ISSUES/AUTHORITIES IN 2004-2005 CONTRACT LAW EXAMINATIONS
S/N
ISSUES
AUTHORITIES
ISSUES IN THE FORMATION OF A CONTRACT:
OFFER
Legal requirements necessary for the formation of a contract
Storer v Manchester City Council (1974) and
Intention to enter contract and offer not capable of being accepted. We may sell to you at certain prices.
Gibson v Manchester City Council (1978)
Display of Goods is an invitation to treat and an offer is made by the customer when he presents the goods at the cash desk. Newspaper advertisement is also an invitation to threat
Partridge v Crittenden (1968)
In a case of unilateral offer of contract, the advertisement can be the offer
Acceptance by performance
No communication of acceptance is required
Carlill v Carbolic Smoke Ball Co. (1893), Bowerman v ABTA (1995).
Harvey v Facey (1993) and Clifton v Palumbo (1944)
No offer between them because there is no offer matched by corresponding acceptance –
R v Clarke (1927) – Contrary authority Gibbons v Proctor (1891)
CONSIDERATION
Consideration must move from the promises but not necessarily to the promisor
Oxford v Davies
Consideration provided for one party can serve as good consideration to a second party in a separate contract
Pao On v Lau Yiu Long (1980)
Public duty and consideration
Glasbrook Bros Ltd v Glamorgan C. C. (1925)
Ward v Byham (1956).
To receive extra amount there must be consideration
Stilk v Myrick (1809)
Practical Benefit must be established to receive extra benefit –
Williams v Roffey Bros & Nicholls (1991) and doubts on the case Re. Selectmove Ltd (1995) and South Caribbean Trading Ltd (SCT) v Trafigura Beeher BV 2004
ACCEPTANCE
Can there be acceptance in ignorance of an offer. The law is ambiguous
Williams v Cardawardine (1833), Gibbons v Proctor (1891), R v Clarke (1927)
COMMUNICATION
If however the communication can be made over the phone or e-mail (something which will turn on the wording of the advertisement itself) then A should succeed in communicating his acceptance first and creating a binding contract before C’s communication has occurred.
Manchester Diocesan Council for Education v Commercial and General Investments (1970)
LEGAL ISSUES IN THE CREATION OF A CONTRACT
Rules on intention to create legal relations
Balfour v Balfour (1919),
Jones v Padavatton (1969)
Coward v MIB (1962)
Simpkins v Pays (1955)
Edmonds v Lawson (2000)
Problems with consideration – offer to make payment after the arrangement has commenced
Ø Roscorla v Thomas (1842), Re McArdle (1951), Pao On v Lau Yiu Long (1980)
Ø It appear there is no contract with Ian
Ø Jeremiah is her brother with – Balfour v Balfour and Jones v Padavatton
Intention to enter legal contract was excluded within a family relationship
Ø in which intention was excluded within a family relationship
REVOCATION OF AN OFFER
Revocation of an offer must be communicated to be effective
Byrne v Van Tienhoven (1880), Henthorn v Fraser (1892)
Revocation of an offer in a newspaper advert must reach substantially the same audience as the offer.
Shuey v USA (1875)
Principles of certainty of contract terms
Scammel v Ouston (1941) and Hillas v Arcos 1932
Promissory Estoppel
Central London Property Trust Ltd v High Street House Ltd (1947)
Variation of contract principles
Pinnel’s case and Foakes v Beer.
How can Cruisers end the arrangements – The
Post Chaser (1982)
Sale of Goods issues
Sale of Goods Acts 1979
PRIVITY OF CONTRACT AND RIGHTS OF THIRD PARIES
Linden Gardens v Lenesta Sludge Disposal (1994) 1 AC 85
They may fall within the limited class of exception discussed by Lord Denning in Jackson v Horizon Holidays ad still generally recognised
s.1(1) and .1(2) as regards the provision of bus service – Nisshin Shipping Co. Ltd v Cleaves & Co. Ltd.
Recognition of performance interest
Panatown v Alfred McAlpine Construction Ltd (2000): Radford v DeFroberviller (19977)
Common law exception to privity of contract
(Darlington B.C. v Wiltshier;Contract (Rights of Third Parties) Act 1999.
