Contract Case Study: Abu V. Shell Company

The case we were provided with was Abu V. Shell Company. In this case Abu and Shell company signed a contract of 10 years on the basis of the statement by Shell company experts that the station would be able to sell 900 000 liters of petrol per year. The approximate amount was provided on the basis of being direct access to the service station from Main street. A decision made by the local council announced that there would be a change in the traffic dierect access , Shell company continued the contract without any changes and maintained that sales would be 900,000 litres per year. Consequently the sales of petrol were turned extensively low and Abu made a large loss. We were meant to enlighten the potential scenarios of taking a legal action
These elements are essential in a contract. There are 3 types of Contracts on classification according to enforceability A valid contract , Void and Voidable If all these elements are present in a contract that contract is known to be Valid, A valid contract can be enforced by law thus creating legal rights and obligations against each other. If any one or more of these elements are found to be missing the contract is known to be a void contract. A void contract cannot be enforced by law and no legal rights are created. A voidable contract is a contract that is Valid and binding unless it is repudiated. According to my case, there was an offer made by Shell company and acceptance to the offer by both parties, considering shell company would make sales amounting to 900000 per year. The contract also had intentions to make legal relationships and the terms of the contract were mentioned
Breach of contract is betrayal or violation to perform or execute any term in a contract by one or more parties without an appropriate or legitimate legal excuse. In my view Shell company with the breach of contract also misrepresented the amount of sales it would make. Misrepresentation is a statement of fact which is made by one party that causes the other party’s judgment about the contract. A misrepresentation can only be in effect when that statement made by the party is a statement of fact and not opinion, the statement is found to be false and the innocent party believed the statement to be true which cause the innocent party to induce into the contract. In the case, The statement of making 90,000 sales of petrol, was not an opinion but in reality it was a fact and a promise of them making 90,000 sales, Abu also believed this statement to be true and got into the contract with shell company on the basis of this statement. This statement was then found to be false since they did not reach the target of 90,000