Business Law and EthicsContract Law

1. Formation of Contracts
2. Offer and Acceptance: McDermott details the fundamental principles of offer and acceptance, which are essential to any contract. He illustrates this with the landmark case of Carlill v. Carbolic Smoke Ball Co. where an advertisement was treated as a unilateral offer.
   • Action: When drafting a contract, ensure that offers are clearly defined and specify acceptance procedures to avoid ambiguity.
3. Consideration: The necessity of consideration, which means something of value must be exchanged, is expounded upon. McDermott refers to Currie v. Misa to explain that consideration can be a benefit to one party or a detriment to another.
   • Action: Document all elements of consideration to demonstrate that each party is receiving and giving something of value.
4. Intention to Create Legal Relations: Intention is critically analyzed, with domestic and social agreements generally presumed not to be legally binding, as illustrated by Balfour v. Balfour.
   • Action: Clearly state the intention to create legal obligations in business contracts to affirm enforceability.

5. Capacity: McDermott discusses who can enter into a contract, emphasizing that minors and mentally incapacitated persons may have limited ability to contract, referencing Nash v. Inman.

   • Action: Verify the legal capacity of all parties before entering into a contract to ensure it is legally binding.

6. Terms of a Contract

7. Express Terms: These are specifically stated, and McDermott emphasizes the importance of explicitly outlining terms. The Thornton v. Shoe Lane Parking case highlights how the terms must be consented to at the point of agreement.
   • Action: Draft clear and explicit terms and ensure all parties review and agree to them before finalizing the contract.
8. Implied Terms: These are terms not expressly stated but inferred. McDermott discusses terms implied by law, such as those in the Sales of Goods Act 1979, which implies terms for quality and fitness for purpose.
   • Action: Be aware of statutory provisions and industry standards that may impose implied terms on your contract.

9. Exemption Clauses: These limit liability and must be clearly communicated. The L’Estrange v. Graucob case is cited to showcase the binding nature of signed documents.

   • Action: Ensure any exemption clauses are highlighted and explicitly agreed upon to avoid disputes.

10. Vitiating Factors

11. Misrepresentation: McDermott divides misrepresentation into fraudulent, negligent, and innocent misrepresentation, with the Derry v. Peek case illustrating fraudulent misrepresentation.
    • Action: Always provide accurate information in contractual negotiations and document disclosures to prevent claims of misrepresentation.
12. Mistake: A profound error affecting the agreement can void a contract, illustrated by Bell v. Lever Brothers Ltd..
    • Action: Conduct thorough due diligence to identify and address potential mistakes before finalizing a contract.

13. Duress and Undue Influence: Contracts entered under duress or undue influence are voidable, as highlighted in Allcard v. Skinner.

    • Action: Ensure all agreements are made voluntarily and document the absence of pressure or undue influence.

14. Performance and Discharge of Contracts

15. Performance: McDermott explains that contracts must be performed exactly as agreed, pointing to Cutter v. Powell for the necessity of complete performance.
    • Action: Maintain meticulous records of performance and compliance with contract terms to defend against claims of non-performance.
16. Breach of Contract: He distinguishes between minor breaches (with partial performance) and fundamental breaches. The Hong Kong Fir Shipping Co Ltd v. Kawasaki Kisen Kaisha Ltd case illustrates the distinction.
    • Action: Assess the severity of breaches carefully and document responses to breaches to protect your contractual rights.

17. Frustration: A contract may be discharged when unforeseen events make performance impossible, as in Taylor v. Caldwell.

    • Action: Include force majeure clauses to cover scenarios where performance may be hindered by unexpected events.

18. Remedies for Breach of Contract

19. Damages: McDermott elaborates on compensatory, nominal, and punitive damages. He uses Hadley v. Baxendale to explain the foreseeability test for awarding compensatory damages.
    • Action: When claiming damages, document all losses meticulously and relate them clearly to the breach to support your claim.
20. Specific Performance: This remedy compels a party to perform their contractual obligations, particularly in unique circumstances, as seen in Beswick v. Beswick.
    • Action: Consider seeking specific performance when monetary compensation is inadequate, particularly for unique or irreplaceable items.
21. Injunctions: McDermott discusses how injunctions can prevent a breach from occurring, with Warner Bros Pictures Inc v. Nelson on prohibitory injunctions.
    • Action: Seek an injunction to prevent a potential breach that could cause irreparable harm, particularly in infringement cases.
22. Quantum Meruit: This remedy ensures payment for services rendered, affirmed in Planche v. Colburn.
    • Action: Claim quantum meruit in situations where services were partially completed, ensuring fair compensation for efforts undertaken.

Business Law and EthicsContract Law