Common_Law

Table of Contents I. The perspective of the law of contract, the rules of offer and acceptance, and impact of new technology ..................................................................................................................................................... 1 II. The importance of the rules of intention and consideration of the parties to the agreement ................ 2 III. The importance of the contracting parties having the appropriate legal capacity to enter into a binding agreement ......................................................................................................................................... 4 IV. The contract terms with reference to their importance and impact if these terms are broken .......... 5 V. The law on standard form contracts ...................................................................................................... 6 VI. The effect of exemption clauses in attempting to exclude contractual liability ................................ 7 REFERENCES .................................................................................................................................................. 9 0 I. The perspective of the law of contract, the rules of offer and acceptance, and impact of new technology Introduction An offer (unlike a solicitation) is a clear indication of the offeror's willingness to enter into an agreement under specified terms, and is made in a manner that a reasonable person would understand its acceptance will result in a binding contract.1 Acceptance is the unqualified agreement to the terms of the offer. When an offer is received, it is either accepted or countered (with a counter offer). A counter offer obligates the other party to accept it or respond with its own counter offer. Accepting an offer (or a counter offer) creates a binding contract.2 Lapse of time mean that an offer may be expressed to last for a special time. If there is no express time limit set, it expires after a reasonable time.3 Revocation of offer is the withdrawal of an offer by the offeror so that it can no longer be accepted. Revocation takes effect as soon as it is known to the offeree. An offeror may revoke an offer before it has been accepted, but the revocation must be communicated to the offeree.4 In case of Ben and Chris, is there a valid offer between Ben and Chris' Chris offers to sell the book written by Bruce for £1,000; Ben received the offer and gave Chris a counter offer of £750. It means that the original offer was dead. Then another counter offer was given by Chris o offer for £900. Therefore the second offer also was dead. Ben didn’t agree this price and need time to think. So there was no contract between Ben and Chris. Besides, the specific time was three days. It will be lapse of time if after three days there was no answer from Ben. However, on the same day, Ben called Chris to buy the book; and Chris sold the book to Eve. The action of Chris is legal because Ben had not accepted to buy the book and there was no 1 Offer. Available: http://www.businessdictionary.com/definition/offer.html. Last accessed 25 March 2012. British Library Cataloguing (2004). Common Law 1. London: BPP Professional Education. p50 3 British Library Cataloguing (2004). Common Law 1. London: BPP Professional Education. P47 4 British Library Cataloguing (2004). Common Law 1. London: BPP Professional Education. P47 2 1 any contract between Ben and Chis. Therefore Chris had the right to revoke selling the book to Ben. In short, there was no contract between Ben and Chris. Also there was no valid offer from Ben and Chris. Therefore, Ben cannot sue Chris. In case of Ben and Dan, is there a valid offer and valid agreement between Ben and Dan' The offer was given by Dan for £1,500 so this was a valid offer. And Ben also agreed to sell the Bruce book to Dan therefore a valid acceptance was made. As a result, there was a valid contract between Ben and Dan. So if Ben has not the book to sell to Dan, Ben breached the contract. Dan can sue Ben. And Dan is able to win. In case of Ben and Eve, is there a valid offer between Ben and Eve' Eve (as the offeror) may revoke her offer and communicate the revocation at any time before the acceptance. So, Eve can cancel her order before she receives the reply from Ben, but the cancellation will not take effect if Ben receives the cancellation letter from Eve, because by that time a contract is already made. In short, Eve could cancel the order effectively and legally before the letter arrived. In this case, the technology had impact to Eve’s action. Firstly, the letter was transported slowly so Eve had time to change her decisions before the letter arrived. Secondly, the fax is a new technology which sends mail quicker than posting letter so Eve’s reject decision can arrive before the letter arrived. As a result, her cancellation is effect and legal. II. The importance of the rules of intention and consideration of the parties to the agreement The rules of intention in commercial agreement Where an agreement is reached between family members or friends in a domestic context, then the presumption is that there is no intention to create legal relations. This presumption is, 2 however, a weak one and is easily rebutted. It is rebutted, in particular, if husband and wife are in the process of splitting up.5 In the case of Ben and his wife Cath, because Ben and his wife separated, the agreement to transfer his share of the property to Cath when the mortgage was paid off is binding to create a legal relation; therefore, his