Contract Law Case Study

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Question :

Write the topic on "Contract Law".


Danny is a dealer in vintage cars. On Tuesday 10th October, he attends an auction at Erik’s Used Car Sales, looking to purchase new stock. One lot at the auction is a 1965 MGB Roadster. The auction guidebook states that the car has a reserve price of £2,500 and the auctioneer estimates that it is likely to sell for £7,000.

When the auction begins, Danny bids £3,500. Despite the best efforts of the auctioneer, no other bids are received. The auctioneer says “this lovely car is worth far more than this” and states that he is withdrawing the lot from the auction. Danny is angry because he has a prospective buyer who would have been willing to buy the car from him for £5,000.

Separately, Danny has purchased a 1978 Jaguar XJ6. Keen to make a sale after the problems at the auction, he writes to three previous clients who collect Jaguars, telling each that the Jaguar is for sale for £10,000, “first come, first served”. All three clients (Farida, Georgina and Harry) receive the letter on Monday 16th October.

Farida is interested in purchasing the Jaguar, and writes a letter to Danny agreeing to buy the car. She posts the letter on her way to work on the morning of Tuesday 17th October. The letter is delayed in delivery and does not arrive at Danny’s showroom until Tuesday 24th October.

Georgina also writes back to Danny, stating that “I would be happy to buy the car if you lower the price to £8,000.” She also posts her letter on Tuesday 17thOctober and it arrives with Danny the following day.

Harry calls Danny, as he wants to know more about the condition of the car. After Danny reassures him that it is very good condition, Harry decides to purchase the Jaguar. He sends Danny an email late in the evening of Wednesday 18th October.

On Thursday 19th October Danny is driving to work at 8.00am when he hears on the radio that 1970s Jaguars are going to dramatically increase in value. He immediately calls Farida, Georgina and Harry to tell them the Jaguar is no longer for sale.

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Answer :


In this given case study, two main issues have been detected related to the character named Danny who is a dealer in the Vintage cars. The first issues relate to 10th of October, Tuesday when he attended an auction at Eric’s used car sales to purchase a new stock. The auction displayed a 1965 MGB Roadster and withheld its original price value at £2,500. The estimated auction price at which it was expected to be sold is a minimum of £7,000. With the beginning of the auction, Danny bided the maximum amount of £3,500 over which no further bid was made by any of the other bidders (McKendrick, 2014). 

However, not reaching the expected price the bidder stopped the auction, thereby preventing any further auction to take place related to MGB Roadster. Being a dealer, Danny wanted to buy that car at £5000 from that auction but failed to do so since no further bidding continued.

The second issue relates to Danny having purchased a 1978 Jaguar XJ6 which he offers to sell in an auction to three separate clients, Farida, Georgina and Harry at a price value of £10,000. All the three clients receive the letter of the offer on 16th October. The first client Farida wants to buy the car and writes a letter to Danny posting on the 17th which happens to arrive at Danny on 24th October. The second client Georgina also plans to buy the same car at a price posting a letter on Tuesday 17th, to lower the price value of the car to £8000 and the letter arrives with Danny on the next day which is 18th October (Knapp, et al., 2016).The third and last client Harry calls Danny to know about the condition of the car, and after being reassured, he decides to purchase the Jaguar and sends an email for confirmation on 18th October, Wednesday. After all the confirmations made, on 19th October, Danny gets to know from the radio that his jaguar’s price value is expected to increase drastically very soon as a result of which Danny immediately calls off the deal with his three clients thereby putting a stop on the sale (Poole, 2016). In both the cases, it can be seen that there has been a breach of the contract thereby failing to maintain the decorum. While in the first case, Danny has been a victim of the breached contract; in the second case, he is utterly responsible for breaking the contract after promising his clients about his sale of the Jaguar.


Based on the laws made, if one party fails to fulfil the contractual obligations and responsibilities it is legally considered to be a breach of a particular contract. During the occurrence of one party has failed to perform a specific task at a stipulated time, that person is subjected to have committed a crime by violating the contract laws.  This situation may occur if one party has failed to work by the terms and agreements of the contract too. The failure to fulfil his duties and responsibilities as provided in the agreement may be another reason behind this issue. Courts and lawsuits not only act as the final remedy to solve matters of a breach in the contract but also if the issue turns up to be below $3000-$75000, in such a case other alternative methods are followed which are informal or the matter is taken to small claims courts. 

