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Business Law Assignment for Part 2 Question

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Section  2(H) of contract act 1950 defines contract as an agreement enforceable by the law and as such for any contract to be legally binding there must be  an offer, acceptance, consideration and intention to create legal relations.

Few issues had been discovered in the case of Sydney Athletic team v Mark. Firstly, we need to determine if the statement between them is a term or a mere representation. The following issue is to distinguish whether the term is a condition or a warranty. The last issue discuss about the breach of condition and the remedy which can be claimed by Sydney Athletic.

Was there a term or a mere representation in the three-year contract signed  by Mark?

The term of contract refers to the content of a contract. Breaching a term in the contract allows innocent party to take legal action whereas a mere representation is an unbinding comment made during negotiation and it does not form as a part of the contract. Thus, a party cannot sue for damages if it turns out to be untrue, it is just a ‘misrepresentation’. Term and mere representation are distinguished depend on the intention of making the statement. To determine the intention, Objective Test will be applied to look at all the circumstances surrounding the making of the contract, which is so-called reasonable man test. Furthermore, four subsidiary tests are used to assist the Objective Test: time factor, writing factor, importance of the statement factor and relative skill and knowledge factor.

In the Sydney Athletic v Mark case, Mark’s intention of signing the three-year contract with Sydney Athletic team last year was to be a professional basketball player for the team with RM300,000 income per year. Therefore, it had satisfied the relative skill and knowledge factor as Mark has the special skill of playing professional basketball. Similar with Schawel v Reade, the House of Lords held that the statement was a term of the contract as the defendant made it as a person of special knowledge and skill as to the horse’s capacity. Moreover, the position of Mark is very important to form the contract with Sydney Athletic which is matching with the importance of the statement factor. We can refer to the judgement of Bannerman v White, the court held that the statement that the actual condition of hops was a term of contract and not a mere representation since the plaintiff knew how important the statement was to defendant and he was actually rely on it. In short, the Objective Test and two of the subsidiary tests have proved that the statement in this case was a term of the contract.

 Since mark has entered into a written agreement and accepted the contract  of Sydney to play with it athletic team for 3years with a pay of RM300,000 per year, As such  he cannot  terminate the contractual agreement for kuala lumpur team simply because  he was not happy  with Sydney team  under the contract act of  section 2 (H) it is not allowed and as such acceptance  has been made by receiving Sydney contract  mark cannot terminate the agreement.

The second issue is to identify whether the term is a condition or a warranty.

The contractual term can be determined as a condition or a warranty. A condition represents the purpose of the contract whereas warranty is the minor part of the contract. The remedies for breaching a condition and a warranty are totally different from each other.

In this case, classical test and modern test are used to identify whether the term was a condition or a warranty. The former measures the degree of importance and whether the term goes into the root of a contract whereas the latter looks at the seriousness of the consequences of the breach.

LAW: Under the Perol Evidence  Rule  of section 92 of the evidence act 1950 it is stated that the court will not allow any oral evidence, also  that vary or contradict a written document  unless the oral evidence within one of the exceptions contained in the section of perol evidence rule while under  section 91 of the evidence Act 1950.    When the terms of the contract have been reduced by consent of the parties to form a document, no evidence shall be given in proof of the contract except the document itself. The oral rejection by mark will not be accepted by the court of law.



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