Paper Example on the Law of Contract

Published: 2023-01-04
Paper Example on the Law of Contract
Type of paper:  Case study
Categories:  Contract Business law
Pages: 5
Wordcount: 1244 words
11 min read

Analysis of the Contract

The law of contract guides on the way people agree to the contracts and how the contract can be said to be biding or not. The law stipulates certain specific conditions under which the contract can be termed as binding and cases where the contact can be revoked or assumed to be null and void. When someone wants to get into a contract with another party, they place an offer. For example, when Xena decided to sell her property and contacted Hercules over the same, then that is known as an offer. The person who makes the offer, in this case, Xena, is known as the offeror and the person who accepts the offer is known as the offeree. In this case, Hercules is the offeree The English Law has ways in which the contract confirmed verbally by phone can be termed as binding. It states that in a case whereby an offer is made and the confirmation is to be made via the phone, then the contract becomes binding when the offeror receives the information about the acceptance of the offer by the offeree. The response of the offeror to the acceptance does not change anything about the contract.

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In the case of Hercules, the contract became valid when he made the call to Xena and accepted the offer. As explained in the case, the call went through and the two talked for a while before the phone went silent as a result of the network challenges. The message about the acceptance of the offer had already been delivered to Xena by the time the network distracted the call. In that case, the call was effective in making the contract valid. The case of Xena and Hercules can be compared to a case whereby a rental agreement is reached verbally. After an agreement to rent a property is reached verbally, the contract is legally binding. Any breach of the contract can attract legal liabilities and can lead to losses to the offeror in the form of payment for the damages.

Damages for Breach of Contract

Hercules had a contract with HM to repair his vehicle for the journey to Xena on the following day. The contract included specific times when the work should be completed. However, HM did not honor the contract and the car was not repaired on time. HM had all details about the planned sale of the property and the intentions of Hercules to travel for 200 kilometers to exchange the contracts at Xena's place. Therefore, the breach of contract was not all innocent and HM knew the damages that could affect Hercules as a result of the failure to repair the vehicle. According to Goldberger (2018), the analysis of the damages should be done on the breach of the contract to determine the necessary payments. The first remedy is financial payment. The remedy is a payment of the losses that the second party incurs as a result of the breach of the contract or the amount that the other party could have made or saved if the contract had been successful. The party is also entitled to the payment of the total earnings they could have accumulated from the contract. For example, Hercules could have bought property at a price that was $50,000 below the market price and this was again for Hercules.

The second remedy is specific performance. The remedy is given to the parties who did not get the goods or services they were supposed to get. In the case of Hercules and HM, the remedy would be that HM has to repair the vehicle immediately without asking for extra pay. The contract required him to fix the car on time and the failure is a liability to him. The challenge with this remedy is that it will not solve the challenge that occurred as a result of the failure to honor the initial contract. The property is already sold and even repairing the car now will not change the fact that Xena had already sold the property and left the country. The payment of the damages explained above is also known as the substantive damages, which refers to the financial payments meant to cover the losses incurred as a result of the breach of contract. The issue of remoteness is one of the factors that are considered in this case. It means that if the party to the contract cannot prove they have incurred losses as a result of the breach, then it is not possible to have them compensated. The burden of proof lies with Hercules to provide evidence that losses were incurred.

Exemption Clause

The law allows one of the parties of the contract to include an exemption clause during the signing of the contract, which means that the two parties in the agreement. The clause is meant to create a limitation on the level of liabilities that one of the parties has and the extent to which the other party can ask for remedies. The sign at the entrance of HM's business which states that HM is not liable for any losses or damages caused by the breach of contract was a valid indication of the limitations put during the contract. The exemption clauses reduce the burden of the party to the contract. For the clause to be effective, there are certain conditions that have to be met. The first one is that the clause should be legally binding to the contracts. It means that the clause has to be fully related to the contract. The other one is that it should be clearly visible to the other party. In the case of Hercules and HM, the warning sign is assumed to be clearly visible to the clients. If Hercules gets into a contract with HM, it is assumed that he has agreed with the terms and conditions of the contract. If the contract is written, the exemption should be stated clearly.

In this case, the contract was not in writing and they agreed on the terms verbally. Hercules brought in his car willingly and he is assumed to have read the sign. When one signs a contract with the second party and agrees to the terms and conditions, it is sometimes difficult to determine all exception clauses that are effective. Therefore, the law advises that if one of the parties uses the exception clauses to defraud the other party, then the exception clause is invalid (Boundy, 2016). In the case of Hercules and HM, the sign excludes HM from all liabilities and this is unfair to the parties because they also have a right to get the right services. The exclusion is unlawful and illegal because it takes advantage of the other law to breach contracts and has a cushion against the liabilities that come with the breach of contract. The exclusion clause is also used to reduce the chances of the party to the contract incurring too many losses as a result of the contract, even when the reason for the breach is not solely theirs (Mitchell, 2018). The advice is given in part B changes with this consideration, whereby the liabilities will only be paid to the extent that they are not covered by the exception clause.


Boundy, C. (2016). Business Contracts Handbook. Routledge.

Goldberger, J. (2018). Assessment of damages for breach of contract. Commercial Law Quarterly: The Journal of the Commercial Law Association of Australia, 32(3), 12.

Mitchell, C. (2018). Interpretation of contracts. Routledge-Cavendish.

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