Sei sulla pagina 1di 26

Content:

Introduction.................................................................................................................................2
1.1)
1.2)
1.3)
2.1)

Explain the importance of the elements required for the formation of a valid
contract in the motor industry.......................................................................................3
Discuss the impact of different types of contract by providing explanations on
comparison with local, export and distance buying modes.........................................9
Analyse terms in contracts with reference to their meaning and effect in the motor
industry.............................................................................................................................11
Apply the elements of contract in both cases business scenarios................................15

2.2 &2.3) Analyse the law of terms in the above two different contracts andvaluate the
effect of different terms in the two contracts.
Case 1..............................................................................................................................16
Case 2..............................................................................................................................18
Conclusion....................................................................................................................................19
Reference................................................................................................................................20,21

Introduction
World Auto Co has established in 2007 and it under the control of Volkswagen corporation which
has headquartered in Wolfsburg, Germany. Volkswagen is one of two the largest carmaker in the
world, and the largest carmaker in Europe. Their mission is that providing Vietnamese customers
high quality cars that manufactured by Volkswagen car manufacturing. Beside that, with a good
staff that has train by the company. They will have enough equipments, knowledge as well as
skills to meet all questions of customers in Vietnam. In Vietnam market, Volkswage distribute
products such as New Tiguan, Touareg, Scirocco, CC, Multivan. But they will not stop there,
they are planning to expand different new products for the customers in the future.

1.1)

Explain the importance of the elements required for the formation of a valid contract in the
motor industry
For any types of contract, there are three main elements to form a contract such as agreement,
consideration and legal intention. Excepting special cases
Agreement
Definition:
Agreement is the first element of binding contract for both parties. And this will be
determined by the roles of offer and acceptance. When one party makes an offer which
is accepted by the other party.Then, both parties must fully understand and accept the
terms or promises contained in the offer.

With means, an agreement will includes specific terms in the contract between
two or more parties. Then, parties need to give a promise (like an offer) to bind
the contract as well as benefits from both parties. After that, one party will
perform the promise and other party can get benefits from the promise. Then that
party need to return valuable benefit for doing the promise know as a
consideration (legal-dictionary, No date)
For example: A said that if B agrees to clean her garden at the weekend, A will
pay 100 for B. When B agrees, the offer has made. So when B complete the
work, A need to pay money for B as the promise.
Rules of offer and acceptance
o Offer
Definition: Offer can be described as the opening statement of
negotiation between the parties or the statement which signifies
the willingness to contract. it is determined by a promise which be
bound on specific term. (HNC & HND Business (2010), Aspects of Contract
and Negligence for Business, chapter 4: Introduction to the law of contract, Offer,
pages 59)

o With means, when an offer has made, the parties will be bound by terms
in the contract and they have obligations to perform it. In addition, the
person who make an offer as known as offeror and the person to whom an
offer is made as know as the offeree. And there are many types of
different forms of an offer such as letter, mail, etc. But its main purpose is
that help the offeror prepare to the contract with the offeree. (wikipedia,
Nodate)

For example: when purchasing a house, the offeror will make an


offer to the offeree which includes all the specific terms about the
prices, repair costs and so on in the contract. If the offeree accept
those terms, then the offer has made. And during the contractual time,
both parties must perform their obligation about terms in the contract.

Rules: An offer need to follow these rule below:


o Not be vague: An offer must be certain which advoid
misunderstanding for offeree.
o An invitation to treat is not an offer. It is an just invitation to
attract people to buy the offer. And it doesn't have any legal bound
between offeror and offeree. it usually help the party that lead to
make an offer. There are four types of invitation to treat such as
autions sales, advertisements, exhibition of goods for sale and an
invitation for tenders.
o

A response in request to clarification on


price/supply information: Supply information will
not be considered to be an offer. For example: Based
on Case Harvey & Facey 1893, Facey's telegram was
just a statement that supply information about his
minimum price. So the court said that it was not an
offer and no contract had been made. (HNC & HND
Business (2010), Aspects of Contract and Negligence for
Business, chapter 4: Introduction to the law of contract, Offer,
pages 60)

o A statement of intention: If someone has an intent to state an


action, but the action hasn't performed. Then, there is never any
offer in this case. For example: Based on case Harris & Nickerson
1873. The buyers can't sue the auctioneer beacause the auction
does not take place.
o Aware of all the terms: The offeree must understand clearly
about all terms in the contract.
o Be communicated to the offeree: The offeror must communicate
to the offeree about an offer to prepare the contract.
o Acceptance.
o

Definition: Acceptance is the unqualified


agreement to the terms of the offer. (HNC & HND
Business (2010), Aspects of Contract and Negligence for
Business, chapter 4: Introduction to the law of contract,
Acceptance, pages 67)

o With means, acceptance known as an the act of receiving an offer


from offeror and terms in the contract. For example, A said that
she will pay 150 for B if B repair her storehouse in two days.
When B agrees, then B has accepted the offer and having
acceptance. (wikipedia, nodate)

Rule: Acceptance need to follow these rules below


o Communication of acceptance: The offer is only effective if
acceptance communicate to the offeror. There are many ways to
communicate to the offeror such as post, hand delivered,
telephone, etc. (HNC & HND Business (2010), Aspects of
Contract and Negligence for Business, chapter 4: Introduction
to the law of contract, Acceptance, pages 67)

o Silence is not sufficient: Acceptance need to have a specific


message about the offer to offeror. It must be expressed in words
or by action or implied (inferred from conduct).
o Acceptance must be unconditional (absolute and unqualified)
o A counter offer is not an acceptance. It just makes a new offer
which can in turn be accepted or rejected. Moreover, when a
counter offer is made. Offeror and offeree will changes their
position such as offeror become offeree and offeree will become
offeror.
o A request for information is not an acceptance
Consideration.
Definition.
Consideration is something value to exchange the promise between promisor and
promisee. It can bound the promise of both parties.
With means, consideration may include a promise to perform terms which has
made in the contract. Parties must be bound by the promise which avoid
breaching the contract. For example, A will agree to sell a horse for B with the
cost of 250 and B has accepted this offer. In this case we can see that,
consideration of A is a horse and consideration of B is money. The consideration
will bound to perform their promise for both parties.

Types of Consideration.
o Executed consideration is a performed, or executed, act in return for promise.
(HNC & HND Business (2010), Aspects of Contract and Negligence for
Business, chapter 5 Consideration. Consideration, pages 80)

With means, in this type of consideration one party must perform their act
to get the offer from another. For example, A offers a reward for finding
his lost dog. And then B performs the act for finding the dog. In this case,
A's promise will be bound when B perform the act and the offer has made.
o Executory consideration is a promise given for a promise, not a performed act.
(HNC & HND Business (2010), Aspects of Contract and Negligence for
Business, chapter 5 Consideration. Executory Consideration, pages 81)

It means, both parties use the promise to exchange the promise. For
example, A promise to sell his car for B with a reasonable price and B
promise to accept and pay for it. In this case there is nothing to bound for
both parties, so the contract can be breach if one party fail in doing the act.
o Past consideration: Anything which has already been done before a promise in
return is given is past considertion which, as a general rule, is not sufficient to
make the promise binding. (HNC & HND Business (2010), Aspects of Contract
and Negligence for Business, chapter 5: Consideration. Past Consideration,
pages 81)

With means, for work already done and before promise made . the
promise isn't sufficient to bound. For example, based on Case Re
McArdle 1951. The court said that improvements on the house of the wife
had been done before the promise made. So at the time the promise
making, improvements of the wife were past consideration. And it isn't
bound.

o Rules of valid consideration.

Performance must be legal: all the acts must be legal, if not the court
will not obliged to solve for illegal acts
Performance must be possible: for impossible cases, contract will not
binding
Consideration must pass from the promise: only the person who is a
party of the contract has enforceable rights or obligations under it(HNC &
Consideration must be sufficient but necessarily adequate: Just need to
have something to exchange, but it doesn't need to compare about the
value. (HND Business (2010), Aspects of Contract and Negligence for
Business, chapter 5: Consideration. Rules of Consideration, pages 81)

Legal Intention
o Definition Intention to create legal relations can be defined as follows:
An agreement will only become a legally binding contract if the parties intend this to be
so. This will be strongly presumed in the case of business agreements but presumed
otherwise if the agreement is of a friendly, social or domestic nature (HND Business
(2010), Aspects of Contract and Negligence for Business, chapter 6: Intention and
Capacity. Intetntion pages 98)

Intention usually focus on mental attitude and state of mind. So when one party
intent to make agreement, at that time the party has a legal intention and will be
bound in the contract. But, it also depends on facts around and siutations. For
example, at a room, A are playing game and B calls her name. A throws a pen at
his face. A's intention is hit B and her main purpose is to stop calling her. (legaldictionary, Nodate)
Domestic arrangements
For arrangements which includes social, husband and wife, relative,etc are not usually
intented to be binding. Excepting some special cases which court will consider. For
example, Case Jones & Padavatton 1969. In this case a daughter sue her mother for
allowance. And the court said that it's not create a legal intention. This is personal
problem in a family, so they will solve by themselves.
Commercial agreements
For business arrangements, It is presumed that there is an intention to make a legal
relations.

Because these are three main elements to form a contract. So if we miss one of three elements,
we cant form a contract . However, Its not enough to make a valid contract. We need to
mention to these factors as follow:

o Form: there are two main forms to form a contract such as written and oral. So it
will depends on types of contract, the parties can choose the best appropriate
forms to form the contract.
o Genuine consent: A valid contract which will satisfy these requirements such as:
no duress, entirely agree with terms in the contract and no fraudulent
o Capacity: for the person who make the contract. they must have capacity and
ability to aware about terms in the contract.
o Content: a contract must list all the necessary information and terms of two
parties in the contract. And it also need to make a specific period time for the
contract
o Legality: A contract must be legal . If not, the court will not obliged to deal with
it and deemed to be illegal or contrary to public policy.

