this agreement expressly rebuts intention, there will be no intention to create legal relations. 2. 5 Capacity to contract: In order to make a valid contract, all parties involved must have capacity. All corporations and adults have capacity. The capacity is not binding minor, drunkards, bankrupt and mentally incapacitated person. Contract with minors fall within three categories : * A valid contract is binding in the usual way.

There are 2 types of valid contracts: Contract for Necessaries and Contract for Beneficial Service. (see Doyle v White City Stadium 1935) * A voidable contract is binding unless and until the minor rescinds the contract and usually For example, see case Steinberg v Scala (Leeds) 1923 * An unenforceable contract is unenforceable against the minor unless he ratifies (adopts) it – but the other party is bound. For example, see case R Leslie Ltd v Sheill 1914. The drunkards are not enough of sound mind, so they cannot be awareness of entering the contract.

In the same way, the unsound people fail to understand how important of entering the contract. They are too lack capacity. 2. 6 Certainty of terms: In order to be a binding contract, an agreement must be certain. It means that it should not be unduly vague, or obviously incomplete. As a general rule, an agreement cannot be enforced if it lacks certainty. However the courts will strive to fund a valid contract. If terms are uncertain, the courts may clear the uncertainty by the means of Trade customs & Usage or previous dealings between the parties, to determine the essential terms of the agreement.

There are four situations of uncertainty: Firstly, whether the agreement contain vague term or a meaningless term such as a reference to the “usual conditions of acceptance” where there were no such conditions (see Nicolene Ltd. v. Simmons1953) Secondly, if essential terms are missing then there no contract comes into existence. For example, when the agreement lacks important details such as price, date of delivery, description of goods and so on (see Hillas & Co. Ltd v. Arcos Ltd 1932). Third, the general rule is that a mere “agreement to agree” does not give rise to an enforceable contract.

If an agreement is found to be a mere agreement to agree, it would not have constituted a binding contract (see Hillas & Co. Ltd v. Arcos Ltd 1932). Lastly is the formalization of the agreement. A court will look at all of the circumstances to determine whether a binding contract exists: * The parties had merely agreed to reach an agreement in future, in which case there is no contract. * The parties had made the existence of the contract conditional on its being formalized, in which case there is no contract before formalization * The parties had reached an agreement prior to formalization (see case Meyer v.

Davies). Claim 1: * Issues: Is there a contract between A and B. * Rule: * A legal contract is an agreement between two or more parties in which legal rights and obligations are created and are enforced by a court. * An offer is a definite promise to be bound on specific terms. * Acceptance of the offer is a final and unqualified agreement to all the terms of the offer and when offer will in force. * An offer and an acceptance create a contract. * Revocation: * Postal rule: * Application: There are two parties which is A Pty Ltd and B Ltd On January 1, A Pty Ltd offered to sell a widget machine to B Ltd for $20,000.

As a result, A is bound to his offer to B. The mode of communication is not by post. Furthermore, the method of acceptance is not mentioned as by post. Therefore, postal rule is not applied. On January 3, A sold the machine to C for 25,000, which is probably the true market value. By sold the machine to C, A had revoke his offer to B. But to revocation must be communicated to the offeree to take effect. On January 4, B posted a letter of acceptance to A. Since the postal rule is not applied then the acceptance take effect on communication or when it is delivered.

On January 5 at 9am A faxed B that it has sold the machine to C. This mean the revocation has been communicated to the offeree by fax. Which mean the revocation take effect at 9am, January 5. At 3pm B’s letter of acceptence was delivered to A’ office. But at that time, A’s revocation has already take effect so the B’s acceptance is invalid (see Entores Ltd v Miles Far East Corporation 1955)2 To sum up, in this case, A has revoke the offer before B accept it and the revocation has been communicated to the offerre so the revocation has take effect. * Conclution:

