Understanding the Meaning Behind and the Purpose of Contracts

TASK1) A contract is an agreement between two or more parties. It can be written, oral, by conduct. For a contract to be binding it must have the following features: a) intention to create legal relations. b) Consideration. An offer is an expression by one person (the offeror) that he is willing to contract with another (the offeree) on specified terms. Bloke Andsome’s advertisement is an invitation to treat. An ad can be offer: Carlill v Carbolic Smoke Ball but is more likely to be an invitation to treat: Partridge v Crittenden. Although not exactly business, there is no reason to doubt intention to create legal relations. The price of Bloke’s super sonic car stereo as stated £250 in newspaper. Ed Goff calls and asked it for £135 and Ed’s reply is a counter offer and Bloke said he can have it at £140 Ed Goff but it will be open for 6 days and Ed takes time to think. Case law: Hyde v Wrench & Brogden v Metropolitan Railway. Hyde v Wrench in this case the defendant offered to sell his farm for £1000. The claimant’s agent made an offer of £950 and the defendant asked for a few days for consideration, after which the defendant wrote saying he could not accept it, whereupon the claimant wrote purporting to accept the offer of £1000. The defendant did not consider himself bound and the claimant sued for specific performance. The court held the claimant could not enforce this acceptance because his counter-offer of £950 was an implied rejection of the original offer to sell at £1000. Brogden v Metropolitan Railway in this case the claimant had been a supplier of coal to the railway company for a number of years, though there was no formal agreement between them. Eventually the claimant suggested that there ought to be one, and the agents of the parties met and a draft agreement was drawn up by the railway company’s agent and sent to the claimant. The claimant inserted several new clauses into the draft, and in particular filled in the name of an arbitrator to settle the parties differences under the agreement should any arise. He then wrote the word approved on the draft and returned it to the railway company’s agent. There was no formal execution, the draft remaining in the agent’s desk. However, coal was supplied according to the prices mentioned in the draft, though these were not the market prices, and prices were reviewed from time to time in accordance with the draft. The parties then had a disagreement and the claimant refused to supply coal to the railway company on the ground that, since the railway company had not accepted the offer contained in the amended draft, there was no binding contract. The court held the decision that the draft was not an express binding contract because the claimant had inserted new terms which the railway company had not accepted but the parties had indicated by their conduct that they had waived the execution of the formal document and agreed to act on the basis of the draft. There was, therefore, an implied or inferred binding contract arising out of conduct, and its terms were the terms of the draft. In case of Kayte Mussi there was no genuine offer and acceptance, silence does not mean offer is accepted. Case Law: Felthouse v Bindley in this case the claimant had been engaged in negotiations with his nephew John regarding the purchase of John’s horse, and there had been some misunderstanding as to the price. Eventually the claimant wrote to his nephew as follows: ‘If I hear no more about him I consider the horse is mine at £30.15s’. The nephew did not reply but, wishing to sell the horse to his uncle, he told the defendant, an auctioneer who was selling farm stock for him, not to sell the horse as it had already been sold. The auctioneer inadvertently put the horse up with the rest of the stock and sold it. The claimant now sued the auctioneer in conversion, the basis of the claim being that he had made a contract with his nephew and the property in the animal was vested in him (the uncle) at the time of the sale. The court held that the claimant’s action failed. Although the nephew intended to sell the horse to his uncle, he had not communicated that intention. There was, therefore, no contract between the parties, and the property in the horse was not vested in the claimant at the time of the auction sale. Rose fastbabe offers to pay £145 in cash and Bloke accepted the offer, while they both are exchanging the cash for the keys and logbook that time the offer and acceptance was completed. But that time Ed Goff arrives and purports to accept Bloke Andsome’s offer to sell for £140 so here I can suggest there is no requirement for Bloke to hold it open for 6 days as there is no consideration provided by Ed Goff, so it is not an option. Case Law: Watson v Phipps.

