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Contract Law: The Case Study Essay

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A contract is a mutual agreement of obligation between two people or parties reaching consent. In most cases, such commitments are enforced by the law. The arrangement involves one side making an offer, which the other party accepts. A contract consists of such elements as offer and acceptance, appropriate consideration, and legality (Eisenberg, 2018). The parties involved should also have the contractual capacity to commit to the pact. Applying the law in contracting means that there are consequences if any participant forfeits the rules pertaining to the engagement. Therefore, breach of contract necessitates legal measures for failing to honor the deal or hindering the execution of the promise by the other party. This negligence is a case of punitive damage for which the complainant requires compensation for money and time wastage.

The scenario presented involves two individuals, Johnny, who is not a merchant under the Uniform Commercial Code, and his neighbor Mark, from whom he offers to buy a car for $30,000. The latter requires some time to consider the offer to which Johnny agrees and puts down in writing that his proposition is going to remain open for fourteen days. After a week, Johnny sees another car that fascinates him, buys it and informs Mark of his intention to revoke the initial offer. In response, Mark insists that Johnny’s proposal was in writing and still holds it. Johnny apologizes, saying he cannot keep the agreement but promises to give mark $10,000 for the assistance that he had received from him in the previous year around the house. Appeased, Mark accepts only for Johnny to annul his second pledge after a week. The former decides to sue Johnny for breach of contract on the two commitments, buying the car and the $10,000 offer.

There was a valid contract between the two, but Johnny dissipated both Marks’s time and money. He Hastily offers to buy the car instead of informing him that he hasn’t made a final decision and needs to check more cars before settling on one. Johnny also made the mistake of writing down his promise to Mark. Purchasing a car requires a lot of research and inquiries instead of choosing the first option due to the availability of more varieties that might even be cheaper in the market. After being approached by Mark, Johnny should have told him that he had not made a final decision because he still wanted to look around; therefore, he was unwilling to commit. The promising note written by Johnny caused the car to be withheld from other customers willing to purchase it. Mark, the car owner, had the opportunity to sell the machine, but he had the integrity to hold it. Johnny’s actions concerning the car are wrong, and he deserves to pay for them.

There is evidence of an oral contract between Mark and Johnny, although it is related to the first agreement, which Johnny also broke. He acknowledges Mark’s help on his property and offers to compensate him, making the latter cancel his initial disappointment on the car contract. This agreement makes Johnny legally liable to atone for all the words he fails to honor.

Breach of a contract is concluded when a party involved fails to perform their role and doesn’t give a valid excuse. In this view, the elements of a contract are not fully satisfied; therefore, Mark has an entitlement to take legal action against Johnny (Luntz et al., 2017). Having kept his part of the agreement, Mark deserves compensation for indemnity.

Eisenberg, M. A. (2018). The Theory of Efficient Breach. In Foundational principles of contract law . Oxford University Press.

Luntz, H., Hambly, D., Burns, K., Dietrich, J., Foster, N., Harder, S., & Grant, G. (2017). Torts: Cases and commentary ( 8 th ed.). LexisNexis Butterworths.

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Contracts Big Picture Outline

When addressing a contracts essay or MBE question, you need to follow a very strict outline. Do not jump ahead, as you cannot address the issue of damages before you know what type of law applies.

I cannot stress how important it is to analyze a question, either essay or MBE, in this particular order. This will help assure that you do not miss any issues and organize your essay in a coherent fashion.

First, you have to decide what law to apply.

This ALWAYS has to be the first question you ask yourself.

• UCC Article 2 , if the contract deals with the sale of goods. Goods are a tangible movable item.
• Common Law , if the contract deals with services, land, or something other than goods.

Next, and you can NEVER skip this, you must ask IS THERE A CONTRACT

•  A contract is a legal relationship between two or more parties with:
• Offer →  a manifestation of the intent to enter into a contract. Be sure that you distinguish a genuine offer from an advertisement or an invitation to deal. Analyze whether there is an intent to contract.  Know the difference between a UCC firm offer and the common law option contract .
• Bilateral Contract: promise for a promise where the acceptance is a return promise.
• Unilateral Contact: promise for performance where the acceptance is the return performance.
• This is another place where common law and the UCC differ; common law states that there has to be a “mirror image,” where the UCC allows for battle of the forms.
• Is there a consideration substitute? Such as promissory estoppel ? This is synonymous with detrimental reliance .

Next, consider whether any DEFENSES BAR THE CONTRACT

• Lack of capacity → is one party a minor or otherwise lacking in capacity?
• Duress or coercion   → has one party been forced into the contract in some way?
• Fraud   → was the contract entered into under false pretenses?
• Illegality   → is the subject matter of the contract illegal? I.e., a contract to kill someone will not be enforced.
• Mutual mistake   → if both parties are mistaken as to a basic assumption of fact that has a material effect on the contract.
• Unilateral mistake   → if only one party is mistaken, this is generally not a defense. However, if the other party knew or had reason to know of the mistake, it will be a defense to the formation of the contract.
• Unconscionability   → is the contract unconscionable? The court looks at a multitude of factors.
• M – contract in anticipation of marriage
• Y – a contract that will take over a year to complete
• L – a contract for the sale of land
• E –a contract to be an executor
• G – a contract for a sale of goods over $500
• S – a contract for surety ship

Then, and only after the first 3 steps, you INTERPRET THE CONTRACT

• Remember that under common law one needs consideration, while under the UCC consideration is not required.
• Parol Evidence: any prior or contemporaneous oral or written statements that vary or contradict a fully integrated agreement cannot be brought in. However, if there is a partial integration, a prior or contemporaneous oral or written statement can come in to supplement, so long as it doesn’t contradict. Be wary of things that aren’t really parol evidence . Remember you can always bring in prior or contemporaneous statements to prove that there was not a contract (see conditions and defenses to contracts).
• Course of Performance → what has previously been done in this particular contract?
• Course of Dealings → what has previously been done in prior contracts between these particular parties?
• Trade Usage: customary trade practices.

Finally, is there an EXCUSE FOR NON-PERFORMANCE

• Express Condition Precedent : where the performance is conditional on the occurrence of some event and the condition is stated in the agreement.
• Precedent : must occur before the performance or before the performance is excused.
• Concurrent : must occur at the same time performance is rendered.
• Subsequent – if it occurs, it extinguishes the absolute duty to perform.
• Impossibility : is the contract impossible for ANYONE to perform? Be wary, if someone somewhere can perform, it is not truly an impossibility.
• Frustration of Purpose : has the purpose of the contract been frustrated? For example, if you rented a room to watch a parade, and the parade gets canceled, that would be frustration of purpose.
• Impracticability : has the contract been made commercially impracticable by the occurrence of a contingency the non-occurrence of which was a basic assumption on which the contract was made? Essentially, did something that neither party could foresee happen to make the contract commercially impracticable? Bear in mind that commercially impracticable is not the same as merely no longer profitable.
• Subsequent Agreement by the Parties : just like two consenting adults can contract for what they want, they can also agree to contract OUT of something.

Was there an ANTICIPATORY REPUDIATION

Ask yourself 2 questions

• Is the Contract fully executory (has neither party performed)? If yes, there may be an anticipatory repudiation. If no, anticipatory repudiation is not applicable and the party must give the other party time to perform.
• Did one party unequivocally state an inability or unwillingness to perform? If yes, then there may be an anticipatory repudiation. If no, but grounds for insecurity exist, the other party may request adequate assurances of performance. If such assurances are not received, it may be treated as an anticipatory repudiation.
• If there was an anticipatory repudiation, a party need not wait for the time for performance and may treat the contract as breached and sue immediately for damages.

Next, if the duty to perform is not excused, ask yourself: 

Has there been a breach.

Please do not get to this step until you have analyzed absolutely EVERYTHING else.

• Is it major?
• Is it minor?

Are there any:  

Third-party beneficiary, assignment or delegation issues.

• TPB: intended or not?
• Delegation: a party can delegate duties
• Assignment: a party can assign rights

Finally, WHAT IS THE REMEDY

Never end a contracts essay without talking about a remedy . Why would you bring a breach of contract claim without asking for a remedy?

• Expectation: what the non-breaching party would have had if the contract had been fully performed. This is the most common type of damages.
• Reliance: to put the non-breaching party in the position they would have been before the contract was made.
• Restitution : this is to prevent unjust enrichment and is used on things like promissory estoppel.
• Consequential: things like lost profits, but it must be foreseeable.
• Incidental : any damages that are “extra,” such as storage costs, costs to resell, etc.
• Liquidated: where the contract specifies the amount of damages in the event of breach. This will be upheld so long as it is reasonable.
• Specific Performance : only used when goods are sufficiently unique.

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Terms Of The Contract Essay Plans Notes

Updated terms of the contract essay plans notes.

Contract Law

From the AuthorContract law notes fully updated for recent exams at Oxford and Cambridge. These notes cover all the LLB contract law cases and so are perfect for anyone doing an LLB in the UK or a great supplement for those doing LLBs abroad, whether that be in Ireland, Hong Kong or Malaysia (University of London).

These were the best Contract Law notes the director of Oxbridge Notes (an Oxford law graduate) could find after combing through dozens of LLB samples from outstanding law students ...