There is no contract between A and B. Claim 2: * Issues: Advise Theresa: Can she sue Robert for breach of contract? Will it be different if Robert had changed his mind before Theresa had started paying the mortgage? * Rules: * A legal contract is an agreement between two or more parties in which legal rights and obligations are created and are enforced by a court. * An offer and an acceptance create a contract. * An offer is a definite promise to be bound on specific terms. * Acceptance of the offer is a final and unqualified agreement to all the terms of the offer and when offer will in force. A valuable consideration in the sense of the law may consist either in some right, interest, and profit or benefit accruing to one party, or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the other. * There are three main categories of consideration which are future consideration “a promise for a promise”, present consideration “an act for a promise” and forbearance. * Intention to create legal relations is normally defined as the willingness to be bound by the term of the contract of parties. Domestic agreement is presumed not usually legally binding, which means that there is no intention to create legal relations in domestic agreement. However, if this agreement includes commercial substance, there is intention to create legal relations. * A unilateral contract arises where only one party assumes an obligation under the contract * Bilateral contract is the contract that each party takes on an obligation, usually by promising the other something. * Revocation is the termination of offer by the offeror. The revocation is effective only before the offeree accept the offer * The revocation must be communicated to the offeree. * Application: There are two parties in this case: Robert and Theresa Robert and Theresa are planning to divorce. They have spent their married life in a house which they bought in joint names, with the help of a mortgage which has six years still to run. Robert and Theresa agree that Robert will move out of the house and if Theresa meets the mortgage repayments for the next six years, Robert will, at the end of that time, transfer sole ownership of the house to her.

Therefore, it can be said that there is an agreement between Robert and Theresa. Moreover, this agreement has consideration from both Robert and Theresa. Robert’s consideration is that he will move out of the house and transfer sole ownership of the house to Theresa and Theresa’s consideration is that she will meet the mortgage repayments for the next six years. Furthermore, Robert and Theresa are husband and wife so it is a domestic agreement. And there is a presumption that a domestic agreement is not intended to be legally binding (see Balfour v Balfour 1919) .

However, in this case, Robert and Theresa are planning to divorce. So they will want to make things clear between them. And this agreement also had the commercial subtance which was the repayment of the mortgage and the ownership of the house. Hence, in this situation, it can be presumed that Robert and Theresa have intendtion to create legal relation (see Merritt v Merritt 1970). After that, Theresa pays the mortgage for a year, at which point Robert says he has changed his mind, and does not intend to transfer his share of the house to her.

This issue can be considered in two ways. Firstly, Robert’s conduct can be considered as the revocation. And when Robert sent the revocation, Theresa has already paid the mortgage for a year. It means that Theresa has accepted Robert’s offer by conduct. She has paid the mortgage for a year which can be considered the present consideration “an act for a promise”. Therefore, Theresa’s acceptance has already reached Robert. However, in theory, offer can be revoked anytime before acceptance.

As a result, Robert has revoked his offer after Theresa’s acceptance so his revocation is invalid. Secondly, this issue can be conceived depend on case law. It was ruled by the court that Robert had made a unilateral offer, and Theresa had accepted it by beginning to made payments for a year. When an offer is meant to be accepted by conduct, it has been held that it cannot be revoked once the offeree has begun to try and perform whatever act is necessary (BPP, p48). It means when Theresa had accepted Robert’s offer, Robert cannot revoke his offer.

Lastly, it is decided by Court of Appeal that there is an implied promise not to revoke once performance has commenced in case of a unilateral contract (see case Errington v Errington 1953). Therefore, in this case, Robert cannot revoke his offer. To sum up, although consider by any other ways, it is conclude that there were an agreement, a consideration and the intention to create legal relation between Robert and Theresa. Consequently, there is a contract between Robert and Theresa. When Theresa pays the mortgage for a ear, Robert can not change his mind. If he does not move out of the house and transfer sole ownership of the house to Theresa when Theresa repaid the mortgage, Theresa can sue him for breach the contract. If Robert had changed his mind before Theresa had started paying the mortgage. There is still has consideration between Robert and Theresa. and It will be a future consideration “a promise for a promise”. However, it would has been difference compare with the case where Robert changed his mind after Theresa has paid the mortgage for a year.

To see if Robert can revoke his offer or not, we have to look at what kind of offer that Robert had made, unilateral or bilateral. Firstly, if Robert has made an unilateral offer that he will move out of the house transfer sole ownership of the house to Theresa and Theresa accepted the offer by performance, in form of repaying the mortgage. Robert changed his mind before Theresa started paying the mortgage. It can be considered that Robert has revoked his offer before Theresa acceptance. It is identical with the theory, offer can be revoked anytime before acceptance.