The law provides certain remedies for those people who have been victims to provide them relief, such as those cases where the damage needs to be incurred, special steps are taken to support the victims and cancellation and restitution (Appleman & Holmes, 2016). 

Under the rules of law, the damages are considered to be a form of the reward of legal remedies such as money, which are to be given to that person who has fallen victim in the contract as a form of compensation of the losses they have suffered (Meng, 2017). The law, however, states that the damages that have been incurred, however, differ from case to case based on the amount of money which had been at stake. In our case study, it has been seen that in the first issue, although Danny was willing to provide £5000 for the auction to get hold of the Roadster, the auctioneer stopped the process at the last moment. Thereby demeaning their needs and wishes and leaving a sense of uncertainty for them never even to get the chance to get the car again. In the second case, Danny himself demeaned the contract by giving hope to his clients in the first place and just before the deal could even start stopped the process by breaking the rules of the contract (Oman, 2017).

The second step which is followed is a specific performance where the courts use a specialised remedy for those times when no other forms of legal remedy such as money are available to compensate the other party. In case if the party which has fallen victim to the opposing party fails to reach that position or attain that profit that they could have otherwise enjoyed had the contract been still valid, the court uses legal remedies to help them consolidate their losses (Twigg-Flesner, 2013). One of the most common reasons for the granting of specific performances by the court is the uniqueness of a particular contract for times when the matter is not related to money or the initial amount which has suffered a loss is unclear. When a contract is for the sale of a particular product here, in this case, it is the two cars, jaguar and Roadster; the subject falls under the unique category (Cui, Ge, & Jing, 2013).  In this case, mere money damages that have been experienced by the buyers and therefore they do not, however, get any form of remedy from the court.

 Based on UCC, cancellation laws turn up when either of the party members put an end to the contract if in case it has been breached (Stone, 2016). The process is similar to that of the termination, but in this case, the cancelling party gets the power to attain remedies from the court since the other party has already violated the laws of the contract or has created an imbalance in the process (Murray Jr, 2014). The laws of restitution are made to support the victims by ordering the defendants who are expected to have committed the crime, to return the money to fulfil the financial losses. To be just and fair, a judge may give orders of restitution to be to be paid to the victims for whatever amount they believe is necessary in that particular case (Appleman & Holmes, 2016). 

All these steps can also take place because the defendant is found guilty in the entire case. All the extra losses are required to be returned by either the defendant or the court in case they are unable to provide the desired amount (Chen-Wishart, 2015). The pocket losses which are suffered constitute of those expenses which are not covered by the insurance company, that are incurred directly as a result of the committed crime. A private attorney can be hired in case of any loss incurred as a result of breaching any contract who would further help to provide information’s to continue with the case for further civil court complaints.


If in any form of legal contract, any form of violation or breach of the contract has been experienced, or the other party has shown dishonour to the contractual obligations the money involved for that person fallen under victim may be at stake. Thus, in order to move forward to support their own cases, an attorney of any small business firm needs to be contacted to even before jumping to the laws of the court (Murray Jr., 2014). In our given case study, we can see how the three remedies that have been provided under the law, such as Damage law, Specific performance Law, Cancellation and Restitution Laws have found relevance in our case. There are many kinds of damages such as compensatory damages, punitive damages, Nominal damages and Liquidated damages. In all these cases, the non-breaching party is kept in such a position that any form of damages experienced by them, including any form of injury is considered to be a punishable act on the part of the defendant party who has demeaned the clients in both the cases (Klass, 2017)

