Law of Obligations Complete PDF

meeEmail: Legal obligation is created by a person (legal entity) towards another person- can be a corporation, a legal person, a company, association, society. A legal entity is anything that can sue or be sue. A dog is not a legal entity, a tree is not. However a company is, the govt is. Law of obligations deals with entity. **The module is divided into 2 parts.** **1- contract laws** and what are the obligations that are entailed by contract and what obligations are placed on the parties and what happen if a party breached contract. Principles of termination of a contract/ principle of remedies. **2- Law of torts/Tort law.** It deals with obligations created by law and are imposed by a particular entity. Duty of care, if it has been and whether the duty of care is the cause of the injuries caused by the person. We will also deal with other minor torts ex: trespassing. Exam split in two parts; answer only one part. Read the question carefully. Problem type questions-no essays. How to answer- the IRAC method. Can be mix- a 100% tort law or 100% contract law. **Definition of contract**: agreement between 2 or more people and they are bound by the law It is an agreement, meaning there are two or more entities that agree on a set on terms. That agreement gives rise to obligations, and it is those obligations which are recognized by law. There must be a *[formal and legally binding agreement]*. It means that it *[contains terms and conditions which all parties must agree, honor and respect.]* The word agreement here means all parties are on the same page when it comes to the terms of the contract but the most important part of a contract is not only the agreement but the fact that it creates legally binding obligations on the parties **All contracts are agreement but not all agreements are contracts.** Example of contract: Employment contract , a telephone subscription **Founding Principles of Contract law** **[ The form of a contract]** Many people think that the form of a contract is written but it can also *be oral and partly oral and partly written.* i. Written ii. Oral iii. Partly written and partly oral 1. Freedom of contract Anybody can contract with anybody they want on whatever terms they want. Each person is free to make their own choice as to the terms of a contract. Can have unfair terms/contract (ex: phone). It is not universally applicable 2. Binding form of contract All the parties to a contract acknowledge that the contract (terms of a contract) creates obligations on these parties and they understand that they are legally bound by those terms. They must fulfill these conditions, must honor the terms. Otherwise, they may be liable to pay damages in court. You must respect the terms otherwise pay damages to the other parties in court. 3. The meeting of the minds In latin we call it consensus ad iden. It is the meeting of the minds, and it says all the parties must have the intention to be legally bound. All the parties to the contract have the intention to be legally bound by the terms of the contract. All the parties involved agree that the contract creates legal obligations that are imposed on them. If one of the parties has no intention of being legally bound there is no meeting of the mind and therefore there is no contract. **Formation of a contract** There are 5 elements to the formation of a contract. **1. An offer and** **2. An acceptance** **3. Consideration** **4. Intention to be legally bound** **5. Capacity** Offer An offer is the underlying requirement in the formation of a contract. An offer is a proposition put by one person and that person is known as the offeror and that proposition to the other person and that person is the offeree. The offer is made by one person and can be made to one specific person or can be made to a group of ppl, can even be made to the world at large. But there are certain requirements; the offer must be clear, precise and must be capable of acceptance. It means that the offer must be sufficiently explicit on terms. Must be specific enough to create a legally binding agreement, i.e a contract. If an offer is too vague it is not capable of being accepted/ not capable of acceptance. An offer which is too vague shows that there is no intention of being legally bound. An example would be an offer which is too vague would be an offer which does not define a specific quantity or quality of a product. **[Offers in Unilateral Contracts:]** A unilateral contract is a contract where the offer is not directed at one particular person. The offerer makes a promise and he has to deliver on that promise in exchange of the performance of the requested action to the other party. Example: lost dog. I promise you to give you 10k if you bring back the dog. No need to say you will perform the action but do it. Res Extincta- dead things The offer in a unilateral contract can only be accepted if the other party has **fully** performed the requested action. The offerer is bound to fulfill his obligations if the other party fulfilled his part. Otherwise- BREACH of contract. CASE about offers and unilateral contracts: **The case of Carlill v Carbolic Smoke Ball Co LTD \[1892\] EWCA civ 1** Facts: Mrs. Carlill had influenza, and she decided to purchase a snowball made by that company. The company claimed that they would pay a hundred pounds to whoever caught influenza using the snowball. The company even deposits 1000 pounds in a separated bank account to show their goodwill/ good intention. Mrs carllil caught influenza after using the for 2 months. She was married to a lawyer. She decided to sue the company. She brought the case to court and the issues: 1\. Was the advertisement and offer in the unilateral contract ? 