Therefore, if this is a unilateral offer from Robert, he can revoke his offer before Theresa had started paying the mortgage. On the other hand, if the agreement between Robert and Theresa was bilateral that Theresa made a promise to pay the mortgage, in return for Robert’s promise to move out of the house and transfer sole ownership of the house to her, that agreement would become binding when the promises were exchanged. Therefore, although Robert changed his mind when Theresa pays the mortgage for a year or before Theresa had started paying the mortgage, he can not revoke his offer. Conclution: Robert cannot change his mind when Theresa pays the mortgage for a year. If he change his mind, Theresa can sue him for breach the contract. If Robert had changed his mind before Theresa had started paying the mortgage * It would be different in case of this is a unilateral offer from Robert. It means he can revoke his offer before Theresa had started paying the mortgage and Theresa cannot sue him for breach the contract * It would not be different in case of this is a bilateral agreement. It means Robert cannot change his mind and revoke his offer.

If not, Theresa can sue him for breach the contract. Claim 3: * Issues: Can Bradley legally repudiate the contract and recover the money? Does Bradley have to return the Porsche? * Rules: Necessaries: Goods or services suitable to the condition in life of the minor and to his needs at the time of sale and delivery * Application: There are two parties in this case: Bradley and the dearler. Bradley, the 17-year-old, son of a wealthy parents who live overseas, is enrolled at a regional university. Bradley is a minor. Before leaving his capital city home he pays a small deposit for a ? 50,000 Porsche sports car which he is allowed to take away because the dealer knows his parents. There is a contract for necessaries good Bradney, a minor, and the dealer. This is a valid contract because Bradley is a son of a wealthy family so the Porsche car is suitable to his condition of life and at the time of sale and delivery the car Bradley need a vehicle for his transportation. At university Bradley learns about extreme poverty in developing countries. He wishes to repudiate the contract for the Porsche and donate the value of the car to the charity, World Vision.

Since this is a valid contract he cannot repudiate the contract. If Bradley can repudiate the contract, then he have to return the Porsche which is not him. * Conclution: He cannot repudiate the contract therefore he cannot recover his money. If Bradley can repudiate the contract, then he have to return the Porsche which is not him. Task 2: Explain the differences among conditions, warranties and innominate terms with examples to illustrate: Once a contract has been formed it then becomes necessary to identify the terms of the contract. The terms of the contract impose the obligations on each party.

Condition is a term which is vital to the contract, going to the root of the contract (BPP, p88) If a condition term is breached by a party, the orther party can claim for damages and terminate the contract. (see Poussard v Spiers 1876) Meanwhile, warranty is a less important term. It does not go to the root of the contract, but is subsidiary to the main purpose of the agreement (BPP, p88). If a warranty term is breached by a party, the orther party can only claim for damages only but can not terminate the contract (see case Bettini v Gye 1876 and Schuler v Wickham Machine Tool Sales 1973).

To understand the difference between conditions and warranties, two cases : Poussard v Spiers 1876 in term of condition and Bettini v Gye 1876 in term of warranties will be considered to make clear this issue. Both the contracts is form between an opera singer and a producer to sing in a series of performances. And because of illness, both two singers can not attend on time. However, they did not breach similar terms so effects of the each term breached are different. In Bettini v Gye 1876, the producer requests the singer has to be in London for rehearsals six days before opening performance.

It can be said that the most important task of the singer is to sing in the opera performances. When producer sign the contract with the singer his main purpose is for the singers sing in the performance. Therefore, singing in the shows is the condition of the contract. Besides, taking part in the rehearsals is less important than singing in the performance since it is to prepare for performance better which mean the rehearsals clause was supplementary to the main purpose of the contract.

Therefore, taking part in the rehearsals can be seen as warranty of the contract. And , the singer did not arrive until the third day before the opening. Therefore, the contract did not fail since the singer missed some of the rehearsals but not miss the performances. Hence, the producer can claim damages but he can not terminate the contract with the singer In Poussard v Spiers 1876, In case Poussard v Spiers 1876, the singer was unable to appear on the opening opera night or on the next few days. And the producer engaged a substitute in her place.

Her failure to sing on the opening night was a breach of condition in the contract so the producer can claim the damages and terminate the contract with her Apart from conditions and warranties, innominate terms (intermediate terms) are terms of a contract that cannot be classified as conditions or warranties. Where the term broken is not clearly intended to be a condition or warranty, it will be classified as innominate term. When the innominate terms were breach, depent on the seriousness of the breach that the court will declare whether apply conditions or warranties.