Any nominal of liquidated damages that have been caused by the party has made him breach the contract by providing them a chance to enter into the contract of making a purchasing process and then again stopping the process forcefully after their own needs have not been fulfilled (Cartwright, 2016). On the basis of the common rules of a contract, any form of deal can only start only when both the parties have agreed to the terms and conditions given or placed by the contractor. Having both initially agreed to these terms, it has been a violation of the promise made beforehand by both the auctioneer in the first case and Danny in the second (Hunter, 2017). It has been seen that in both the cases, the clients have been harassed by inviting them to join the contract and later by removing them from the contract by force. Once a contract has been made, no party has the authority to pull off the initial rules or change the contract unless taken the help of legal authority or on a mutual basis (Veasey & Simon, 2017)

Putting for sale of both the roadster as well as the Jaguar was meant to be a form of contract where the expectations of the clients were not fulfilled (Prince, 2015). In the first case, the auctioneer initially placed the bid to £7000 and raised hopes of Danny who was already in the contract and was willing to pay an amount up to £5000 for buying the Roadster since he was very determined to buy that vintage model. However, not fulfilling the expected amount of £7000, the auctioneer failed to continue the process (Adriaanse, 2016). Although no form of loss had been experienced in this case since the auctioneer would not have sold it at the lesser price, but Danny was demeaned after taking away the opportunity from him. In the second case we see Danny himself plans to sell of his Jaguar at a price range of £10,000. The contract starts immediately after he makes a call to his three clients, offering them to buy the product. Each of the three clients makes an effort to purchase the car and Harry even makes a call and finalizes the deal with him after one day (Andrews, 2016)

His hopes and expectations rose already and he fulfils all the qualifications required by Danny for his purchase. However, Danny makes a mistake when he changes his mind at the last moment while riding in the car. Having heard the prices to increase in the near future of his Jaguar, he assumes to be experiencing a loss by selling it at £10,000 (Sherwin, 2015). He therefore calls off the deal, thereby breaking all the hopes of his clients. Had he started the contract providing all the information’s to his clients and his fluctuating mind-set, the clients would have executed their plans accordingly (Hillman, 2013). He failed to perform his duties of a reliable and sensible party by violating the contract after making a unique agreement of such which falls under the specific performance laws were even after suffering the losses the clients could not get any form of legal remedy from the court since this was a manner of unique preference. The loss suffered by the parties who fell victim to the breach of contract, could not be sufficed since their position could not be made better and therefore no legal steps can be taken against Danny. 

The laws of cancellation and restitution could have allowed the non-breaching party to cancel the contract had they not been satisfied with the deal and ordered for restitution if in any form they could have provided any form of benefit to the breaching party here, Danny. While restitution as a legal remedy can provide power to the non-breaching party to pull back their position that was present prior to the contract even started, but in this case Danny himself pulled off the contract by putting it to an end (Mante & Ndekugri, 2017). The laws of cancellation on the other hand it puts a stop to the contract, thereby relieving all parties of any obligations. This law how works in accordance with Danny thereby safeguarding his own position (Landa, 2016). Taking both the cases into account, if the clients produce this matter addressing the court, it would be still act void since, although they have somewhat breached the contract, they also have the supreme power to pull off their deals by cancelling the contract if they are not satisfied with the existing circumstances.


Thus we see that although breaching any form of contract is a legal office, which needs the attention of the court if any, forms of wrongs have been done, there are various laws provided by the court as well to safeguard both the parties if the case is minor (Klass, 2017). Minor cases still take into consideration by the small court attorneys, if any form of dishonouring has taken place in the agreement process or deal if any form of non-performance has taken place. In this case, both the auctioneer as well as Danny has failed to provide the services they promised to and later stopped the process entirely thereby violating the system altogether (Houh, 2015). The principles of freedom have been violated in this case which gives all the power to make a complaint against the violators (Veasey & Simon, 2017). 

A new system has come up to develop and protect the weaker parties in special situations such as this which is the right of withdrawal. This power allows them to intervene in the process involved in the contract for certain particular situations if they find any invalid process is taking place or not fulfilling their expectations. In our case, no form of harm or physical damage has been experienced in both the cases which give enough proof and support to the auctioneer and Danny to safeguard their cases with the help of these laws (Klee, 2015). However, the entire process is only possible when the clauses are rightly maintained, and the rights are not misused in any way.