2.Did Mrs. Carlill perform the requested action in the advertisement/ the offer? 3\. Is Mrs. Carlill entitled to the 100 pounds. **[Case note: The name of the case, the facts of the case, the legal issue of the case (the question the judge must answer), the reasoning of the judge, in some cases the obiter and the conclusion (one sentence) ]** 1.The court held that the offer was made to those who would use the product according to the terms made in the advertisement. 2\. Mrs. Carlill having use the product in accordance with the advertisement constituted acceptance. 3.Purchasing the ball; the act of Mrs. Carlill of purchasing the smoke ball constituted consideration. 4.The company having deposited the money in the bank account showed their serious intention to be legally bound by their advertisement cannot blame that it was a joke then. Therefore: the company was forced to pay the money to Mrs Carlill. **CASENOTES** **Facts of the Case** - The **Carbolic Smoke Ball Company** advertised that their product, a \"smoke ball,\" would prevent influenza and other illnesses. In the ad, they promised to pay **£100** to anyone who used the product as instructed and still caught the flu. - To show they were serious, they claimed to have deposited **£1,000** in a bank account. - **Mrs. Carlill** purchased the smoke ball, used it as directed, and still contracted the flu. She then claimed the £100 reward. **Issues** - **Was the advertisement an offer or just a marketing gimmick?** - **Was Mrs. Carlill entitled to the £100 based on the ad?** **Court\'s Decision** The **Court of Appeal** ruled in favor of Mrs. Carlill, stating that the ad was a **unilateral offer** (a promise made to the world at large) and anyone who fulfilled the conditions (in this case, using the smoke ball and still contracting the flu) could claim the reward. The court reasoned that: - The court held that the advertisement was **not an invitation to treat** but a **unilateral offer** made to the public at large. - The company\'s deposit of £1,000 showed a **serious intention** to be bound by the promise, and Mrs. Carlill **accepted** the offer by performing the required actions (using the smoke ball as instructed). - The court also found that **consideration** existed because Mrs. Carlill purchased and used the product, which was sufficient to form a binding contract. - Since Mrs. Carlill fulfilled the terms of the offer (used the smoke ball and still got the flu), she was entitled to the £100 reward. A unilateral means that one party creates an offer and it is only by performance of the offer that the other party accept the offer. There is a distinction to be made for products on display at the supermarket. They don't make an offer only invitation to treat. It is an expression of willingness to receive offers to other people, to negotiate. **DISTINGUISH BETWEEN OFFER AND INVITATION TO TREAT** **Key Concepts:** - **Invitation to Treat**: An **expression of willingness** to enter into negotiations or receive offers from others. In the context of a supermarket, the display of products is an invitation for the customer to make an offer to purchase, which the store may accept or reject. - **Offer**: A **definite proposal** made by one party to another, indicating a willingness to be bound by specific terms. In the supermarket scenario, the offer is made by the customer when they present the product at the checkout, and the store accepts this offer when it processes the sale. **The leading case regarding invitation to treat**: **Fisher v Bell (1961)** In this case they had a shop and in that shop there was a knife which was on display. Mr Bell argued that the placing of an item in display on a window shop does not constitute and offer but rather an act of invitation to threat. If ppl want to buy the knife must make and offer first. In that sense nothing wrong because it was not necessary for sale. **Facts:** - A shopkeeper, **Mr. Bell**, had a flick knife displayed in the window of his shop with a price tag. - The **Restriction of Offensive Weapons Act 1959** made it illegal to offer such weapons for sale. - The **police charged Mr. Bell** with \"offering\" the knife for sale, in violation of the Act. **Issue:** - The key question was whether the display of the knife in the shop window constituted an **offer** to sell or merely an **invitation to treat**. **Rule:** - Under contract law, a display of goods in a shop window is considered an **invitation to treat**, not an **offer**. An **offer** occurs when a customer indicates they want to buy the item, and the store owner can then accept or reject the offer. **Application:** - The **court held** that the display of the knife was an **invitation to treat**, not an offer. Mr. Bell was not \"offering\" the knife for sale by simply displaying it. - The **court applied the principles** of contract law, stating that merely displaying goods in a shop window invites customers to make an offer to buy. The shopkeeper then