If the effect of breach is too serious, it can be regarded as a condition and the remedies for the breach are claim for damages and termination of the contract (see The Mihalis Angelos 1971). Nevertheless, if the effect of breach is not too serious, it can be considered as a warranty and the remedies for the breach are claim for damages only (Hong Kong Fir Shipping Co Ltd v Kawasaki Kisa Kaisha Ltd 1962). Task 3: Law on standard form contracts: In theory, the standard form contract is a standard document prepared by many large organizations and setting out the terms on which they contract with their customers.

The individual must usually take it or leave it: he does not really” agree to it” (BPP, p37). For example, a customer has to accept his supply of gasoline in petrol station without negotiating discounts. In other word, a standard form contract, sometimes called “contract of adhesion” is a type of contract, a legally binding agreement between two parties to do a certain thing, in which one side has all the bargaining power and uses it to write the contract primarily to his or her advantage. Standard contracts may apply unequal power relations.

When the good is vital for the customers, they must accept the standard form of contract to own the goods. The consumers must accept the standard provisions and unable to change those terms. This problem may be mitigated if there are more suppliers who can offer different terms. For example, electricity is the essential necessary of the human life. In Vietnam at the moment, EVN is the monopoly distribution electricity so the people has to accept their terms or standard form of contract to use electricity without negotiation. This problem will be different if there is another electricity dictriduter other than EVN.

Petrolimex is another example. They are the monopoly distribution petrol in Vietnam. Because the consumer cannot negotiate the standard terms of this type of contract, the institutions set out the clause. Those clause is known as exclusion clause which is a term of the contract that limits or excludes a liability from one party that they would otherwise be subject to. Sometimes, the exclusion clause creates the unfair situations for the other parties who do not rely on it. Therefore, the legislation established Unfair Contract Term Act 1977 (UCTA) to protect consumers in such situations.

The Act uses two techniques for controlling exclusion clauses. Some them are void, whereas others are subject to a test of reasonableness. The main provisions of the clauses are: avoidance of liability for negligence, avoidance of liability for breach the contract, unreasonable indemnity and sale and supply of goods. At first, avoidance of liability for negligence is a provision of UCTA 1977 to prevent a person acting in the course of a business from restricting his liability for death or personal injury resulting from negligence.

In the case of other loss or damages, a person can restrict his liability for negligence unless the term is reasonable. “Negligence” covers breach of contractual obligations of skill and care, the common law duty of skill and care and the common duty of occupiers of premises under the Occupiers’ Liability Acts 1957 and 1984 (BPP, p102). For example, the laundry cannot make the exclusion clause to excluded liability for loss of or damage to customers’ clothing (see Alderslade v Hendon Laundry 1945).

Secondly, avoidance of liability for breach of contract is a provision of UCTA 1977 to prevent the person who imposes the standard term, or deal with the consumer from restricting liability for his own breach or fundamental breach; or claiming to be entitled to render substantially different performance or no performance at all unless the term is reasonable (see Photo Production Ltd v Securicor Transport Ltd 1980) Thirdly, unreasonable indemnity clauses are clauses whereby one party undertakes to indemnity the other for liability incurred in the other’s performance of the contract are void if party giving the indemnity is a consumer, unless it is reasonable (BPP, p. 03). For example, see Stewart Gill Ltd v Horatio Myer & Co Ltd 1984. Moreover, another provision of UCTA 1977 is Sale and supply of goods which prevent a consumer contract for the sale of good, hire purchase, supply of work or materials or exchange of goods from the exclusion or restriction of liability for breach of the implied terms in Sale of Good Act 1979 and Supply of Good and Service Act 1982. There are five terms implied by Sale of Good Act 1979: * Title: the buyer has a right to sell. For example, Tom has right to sell his camera to other people. By contrast, if Tom stole the camera from other people, he has not a right to sell it. Sale by description: The goods must match what the seller says about them. For example, Anna ordered an authentic Channel handbag with red color on shopping online website. It is described on the web page with photos and the seller state that it is authentic. However, when Anna receives the handbag, it is a pink handbag instead red and it is a fake handbag as well. In this case, the handbag which the seller sell to Anna is not correspondence with description so Anna can sue the seller for breach the term sale by description of the contract. * Merchantable quality: Fit for the purpose for which goods of that description are commonly bought as is reasonable to expect. For example, David buys an Mp3 player from Tim.

