Business Law And Ethics: Paramount Estates Ltd Essay

Question:

Discuss about the Business Law and Ethics for Paramount Estates Ltd.

Answer:

Issue

The key issue in this case revolves around the statement which was made by Mikaela to Towers flour regarding the almond flour to be gluten free, to be considered as the term of the contract.

Rule

A contract is a promise made between two parties, which give rise to certain responsibilities and duties. These are born from the contractual terms which represent what each party has to do. In case there is a failure to perform these terms, the liability is attracted under the contract law. Before a contract is formed, certain negotiations take place in a contract, which is known as puffs and which is not considered as terms of contract as there is an absence of an intention to be bound legally in such statements[1].

The key rule is that all the statements made before entering into the contract are simply presentations as the same is not reduced in written form in an agreement expressly. In Birch v Paramount Estates Ltd[2] was a case where the court stated that the oral statements could be considered as terms of enforceable contract given that it is crucial to make certain that the obligations of the parties are carried out as had been envisioned in the contract. Hence, the basic rules which have been formed provide that the statement which is made before formation of contract for considering them as the contractual term has to be based on the intentions of the parties.

Heilbut, Symons & Co v Buckleton[3] was a case where the intention of the party had to be looked keenly to see the presence of meeting of minds, i.e., consensus ad idem. The main reason for entering into the contract has to be the making of the statement. The same has been found in Bannerman v. White[4] in which the court held that the statement has to induce the contracting party and that the decision has to be made only after conceding to the agreement which was based on the statement made.

Application

In the given case study, the statement made by Mikaela was made orally and it can be deemed as a contractual term on the basis of Birch v Paramount Estates Ltd as it is the key element of the contract. The intention of the parties which forms the agreements had to be considered where it was made very clear that the almond flour had to be gluten free and this was a key fact in the case. This term was clearly agreed by Tower flour on the basis of the prior request made by Mikaela and her informing that this was a preference for the majority of clients. This agreement would not have been made in case there was an absence of consensus ad idem regarding this term. Hence, it is very clear that due to the meeting of minds and the intention of the parties, the statement made here was a contractual term.

Conclusion

Hence, the statement which was made by Mikaela to Towers flour regarding the almond flour to be gluten free has to be considered as the term of the contract.

Issue

The key issue of this case revolved around the inference of an implied term from the agreement which was made by Mikaela and her clients regarding the wedding cake to be gluten free.

Rule

Under the contract law, the contractual terms can be express or implied. A term would be implied when the parties obviously conceded to it in case it was brought before the attention of the parties during the negotiations[5]. In this regard, the view of a reasonable bystander, as had been given under the Shirlaw v Southern Foundries[6] case proves to be of help. As per this test, the term would be deemed as implied only when a prudent person would agree that the statement was so obvious that it could be considered as an expressed term.

The key test which proves to be of help is the business efficacy test which was given in Moorcock[7], and which provides that a term would be deemed as implied when it is significant to make certain that the business is run in an efficient manner. Similar ruling was given in Trollope and Colls Limited v North West Metropolitan Regional Hospital Board[8], where the implied term of a contract was inferred as running with the intention of the party and without which, the contract cannot be preceded. Also, a term is implied when it is a common practice in the business.

Application

In this case, gluten free cake is something which attracts the clients in the business of Mikaela. So, it can be reasonably expected that the gluten free flour would be used to make the cake. Hence, it becomes an implied term for Mikaela to use the gluten free cake, particularly based on the prudent person view as given in Shirlaw v Southern Foundries. Further, applying the case of Moorcock, the business efficacy test provides that the gluten free cake would help Mikaela in taking her business forward without being confronted by the clients. And so, the use of gluten cake can be deemed as a trade commonality and has to be considered as an implied term of the contract.

Conclusion

Hence, on the basis of discussion carried above, it can be concluded that the gluten cake was an implied term in the contract made here.

Issue

The key issue in this case revolves around the blue icing color which Kimiko had instructed Mikaela to put in the cake as being warranty based on the contract law.

Rule

When a condition is contained in the term of a contract, it forms as the basis of such contract. The key obligations of the parties are a key term in the contract. The term of the contract proves to be the root of the contract and holds the entire contract together[9]. In case the condition of a contract is breached, the contract ends. In Poussard v Spiers and Pond[10], the plaintiff had promised that she would perform at the opera of defendant. Though, due to her sickness, she could not perform her promise and the defendant had to hire another singer. The plaintiff sued the defendant but the court held that the breach was on part of the plaintiff as she could not perform the contractual obligation. So a condition is the base of the contract.

On the other hand, a warranty does not hold much significance in a contract. Through these, minor preferences are shown in the contract. Wills v Amber[11] saw the court agreeing that the warranty is such a term through which the agreement is not ended just because a breach of the same is cited.

Application

The main term of this term was baking the cake as per the preference of Kimiko. And so, the cake should be baked by Mikaela and this is the key condition. The blue icing on the cake was an added decoration and would not affect the contract in a significant manner, thus making it a warranty.

Conclusion

Hence, the icing on the cake would be deemed as a warranty, instead of a condition.

Issue

The key issue in this case revolves around the liability of Mikaela for failing to observe the requirement of blue icing due to presence of exclusion clause at the premises.

Rule

An exclusion clause is such a term through which the liability of a party can be limited. In order for the exclusion clause to be valid, it has to be brought to the attention of the parties and has to be read by them for it to be valid, as was held in Chapelton v Barry UDC[12]. Though, when the contract is signed even without reading such a clause, it is deemed as valid, as was held in L'Estrange v Graucob[13]. Further, based on Wills v Amber, the breach of warranty can result in the party being ordered to pay damages for beaching the warranty.

Application

In the given case study, the warranty had only been breached by Mikaela and not the contract. Hence, the contract cannot be terminated on this basis, based on Wills v Amber. Further, the exclusion clause would help Mikaela in the liability arising from the breach as it is valid.

Conclusion

Hence, the breach of warranty would not attract any liability for Mikaela owing to the exclusion clause.

How to cite this essay: