Chapter 2: Contract Law

 Essential elements of contract

. Agreement (offer + Acceptance + enforceable by law)
. Consideration
. Intention to create legal relation
. Capacity to enter into contract
. Legality (contract should be bound by legal reason)

 Forms of contract
1) General rule
. Contract can be in any form
. Most of contracts are SIMPLE CONTRACT
. Simple contract can be in WIRTING, ORAL, and CONDUCT BY PARTIES

2) Exception
. Some contracts should be in writing format
Ex, Bills of exchange, Transfer of shares, Contracts relating with land etc.

3) Specialty Contracts
. Such contracts should be in writing, signed, witnessed and delivered
Ex. Conveyances Of land, Leases
. Specialty Contract is valid till 12 years
. And other contracts are valid till 6 years

4) Subject to contract
. It means that parties who have entered into contract are not legally
bounded till contract overs/end/executed
. Even parties agreed terms and conditions of contract they are not
legally bounded to do so
. They can withdrew themselves form contract agreed without any
liability
Ex. Mr. A deals with Mr. B that he will provide ‘luxury house’ to Mr. B
after 3 years and both parties signed a contract but after 1 year Mr. B
 demanding new house from Mr. A as he promised and Mr. A refused to
give him a new house by saying “I promised to give you new house
after 3 years and you demanding it now so I withdrew form contract”

Note: by legally Mr. a can withdrew himself form contract without any
liability

 Offer
. “It is statement of willingness on specified terms which is not bounded
to do with further negotiations”
. An offer is can be in any form; it can be in oral, writing, or conduct by
parties
. It will not valid till communicated with offeree
. An offer can be made to single person or group of persons or to whole
world
. Some terms are not capable with being OFFER which is as follows;
I) An invitation to treat
. It is just an invitation to party for to make offer and negotiation can
be possible

Case 1 (Invitation to threat)

Mr. Bill display a television set at window of his shop with price tag
So it is just an invitation to treat not an offer by Mr. Bill coz he did not
completely stated that he will sale TV set for all peoples and it is just a
matter of negotiation

Case 2 (Offer)
Mr. Smith offer car to Mrs. Johnson in exchange of 2 computer and as
per contract between them Mrs. Johnson provided 2 computer to Mr.
Smith but he refuses to give a car to her
So Mrs. Johnson can sue Mr. Smith at the court of law and can claim a
car in exchange of 2 computer as per terms of contract
II) A mere statement of selling price for information asked is not an
offer

What is mere statement?

. It is just a statement for answering specified question
Ex. Mr. Steve ask a question to Mrs. Emily about selling her property
As “for which amount you interested to sell you property” then Mrs.
Emily answered that “Minimum price is $100000” so from her
answer she just replied to question asked by Mr. Steve not more then
that
. Here she was not willing to sell her property to Mr. Steve
. Means it just invitation to treat for Mr. Steve not an offer

III) A mere statement of intention to sell is also not an offer

Ex.
. Once a day Mr. Dog had walked with his old friend Mr. Tom and told
him that He (Mr. Dog) intended to sell his old house for $25000 but
did not found a proper buyer for it
. On the bases of this Mr. Tom claim on Mr. Dog’s old house for $25000
by assuming that Mr. Dog wants to sell his house to him
. But it is not true he just chit chat with Mr. Tom about his old house
nothing MADE ANY OFFER TO MR. TOM
. So in this case Mr. Tom cannot legally demand old house of Mr. Dog
coz he just intended it not offer it to him

IV) Auction
. Advertisement of auction houses are not AN OFFER
. It is just invitation to treat
. But once bid is successfully done for any item which is bring to
auction , auction house is legally bind for it and now it become a
contract between auction house and a person who bids for item sold
. If auction house refuses to provide item being sold at auction then
claimant can sue them at court of law
 V) Cross offer
. It not creates legal binding

 Termination of an offer
. It means that WHEN OFFER CANNOT BE ACCEPTED
a) Revocation
b) Rejection
c) Lapse

a) Revocation ( Withdrew from contract)