refusing is illegal. In Ben and his daughter Dawn’s case, it seems that agreements of a domestic nature between parent and child are likewise presumed not to be intended to be binding. So Ben can refuse to buy car for Dawn without effects by law. Consideration in an agreement A simplistic definition of consideration is something of value given by one party, in return for the performing of a contract, or for the promise to perform a contract, by the other party. In Ben and his wife's case, the consideration given by Ben is: he agreed to pay Cath £1,000 per month in order to maintain her and their daughter Dawn and promised that when the mortgage was paid off he would transfer his share of the property to Cath The consideration given by Cath is: she agreed Alan's promise. Advise Ben and Cath about their legal position Because there are agreement and consideration between Ben and Cath, he gave a promise to Cath, but later he refused it. According to the private of contract law, Ben has to fulfill the contract by transferring his share of the property to Cath. He cannot refuse to transfer the share. If he refuses, Cath can successfully sue him. So for Ben's best choice is transfer the share to Cath. In Cath’s position, there is a valid contract between Ben and her. So Cath should go to the court and sue John based on him breached the contract for not reducing the rental, she will win. 5 British Library Cataloguing (2004). Common Law 1. London: BPP Professional Education. P74 3 III. The importance of the contracting parties having the appropriate legal capacity to enter into a binding agreement Legal capacity is the fact that the law regards some groups as being unable to enter into binding contractual arrangements, because they might not be in a position to fully understand the agreement they have entered into. For examples: minors or mental problem person. What would happen if a person lacks legal capacity enters into a contract: The contract can be void in favour of the minor that lacks legal capacity. Where is a minor charged with obligations and the other contracting party seeks to enforce those obligations against the minor, the agreement is deemed as void. The contract can be voidable in favour of the minor lacks legal capacity. Based on capacity to a contract, a minor has the right to repudiate certain contracts. All other contracts entered into by a minor are described as unenforceable, the minor is not bound, but the other party is bound. The minor is not responsible for fulfill the contract. There are two sorts of contract are valid and binding on a minor: necessaries (E.g. Food and clothing) and service contract (E.g. Education)6 In the case, how legal capacity will affect contracting parties: In case of Dawn and her older brother, there is a contract between them that Dawn borrows £500 from the brother to tide her over until she can find a job. However, at that time, Dawn was only 17 years old, so she had no legal capacity to enter into a contract. If the brother insists to make contracts with Dawn, the contracts are likely to be voidable: Edwards v Carter 1893, or unenforceable: R Leslie Ltd v Sheill 1914. So Dawn could not be compelled to repay it, as this would constitute enforcement of the contract. In the second case, because Dawn is a minor so she is not responsible for fulfill the contract while the owner, an adult, would be bound by the contract. Therefore, Dawn also has to pay for lease if she continues the contract. But Dawn is able to terminate the contract before three month. 6 British Library Cataloguing (2004). Common Law 1. London: BPP Professional Education. P76 – P77 4 In case of Dawn and Palatial Pads Ltd, Dawn pretended to be 21 to order a £700 suite of furniture from Palatial Pads Ltd on 12 months’ interest-free credit. Because the company didn’t know the real age of Dawn so it didn’t break the law when it made contract with Dawn and the company was not also responsibility if it unilaterally terminated the contract in 12 months period. Besides, Dawn will be punished because of her pretense, and she is also responsible for any situation. IV. The contract terms with reference to their importance and impact if these terms are broken The importance of terms in the contract: Terms in the contract are obligations that the contracting parties have to fulfill because there are agreements between two parties. In Ben's case, one of the terms given by Ben is: ‘Brenda’s Garage Ltd guarantees that, for three months from the date of purchase, it will put right free of charge any defects in the vehicle which cannot be discovered on proper examination at the time of purchase. Thereafter all work and materials will be charged to the customer.’ This is considered as an obligation that John has to fulfill in the contract. It is deemed to be an unfair term. Because in normal, the warranty of a new car is from two to three years, so for a nin emonth-old car, the warranty should be 15 months to 27 months. Therefore, three months is too short for Ben to check the car. Terms which are against the statutory regulations may render the contract void. In case of Ben, after nearly 4 months, the engine and gearbox seized up. The repairs will cost £2,000. Ho wever the contract is unfair so the contract is voidable by statute law. As a result, Ben has not to pay the repair cost; Brenda’s Garage should pay the repair cost for Ben. It is therefore important that the terms in the contract must be clearly understood and reasonable by contracting parties before they sign on the agreement. If there are vague or unreasonable there may be no contract anymore. 