However, when he uses it, he has discovered that he cannot hear any sound from the player. The basic functions of the Mp3 player is play music. The Mp3 player which David has just bought can play music, it means if failure the merchantable quality so David can sue Tim for breach the merchantable quality of the contract. * Fit for the purpose of the buyer: if the buyer reasonably relies on the seller’s skill. For example, Albert wants to buy an old mobile phone which is easy access to Internet and can take photo sharply with cheap price. Tony who is the owner of mobile shop offers that his shop has the mobile phone like that and Albert agrees to buy it.

However, after buying it, Albert recognized that this mobile phone is old modern so it cannot enter the Internet as well as take photo. It means Tony has sold the products which does not fir for the buyer’s purpose so he can be sued by Albert. * Sale by sample: the goods delivered to the customer must be the same with what they have examined. For example, Kim has bought the perfume which she has sample in the edepartment store. However, after bringing it home, it appear not similar to the one in the store. Hence, Kim can sue the store because it has breach Sale by sample term. Moreover, there are three implied terms in the supply of services.

Service must be rendered with due care and skill, fit for purpose and correspond with description. For example, Anna brings her dress to laundry and asked at the drycleaners whether it was possible to have her expensive dress dry cleaned. After inspecting the coat, an employee of the laundry told Anna that they had a special process for it and there would be no problems. However, when Anna went in to collect her dress, it did not look any cleaner and it was now coming apart at the seams because the dry cleaning fluid used had dissolved some of the stitching. In this case, the laundry has lacked of due care and skill. Moreover, their service does not either satisfying the customers’ requirement or corresponding with depreciation.

Hence, Thomas can sue the laundry shop and claim for damages. In the test of the reasonableness of the exclusion clauses, the term must be fair and reasonable having regard to all the circumstances which were, or which ought to have been, known to the parties when the contract was made (BPP, p. 103). For example, in consumer contract, the court will consider the relative strength of the parties’ bargaining powers, whether the customer could have satisfied his requirements from another source, whether any inducement was offered to the customer to persuade him to accept a limitation of his rights and whether any other person would have made a similar contract with him without that limitation.

Moreover, the court will also consider whether the customer knew or ought to have known of the existence and extend of the exclusion clause, the reasonableness if failure to comply with a condition excludes or limits the customer’s rights, whether it was reasonable when the contract was made that compliance with the condition would be practical or whether the goods were made, processed or adapted to the special order of the customer (BPP, p. 104). Claim 4: * Issues: Can Mary claim the damage for her injury? Can Mary claim the damage for her good that had been ruin? * Rules: Exclusion clauses: * Application: There are two parties in this case which are Mary and Garrod’s store. Mary parked her car in the customers’ car parf of Garrod’s store, at the cost of ? 2. At the entrance to the car park there were two notices. One, placed on the right of the entrance, read: “No liability is accepted for death of, or injury to, a customer”. This is the exclusion clause of the Garrod’s store. Mary had read the clause before the contract made. Therefore this is a term of the contract.

The other, placed on the left of the entrance but not visible because two Garrod’s vans were parked in front of it, read: “Cars parked at owner’s risk”. This is also a exclusion clause but she cannot read it and not aware of it. So this is not a term of the contract. While she was parking the car in one of the spaces provided, two employees of Garrod’s, who were cleaning the upper windows of the store, negligently dropped a bucked of water through the windscreen of Mary’s car causing facial injury to Mary and completely ruining some other goods which Mary had just bought from another store. There is two damage. The first one is the facial injury. But she cannot claim the compensation for this accoding to the exclusion clause that state: “ No liability is accepted for injury to a customer”.

The second one is the damage of the car and the goods that she bought from another store. She can claim the compensation for this since she is not aware of the exclusion mention the damage of the car and goods (see case Alderslade v Hendon Laundry 1945). * Conclution: Mary can claim the damage for her injury. Mary can claim the damage for her good that had been ruin. Conclusion This report above has partly help us have an overview of the part of law of contract in common law. List of cases as example has considered to illustrate the doctrines of the law. Understanding these features is necessary to doing business because contract is an important part in business.