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What is the meaning of the following contractual terms? What is the result if the terms are put into practice? a) Force Majeure b) Price Variation clauses

UK Business Low

Learning and assessment criteria

1 Learning outcome one (L01) – Understand the essential elements of a valid contract in a business context

1.3 analyse terms in contracts with reference to their meaning and effect

2 Learning outcome two (L02) – Be able to apply the elements of a contract in business situations

2.3 apply the law on terms in different contracts

2.4 evaluate the effect of different terms in given contracts

Scenario 1

You are a solicitor working for a firm which provides a series of seminars for clients wanting to set up a business for the first time. Your task is to produce a written report, to be given to each client attending the seminar, setting out in “user friendly” style the principles of law relating to the ‘Terms’ in a contract and ‘Exclusion of Liability’ clauses by answering the following questions:

Questions

1. What is the meaning of the following contractual terms? What remedy is available if these terms are broken?

a) Condition

b) Warranty

c) Innominate term

2. What is the meaning of the following contractual terms? What is the result if the terms are put into practice?

a) Force Majeure

b) Price Variation clauses

c) Retention of title clauses

Case Study – Exclusion of Liability Clauses

Peter likes to travel away from home for weekend fishing with his friends. He arrives at the Leisure Land Hotel, owned by Holiday Professionals Ltd. He has stayed there several times before. His room is not ready so he leaves his bag with the receptionist and is given a ticket of receipt which he puts in his pocket without reading it. The back of the ticket states:

‘All items left at reception at owner’s risk’. [Notice 1]

When Peter returns to the hotel he is informed that his bag has gone missing but that it will be returned to him as soon as it is found.

Peter goes to his bedroom and sees a large notice which states:

‘Holiday Professionals Ltd accepts no responsibility for loss of property or injury to persons, howsoever caused’ [Notice 2]

Peter decides to carry his laptop to dinner in case it is stolen from his room. Unfortunately, on the way, he catches his shoe in a large hole in the stair carpet, and falls down the stairs breaking his arm and damaging his laptop.

Answer the following with respect to Notice 1 and Notice 2 (they are both exclusion clauses), separately:

1. Is the notice a term of the contract?

2. What is the effect on each notice of:

a. The Unfair Contract Terms Act 1977

b. The Unfair Terms in Consumer Contracts Regulations 1999?

Advise Peter whether he can bring a claim in contract against the company for:

a. the loss of his overnight bag, which has not been found, [Notice 1]

b. the damage to his laptop [Notice 2], and

c. the injury to his arm [Notice 2].

Note, to achieve a –

* Pass Grade, you should be able to answer the above.

* Merit Grade, you should, additionally, be able to:

o Show that you have used several sources of information to explain and illustrate the contract terms and their significance

o Explain the effect of the Unfair Contract Terms Act 1977 and the Unfair Terms in Consumer Contracts Regulations 1999 on exemption clauses and give reasons to justify your conclusions

o Demonstrate an effective approach to study and submit the report on the specified date

* Distinction Grade, you should, additionally, be able to:

o Evaluate how well consumers are protected by the law for exemption clauses when dealing with a business

o Solve the contract problem question demonstrating lateral and creative thinking.


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