Remote Losses
Hadley v Badendale and Jackson v Royal Bank of Scotland (2005) UKHL 3)
McAlpine Construction Ltd (2000) HL:
INCORPORATION OF TERMS INTO A CONTRACT
SALE OF GOODS ACT 1979 & COMMON LAW CASES
Ø Olley v Marlborough Court Hotel (1941), Chapleton v Barry UDC (1940)
Ø Thorton v Shoe Lane Parking (1971)
Ø Parker v South Eastern Rly (1987)
Ø s.14 of the Sale of Goods Act 1979 (goods sold in the course of business should be of satisfactory quality
UNFAIR CONTRACT TERMS ACT 1977
Ø Unfair Terms in Consumers Contract Act 1977 (UCTA) [s.1 applies where one party deals in the course of a business or s.2 where the parties deal on one party’s standard written terms
Ø The 1977 Act applies where a party attempts to exclude liabilities arising in the context of a business s.1.
Ø D & B Customs Brokers v UDT
Ø Central London properties v High tress Houses
Ø R&B Customs Brokers, Stevenson v Rogers
Ø Feldaroll Foundry Plc v Hermes Leasing (London) Ltd (2004)
Ø or if the parties deals on Ultraclean’s written standard terms of business (St. Albans City District Council v International Computers Ltd (1996).
UNFAIR TERMS IN CONSUMER CONTRACT REGULATION 1999
Ø Unfair Terms in Consumers Contract Regulations Act 1999 (UTCCR)
Ø Applications of ss. 6 and 12 of UCTA 1997 and the relevant case law.
Ø Application of ss.2(2), 3, 11, 13, 24, Sch. 2 and the case laws interpreting the sections
Ø Terms are also implied into contract by Breach of implied terms and whether express terms cover the breach
Ø 1999 (UTCCR) applied to unfair terms between a seller and supplier on the one hand and consumer on the other s.4(1)
Ø Unfair terms principles in Director-General of Fair trading v First National Bank Plc (2002) HL; UTCCR 1999 ss.4-6, Sch.2)
Ø L’Estrange v Graucon
Notice must be given before the time of the contract
Olley v Marlborough Court (1949)
It must be embodied in a document of ‘contractual force’
Chapelton v Barry Urban District Council (1940)
Appropriate notice of exclusion clause must be given
Parker v South Eastern Railway (1877
Extra notice must be given of onerous or unusual terms
Spurling v Bradshaw (1956) and Interfoto Ltd v Stiletto Visual Programmes Ltd (1989) (terms iii and iv)
CATEGORISATION OF TERMS IN CONTRACT
Principles for establishing the importance of contract terms
L Schulter v Wickman Machine Tool Sale (1974); Lambeth North Central v Butterworth [1987
Innominate Terms
practical consideration will usually be of commercial nature [expectation of future business in other contracts, long-term relationship or an unwillingness to impede supply)
Legal consideration will generally be considered with the claimant’s duty to mitigate his losses
British Westinghouse Electric Co. Ltd v Underground Electric Rys Co of London Ltd (1912) and Payzu v Saunders (1919)
Classification of contractual terms into conditions, warranties and intermediate and innominate terms
Hong Kong Fir Shipping Co. Ltd v Kawasaki Kisen Kaisha Ltd (1962)
ELEMENTS THAT COULD VITIATE AN APPARENT CONTRACT
Ø Legal doctrine of economic duress and equitable doctrine of undue influence
Ø As a matter of practicability and commercial reality, most transactions were affected by some form of duress or undue influence
Ø Are the principles upon which courts intervene very clear and whether the case which established this principles were in conflict.
Ø All involve the application of House of Lords’ decision in Shogun Finance v Hudson – the way in which the contract was formed (particularly whether it was made face to face) was critical in determining, whether the resulting contract was voidable or void.