1.2)

Discuss the impact of different types of contract by providing explanations on comparison


with local, export and distance buying modes
Nowadays,there are many types of the contracts that the parties can choose which can be
unilateral and bilateral contracts, executed and executory contracts and so on . It will depend on
each types of contracts, objectives, situations,etc. The parties can choose the best forms for the
contract. There are two main forms of contracts such as written and oral contract. For each
forms, there will be different advantages and disadvantages, legal binding,etc which shown as
below.

Written contract: It is a contract which has made in writing. It will include evidences, specific
terms and signature of two parties. This forms usually apply for commercial arrangements
because it includes many terms about trading between two parties. So it needs to have clear
information as well as evidences which avoid breaching the contract. In addition, for high value
contract it also need to be made in writing to bind both parties about terms in the contract.
o Advantages of writing form
Having evidences and specific terms
Legal binding
Time prescription
There are clear rules on compensable damages
o Disadvantages of writing form
Take a lot of time and cost
It will be inconvenient for export contract.
o Legal binding
Both parties will be bound by terms in the contract. And they have obligation to perform
them.
o Example: A will agree to sell a house for B with 5000. After discussing about terms,
period time of payment. Both parties has agreed and signed in the contract.
Oral contract: In this form, contracts are usually made by orally. it doesn't have any evidences
or terms. It is just an agreement between two parties. So it usually apply for quick exchange or
for small objectives. It is usually common for sale of goods contracts. And it also has different
advantages and disadvantages.
o Advantages of Oral form
It's convenient for both parties
Quick arrangement
Save a lot of time and money
Both parties can quickly get benefits from the contract
o Disadvantages of Oral form
Lack of evidences for suing other

Less of legal binding


o Legal binding
The parties will be bound by performing their promises.
o Example: A said that he will agree to sell his old television with 80 for B. Then, B agrees
and taking money from his wallet to give A at that time. Everything happens on orally.
However, To carry out signing the contract. There are many types of transaction that the parties
can use such as face to face, distance buying modes and so on. Parties will depends on objectives
or value of contract to choose the best transaction. For important objectives or high value
contract, parties can use face to face form to directly meet and discuss about the contract.
Otherwise, for small objectives or low value parties can use distance buying modes form to make
the contract. Distance buying modes may include mail order, telephone or internet. This can help
parties save time and money. These are advantages and disadvantages about two main types of
transaction such as face to face and distance buying modes.
Face to face: In this transaction, two parties will directly meet and talk about information and
terms in the contract. When both parties agree with terms in the contract, then they come to sign
the contract.
o Advantages:
Making contract can become more convenient and easier.
clear explaination and understanding about the contract
Solve unexpected problem immediately
Can know intention of other party
o Disadvantages:
Take a lot of time and money
It is inconvenient for export contract.
Distance buying modes: In this transaction, perties can exchange information and make the
contract through mail order, telephone, webs and so on.
o Advantages:
Save a lot of time and costs
Its convenient for export contract
o Disadvantages:
It's difficult to explain clearly
Easy to get misunderstanding
unknown about intention of other
Can be deceived.
1.3)

Analyse terms in contracts with reference to their meaning and effect in the motor industry
As we know, when we make a contract. We need to understand about terms in the contract. They
are very importance because parties will be bound by those terms and they may affect to the right

10

of perties. So parties need to consider terms and its roles. These are some main terms that the
parties can consider such as express term, condition term, warranty term, implied term and
exclusion clauses.

Express term: is a term expressly agreed by the parties to a contract to be a term of that
contract. In examining a contract, the courts will look first at the terms expressly agreed by the
parties. (HND Business (2010), Aspects of Contract and Negligence for Business, chapter 7:
Terms and Exclusion clauses. Express term. pages 109)

It is a terms that have been clearly mentioned and agreed by two parties at the time the
contract is made. For example, Case Scammell & Ouston 1941. The defendants want to
buy a motor-van from the claimants on hire-purchase, but hire-purchase terms on the
offer of claimants were never specified. So the court can't identify a contract because the
lauguage used was so vague. So, the claimants can't sue the defendants.
Implied term: a term deemed to form part of a contract even though not expressly mentioned.
Some such terms may be implied by the courts as necessary to give effect to the presumed
intentions of the parties. Other terms may be implied by statute or custom.(HND Business
(2010), Aspects of Contract and Negligence for Business, chapter 7: Terms and Exclusion
clauses. implied term. Pages 114)

With means, these terms doesn't usually directly mention to the contract. and they are
default rules for the contract. When parties made the contract. These terms are implicity
valid. The purpose of these terms are to increase effectiveness for perform the acts, to
achieve fairness between two parties or to reduce hardship. (wikipedia, nodate)
For example, implied by custom. For different region, there will be different custom of
trade in Vietnam. When you go to the market and buy ten of eggs . For northern of the
country, ten may includes elevent or twelve of eggs. And for western of the country, ten
may includes fitteen of eggs. So it will bases on custom of each region which make a
reasonable decision.

Condition term: A term of which is to vital to the contract, going to the roof of the contract. .
(HND Business (2010), Aspects of Contract and Negligence for Business, chapter 7: Terms
and Exclusion clauses. Condition term. Pages 111)

These terms are very important because it will affect to the purpose of the contract and
the parties can't enter into the contract without them. So two parties must follow them

11

seriously. If one party breachs condition terms or make a condition falsely. The wronged
party can suffers consequences such as discharge, claim for damages and so on.
For example, Case Poussard & Spiers 1876.
The facts: Madame Poussard has made a contract with Spiers that she will sing in an
opera throughout a series performances. But she later get illness and can not appear on
the opening night. And after a few days, she had recovered but the producer declined to
accept her services for the remaining performance.
Decision: The courts said that Madame Poussard has breach condition terms by failure
in singing in opening night. And the producer has the right to discharge or claim for
damages from her.
Warranty term: A less important term. It doesnt go to the root of the contract, but is
subsidiary to the main purpose of the agreement (HND Business (2010), Aspects of Contract
and Negligence for Business, chapter 7: Terms and Exclusion clauses. warranty term. Pages
111)

These terms are less important than condition terms because it doesn't affect to the main
purpose of the contract. It may cause some small damages or delay the contract. If
There is no warrant terms in the contract, two parties can still make a contract and the
contract will remain binding on both parties. If one parties breach the warranty term,
other party just claim for damage from wronged party. (Lawhandbook, nodate)
For example, Case Bettini & Gye 1876.
The facts: Bettini has made a contract with Gye that he will engage for the series of
performances. And he has to be in Londone for six days before the opening
performance. However, he got sick and unable to come until 3 day before the opening.
Then, Gye has unaccepted his services and discharge him.
Decision: in this case the court said that He was late three day in openning performance
is that breach the warranty terms in the contract. So he must compensate for the damage
which he has caused. However the contract was still valid and Gye can't discharge
Bettini.

Exclusion clauses: a clause in a contract which purports to exclude liability altogether or to


restrict it by limiting damages or by imposing other onerous condition. They are sometime
referred to as exemption clause. (HND Business (2010), Aspects of Contract and Negligence
for Business, chapter 7: Terms and Exclusion clauses. Exclusion Clauses. Pages 119)

This form will help the party which excludes one of the parties from responsibility for
something that may go wrong in the performance of the contract or limits that

12

responsibility. However, for lawsuit about exclusion clause, the courts usually consider
that exclusion clauses are unfair and try to limit their application. Then, the court will try
to explain about exclusion clauses that gainst the party try to rely on it and making it
narrowly. These are some rules that can apply to determine the effective of exclusion
clause (Lawhandbook, nodate)
Contractual documents: the document containing notice of the contract must be an
integral part of the contract. For example Case Chapelton & Barry UDC 1940. In this
case, the court said that the defendant can't rely on a notice on the back of the ticket to
disclaim liability for injury because when claimant receive the ticket, he didn't see a
notice on the back of the ticket and the defendants gave no warning of limiting
conditions of the chairs. So the defendant can use exclusion clause for this case. (HND
Business (2010), Aspects of Contract and Negligence for Business, chapter 7: Terms
and Exclusion clauses. Contractual Document. Pages 120)

Signed contracts: When a contract is signed by the parties, they will be bound by the
exclusion clauses even they has read it or not. For example, A and B have a contract
about purchasing a machine. A read the clause in the contract by himself and signed the
contract. Then if there some issues that happen in the contract, B can't sue A from
relying on the clause because B has signed the contract by himself. However, if B ask A
to explain about the clause and B misled by A. Then A will be bound on exclusion clause
and claim for damage. (HND Business (2010), Aspects of Contract and Negligence for
Business, chapter 7: Terms and Exclusion clauses. Signed contract. Pages 121)

Unsigned contracts: Party must be aware of contract's terms before they enter into the
contract. For example, Case olley & Marlborough Court 1949. In this case, the court
said that the hotel can't disclaim liability relying on the notice because the claimant has
made the contract before they see the notice, so it's too late and the hotel must claim for
damages. (HND Business (2010), Aspects of Contract and Negligence for Business,
chapter 7: Terms and Exclusion clauses. Unsigned contract. Pages 121)

Onerous terms: when a term is particularly unusual and onerous it should be


highlighted. Failure to do so may mean that it does no become incorporated into the
contract. For example, Case Interfoto Picture Library Ltd & Stiletto Visual Programmes
ltd 1988. And the court said that this term was onerous and it doesn't sufficiently bring to
attention of the defendant. Then the court will reduce fee to reflect more fairly the loss
which caused to the claimants by the delay. (HND Business (2010), Aspects of Contract
and Negligence for Business, chapter 7: Terms and Exclusion clauses. Onerous term.
Pages 123)

13

Interpretation of exclusion clause: The courts interpret any ambiguity against the
person at fault who relies on the exclusion. This is known as contra proferentem rule.
Liability can only be excluded or restricted by clear words. . (HND Business (2010),
Aspects of Contract and Negligence for Business, chapter 7: Terms and Exclusion
clauses. Interpretation. Pages 124)

If there is any issues that not clear about exclusions clauses for people at fault. The court
will clearly interpret for the people who relies on the exclusion . Then, they can clearly
know their liability for their fault. From that, based on the exclusion clauses, they can
reduce or exclude their liability.
Main "purpose" rule: Where the exclusion applies, the court will usually consider to
the main purpose rule to make decisions. By this the court presumes that the clause was
not intended to defeat the main purpose of the contract.
Fundamental breach: There is no doubt that at common law a properly drafted
exclusion clause can cover any breach of contract.
For example, case Photo Production v Securicor Transport 1980 . (HND Business
(2010), Aspects of Contract and Negligence for Business, chapter 7: Terms and
Exclusion clauses. Fundamental, Pages 124)

Statutory law.
The Unfair Contract Terms ACT 1977
UCTA includes noitices and contract terms which help the party exclude or restrict their liability
in the contract and tort. In general the Act only applies to clauses inserted into agreements by
commercial concerns or business. For example, when the court consider and see that if there is
an unfair term to one partym then this term is invalid.
The liability arising must be a business liability (s.1(3) UCTA 1977);
Beside that, the Act doesn't apply to some contracts, for example contracts of insurance or
contracts which relate to the transfer of an interest land.

14

Specially applied to:

Clauses that attempt to restrict liability for negligence;


Clauses that attempt to restrict liability for breach of contract

o Clauses which are avoid.


It's not necessary to consider how other legal rules can affect an exclusion clause if it's created
void by statute. So the court will no need to consider that is reasonable or not. A clause is void by
statute in the following circumstances (HND Business (2010), Aspects of Contract and
Negligence for Business, chapter 7: Terms and Exclusion clauses. Clauses which are avoid,
Pages 125)

For death or personal injury resulting from negligence, a exclusion clauses or limit
liability can be void. s2 (1) UCTA
If the loss or damage is caused by a defect of the goods in consumer. Then, it will be a
guarantee clause which purports to exclude or limit liability. s 5 UCTA
In the contract for sale and hire purchase of goods. a clause that purports to exclude the
term that the seller has a right to sell the goods is void. s6 (1) UCTA
In the contrac for exchange materials with customers, a clause can exclude or limit
liability for breach of the conditions involved to description, quality, fitness and sample
implied by the Sale of Goods Act 1979 is void. s 6(2) and 7(2) UCTA.
o Clause which are subject to a test of reasonable
If a clause is not automatically void, it's subject to a test of reasonableness. Then ehe main
provision of UCTA that refer to this type of clause are shown as bellow.

Terms or notices excluding or limiting loss or damage resulting from negligence (s2)
Exclude liability arising in contract (s3)
Sale and supply of goods (s6, s7)

o Exclusion of liability for negligence (s 2)


For people who work in course of business can't restrict their liability for death or personal injury
resulting from their negligence. But in some case, if it causes other losses or damages with
reasonable reasons, then the court can consider about the case.
o Standard term contracts and consumer contract (s 3)
In this term, if the people use a standard term contract to deal with the customer, then they can't
restrict their liability for their own breach, unless it's resonable. However, if they don't use a

15

standard term contract, they may take advantages and restrict their liability from their fault. For
example, case George Mitchell Ldt v Finney Lock Seeds Ltd 1983
In addition, if the business carry on an activity, but it just support to the business activites of the
company. Then, it will not be in the court if the business, unless it is integral part and carried on
with a degree of regularity. For example, case R&B Customs Brokers Ltd v United Trust Ltd
1988. (HND Business (2010), Aspects of Contract and Negligence for Business, chapter 7:
Terms and Exclusion clauses. Consumers, Pages 126)

o Sale and supply of goods (ss 6 to 7)


The seller has a right to sell the goods for any contract ( consumer or non-consumer) in the sale
or hire purchase of good. And the contract can't exclude the implied condition terms. For a
consumer contract for sale of good, hire purchase, supply work or material and so on which can't
exclude or reduce the liability for breach terms relating to description, quality, fitness, and
sample by implied SGA 1979. However for non-consumer contract, exclusions can be subject to
the reasonableness test.
o The statutory test of reasonableness (s 11)
Before making the contract, the parties must be fully aware all terms in the contract which is fair
and reasonable relating to all the circumstances. Beside that, statutory guidelines have been
includes in the Act to assist the determination of reasonableness. From that the court will
consider as bellow.

The relative strength of the parties bargaining positions


Whether any inducement (such as a reduced price) was offered to the customer to
persuade to accept limitation of his rights.
Whether the customer knew or ought to have known of the existence and extent of the
exclusion clause.
Whether the goods were made, processed or adapted to the special order of customers.For
example, case Smith v Eric S Bush 1989

(HND Business (2010), Aspects of Contract and Negligence for Business, chapter 7: Terms
and Exclusion clauses. Statutory test of reasonableness, Pages 128)

The Unfair Terms In Consumer Contract Regulations 1999.


An unfair term is a term that can happen a significant imbalance in the parties' rights and
obligations under the contract. It means the unfair term can disadvantages for consumers in
the contract. (HND Business (2010), Aspects of Contract and Negligence for Business,
chapter 7: Terms and Exclusion clauses, Unfair Terms in Consumers contract regulations
1999. Pages 129)

The Unfair Terms in Consumer Contracts Regulation 1999 (UCCCR) will apply to consumer
contract and to terms which have not been individually negtiated. Beside that, they also apply
to contracts for the supply of goods and services. Moreover, the UTCCR will help the

16

consumer that protect them against unfair standard terms in contracts. So they can get more
benefits when they intent to make a contract with traders.
In addition base onThe UTCCR, the consumers can reduce their statutory or common law
rights from terms and impose unfair burdens on the consumer over and above the obligations
of ordinary rules of law. (oft, no date)

17

2.1) Apply the elements of contract in both cases business scenarios


Case 1: Warranty Certificate Part XYZ
In this case, Skoda has sell a product which is VW Oild Pump to customers. And the customers
will receive a warranty certification about the product. And this certification will include detain
information and terms about the warranty. These are some essential elements in this case
Agreements: it includes two factors such as offer and accpetance. When Skoda sells a oild pump
to the customers and they accept to buy it. Then the offer has made. Moreover, The customers
will receive added warranty certification from purchasing the product as an consideration.
Finally, the trading has completed with an offer from the company and an acceptance from the
customer.
Consideration: This is a transaction between Skoda company and the buyer about purchasing oil
pump. So consideration of Skoda is the oil pump and consideration of the buyer is cash which
will pay for the product. In addition, the buy also receive added warranty certification and it also
a consideration.
Legal Intention: because this is commercial agreement, the parties have a legal binding for
performing their acts
After there are enough three essential elements, the company can form a contract with the
customer. However to make the contract become valid, the company need to metion some
factors that has analysed above ( task 1.1)
Case 2: Regional Business Manager.
In this case, this is a letter of appointment to invite people that work in World Auto Co Vietnam.
However, these information are not complete. So the employee need to full fill this letter. In
addition, the employee need to agree with terms that has given by the company before sign the
contract.
Assume that there is an employee that full fill information in the letter and has accepted by the
manager. Then come to sign the contract.
Agreement: It also includes two main things such as offer and acceptance. This letter of
appointment to invitie the people working for the company is like an offer. And employees who
receive the letter and agree with all terms of the company which is an acceptance.
Consideration: This letter is like an contract so it also need to have the consideration from two
parties which are company and employees. This consideration belongs to excutory consideration
(promise given for a promise). So consideration of company for employees are that salary,

18

rewards, holiday, and so on. And consideration from employees can be working time, ideas,
performances, profits,etc. Which help the company grow up.

Legal Intention: When World Auto Co make a letter of appointment to invite the people work in
the company and if there is an employee who agree to work for the company. Then it will be
comepletely a commercial agreement. So both parties will have a legal binding in performing
their acts.
Base on three essential elements above, the company has enough factors to form a
contract with the employee. Beside that, the company also need to metion some factors
(task 1.1) to make the contract become more valid.
2.2&2.3) Analyse the law of terms in the above two different contracts and evaluate the
effect of different terms in the two contracts
Case 1: Warranty Certificate Part XYZ
In this case, there are some terms that we need to includes such as condition terms, warranty
terms, implied terms and exclusion terms
Condition terms: Condition term is a term which is basic and important to the contract because
it will affect to the purpose of the parties. So a condition term need to be clearly stated and show
in specific in the contract. Beside that, to make it become more valid, a condition term can be
defined the period time in the contract. So based on the scenario, these are condition terms as
follow
IV. This warranty is valid only if the Product's serial number on the Product has not been
altered, defaced or removed.
V. This warranty cannot be replaced or re-issued and this warranty card must be presented
upon request.
VI. This warranty is valid only in respect of World Car Parts purchased in Vietnam from a
preferred partner.
ANY ALTERATION OR ANIENOMENTS TO THIS CERTIFICATE WILL RENDER
THE WARRANTY VOID.
In the warranty certification, it has shown all terms and conditions about product warranty
clearly. So to ensure all the products that customers bring to the company for warranty. It
requires that the customers need to perform terms in the contract correctly. Firstly, this warranty
is just valid for product which has not been altered, defaced or removed the serial number. So the
customers need to keep the serial number carefully. The secondly, the warranty can't replace or
copy to another one. It is just valid for original one. The thirdly, this warranty just apply for
World Car Parts purchased in Vietnam from a preferred partner. And finnaly, any alterlation to
this warranty will make the warranty void. Therefore, if the customer doesn't follow these terms
or breach the contract, then the company can't warranty the products for customers. And the