decides whether to accept or reject the offer. **Conclusion:** - The **court ruled in favor of Mr. Bell**, acquitting him of the charges. The display of the knife in the window was not an offer, and therefore, he had not broken the law. **Second case**: **Pharmaceutical society of G.B Boots Cash Chemists (1953)** The Pharmaceutical society sued boots, they claimed that there was certain medications that was on display and these required prescription to be bought. The defendant argued that placing items on shelves does not constitute an offer but only an invitation to threat. It is only when a person take the item and place it in its carting bag, it is when the customer makes an offer to buy and the supermarket can accept or deny the offer. Boots won their case. They would never sell the item on prescription as they would reject the offer made by the customer. **Facts:** - Boots Cash Chemists introduced a **self-service system** in their stores where customers could pick up items and bring them to the cashier. - The **Pharmaceutical Society of Great Britain** brought a case against Boots, arguing that the sale of certain drugs (medicines) was happening without the supervision of a **registered pharmacist**, which was required by the **Pharmacy and Poisons Act 1933**. - The claim was that the sale took place when the customer picked up the drugs from the shelves, without the oversight of a pharmacist. **Issue:** - The legal question was whether the **sale of medicines** took place when the customer picked the goods off the shelf (which would mean the sale was unsupervised) or at the checkout counter (where a pharmacist was present). **Rule:** - In **contract law**, the **display of goods** in a store is generally considered an **invitation to treat**, not an **offer**. - An **offer** is made by the customer when they bring the goods to the cashier, and the **acceptance** of that offer occurs when the cashier processes the payment. **Application:** - The court held that in a self-service store, the **sale** was not completed when the customer picked up the items but rather when they presented them to the cashier for payment. - Since a **registered pharmacist** was available at the point of sale, the transaction complied with the legal requirements of the **Pharmacy and Poisons Act**. **Conclusion:** - The Court of Appeal ruled in favor of **Boots Cash Chemists**, stating that the sale occurred at the **cashier's counter**, under the supervision of a pharmacist. Therefore, the self-service system did not violate the law. - This case confirmed that the **display of goods** in a self-service store is an **invitation to treat**, and the **contract of sale** is completed at the cashier's desk, allowing businesses to operate self-service models without breaching sale laws concerning regulated items. An invitation to treat is only an invitation to treat, they are not force/ obliged to sell the item. In the exam, if ever there is a question on treat you have to mention fisher case otherwise no marks. The boots case applies in the uk but does not apply in France, it is the total opposite. In France items place on a shelf are offers. Must distinguish offers in unilateral contracts with invitation to threat. **When is the offer created? When is it valid?** The offer is valid when it comes to the attention of the offeree. Effective communication. When the offer is brought to the attention of the offeree. Ex: offer post by the post and the letter never received; the offer is not valid. It is when the offeree get knowledge **[How is the offer terminated?]** **3 possible outcomes:** **[1. An acceptance]** Accepting the offer, the contract ends. Termination of the contract. The offer is not valid anymore because it has been accepted. 2. **[Rejection ]** If an offeree rejects an offer, the offer is terminated. Once the offeree has rejected the offer, they cannot get back to the offer. Rejection terminates an offer. **3. [Counteroffer (a rejection plus an offer)]** A counteroffer is a response to an initial offer that changes its terms, effectively rejecting the original offer. It introduces new conditions that the original offeror must accept for a contract to be formed. **Hyde v. Wrench (1840) 3 Beav 334** is a significant case in **English contract law** that established the principle regarding **counter-offers** and their impact on original offers. **Facts:** - **Mr. Wrench** offered to sell his farm to **Mr. Hyde** for **£1,000**. - **Mr. Hyde** made a **counteroffer** of **£950**, which Mr. Wrench rejected. - Mr. Hyde then tried to accept the original offer of **£1,000**, but Mr. Wrench refused to sell. **Issue:** - Can the original offer still be accepted after the offeree makes a counter-offer? **Rule:** - A **counteroffer** constitutes a **rejection** of the original offer and nullifies it. Once the original offer is rejected, it cannot be accepted unless the offeror restates or renews it. **Application:** By making the **£950 counteroffer**, Mr. Hyde had **rejected** the original offer of £1,000. Therefore, he could not later accept the original offer as it was no longer valid. **Conclusion:** - The court held that once a **counter-offer** is made, the original offer is **terminated**, and Mr. Hyde could not accept it afterwards. **[ ]** **[Other ways to terminate an offer:]** 4**. Lapse of time** An offer may contain a period of validity which means it is valid for a specific period of time. The law says if there is no specific time mentioned in an offer it is then by reasonable period of time. A reasonable period of time will depend on the facts of the case(subject matter of the contract), who the parties, circumstances of the parties, amount of money at stake etc. Good practice to mention the period of validity. 