1) Offeror can make revocation (withdrew) from contract before offer
being accept by Offeree, even if offer is open for some time period
Ex.
. Mr. A offer his Showroom to Mr. B for $3000 and opens the offer for 1
month period
. After 20 days of offering, Mr. A make revocation from contract coz Mr.
B does not accept the offer till now
. But if Mr. B accepted his offer for showroom at 15th day and even after
acceptance of offer by him, Mr. A cannot make revocation from contract

2) Revocation must be communicated to offeree before being accept by

offeree
Ex.
. At 1st Jan 2019, Mr. A posted an offer on his whatsapp about SELLING OF
IS HOUSE
. Offer is reached at Mr. B on 5th Jan 2019 and he immediately accept it
. But in between this time period, Mr. A sends a revocation letter to Mr.
B on 4th Jan 2019
. Now Mr. A is not legally to do so coz letter reached at Mr. B on 6th Jan
(before offer being accept)
 3) Revocation must be communicated to offeree before being accept by
offeree OR Reliable third party
Ex.
. Mr. A offer his bike to Mr. B and this offer being open to 2 days
. But after 1 day of offer reliable friend of Mr. A /// Mr. C told Mr. B
that Mr. A make revocation from contract

Note: There are 2 exceptions for revocation as follows;

i) Revocation is not held true when offeree pays some amount
to offeror to open offer for some time period

ii) If offeree strictly follows terms and conditions of contract,

then also revocation concept is not applicable

b) Rejection
. A counter offer is made in exchange of original offer which abolish original
offer
. A mere statement about further detail in counter offer is not also an offer

c) Lapse ( Crossing the time limit of contract )

1) When offeror dies (before accepting the offer by offeree)
EX.
Mr. Man make contract with Mr. Boy on 1st of Feb and opens it for 3 days
(till 4th of Feb)
. But at Mr. Man died on 2nd of Feb and Mr. Boy accept the offer on 3rd of
Feb
. In such case, there is lapsed in contract
. But if Mr. Boy accept offer immediately after being offered by Mr. Man
that is on 1st of Feb, Then in such case contract is become legally bounded

2) Death of offeree
 3) Failure of condition agreed in a contract
Ex. Mr. Ajay promised to provide water filter to Mr. Jay for $100 but at
the point he (Ajay) demands $200 for fulfilling his offer thus in this case
Mr. Jay can sue Mr. Ajay at court of law

4) After expiry of contract time

Ex. Mr. Vijay promised to give $100 after 3 days to Mr. Ad but fulfil his
promise made with Mr. Ad after 5 days

 Acceptance
. Acceptance is just an assent or approval for terms and conditions of
contract
. Acceptance can be in writing or oral or conduct by parties
. Acceptance for an offer will only be granted if it is properly communicated
to offeree
. And offeror is free to choose mode of communication means it can be
telephone or post or fax or telegram

Some terminologies in ACCEPTANCE OF AN OFFER;

1) Acceptance will take effect when it is properly communicated with

offeree
EX.
. ABC Ltd. Make’s an offer to XYZ Ltd. For old motor bike at $12000
through fax at office of XYZ Ltd.
. ABC Ltd. Clear’s that offer is open for 2 days only
. XYZ Ltd. accept the offer immediately but didn’t send a reply to ABC Ltd.
About acceptance of their offer during business hours of ABC Ltd.
. In this case, contract is not legally binding

2) Silence by offeree is not acceptance

Ex.
. An offer for Horse was made by Mr. A to Mr. B at $100
 . But Mr. B didn’t reply for offer by Mr. A
. In such case, offer is still hold by Mr. B
. That’s why there is no contract between both parties

3) Postal Rule
What is ‘Postal Rule’?
. According to postal rule, offer is accepted as soon as letter posted by
offeree
. Letter should be properly stamped, address, and posted
. Acceptance letter should be communicate properly
. All rules stated above must followed by both offerror and offeree while
posting acceptance or offer letter
. Even if acceptance letter not read by offeror
Ex.
. Mr. James sent a letter to Mr. Nike on 1st of Dec by offering OLD HOUSE
of Mr. Nick for $120000
. Mr. James opens an offer for next 10 days (Till 11th of Dec)
. Mr. Nick immediately accept offer of James and post a letter to him
. But letter was reached at Mr. James house at 12th Dec and now he
refuses to accept the offer
. In this case, Mr. James cannot legally refuses to accept an offer coz even
if letter was reached at his house at 12th of Dec it was posted by Mr. Nick
on 1st of Dec
. And according to Postal rule, Offer is accepted as soon as it posted

Note: There is exception for postal rule is that;

.Offeror can make condition that he will only assume acceptance form
offeree when letter will actually receive by him
. Not when acceptance letter posted by offeree according to postal rule
 Consideration
. In simple word, consideration means there should be something in
exchange of something
Ex. My friend John promised me to give $100 in exchange of my TV set
John getting TV set / I getting $100
. In legal terms, contracts should be supported by consideration from each
party
. Contracts by deed (some specialty contracts) need not to be supported by
consideration unless terms of contracts need it

1) Types of consideration
a) Executory Consideration
. It is consideration for promise for to do something in future
Ex.
I ordered Home Cleaner from e-commerce website and delivery is CASH
ON DELIVERY means that e-commerce website will get payment for order
and I receive order

b) Executed Consideration
. Consideration is at point of contract made
Ex.
I gave $1.2 for newspaper to newspaper shop as soon as buy a newspaper
There is no future consideration in this contract

c) Sufficient consideration
‘Consideration must be sufficient but need not to be adequate’
Sufficient > .There should be some monetary value
. And it should be capable with law

Ex.
My friend jay invites me on dinner today at 9 pm but due to some
working reason I could not go at hotel for dinner with him
 In such case, I not legally bind to jay to have dinner with him coz there is
no sufficient consideration and legal relationship between me and him

Adequate >. It not required both parties to have adequacy in

consideration (It not require both parties should agree same value
consideration)

Ex.
I promised to Mr. Adams sell my car for $12
In this case, if I refuses to give a car to Mr. Adams then Mr. A can sue me
at court of law for breaching terms of contract
Even if car value is $12 I must legally bounded to sell it to Mr. Adams
coz there is sufficient consideration for contract

d) Past Consideration
. It is insufficient and invalid
Ex.
Case 1 (legality)
. Mr. A offer $1000 to Mr. B for washing his car and Mr. B
immediately accepted it
. After completion of work by Mr. B, Mr. A refuses to give him $1000
. In such case, Mr. B can sue Mr. A for breaching terms of contract
. Because promised of giving $1000 is made before the work done

Case 2 (no legality)

. Mr. John order Mrs. Monica to decorate his office with flower
. Mrs. Monica immediately decorates his office
. After completion of Mr. John promised $120 reward to Mrs. Monica
. But later on date he refuses to give her reward of $120
. In this case, Mrs. Monica cannot sue Mr. John
. Coz promise was made after completion of work / after contract
was formed between both the parties
e) Performance of existing duty
. Consideration is not apply for performing existing STATUTORY
DUTY

Ex.
You cannot offer any extra payment for police above their salary for
solving a case IMMEDIATELY because it is their duty to do so
. Consideration is not apply for performing CONTRACTUAL DUTY
EX.
You cannot offer extra pay for your worker for performing their work
Yes that it will be different scenario if you paid them bonus only on
over and above normal working hour

Note: There are some exception for sufficient consideration

1) If existing statutory or contractual duty is exceeded Then
consideration is sufficient
Ex.
.You can demand extra police force over statutory requirement
. Workers can demand bonus for extra hours

2) Consideration for statutory and contractual performance is sufficient

when it is benefited for both the parties
EX.
ABC Ltd. Offers extra payment for their workers for to increase
production speed