I advise Bloke Andsome as my client that he is not liable to Ed Goff and Kayte Mussi and as far as Rose fastbabe its a deal and both offer and acceptance was there and the contract between them was a valid contract.

TASK 2 a) Terms are specific binding details of a contract. They are the contents of a contract. Statements made in pre-contractual negotiations may become terms or remain as mere representations. The latter are mere inducements or incidental statements. It is essential to distinguish a mere representation from a term. If a statement made in pre-contract negotiations proves to be untrue the remedy is misrepresentation unless the representation became a term, which then gives the right to sue for breach of contract. In common law the court distinguishes them in a number of ways: a) when the representation was made and when the actual contract was entered into. b) whether it was later put into writing. c) the importance of the statement to the recipient. Case Law: Bannerman v White; sale of hops treated with sulphur essentially a term. d) expert knowledge of the person making the statement. Dick Bentley Productions Ltd v Harold Smith Ltd in this case the defendants where experts who could deal with the plaintiff’s request who asked for a well vetted car of less than 20,000 miles. The defendant’s statement was a term. This case can be distinguished from Oscar Chess Ltd v Williams. (Innocent misrepresentation case).

Express terms: These may be written or oral or both and must be complete. Either or both parties have to specifically insert the terms in the agreement. Certainty is very crucial since both parties need to have no doubts concerning the terms, King’s Motors (Oxford) Ltd v Lax (Case of uncertain rent), or the case of Scammel v Ouston (case of unspecified hire purchase terms for van to be purchased).

Implied Terms: These are terms imported into the contract

from external sources. These sources include: a) Custom

(past action of the parties); Hutton v Warren. Entitlement

to fair allowance for labour and seed is a custom, which

dates back centuries and are implied in contracts even if

not expressed. Express terms however take precedent over

implied terms in case of a conflict unless the express terms

are illegal. b) Statute; Protections given by the Sale of

Goods Act 1979. Sections 12, 13, 14 and 15 are the most;

essential in the legislation as far as the sale of goods

contracts are concern. Also important is the Supply of

Goods and Services Act 1982 dealing with contract of

service,hire and exchange. C) Courts; they normally seek to

give business efficacy to a contract by establishing the

presumed intention of the parties ( Terms implied in facts).

Also where such a term is implicitly required by the nature

of the contract hence implied in law as in the case of

Liverpool City Council v Irvin. Terms could be distinguished

according to the degree of importance: a) Conditions; these

terms are said to be primary and go to the root of the

contract. Poussard v Spiers. b) Warranties ; these are

auxiliary to the main purpose. Bettini v Gye. The rehearsal

clause was subsidiary to the main purpose of the contract.

Classification may depend on statute or case law.