5. **Conditional offer** It is an offer which will be terminated if a specific even occurs. 6**. The death of the offeror** If the offeror dies, the offer dies with him. 7**. Revocation of the offer (most important)** The offeror can revoke an offer at any pt of time until it is accepted. The revocation must be communicated effectively through the offeree. It takes place when the revocation is brought to the attention of the offeree. **[Acceptance]** 26/09/24 The acceptance must be unconditional and unequivocal. The terms of the acceptance must match exactly the terms of the offer. If you have an offer that is not unconditional and unequivocal you do not have acceptance and therefore you do not have a contract. If an offeree accepts an offer, they must accept the offer without amendments or negotiations. [If there is an amendment it is not an acceptance but rather a counteroffer. ] **How do you accept?** Acceptance can take several forms **written, oral and by gesture**. You can make a gesture by offer but you can make acceptance by gesture. Ex: handshake. Sometimes an offer can specify a specific method of acceptance. Ex: email saying acceptance must be done by sending a letter. In case of **acceptance by post** there is a specific rule that applies, and this is called the postal rule on acceptance. The acceptance **is valid when the acceptance letter is properly addressed, stamped and posted regardless of what happens to the letter.** If you have receipts by the post office saying that it has been properly posted then it is valid. The **postal rule applies even if the letter was never received.** This [principle applies only with acceptance by post] it does not apply to mail or fax. **Case: Adams v Lindsell (1818)** A landmark case in contract law that established the "postal rule." **Facts of the Case** - **Parties Involved**: Adams (plaintiff) and Lindsell (defendant). - **Context**: Lindsell, a wool dealer, offered to sell wool to Adams, a wool manufacturer, via a letter sent on September 2, 1817. - **Issue**: The letter was misaddressed, causing a delay. Adams received it on September 5 and sent his acceptance the same day. However, Lindsell received acceptance on September 9, two days after selling the wool to a third party on September 8. **The main issue was whether a contract was formed when Adams posted his acceptance or when Lindsell received it**. **Court's Decision** The court ruled in favor of Adams, establishing that the acceptance was effective when it was posted, not when it was received. [**This principle is known as the postal rule**](https://www.lawteacher.net/cases/adams-v-lindsell.php) **Holwell Securities v Hughes (1974)** **Facts:** - Dr. Hughes granted Holwell Securities an option to purchase his property for £45,000. - The option was to be exercised "by notice in writing" within six months. - Holwell Securities posted a letter exercising the option five days before the expiry date. - The letter was lost in the post and never reached Dr. Hughes. **Issue:** - Does the postal rule apply, making the acceptance effective upon posting, or is actual receipt required for the acceptance to be valid? **Rule:** - The postal rule generally states that acceptance is effective when it is posted. - However, if the terms of the offer specify that actual receipt is necessary, the postal rule does not apply**.** **Application:** - The court examined the phrase "notice in writing" in the offer. - It was determined that this phrase indicated a requirement for actual receipt of the acceptance by Dr. Hughes. - Therefore, the postal rule was excluded in this case because the terms of the offer required that the acceptance be received to be effective**.** **Conclusion:** - The court held that the postal rule did not apply. - Holwell Securities' acceptance was not effective because it was not actually received by Dr. Hughes within the specified time frame. **This case highlights the importance of clear communication terms in contract formation and shows that the postal rule can be excluded if the offer specifies that actual receipt is necessary for acceptance.** **Case: Household Fire Insurance v Grant (1879)** **Facts:** - Parties: Household Fire Insurance Company (plaintiff) and Mr. Grant (defendant). - Context: Mr. Grant applied for shares in the Household Fire Insurance Company. - Action: The company allotted shares to Mr. Grant and sent him a letter to notify him of this. - Issue: The letter was lost in the post and never reached Mr. Grant. Consequently, Mr. Grant did not pay for the shares. - Outcome: When the company went bankrupt, the liquidator sought payment from Mr. Grant, who refused, arguing there was no binding contract since he never received the acceptance letter. **Issue:** - Is a contract formed when the acceptance letter is posted, even if it is never received by the offeree? **Rule:** - The postal rule states that acceptance is effective when it is posted, provided the post is an acceptable means of communication between the parties**.