3) Performance of existing contractual duty is sufficient consideration

when promise is made by third party

Note: Consideration for illegal act is not enforceable by law

Ex.
Mr. Arthur promised drugs to Mr. Belarus in exchange of his Computer
f) Part payment problem
Ex.
. Mr. Smith owed $1200 to Mrs. Ruth and agrees to provide $1000 in
full and final settlement of payment
. In such cases Mrs. Ruth can sue Mr. Smith for remaining balance of
$200

Note: There are some exceptions for part payment problem as

follows:
1) Part payment made by third party
Ex.
. In above example of Mr. Smith and Mrs. Ruth, if remaining
balance of $200 will paid made by Third party (i.e. Mr. Bull husband
of Mrs. Ruth)
. Then in such cases, Mrs. Ruth will not legally sue Mr. Smith at
court of law

2) If creditors freely accept for smaller amount of larger amount of

debt
. Mr. Cook is creditor of Mr. Chief and owns debt of $50,000
. But due to some financial difficulties faced by Mr. Chief, Mr. Cook
freely accept $40,000 of debt in full and final settlement of
$50,000 debt

3) Accord and satisfaction

. Accord means both party freely accept part payment

. Satisfaction means payment might be paid in later date or at

different place or in different form of currency
Ex.
. Doctor and patient Ltd. Owed $1500 to Mr. Tree and agrees to
provide debt of $1000 only and makes a condition Mr. Tree will
 have to accept this offer if he will not accept it, then Doctor and
Patient Ltd. Will paid nothing to him
. And Mr. Tree accept offer D & P Ltd. In pressure but after that he
sue D & P Ltd. At court of law
. Court made his decision by saying that offer is not freely accepted
between Mr. Tree and D & P Ltd. And D&L Ltd. Puts pressure on
Mr. Tree
. So Mr. Tree can sue them for remain $200 of debt

4) Doctrine of Promissory Estoppel

. It is concept based on JUSTICE AND FAIRNESS
. It prevents a person claim back his or her smaller payment
Ex.
. Plant Tree House Ltd. Let their store to Mr. Boy on annual rent of
$12,000 ($1000 monthly)
. But in the time Corona Pandemic, Mr. Boy suffers huge loss from
his business
. After looking bad situation of Mr. Boy, Plant tree house ltd.
decided that they will reduce annual rent of $12000 from $12000
to $6000 only for Pandemic time
. After pandemic will over, there will be original annual rent of
$12000 should be paid by Mr. Boy and this was freely accepted by
both parties
. But after pandemic overs, Plant tree House Ltd, claims back that
remaining rent of $6000 from Mr. Boy
. In such situation Plant Tree House Ltd. Cannot sue Mr. Boy due to
PROMISSIORY OF ESTOOPEL

 Privity Of Contract ( Parties who involved in contracts)

The general rule is:
. Parties who involved in contracts have legal rights and obligation under it
. Can be sue each other
. But there are some exceptions for it as follows;
 1) A person who is not part of contract but expressly named and described
under contracts as long contract is benefits for him/her will be legally
binding according to Contract Act 1999(Rights of Third Party)

Ex.
. Mr. Adams take life insurance from Good Life Insurance Company and
nominates his wife
. After the death of insurer Mr. Adams insurance policy will transfer to his
wife as she nominated by him
. Even though original contract made between Mr. Adams and Insurance
Company, she was expressly named and described in contract under
name of NOMINIEE
. She is entitled for getting benefits of insurance policy

2) Under land law, terms set by original parties will be applicable for future
parties who will be involve into it
Ex.
. Contract was made between D&B Ltd. And York Bros. relating to land of
garden who originally owned by D&B Ltd.
. Was stated that, York Bros. will never construct only a building on the
land of garden and York Bros. freely accepted this term set by D&B Ltd.
. After 5 years, York Bros. Decided that they will sold it to Mr. Warner
. But after 2 months of sold, Mr. Warner stated to build a huge building
on the land of garden
. In the case, Mr. Warner breached terms approved by previous parties of
contract by claiming that “I am not legally binding for contract set by
previous parties” which unenforceable in the view of law