19

company has the right to cancel this warranty. For example, Case As case Poussard v Spiers
1876.
Warranty terms: Warranty term is less important to a contract. it doesn't directly affect to main
purpose of the contract, but it is subsidiary to the main purpose. According to the scenario, these
are some warranty terms as below:
III. The decision of World Car Parts on all questions, relating to Skoda Warranty shall be
final and conclusive and the Purchaser hereby agrees to abide by side decision.
VII. World Car Parts reserved the right to replace 06A 115 105 D, 06A115105D with
comparable model/product
.
Based on the case, this terms can apply for two parties such as the company and the customers.
If one of two parties breach the terms, then wronged party will pay some compensations for
other party, even World Auto Co or the customers. Eventhough, breaching the terms, but the
contract is still vald because these terms are less important and it doesn't affect to the main
purpose of the contract. For example, Case Bettini v Gye 1876
Differences between condition and warranty terms in this case.
Though analysis about conditions and warranty terms above, we can see that there are some
differences between these two terms. In the condition terms, Based on the warranty certification,
If the customers want to warrant their product, they need to satisfy all terms in the warranty
certification. Then World Auto company will have the liability for their warranty. However, if the
customer doesn't obey the terms in the warranty of World Auto company, then the company will
not have responsibility to implement the warranty for the cusomters because they have breached
the terms in the contract. So the company may consider to reject the warranty from customers. In
the warranty terms, If one of two parties breach the terms in the cerfitication, then they can sue
the other for compensation. But they can not terminate the contract by themselves. For example,
for customers if they fail to satisfy the terms which has given in the warranty certification. Then
they still can warrant their products, but they need to pay some extra costs. For World Auto
company, When the customers satisfy all terms in the warranty certification, but they fail or
refuses to warrant to repair for the customers. Then the customers can sue for compesation. But
they can't sue for terminating the contract. Therefore, no ones can termiate the contract by
themselves in the warranty terms. But they can claim for compensaion if one of two parties
breach terms in the contract.
Terms implied by statute: For these terms, the customers will have more right and be protected
by Sales of Gods Act 1979. So the customers will get many benefits from the implied terms
when they buy the product without mention in the contract. From that, when we apply the
implied term for this case. the clients can sue the company when the company doesn't implement
the warranty for the clients even it's not presented into the contract. through that, we can see that

20

the main purpose of this term is protecing the customers by SGA 1979. And the customers will
feel more satisfied and fairly when they make the contract with the traders.
Exclusion clauses: Based on the scenario, these are some exclusion clauses that will be shown as
bellow. With these terms, the company can disclaim their liability for some damages or limit it.
This warranty does not cover Product defects arising from or due to wrong power supply
voltage, improper installation of the Skoda - VW Oil Pump Product.
This warranty does not cover damages arising from or due to acts of God, accident,
misuse, unauthorized alteration or repair by unauthorized person without the knowledge
or approval of World Car Parts.
Following this case, To ensure the customers use warranty services effectively for their products.
They need to clearly read and understand about exclusion clauses in warranty certifitcation.
Firstly, for products which defects arising from or due to wrong power supply voltage, improper
installation of the Skoda. The company will not liability to warranty them. If the customers want
to repair them, they can pay extra money for reparing or come to other stores. And the next is for
products which are broken by accidents misuse, unauthorized alteration or repair by
unauthorized person without the knowledge or approval of World Car Parts. Then, the customers
will have liability for these damage by themselves. Because in the contract, it has listed all terms
clearly before two parties come to sign the contract. So both parties will be bound on these terms
and have to perform them. However, if the products was broken which not belong to these
terms. Then the company will absolutely has responsibility for the damage and repair it for the
customers with a free cost. In addition, if there are some issues about exclusion clauses that
happen. The court will consider which clauses are fair and which ones are unfair. If these clause
are fair, then the customers can't apply warranty services for repairing the products. Otherwise, if
these clause are unfair, then the company will completely warranty for the products effectively.
Beside that, for unfair clause, the court usually limit or make them narrowly. Then the court state
that these exclusion clause become void. For example, Case LEstrange v Graucob 1934.
In general, this warranty certification is a standard from of the company. So it will has a lot of
benefits for the seller as well as the company. And the customers will has less benefits than them.
Beside that, The customers don't have any choices and right to changes these terms in the
contract, they just have one choice is that accept these terms. So there may be some terms which
are unfair for the customers . Then, the court will consider and balance the interests between two
parties.
Case 2: Regional Business Manager.
In this case, there are also some important terms such as condition, warranty and implied terms.
Condition terms: Based on the scenario, this is an important term in case 2 as follow.
You will be required to sign a Company Confidentiality and Non-Compete Agreement, which
is enclosed.