Task 2b) In this case, the legality of the terms is as same, nearly or somehow as the other cases laws and relevant legislation being examined under the effect of exemption clauses in attempting to exclude contractual liability. An exclusion clause is a clause in a contract which purports to exclude liability or to restrict by limiting damages or by imposing other ourious conditions. It is sometimes referred to an exemption clause. The criticism is seller vs. consumer-standard form contracts. Safe-guard- court and UCTA 1977. Requirements for exclusion clauses are: 1) Properly incorporated, 2) Interpreted strictly. 3) If it is voided by law (statute) it is unnecessary. The rules of exclusion clauses are: it must be included in of contract which has been signed. It must be put forward before the court is made. Both parties must be aware of it. Reasonable notice that conditions are proposed by it (i.e. integral part of it). If signed, the parties will be held to have agreed the term. Exclusion clauses case laws are: Chapelton v Barry- In this case the document is not contractual. Thomson v LMS Railway- In this case it is a constructive communication. L’Estrange v Grace- In this case where the document containing the clause is signed. Olley v Marlboro- In this case it is a belated notice of a exclusion clause. Some exception cases under exclusion clauses are: J. Spurling Ltd v Bradshaw, Hollier v Rambler Motor- In this case it appeared that the claimant had his car repaired five times in five years by the defendants and had signed a form containing a clause stating ‘ the company is not responsible for damage caused by fire to customers’ cars on the premises’. On the occasion in question the claimant was not required to sign a form when leaving his car for repair. In the event the car was damaged by fire caused by the defendants’ negligence. In an action by the claimant the defendants pleaded the clause. It was held by the Court of Appeal that the claimant succeeded and that the clause did not apply. Previous dealings were not incorporated and in any case as a matter of construction the wording was not sufficiently plain to exclude negligence. However, where the parties are, for example, large corporations, terms used in previous dealings between the parties themselves or in the trade generally may be incorporated. Performance of a contract under exclusion clauses, case laws such as Cutter v Powell- In this case the first and most common form of discharge is by performance, which must be complete and exact for it to be effective as confirmed in this case.Bolton v Mahadeva- In this case Bolton installed a central heating system in the defendant’s house. The price agreed was a lump sum of £560. The work was not done properly and it was estimated that it would cost £179 to put the system right. The court of appeal decided that the lump-sum payment suggested that the contract was entire, and since Bolton had not performed his part of it properly and in full, he could not recover anything for what he had done. The overall general rule of exclusion clause liability is do the person own part of the contract as exactly as he agreed, it must be exact, but now it allows some exception to this rule when substantial performance came, contractual obligations are discharged only by complete and exact performance, very large part of contract. Sumpter v Hedges- In this case the court ruled acceptance of partial service means partial payment on a quantum meruit basis must be made to the other party. However if work done was not accepted no payment would be expected. Another case is Planche v Colbora.

TASK3a) The claimant will be able to take advantage of tortious rules which may be more advantageous. The most important of these will be the rules on limitation. These rules govern the time period within which a claimant must bring an action. In contract, time periods generally run from the time a contract is made and in tort from the time damage is suffered. Other rules are those on causation and remoteness. Remoteness principles in tort are generally thought to be more favourable to the claimant than those in contract. Not all concurrent liability principles will run in the claimant’s favour. If the claimant chooses to sue in negligence, then the defendant has the opportunity of raising the defence of contributory negligence by the claimant. If the action is brought in contract, then the opportunity to raise contributory negligence is limited by the current law and is not available where the contractual duty is stricter than negligence. At first, English courts refused to allow professional people, such as solicitors and architects, to be sued in tort by their contractual clients. This created a problem as certain professional people, such as doctors, could be sued in contract or tort. The decision in Hedley Byrne v Heller, changed the basis on which English law operated. It was now possible for a person who did not have a contract to sue in respect of negligent advice leading to economic loss. This raised the question of why a person who had a contractual relationship should not be able to take advantage of tortious principles and might be worse off than a person who had received gratuitous advice. In occupier’s liability the cases are Wheat v E Lacon & Co Ltd, & Harris v Birkenhead Corporation- In this case it has been established that there can be more than one occupier of the same premises, although the duty required of each might be different. Occupiers liability act 1984, cases are: Keown v Coventry Healthcare NHS Trust.

Task3b) Vicarious liability is an example of strict liability, in the sense that there need to be no fault on the part of the employer before they can be made liable. Cases are : Dubai Aluminium Co Ltd v Salaam . There was a doctrine that can be justified on a moral basis and as the employer benefits from the employee’s work they should bear cost of accidents arising out it. The strength of the doctrine is reflected in the House of Lords decision in Majrowski v Guys and St Thomas NHS Trust. The claimant had brought a claim against his former employers under the Protection from Harassment Act 1997 on the grounds of their vicarious liability for his former line manager’s homophobic bullying. The House of Lords dismissed the employer’s claim that the legislation was of a public order nature and was not intended to impose a burden on employers. Where the harassment was carried out in the course of employment, the employer could be vicariously liable. Where the employee is working on the employer’s premises, the employer must act in the same manner as a reasonably prudent employer. Reasonable care must be taken for the employee’s safety. ( Latimer v AEC Ltd), the employer must devise a suitable system, instruct employees what to do and supply any implements they may require. In doing this the employer must take care to see that the system is complied with and bear in mind that employees are often careless for their own safety. Cases such as: General Cleaning v Christmas & McDermid V Nash Co Ltd. A strict liability tort is committed simply by performing the relevant act, without having to prove any additional state of mind at the time. The tort under Rylands v Fletcher is an example of a tort of strict liability. The main difference between strict liability & general tortious liability is that tortious liability is fault-based.

