Analysis on Contract Law

Issue

In accordance with the described case situation, Sunny Hold Ltd had not provided satisfactory services to Rose as there were a lot of dissimilarities between actual services and descriptions in the brochure. Rose has the following complaints from the management of the hotel:

• There was no private pool and children paddling pool
• 24-hour attendance for disabled guests
• The guest room did not have air conditioning

On her complaint, the management of the hotel pointed out the exclusion clause in the brochure that the "Company or their employees will not be obliged in any case for dissimilarities contained through information, representation, or description provided in the brochure.".

We Promise Exceptional Assignment Writing & No AI Shortcuts !

Order Now View Samples Assignment help

Legal provisions

Contractual Obligations

Contractual obligations can be defined as duties and responsibilities that are required to be fulfilled by each party to discharge the contract by the performance. These obligations vary as per the subject matter of the contract. For example, contractual obligations for the sale of services will be different from the rental contract. Generally, the following contractual obligations are satisfied in all types of contracts:

Payment: The buyer is obliged to provide payment for the goods and services rendered by the seller. This obligation will be clarified by the terms of the contract, as it will state the payment amount and the deadline for the same

Delivery: Seller is required to provide satisfactory services as per the description in the deed of the contract. description of delivery will be considered as per the expressed terms inserted by the parties.

Quality of goods: In accordance with the Supply of Goods and Services Act 1982, the seller is required to provide qualitative delivery to the customers. Further, it must resemble the description provided by them.

In accordance with the provisions of the Supply of Goods and Services Act 1982, traders are required to provide services as per the proper standard of workmanship. In addition to this, if there is the absence of a specific date, then it must be completed in a reasonable time and charge. In addition to this, material goods used to provide services should be of satisfactory quality. Failure to comply with these contractual obligations will be considered a breach of contract. Consequently, customers will be entitled to redress in necessary situations in civil courts.

Exclusion of Contractual Obligation

Contracting parties are in a position to reduce their obligation by inserting an exclusion clause. These terms are considered a part of the contract if they are incorporated in a proper manner, and loss to the party must be covered in the description of the clause. However, all exclusion clauses are not considered fair and valid as per the provisions described under Unfair Terms in Consumer Contracts Regulations 1999. This is because, in various situations, the rights of customers are violated by the applicability of the exclusion clauses. On the basis of this aspect, a contractual term is said to be unfair if it meets any one of the following criteria:

• Individual negotiation of contractual terms is not done
• The inserted term contradicts the requirements of good faith
• Inserted term by the parties had caused a significant imbalance between rights and obligations to the impairment of consumer
• Indicative described under schedule 2 of Unfair Contract Terms Act 1977

In accordance with the case decision of Director General of Fair Trading v First National Bank [2001] UKHL 52 House of Lords, good faith is not an artificial or technical concept. It is because this approach considers merely commercial morality and practice [MMcKendrick, E., 2012. Contract Law: Text, Cases, and Materials. Oxford University Press.]. This case lays down only a composite test by considering the substance and formation of the contract. Furthermore, the concept of fair dealing states that the supplier must not (whether unconsciously or deliberately) take advantage of the customer's lack of experience, indigence, necessity, weak bargaining position, and unfamiliarity with the subject matter of the contract. In any of such situations, the exclusion will not be considered valid [EElaw Resources]. 2016. Statutory implied terms: The Sale of Goods Act 1979 and the Supply of Goods and Services Act 1982.

Regulation of this UTCCR 1998 states that if an exclusion clause is said to be unfair, then it will not be considered as a part of the contract. Further, the rest of the contract will be valid and effective for the contractual obligation. By considering this aspect, it can be said that the invalidity of the exclusion clause is not equivalent to the invalidity of the entire contract. Henceforth, contracting parties will be required to accomplish their performance without considering unfair terms. Remedies for the breach of contractual obligations.

Contractual law has described provisions for a remedy for the innocent party to compensate for their injury if satisfactory performance is not provided by the contracting party. Remedies for the breach of contractual obligations are described on the basis of bifurcation of contractual terms.

