Business Law
Business Law tests the general principles of contract, sale of goods, agency and partnership as applied in Sri Lanka, where the contract law is largely the Roman-Dutch common law supplemented by statutes such as the Sale of Goods Ordinance No. 11 of 1896 and the Prevention of Frauds Ordinance No. 7 of 1840.
Core rules
- A valid contract requires offer, acceptance, consideration, capacity, intention to create legal relations and legality of object.
- An offer must be definite and communicated; acceptance must be unqualified and communicated. The postal rule treats acceptance as complete on posting where post was contemplated.
- An invitation to treat is not an offer: shop displays, price lists, prospectuses and most advertisements invite the customer to offer, and the seller may refuse.
- Vitiating factors - misrepresentation, mistake, duress, undue influence - make a contract voidable; illegality makes it void.
- Discharge by performance, agreement, frustration or breach. Damages are limited to losses within the reasonable contemplation of the parties; specific performance and injunctions are equitable remedies.
- Sale of Goods Ordinance: implied conditions of title, sale by description, fitness for purpose and merchantable quality; nemo dat quod non habet; caveat emptor governs quality outside the implied terms.
- Prevention of Frauds Ordinance: a transfer of land is valid only by notarial deed attested by witnesses.
- Partnership: mutual agency and unlimited joint liability of partners for firm debts.
Worked example
Goods on a shelf carry a price tag; the customer offers at the till, and acceptance occurs when the cashier accepts payment. No contract exists before that, so the shop may decline to sell. If instead a tender is accepted by letter posted on 1 June, the postal rule completes the contract on 1 June even if the letter arrives later.
Traps that cost marks
- Treating every advertisement as an offer.
- Relying on past consideration as good consideration.
- Confusing breach of condition (right to reject) with breach of warranty (damages only).