The following is a more accessible plain text extract of the PDF sample above, taken from our Contract Law Notes . Due to the challenges of extracting text from PDFs, it will have odd formatting:

1. ‘Interpretation is not the same as the implication of terms. Interpretation of the words of a document is the precursor of implication. It forms the context in which the law may have to imply terms into a document, where the court concludes from its interpretation of the words used in the document that it must have been intended that the document would have a certain effect, although the words to give it that effect are absent.’ (LORD HODGE, Trump International Golf Club Scotland Ltd v. The Scottish Ministers (2015)). Examine the roles of interpretation and implication of terms in the light of this statement.

Thesis: I argue, in agreement with Lord Hodge, that interpretation is not the same as implication; the two have different roles in the law of contract. (1) I begin by acknowledging conceptual similarities between the two exercises: in particular, as O’Sullivan notes, to give effect to the intentions of the parties, judged objectively – so that at a high enough level of abstraction the difference between them is merely one of degree. (2) It does not follow, however, that they are so similar as to justify assimilation. I argue that it is possible to articulate a stable conceptual distinction between interpretation and implication: in brief, as Davies argues, interpretation is concerned with ascertaining the meaning of words which are contained in a written document; implication is to supplement the document with terms that are additional to the express terms chosen by the parties. (3) It follows that interpretation and implication must remain distinct in two senses. First, they should be sequentially differentiated: the terms of the contract must first be interpreted before the court can sensibly decide whether additional terms should also be implied. (4) Second, different rules should apply to each exercise: because they are not identical in character, anomalies would result if implication is seen merely as an aspect of, and controlled by the same principles as, interpretation. (5) In particular, I demonstrate that implication is a more intrusive power than interpretation, and should be governed by more stringent rules out of respect for the freedom of contract.

(1) Conceptual similarities between interpretation and implication

Lord Hoffmann in AG of Belize v Belize Telecom argued: “In every case in which it is said that some provision ought to be implied in an instrument, the question for the court is whether such a provision would spell out in express words what the instrument, read against the relevant background, would reasonably be understood to mean… There is only one question: is that what the instrument, read as a whole against the relevant background, would reasonably be understood to mean ?”

Expressing support for this approach, Arden LJ remarked in Stena Line Ltd v Merchant Navy Ratings Pension Fund Trustees Ltd : “This development promotes the internal coherence of the law by emphasizing the role played by the principles of interpretation not only in the context of the interpretation of documents but also in the field of the implication of terms…. The internal coherence of the law is important because it enables the courts to identify the aims and values that underpin the law and to pursue those values and aims so as to achieve consistency in the structure of the law.”

Finally, in Trump International Golf Club Scotland Ltd v The Scottish Ministers , Lord Mance resisted the retreat from Belize in Marks & Spencer plc v BNP Paribas Securities , saying: “I would not encourage advocates or courts to adopt too rigid or sequential an approach to the processes of consideration of the express terms and of consideration of the possibility of an implication… It appears to me helpful to recognise that… the processes of consideration of express terms and of the possibility that an implication exists are all part of an overall, and potentially iterative, process of objective construction of the contract as a whole”.

This raises the question as to whether conceptual similarities between interpretation and implication can be identified.

According to Kramer, linguistic philosophy suggests that in the same way that meaning can be inferred, by reference to context, from words, meaning can be inferred, by reference to context, from silence. Much of interpretation is about supplementing the linguistic meaning of the words used by a process of pragmatic inference, against the broader context, because it is prohibitively costly (and probably impossible) to convey all intended meaning by “encoding” it linguistically. In particular, a communicator can intend what goes without saying and what does not cross his mind. As Lord Hoffmann puts it, “We use words in daily life against a background of knowledge which we assume that our listeners share and we need not therefore specifically mention”. This does not even depend on conscious thought. The formulation of thoughts into words is an unconscious, reflex process. Kramer uses a famous example of the philosopher Ludwig Wittgenstein: if someone asks me to “teach the children a game” they do not intend me to show them how to gamble with dice. This is true even though excluding unsuitable games with die was not present in the speaker’s mind when he made the request. Every communicator intends his utterances to be interpreted using the background of social norms, understandings and expectations. Accordingly, the distinction between interpretation and implication breaks down. Both set out to ascertain what would reasonably be intended in the situation that has arisen, which is what the parties’ (objectively ascertained) intention is.

Hooley also argues that there is a clear linkage between interpretation and implication. Whether you are interpreting the express words of a contract, or whether you are interpreting the gaps between the words of the contract as a whole, you are, in both cases, seeking to identify and give effect to the meaning or...

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