 Intention to create legal relationship

. It simply means that, parties who involved into contract should create legal
relationship between both of them for enforcement of contract
1) Social and domestic agreement
. Such agreements are not create legal relationship
Ex.
. A father made a promise to his son that he will give him a motor bike if
he (son) will pass ACCA exam within 2 years
. And as per promise, son passed his ACCA exam with 1 ½ year of limit
time 2 year
. But he’s father refuses to give him a motor bike as per promise made by
him
. In such case, a son could not be sue his father
. Coz there is no legal relationship between him and his father

Note: there are some exceptions for it as follows;

a) If husband and wife got divorced then any promise made between
them is enforceable even it was in writing or oral or conducted by
parties
Ex.
. Mrs. Cow and Mr. Bull separated last year
. Mr. Bull promised to Mrs. Cow that after being separate “I will pay
you $100,000 as compensation for maintenance of further life”
. But after being separated, Mr. Bull refuses to pay compensation of
$100,000 to Mrs. Cow as he promised to her
. In such situation, Mrs. Cow can sue him for paying compensation of
$100,000 even if this is a domestic agreement

b) Letter of comfort
Ex.
. If parent company provides resources to subsidiary company for
fulfill contract even after subsidiary company not able to fulfil terms
agreed into a contract
. Then parent company is not liable for fulfilling legal conditions or
terms of subsidiary company contracted with other party
 Contractual terms
1) Term v/s representation
. A statement can be in writing or oral
. Made during negotiation
. In order to induce contract can be TERM OR MERE REPRESENTATION
OF CONTRACT

Note: Representation is something said by offeror in order to induce

offeree in enter into a contract may or may not be representation

. If representation does become term of contract, then innocent party

can claim damages for breaching representation
. If representation does not become term of contract, then innocent
party can only claim damages based on equity

2) Source of terms
. Terms can be expressly or implied
. Expressly terms specifically worded at contract and it must be clear for
too enforceable it
. Implied terms are not specifically worded or expressed at contract but
they are still part of contract
. They may be implied by statute or customs or courts
Ex.
Employment contract is not specifically include that employees must be
obey towards company it is matter of common sense that must be
followed by each employee

Note: Expressly terms override on implied terms but some statutory

terms are not override by expressly terms
Ex. Statute has minimum wage requirement $15 per hour for every
employee but ABC Ltd. Expressly set term of $13 per hours in their
employment contract with employee which is not enforceable
3) Types of terms;
a) Conditions
b) Warranty
c) Innominate Terms

a) Conditions
. Conditions are based on grassroots level of contract that must be
performed by both parties
. Conditions are result in DAMAGES OR REPUADIATION OR BOTH
Ex.
. Warner Bros. made a contract with Spine Ltd. For supplying 250
kg of wood on regular basis
. And stated that condition that Spine Ltd. Has to supply wood on
regular basis for at least for 1 month
. But at the first day of contract Spine Ltd. was not able to supply
wood to Warner Bros.
. And immediate after that Warner Bros. repudiated their contract
with Spine Ltd. And claimed damages

b) Warranty
. Warranty is less important term
. Which is accidental for contract made
. Remedy is DAMAGES only
Ex.
. Root Ltd. Purchased 100 phone from Galaxy Electronics with 3
years of warranty
. After 1 ½ year it showing screen relating problems
. In such case, Root ltd. Can only claims damages suffered from
phones with warranty period

c) Innominate terms
. They are neither conditions nor warranty
. Remedy is based on effect of breach as follows;
1) If trivial > damages only (contract is treated as warranty)
 2) If serious > damages or discharge or both (contract is treated as
condition)

 Exclusion Clauses
. The term exclusion cause or exemption clause seeks to exclude or limits
liability of person for breach the contract