TASK 4a) To succeed in a negligence action the claimant must prove three things: a) That the defendant owed him a duty of care b) That the defendant was in breach of that duty and c) That the claimant suffered damage caused by the breach of duty, which was not too remote. Nettleship v Weston- In this case the defendant was a learner driver who was given lessons by the plaintiff. The plaintiff was injured as a result of the defendant’s negligent driving. The court held that all drivers, including learner drivers, would be judged by the standards of the average competent driver.

Task 4b) Negligence is essentially concerned with compensating people who have suffered damage as a result of the carelessness of others, but the law does not provide a remedy for everyone who suffers in this way.One of the main ways in which access to compensation is restricted is through the doctrine of the duty of care. Essentially, this is a legal concept which dictates the circumstances in which one party will be liable to another in negligence: if the law says you do not have a duty of care towards the person ( or organisation) you have caused damage to, you will not be liable to that party in negligence, no matter how serious the damage. We can analyse the development of the law on duties of care in three main stages: the original neighbour principle as established in Donoghue v Stevenson; a two-stage test set down in Anns v Merton London Borough, which greatly widened the potential for liability in negligence; and a retreat from this widening following the case of Murphy v Brentwood District Council. The basic test for a duty of care is now the one set down in Caparo v Dickman. This will usually be applied to duty of care questions in cases involving physical injury and/or damage to property. In breach of duty care the reasonable man test is provided. The court has said as a subjective inquiry into each person’s capabilities would be impossible, an objective test was chosen. The standard of conduct to be attained is that of the reasonable man. The classic statement was given by Alderson B in Blyth v Birmingham Waterworks Co. The case mentioned above of negligence Nettleship v Weston, the facts are mentioned above the court ruled the learner driver may be doing his best, but his incompetent best is not good enough. He must drive in as good a manner as a driver of skill, experience and care. Other factors determining the negligence is the skill which the defendant professes to have (case: Wells v Cooper,) the degree of probability that damage will be done, (case: Bolton v Stone,) the magnitude of harm likely (case: Paris v Stepney Borough Council,) the utility of the object to be achieved, (case: Daborn v Bath Tramways ) and the practicability of prevention.

The most difficult task the claimant faces in a negligence action is likely to be proving that the defendant was negligent. The basic rule is that they who affirm must prove. It is therefore up to the claimant to prove, on the balance of probabilities, that the defendant was negligent. This rule is relaxed in two instances: a) proof of criminal conviction under the civil evidence act 1968. B) Res ipsa loquitur it means the thing speaks for itself. Case: Scott v London Dock Co. This maxim after this case has since been referred to as res ipsa loquitur, the maxim is said to have three requirements, they are:

The thing causing the damage was under the exclusive control of the defendant. Cases are: Gee v Metropolitan Railway & Easson v London Railway.

The accident must be of the sort that does not happen in the absence of negligence : The facts in Scott v London Dock Co illustrate this requirement. Bags of sugar do not normally fall out of the sky unless someone has been negligent. The maxim has been invoked in medical negligence actions.

There must be no explanation for the accident. Cases are: Barkway v South Wales Transport Co Ltd- In this case the plaintiff was injured in a road accident when the bus he was travelling in burst a tyre and crashed. The reason for the burst tyre was a defect in its wall which could not have been discovered beforehand. It was held that res ipsa loquitur was inapplicable. The defendants were found liable because they had not instructed theirdrivers