Contractual terms are statements that describe the obligations of parties that are required to be satisfied by their performance. Mainly there are two types of terms, i.e. expressed terms and implied terms. Expressed terms are inserted by the mutual will of parties to describe their promise. Further, bifurcation of expressed terms is done in conditions, warranties and innominate terms. The description of these terms along with their impact of breach is as follows:

Conditions

Conditions are the most important terms of the contract to be performed by the parties. If the conditions of the contract are not satisfied, then the innocent party is in the position to repudiate the entire contract, and further they can sue the faulty party for the claim of damages. In the case of Poussard v. Spiers (1876) [11 QBD 410], the employee had breached the conditions of the contract, due to which she was replaced as the employer had terminated his contract. In this case, the court held that the conduct of the employer is justified because a breach of condition is referred to as a breach of contract.

Warranties

Warranties are the minor terms of the contract, as they do not link to its central existence. If the contracting party is not able to satisfy the warranties of the contract, then the aggrieved party can only claim damages, but they are not in a position to terminate the entire contract. According to the case precedent of Bettini v. Gye 1876, the employee had breached the warranty of the contract, and her employer had terminated the contract. In this case, the court of law stated that breach of warranties does not provide entitlement to the innocent party to end the contract, as they have only the right to claim damages.

Innominate terms

An approach to the innominate term has been developed from the case of Hong Kong Fir Shipping v. Kawasaki Kisen Kaisha. In accordance with this case, the innominate approach should be considered for breach instead of classification of terms in conditions and warranties. In accordance with this approach, an innocent party will be entitled to the breach of the entire contract only if they are substantially deprived of the entire benefit.

Application of Legal Provisions

In accordance with the given case scenario, it can be said that the contractual obligations of the hotel have provided satisfactory services to the customers in accordance with the description provided in the brochure. In addition to this, they are not entitled to exclude their liability regarding the terms, which will contradict the fundamental rights of the customers. Provisions of Supply of Goods and Service Act 1982 states that the seller is required to deliver the services in accordance with the description provided at the time of sale.

By the applicability of the above-described provisions, it can be said that the exclusion clause inserted by hotel management is not valid. It is because it is contradictory to implied terms described under SGSA. This aspect is also supported by the case decision of the Director General of Fair Trading v First National Bank. It is because the management of the hotel had taken advantage of the weak bargaining position of the customers. The justification of this statement is obligation in dissimilarities in actual services and standard services in brochures is excluded by the insertion of an exclusion clause, which is completely unfair to the customers [ZZoll, F., 2012]. The binding power of the contract: protection of performance in the system of the Common European Sales Law. Journal of International Trade Law and Policy. Insertion of such terms reduces their right to claim damages in situations where they are not satisfied with the provided services of the organisation. On the basis of this aspect, the exclusion clause inserted by the hotel will not be considered as a part of the contract.

In accordance with Regulation 8 of Unfair Terms in Consumer Contracts Regulations 1999, contracts between parties will be continued for completing the performance. Case facts of the provided scenario show that there is a breach of warranty on the part of the management of the hotel as they failed to provide services in accordance with the description given in the brochure. However, Rose is not entitled to terminate the entire contract on the basis of a breach of the warranties.

Conclusion

As per the described legal provisions, it can be said that Rose is entitled to claim compensation for the non-satisfactory performance on the part of the management of the hotel. However, compensation of the entire return is not justified as ancillary terms were not satisfied. On the basis of provisions of the Unfair Terms in Consumer Contracts Regulations 1999, the exclusion clause inserted by the hotel in the contractual deed will not be considered valid because it is in contradiction with the legal provisions. Thus, the management of the hotel is not in a position to take advantage of that clause to reduce their contractual obligation.

Get assignment help from our experts!

References

• Clarkson, K.W., 2010. Business law. Text and Cases: Legal. Cengage Learning.
• Lando, O., 2003. Principles of European contract law. Kulwer law international.
• McKendrick, E., 2012. Contract Law; Text, Cases, and Materials. Oxford University Press.

UPTO55%

Avail The Benefit Today!

To View this & another 50000+ free

Enter Email

Submit