Aspects of Contract and Business Law Case Studies

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Temuulen Od-Ochir        Unit 21 Aspects of Contract and Business Law

726073                BTEC Extended Diploma in Business


Contract law is important for businesses because any promises or agreement made in a business should be binding which according to the law should involve some form of exchanges. It would be impossible to run a business without a contract as that would not make promises binding. For example: suppliers would be very reluctant to supply their product to a retail store if that retail store could suddenly decide they are going to buy from different supplier and do not expect to compensate for the money they put in. The contract law helps the innocent party to recover financially given that the contract has been performed as agreed by them. The law helps the organisation to know what to expect if the agreement is not carried and the law doesn’t allow those who fail to perform get away with their breach.

Task 1

Below is a contract for the sale of Solid and Frogged bricks for a company building house.

Agreement of supplying Bricks

Supplier: Amersham &Wycombe

Buyer: Temuulen

Date to be delivered : **/**/****

Date of Signing : **/**/****

Material Name                     Unit                    Price (per unit)                         Total Price

Solid Bricks        50000                                  £3.50        175.000

Frogged Bricks        60000                                 £2.50        150.000



Total price for the Solid and Frogged bricks will amount to £325,000

The purchaser has paid a sum of £320,000 and the outstanding; £5000 will be paid within one month from the date purchased the bricks, therefore covering the whole sum of £325,000

Accepted by:

Seller:        £ £ £                                                        buyer: $ $ $

Signature:  % % %                                                         signature:  % % %

The first element of the contract is the offer. This is where an item or service is being offered by one party to another party.  It is simply what is offered to the other party in return of that persons promise to act. The terms of the contract on which the offer is made should not be ambiguous, in other words shouldn’t be unclear. The terms should be specific and certain. In the contract above an offer of £325,000 was made by “Temuulen” industrial to Amersham & Wycombe limited, in return for their promise to act by supplied the demanded products. The terms of the contract are clear, it states what is being bought and at what price.  Both the parties reach an agreed price.

The initial offer was made by Amersham & Wycombe limited because the bricks may have cost £4.50 and £3.50 at retail prices. Temuulen Industrial didn’t accept this offer, but instead put in a counter offer saying “Can we have the bolts for £3.5o and the other for £2.5o because we are buying such a huge amount?” Amersham & Wycombe limited accepted this offer. This is what created the contract. A contract can only be formed when the other party accepts the offer.

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Consideration may be a benefit, or it might be a detriment meaning that is removes something or is not beneficial. Consideration might be executory (future) or executed (present).  Consideration cannot be from the past and it must be sufficient, have economic value and must move from the promisee.

In the contract above the consideration has economic value to both parties; money being the case in Temuulen industrials and the 2 different types of bricks in Amersham & Wycombe limited’s. These both have economical value to both parties. If Temuulen industrial failed to pay Amersham & Wycombe limited after the ...

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