Common law rules for to be valid clauses as follows;

1) It’s must be incorporated into contract
2) It’s wording must cover loss

An exclusion clauses incorporated into contract by:

1) Signature
2) Notice
3) Previous dealings

1) Signature
. Signature incorporates exclusion clause even if document is not properly
read or understand by person
. But there is contras situation for it as;
Signature is not incorporates exclusion clause if term of contract is
misrepresented

2) Notice
. By the way of notice, exclusion clause must be comes into attention of
readers at the time of contracts is made

3) Previous dealings
. Exclusion clause is incorporated by previous dealings
. And these dealings must have consistent with many years between both
parties
 Discharge of contract

Discharge of contract can be possible through:

1) By Performance
. Both parties or one party not able to perform act according to deal at
contract

2) By frustration
. Both parties agrees on performance which is not possible to perform

3) By Breach of contract

 Breach of contract
. Breach of contract is possible when one party of contract and not able to
performed obligations under it

. Types of breach;
1) Actual breach
. It is occurs at due date of contract

2) Anticipatory breach (Renunciation)

. It is occurs before due date of contract
. When party shows no intention to complete obligation under contract
. It can be expressly or implied

a) Expressly breach
. It often expressed in words
. In this type of breach, one party has no intention for to complete
obligation under contract
. And it happens before due date of contract

b) Implied breach
 . It not expressed into words but it’s declare by actions or performance
Ex.
Mr. A made contract with Mr. B for providing 2 kg of rice after 2 days
but at 3rd day he sold 2 kg of rice to Mr. C without knowing to Mr. B

Remedies available for breaching Anticipatory Breach;

1) Discharge from contract and claim for damages immediately
without waiting for due date of contract
2) To elect performing continuously for contract and after that
claims for payments

 Damages
. Damages are common law remedy
. They are available for as a tight of breaching of contract
. Damages are compensatory but punitive (not punishable)

. Liquidated damages and penalty

It where contract provides a fixed sum of damages for breaching a contract
and it may liquidated damages or penalty

a) Liquidated damages
. Liquidated damages are genuine pre-estimate of expected loss
. It is amount for damages claimable
. It is enforceable by court
Ex.
. Coca Ltd. Contracted with Pepsi Bros. for maintenance of machinery
planted at factor of Coca Ltd. Every Month in a year for $2500
. And agrees on term that Pepsi Bros. should not miss every month of
maintenance and if they miss out maintenance of even single month they
have to pay $100 for breaching the contract

b) Penalty clause
 . Penalty clause is threaten for large damages in breach
. The amount is very large for expected loss
. Not enforceable in view of court

 Assessment of un-liquidated damages

What is Un-Liquidated Damages?
. It is a damages not decided by contract but allows by law (court)
. Following factors determine measures of un-liquidated damages:
a) Remoteness of losses( what losses can be claim or depth of losses)
b) Measure of damages (How can claim losses or how much is worth for?)

a) Remoteness of losses
. Not all losses are responsible for damages claimable
. If losses are too remote then it will successfully claim for damages
happened
. If losses are not too remote then it will be not enforceable for
damages
Ex.
. Tiger Ltd. ordered a machinery part from Lion Ltd. Which was broken
yesterday while production of glasses
. This part glass making machine is very important for further
production of glasses
. But due to traffic jam, Lion Ltd.’s delivery van was not able to deliver
the part on time
. After 1 day immediately, Tiger Ltd. Sued Lion Ltd. For breaching
contract and claim profit which they suffered from undue delay in
delivery of part
. In such circumstances, Lion Ltd. Is only liable for delay in delivery of
part as they didn’t know it was important machinery part of Tiger Ltd.
. Not liable for profits suffered by Tiger Ltd.

