CONTRACT LAW
Instructions
Read the case study and identify legal principles related to this contract and Advise Mogul
Ltd.
Question 1 – Case Study
XYZ Co., who manufacture oil rigs, wrote to Mogul Ltd, an oil company, offering to construct an
oil rig for £1,000,000. The offer was made on a form containing XYZ’s standard terms of
business. One of the terms contained in the document was that the initially agreed contract
price might be varied according to the cost and availability of materials.
Mogul replied, in a letter containing their standard terms of business, stating that they wished
to order the rig. These terms did not include a price variation clause but contained a statement
that the order was not valid unless confirmed by return of post. XYZ duly confirmed by a letter
dated May 1 which was delayed in the post as it bore the wrong address and did not arrive until
May 14.
Meanwhile, on May 12, Mogul posted a letter to XYZ cancelling the order which arrived on May
13. XYZ ignored this letter and pressed on with the construction of the rig. It was completed
one year later at a price of £2,000,000. Mogul refuse to take delivery. Advise Mogul Ltd.
Instructions
Read the case study and identify legal principles related to this contract and Advise Mogul
Ltd.
Question 1 – Case Study
XYZ Co., who manufacture oil rigs, wrote to Mogul Ltd, an oil company, offering to construct an
oil rig for £1,000,000. The offer was made on a form containing XYZ’s standard terms of
business. One of the terms contained in the document was that the initially agreed contract
price might be varied according to the cost and availability of materials.
Mogul replied, in a letter containing their standard terms of business, stating that they wished
to order the rig. These terms did not include a price variation clause but contained a statement
that the order was not valid unless confirmed by return of post. XYZ duly confirmed by a letter
dated May 1 which was delayed in the post as it bore the wrong address and did not arrive until
May 14.
Meanwhile, on May 12, Mogul posted a letter to XYZ cancelling the order which arrived on May
13. XYZ ignored this letter and pressed on with the construction of the rig. It was completed
one year later at a price of £2,000,000. Mogul refuse to take delivery. Advise Mogul Ltd.