Ø If it is voidable, has luxury taken steps to avoid the contract before jack ‘sell’ the jewellery to Owen. Car and Universal Finance Co. v Caldwell
Supervening event which renders the performance of contract impossible - and so forth
Ø Davis Contractors Ltd v Fareham Urban District Council (1956)
Ø National Carriers Ltd v Panalpina (Northern) Ltd (1981)
Ø Tsakiroglou & Co. v Noblee and Thorl (1962)
Ø Nature of frustration – Davis Contractors Ltd v Fareham Urban District Council (1956) and National Carriers Ltd v Panalpina (Northern) Ltd (1981)
Ø The coronation case were of particular use in determining these – Harne Bay Steamboat Company v Hutton (1903) and Krell v Henry (1903)
Principles for Breach of contract
Marine National Fish v Ocean Trawlers (1935) and the Super Servant Two (1990)
Law reform (Frustrated contracts) Act 1943
PROMISORY ESTOPPEL
Ø Circumstances in which promissory estoppel was developed (attempts at contractual variation or promises given which were intended to be relied upon but were given in absence of consideration)
Ø A rigid insistence upon consideration can lead to harsh result, promissory estoppel is designed to alleviate such injustice
Ø In English law promissory estoppel may be poised as alternative to consideration, that situation has not yet been realised – Baird Textile Holdings v Marks and Spencer (2001)
Ø Application of the rule in Balfour v Balfour (1919), Jones v Padavatton (1969), Coward v MIB (1962), Simpkins v Pays (1955) and Edmonds v Lawson (2000)Formation of contract
MISREPRESENTATION
Actionable Misrepresentation – Implicit statement
Spice Girls Ltd v Aprila World Service BV (2000)
Misrepresentation Act 1967
Is the statement of an agent a misrepresentation?
Bisset v Wilkonson (1927) AC 177
Smith v Land House Corporation (1884) 28 ChD 7
Royscot v Rogerson
Operative mistake has the effect of vitiating a contract
Smith v Hughes
Negligent misrepresentation
Hedley Byrne v Heller(1964) AC 465
Effect of a mistake as to the quality of the subject matter in a contract –
Bell v Lever Bros
Mutual mistake
Sole v Butcher, Associated Japanese Bank v Credit du Nord, the Great Peace
Discharge of a contract
Davis Contractors Ltd v Fareharm Urban District Council
MISTAKE
MISTAKE INDUCED BY FRAUD
THE EFFECT ON CONTRACT
MISTAKE AS TO IDENTITY AND ATTRIBUTES
Ø The situation required candidates to explore, analyse and attempt to reconcile the growing body of case law on the issue of mistake as to identity of one of the contracting parties brought about by the fraud of that party
Ø The law is difficult to reconcile in this area.
Ø The judgement of the House of Lords in Shogun Finance Limited afforded ample materials to discuss in answering this question.
Ø
MISREPRESENTATION - FALSE/FRAUDULENT
warranties of representation:
Heilbut, Symons &Co. v Buckelton (1913)
Statements of opinion can be misrepresentation
Bisset v Wilkinson (1927)
Esso Petroleum v Mardon (1976).
Possession of knowledge which implies a set of fact particularly within her knowledge:
Smith v Land and House Property Corp (1884);
BG Plc v Nelson Group Services (Maintenance) Ltd (2002)
Negligent misrepresentation
Hedly, Byrne v Heller
Innocent misrepresentation
Entitled the other party to rescission of the contract
Fraudulent Misrepresentation
Derry v Peek
James modification of the van may make rescission impossible and would prevent relief under the Act –
Floods of Queensferry Ltd v Shand Construction Ltd (2000);
Government of Zanzibar v British Aerospace (Lancaster House) Ltd (2000).
Contrary authority in Thomas Witter Ltd v TBP Industries (1996).
Finally, has there been a lapse of time that bars rescission?
FRUSTRATION
Principle relating to frustration
Davis Contractors Ltd v Fareham Urban District Council (1956)
National Carriers Ltd V Panalpina (Northern Ltd (1981)
ILLEGAL CONTRACTS
ILLEGAL CONTRACTS
Ø Different treat to contract illegal as formed (which are unenforceable)
Ø Illegal as performed (which may be enforceable in some circumstances)
Ø The importance is, thus, as to the potential enforceability of the contract as to recover money or benefits conferred upon another pursuant to an illegal contract
Statutory illegality – purpose behind the statute
John Shipping v Rank,
In some circumstances, courts have allowed such contract to be enforced
(cf Archbolds (Freightage) v Spanglett); i
in other cases, courts have not allowed the contract to be enforced
(cf Re Mahmoud and Ispahani)
Recovery on a quantum valebat basis for the goods supplied
Mohammed v Alaga
Public policy may not however allow restitutionary recovery on a quantum valebat basis
Awwad v Geraghty & Co.
The parties are in pari delicto and neither can sue on the contract.