21

Based on this terms, if an employee accepts with all terms, then the employee need to return a
signed copy of this letter to the manager as an accceptance. In addition, when the employee enter
into this contract, he must has the responsibility to keep the information of the company as a top
secret, especially information about strategies or new products. Otherwise, if the employee
breach the contract, and these information come to competitors and cause damages for the
company. Then the company can sue the employee and claim for the damages. Therefore because
of the condition terms, if the employee breach the terms in the contract, then the contract will be
unilaterally terminated by the employee.
Warranty terms: It includes: The first 90 days of your employment will be considered
probationary and provides a means by which you and your supervisor can evaluate the suitability
of this placement/or work situation. we encourage you to use this opportunity to discuss issues
and questions with your supervisor
Based on the warranty term, we can see that this term will be applied when the contract become
valid. With means, the employee has signed into the contract. So when the employee make the
contract with the company, then she/he will become a new employee and she/he will have a
probation period time. In that time, the company will monitor and evaluated the employee's work
performances. If the employee can meet given requirements of the company, then the employee
can continue to work at the company. Otherwise, if they employee doesn't have good work
performances and can't meet the requirements of the company. Then, they may be discharged by
the manager of the company.
Differences between condition and warranty terms in this case
Based on the analysis above condition and warranty term in this case, we can see that there are
some differences between two these terms. In the condition term, the contract will become valid
when the employee accept the terms and sign into the contract. After that, both of them will be
bound by the condition terms. So if the employee breach the contract such as reveal information
to outside which can cause some damages for the company. Then, the employee will be
terminated the contract by the company. In the warranty term, the terms just occur when he/she
become a employee who has signed the contract. Based on the warranty term, if the employee
doesn't have good work performances that fail to meet give the requirements. Then the company
may discharge him/her and claim for compensation if the employee causes damages in the
probationary period. However, if the employee's work performance is just ok (not good but not
bad), then the company can make a opportunity for employee that give him/her a training for
increasing knowledge and skills. From that, the employee can keeps working in the company.
Implied terms by state: This is a commercial arrangement between two parties which are
employee and the company. These implied terms may includes salary, break time, holidays, and
so on. The company and employee can negotiate to make these terms, but the terms must follow
the statutory term. So if there is a term that illegal occur in the contract, then each party will be

22

responsible by regulations from the court and they can't retrict their liability. So to ensure all the
terms are ligal and correct. The parties need to negotiate and consider clearly and carefully based
on the statutory law.

23

Conclusion
Based on analysis above, we can see that there are many types of terms in a contract. So to avoid
breaching it, World Auto Co Vietnam needs to understand and perform it clearly. To make a
valid contract, the company need to mention a lot of factors. This will make parties limit of
breaching the terms and they will be bound in terms the contract. In addition, in law, it includes
many rules and procedures which can the parties increase or decrease their power. Therefore, it
will create a fair balance for the parties.

24

Reference:
Worldauto. [nd]. About us. [Online]. Available at: http://www.worldauto.com.vn/index.php?
option=com_content&view=article&id=6&Itemid=18&lang=vi . [ Accessed August 28 2013]
HNC & HND Business (2010), Aspects of Contract and Negligence for Business, chapter 4:
Introduction to the law of contract, Agreement, pages 55
legal-dictionary. [nd]. contract. [Online]. Available at:
http://legal-dictionary.thefreedictionary.com/contract [ Accessed August 28 2013]
HNC & HND Business (2010), Aspects of Contract and Negligence for Business, chapter 4:
Introduction to the law of contract, Offer, pages 59
Wikipedia. [nd]. Offer and Acceptance. [Online]. Available at:
http://en.wikipedia.org/wiki/Offer_and_acceptance [ Accessed August 28 2013]
(HNC & HND Business (2010), Aspects of Contract and Negligence for Business, chapter 4:
Introduction to the law of contract, Offer, pages 60)
Wikipedia. [nd]. Acceptance. [Online]. Available at:
http://en.wikipedia.org/wiki/Acceptance [ Accessed August 28 2013]
HNC & HND Business (2010), Aspects of Contract and Negligence for Business, chapter 4:
Introduction to the law of contract, Acceptance, pages 67
(HNC & HND Business (2010), Aspects of Contract and Negligence for Business, chapter 5:
Consideration. Consideration, pages 80)
HND Business (2010), Aspects of Contract and Negligence for Business, chapter 5:
Consideration. Rules of Consideration, pages 81)
HND Business (2010), Aspects of Contract and Negligence for Business, chapter 6: Intention
and Capacity. Intetntion pages 98)
legal-dictionary. [nd]. Intention. [Online]. Available at:
(http://legal-dictionary.thefreedictionary.com/intent) [ Accessed August 28 2013]
HND Business (2010), Aspects of Contract and Negligence for Business, chapter 7: Terms and
Exclusion clauses. Express term. pages 109)
Wikipedia. [nd]. Implied terms in English law. [Online]. Available at:
http://en.wikipedia.org/wiki/Implied_terms_in_English_law [ Accessed August 28 2013]
HND Business (2010), Aspects of Contract and Negligence for Business, chapter 7: Terms and
Exclusion clauses. Condition and warranty term. Pages 111
lawhandbook.[nd]. The terms of the contract [Online]. Available at:
http://www.lawhandbook.org.au/handbook/ch12s01s03.php [ Accessed August 28 2013]

25

HND Business (2010), Aspects of Contract and Negligence for Business, chapter 7: Terms and
Exclusion clauses. Exclusion Clauses. Pages 119
Business (2010), Aspects of Contract and Negligence for Business, chapter 7: Terms and
Exclusion clauses. Contractual Document, signed and unsigned contrac, onerours term. Pages
120, 121,123)

26