 Measurement of damages
The main aim of measurement of damages is that;
‘To put claimant in a position he would have been in had if the contract was
performed properly’

1) Reliance Damages
. It allows claimant to claim for expenses which he or she incurred during
His/her part of performing obligation under contract
Ex.
. Watson Co. hire Mrs. Emily for to perform into ad
. But before ad being performed Mrs. Emily terminates her contract with
Watson Co.
. After this incident, Watson Co. could not find any actor for their
advertisement and had already incurred $2500 for to bring Mrs. Emily and
other expenses
. In such case, Watson Co. can claim $2500 as compensation for damages
incurred due to above incident

2) If there is no actual loss then claimant can only claim nominal damages
and the claimant must take necessary steps for to mitigate (reduce)
losses
Ex.
. Mr. A insured his house against by fire loss from Ruth Insurance Co.
. Once a day, house of Mr. A completely burned due to electric short-
circuit
. Then Mr. a claim for insurance which he did with Ruth Insurance Co. but
refuses to pay insurance amount to Mr. A
. While their investigation, they noticed that Mr. A didn’t took necessary
steps for to mitigate losses

3) Market price rule

Assumes that contract allows you to buy good for $12 per kg but due to
some difficulties contract terminated by one party then allows to buy
goods for $15 per kg, so that a loss of $3 is claimable
4) Non-financial losses like mental stress or loss of enjoyment
 Equitable Remedies
1) Specific performance
.This allow someone for to perform their contractual obligation
. It will not hold true for personal services
. Having positive effect in contract

2) Injunction
. Order someone to do something or no to do something
. Has positive impact at contract

3) Rescission
. It put back party where they original was before the
contract made

Note: Equitable remedies are only available by order of

court and they will not granted if;
1) Damages are adequate remedy
2) Claimant act as unfair
3) Undue delay in seeking the remedy

 Uncovered topics of exclusion clause

Statutory Rules
. When even if exclusion clause passes common law test then must be have
assent of statutory rules as follows:
a) Unfair Contract Terms Act (1977)
b) Consumers Right Act (2015)
a) Unfair Contract Terms Act (1977)
. UCTA 1977 emphasis on exclusion clause for business to business
contracts
. It excludes the liability for;
1) Death of personal injury due to negligence
2) Other losses due to negligence unless it is reasonable (sensible in
view of court/law)
. The burden of proof is on party who is seeking for relay on clause
. The degree of unfair or unreasonableness of term is measured by
court from following factors;
1) The strength of bargaining position of both the parties
2) Looking whether one party receives inducement letter of terms
3) Whether party knows extent and existence of term
4) The ability of part to insure against the liability

b) Consumers Right Act 2015

. A consumer contract is contract made between consumers and
businesses
. A consumer is ‘an individual acting for purpose wholly or mainly on
outside of his trading, business, craft or profession’
. Legislation is applies for standard form of contract or negotiated
contracts

1) Fairness
. There should be complete fairness while contracting between two
or more parties
. And due to unfairness into contract made, significantly imbalance
obligation of parties under contract
. The degree of unfairness is determine by court as follows;
1) Nature of subject matter of contract
2) All circumstance occurred while contract was made
3) All other terms of contract
 4) Terms of other contract on which original contract is based
(also known as secondary contract)

2) Transparency
. There should be high degree of transparency while doing contract
. Term and condition includes in contract must be in intelligence
form and crystal clear for both parties

3) Terms and notice

. Terms and notices relating to a contract formed will be subject of
fairness assessment

4) Exceptions for core terms

. A term is no subject for fairness assessment if;
1) Term specified the main subject of matter of contract
2) There is appropriateness for price payable into contract
Note: These exceptions for core terms will only applicable when
term is transparent and prominent
. In order to become prominent, term must be come into
attention of parties and beware it to them

5) Automatically unenforceable
. Term will automatically unenforceable when it will Blacklisted
Ex. Term excludes liability for death or personal injury due to
NEGLIGENCE

6) Grey Listed
Term will be gray listed if;
1) Consumers tied into contract beyond they could expect and
Business is not performing their obligations
2) Business decided price or subject matter with consumers after
contract being made