PRINCIPLES FOR AWARD OF DAMAGES FOR BREACH OF CONTRACT
Expectation loss
Robinson v Harman (1884).
Non-pecuniary matters such as loss of amenity, pain, distress and so forth
Ruxley Electronics and Contruction v Forsyth (1995), Farley v Skinner, Hamilton Jones v David & Snape (2003)
Alternative basis for measuring damages on the reliance loss or loss of expenditure basis
Anglia Television v Reed (1972)
Award for restitutionary losses e.g. an account of profit following House of Lords decision in
Attorney General v Blake (2001). Controversy in Experience Hendrix LLC v PPX Enterprises Inc. 2003
Nature of award of damages
under s.2(1) of the Misrepresentation Act 1967 in the light of decision in Royscot Trust Ltd v Rogerson (1991) in terms of removal of possibility of claim of either negligent misstatement or fraudulent misrepresentation at common law
Either a duty of care or an assumption of responsibility to be established by the claimant.
Hedley Byrne v Heller
Claimant need only establish that a misrepresentation has occurred
S.2(1) shifts burden of proof to the defendant to establish that they had reasonable ground to believe that the statement was true up to the point of contracting
Generous awards
Royscot Trust v Rogersn which allows a claimant to receive damages measure as if the tort of deceit had been committed.
Reservations
Forest International Gaskets Limited v Foster Marketing Limited (2005) the CA refused permission for the issue to be sent on appeal to the House of Lords
Non-financial losses arising from loss of enjoyment and this irrecoverable or can they be recovered
Addis v Gramophone Co. Ltd (1909), Jarvis v Swans Tour (1973),
Ruxley Electronics and Construction Ltd v Forsyth (1996),
Malik v BCCI (1991)
Hamilton Jones V David & Snape (2003).
Remote losses
Hadley v Baxendale (1854)
Victoria Laundry (Windsor) v Newman Industries (1949)
The Heron II (1969) and H Parsons (Livestock) v Uttley Ingham (1978)
If the breach is not enough to justify termination of the agreement and the innocent party does so, he may himself be have breached the contract
Decro-Wall International SA v Practitioners in Marketing Ltd 1971
Damages could not be recovered on the basis
Addis v Gramophone Co. (1909) although candidates would want to consider the line of authorities decided since Malik v BCCI (1997).
Damages for loss of employment because the purpose of the contract was employment
Jarvis v Swan Tours (1973); Jacksons vs Horizon Holidays (1975); Farley v Skinner (2001)
Damages on behalf of guest
Pantown v Alfred McAlpine Construction Ltd (2002)
DISCHARGE OF CONTRACTS
Relevant criteria established for the frustration of a contract by the case law
Ø Davs Contractors Ltd v Fureham Urban District Council and National Carriers Ltd v Panalpina (Northern) Ltd [1981]
Ø Destruction of the subject matter Taylor v Caldwell (1863)
Ø Bay Steam Boat Co v Hutton (1904): it is still possible to perform a significant element of the contracts and that they are therefore not frustrated
Ø Bay Steam Boat Co v Hutton (1904) and Krell v Henry (1903) to ascertain whether the existence of the island formed a foundation of the hall hire contract
Ø Essential element - Steam Boat Co v Hutton
Misrepresentation Act 1967 – Frustration
s.1(1), s.2(5), S.1(2) must be applied to determine the result of frustration.
Gamerco SA v ICM/Fair Warning Agency (1995) would be appropriate
If there was unilateral mistake the contract is void unless is within
Smith v Hughes (1871)
Bilateral or common mistake
Bell v Lever Bros (1931); Great Peace (2002)
Impossibility – you can purchase what belongs to you
Cooper v Phibbs (1987)
Destruction of the subject of contract
Financings Ltd v Stimson (1962)
Misrepresentation of warranty
Heillbut, Symons & Co. v Buckleton (1913)
Type of misrepresentation
Hedly, Byrne v Heller (1964) and s.2(1) of the Misrepresentation Act 1967
REMEDIES FOR BREACH CONTRACT
Ø Generally it is only damages that is available for a breach of contract
Ø Nature of damages available
Ø Equitable remedies – order of specific performance or an injunction (granted only in exceptional circumstance
Ø A would not in any event, recover damages for disappointment on the basis of Addis v Gramophone Co. (1909) although candidates would want to consider the line of authorities decided since Malik v BCCI (1997).
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