Scenario
Malcolm has run his own business making parts for the car industry for over 20 years. In 2013 his long-time friend Claire joined the business and together they have worked hard to increase their
sales and expand their client base. They were delighted when they recently entered into a lucrative contact with Luxury Cars Ltd for the production of exhaust systems for a new proto type car
Luxury Cars Ltd were developing.

As all business decisions were made together Malcolm was happy for Claire to attend a meeting without him, with the Managing Director (MD) of Luxury Cars. At the meeting It was agreed that Malcolm
and Claire ( trading as Prifco Car Parts( PCP ) would supply 3,000 exhaust systems a year, for a 5 year period .It was confirmed that the matters discussed at the meeting were subject to a written
contact and this was duly sent to PCP three days later.

Malcolm opened the contract when it arrived at PCP’office and quickly realised on studying the technical specifications that the contract included, that the dimensions provided would cause
substantial manufacturing problems. He amended the drawings and then signed and returned the contract to Luxury Cars

Several weeks later Claire took a call from Luxury Cars requesting the first consignment of exhausts as agreed in the contract. These were made in compliance with the amended specifications and PCP
was paid promptly when they submitted the invoice for the 100 exhaust systems supplied. PCP continued to make and supply the required exhaust systems in 10 similar consignments of 100 exhaust
systems. All were in accordance with Malcolm’s amendment to the design and each consignment was accepted and paid for.

Last month PCP received a letter from Luxury Cars informing them that they (Luxury Cars) would no longer accept any new exhaust systems and they would also be instigating proceedings for breach of
contract as they had discovered that because of the amendments made by Malcolm, the exhaust systems did not fit the chassis of their new car.

Included in the letter was a request for the outstanding payment of £5,000 for one of their top of the range cars, which had been brought by Claire. She had contracted to buy it in the name of PCP.

Malcolm knew nothing about the car and has made clear to Claire that the responsibility for payment rests entirely with her. Claire claims that as she had no knowledge of the changes made to the
contract by Malcolm, if there has been a breach of contract, it is Malcolm’s fault entirely and he alone is responsible for it.
Tasks
You are required to advise PCP on the following issues.
1. Whether a valid contract between them and Luxury Cars exists.
2. In the event that the contract is valid, the implications for PCP in terms of its liability and / or rights.

3. Whether either Malcolm or Claire (or both) can legally refuse liability for the contract and the car and if so on what basis.