5 The impacts when terms are broken: When the terms in the agreement are broken by a party, the other party may seek for remedies through legal action. When terms are broken, it may lead to impact including lawsuits and ill feeling between including lawsuits and ill feeling between parties. This may further lead to termination of relationship between parties and both may of relationship between parties and both may incur expenses for costly legal tussles. V. The law on standard form contracts Standard form contract A standard-form contract is otherwise known as standardized contract. Standard-form contract is usually a preprinted contract containing set clauses. Such contract is mostly used by a business or within a particular industry by making slight additions or modifications in order to meet the specific situation. Since a standard-form contract favors the drafting party, they can amount to adhesion contracts.7 One of the problems with standard form contract is that the dominating party tries to exclude liability for the terms in the contract. In the case, Brenda’s Garage Ltd is not responsibility for the warranty after three months. In case of Ben, the first standard form given by Ben is considered as unfair. It says that the warranty for the car is only three months from the date of purchase. So if Brenda’s Garage’s Ltd provides bad quality car, Ben still has to accept to pay the repair cost after three months. That is very unfair. And actually the suitable warranty is from 15 to 27 months comparing to the reality. 7 . Standard form contract. Available: http://en.wikipedia.org/wiki/Standard_form_contract. Last accessed 25 March 2012. 6 VI. The effect of exemption clauses in attempting to exclude contractual liability Exemption clause It is a clause in a contract which purports to exclude liability altogether or restrict it by limiting damages or by imposing other onerous conditions. Also it knows as exclusion clause. In case of Ben, one of the exemption clauses given by him is that the premises are not staffed by our employees and may be dangerous. Clients who use these facilities are strictly at their own risk and Bash Ltd accept no liability whatsoever for any damage or injury sustained by either those using this facility or their vehicles or property, no matter how caused. The courts look at exemption clause The exemption clause is against statute or not, if it is against the statute the standard form contract may be void. If it is void, it is unnecessary to consider how other legal rules might affect it. There is simply no need to assess whether it is reasonable or not. The exemption clause is not ambiguous must be clear. The exemption clauses are reasonable or not. In Ben's case, the two exemption clauses given for Ben are deemed to reasonable, because the company are not staffed by our employees and accept no liability whatsoever for any damage or injury sustained by either those using this facility or their vehicles or property, no matter how caused. It is reasonable because Bash Ltd warned clearly to anyone. Besides, if any damage are not causing by the company, the company can accept no liability. And Ben has responsibility for his safety. Advise for John about his legal position for the two issues with Bash Ltd Ben returned to his car to find that it had been badly damaged by a towing vehicle driven by an employee of Bash Ltd. However, Baths Ltd denies any liability, relying on the exclusion clause. It is very unfair to Ben because the damage was caused by an employee of the company, not by himself. According to the law of Unfair Contract Terms Art 1977, it says that: ‘under the UCTA, exception clauses are either rendered wholly ineffective, or are ineffective unless shown to 7 satisfy the requirement of reasonableness’8. Bath Ltd cannot show the exemption clause is reasonable. Therefore the exemption clause is void. Secondly, John was severely injured by Bash’s employee negligently and Bash denied liability by use the clause that had displayed in the reception. But according to the law of unfair con tract terms act, it says that: ‘any clause that attempts to restrict for death or personal injury arising from negligence is void’ Therefore Bash's clause is void. It cannot use this clause to deny its liability. In short, Ben can go to the court and claim for his damage based on the law of unfair contract terms art and he will be success. Generally, the court also seeks to protect consumers who are usually the weaker party to the contract from the full force of exclusion clauses. 8 Unfair Contract Terms Act . Available: http://www.singaporelaw.sg/content/ContractLaw.html#section5. Last accessed 23 September 2009. 8 REFERENCES 1. Offer. Available: http://www.businessdictionary.com/definition/offer.html. Last accessed 25 March 2012. 2. British Library Cataloguing (2004). Common Law 1. London: BPP Professional Education. p50 3. British Library Cataloguing (2004). Common Law 1. London: BPP Professional Education. P47 4. British Library Cataloguing (2004). Common Law 1. London: BPP Professional Education. P47 5. British Library Cataloguing (2004). Common Law 1. London: BPP Professional Education. P74 6. British Library Cataloguing (2004). Common Law 1. London: BPP Professional Education. P76 – P77 7. Standard form contract. Available: http://en.wikipedia.org/wiki/Standard_form_contract. Last accessed 29 March 2012. 8. Unfair Contract Terms Act . Available: http://www.singaporelaw.sg/content/ContractLaw.html#section5. Last accessed 29 March 2012. 9