** **Application:** - The court considered whether the postal rule applied in this case. - It was determined that the postal rule did apply because the parties had implicitly agreed to use the post as a means of communication. - Therefore, the acceptance was effective when the letter was posted, even though it was never received by Mr. Grant. **Conclusion:** - The court held that there was a valid contract between Mr. Grant and the Household Fire Insurance Company. - Mr. Grant was liable for the payment of the shares because the acceptance was effective upon posting, creating a binding contract**.** [**This case reinforces the postal rule in contract law, emphasizing that acceptance is effective when posted, even if the letter is lost and never reaches the offeror**](https://www.lawteacher.net/cases/household-fire-insurance-v-grant.php) **[Intention]** The law draws a distinction whether the agreement is made in a **[commercial setting or domestic setting.]** In **commercial agreement** there is a [strong presumption that there is an intention to create a legal relationship.] **In social and domestic agreement** there is [a presumption that the parties do not have an intention to create a legal relationship]. That presumption [can be rebutted if there is sufficiently strong evidence. ] **Case: Esso Petroleum Co Ltd v Commissioner of Customs and E (1976)** The claimant gave the world cup coins for every gallon of petrol sold. They wanted to claim tax from the transaction, to do so they had to prove that the transaction was a contractual one meaning that the purchase of petrol was consideration for the world cup coins in return. Therefore, there was an intention to create legal relationship. This is what the defendant had to prove, that it was contractual and was intention. The house of lord held that the transaction was a contractual one because Esso.. The court held that there was intention to be legally bound. That case must be distinguished to the case of: **Case: Applesome v Littlewoods Ltd (1939)** **Facts** In this case, the plaintiff, Appleson, entered into a contract with Littlewoods Ltd. The contract included a clause stating that the agreement was "binding in honour only." This meant that the parties did not intend to create legal relations, making the agreement non-enforceable in a court of law. **Issue** The main issue was whether the clause "binding in honour only" was sufficient to rebut the presumption of an intention to create legal relations in a commercial agreement. **Rule** In contract law, there is a general presumption that parties in a commercial agreement intend to create legal relations. However, this presumption can be rebutted if there is clear evidence to the contrary, such as a specific clause indicating otherwise. **Application** The court examined the clause "binding in honour only" and determined that it was clear and unambiguous. The phrase explicitly communicated that the parties did not intend to be legally bound by the agreement. Therefore, the presumption of an intention to create legal relations was successfully rebutted. **Conclusion** The court concluded that the clause "binding in honour only" was effective in rebutting the presumption of an intention to create legal relations. [As a result, the agreement was not legally enforceable](https://www.lawteacher.net/free-law-essays/contract-law/commercial-law-and-legal-relations-contract-law-essay.php) **Case: Jones v Vernom Pools (1938)** They are both claimants betting houses, they sued for money they claimed they had won for football betting. In both cases, the coupons stated that they were binding in honor only. The court in both cases held that the statements were sufficient to rebut the presumption. **Facts** Mr. Jones participated in a football pool run by Vernons' Pools Ltd. He filled in two winning entries on the coupons and sent them to the company. The coupons included a clause stating that the transaction was "binding in honour only" and that the entry "shall not give rise to any legal relations." Vernons' Pools claimed they only received one of the coupons, while Mr. Jones argued that he was entitled to the prize money based on his entries. **Issue** The main issue was whether the clause "binding in honour only" was sufficient to rebut the presumption of an intention to create legal relations, thereby making the agreement non-enforceable. **Rule** In contract law, there is a general presumption that parties in a commercial agreement intend to create legal relations. However, this presumption can be rebutted if there is clear evidence to the contrary, such as a specific clause indicating otherwise. **Application** The court examined the clause "binding in honour only" and determined that it was clear and unambiguous. The phrase explicitly communicated that the parties did not intend to be legally bound by the agreement. Therefore, the presumption of an intention to create legal relations was successfully rebutted. **Conclusion** The court concluded that the clause "binding in honour only" was effective in rebutting the presumption of an intention to create legal relations. As a result, the agreement was not legally enforceable, and Mr. [Jones' claim for the prize money was dismissed](https://www.lawteacher.net/cases/jones-v-vernons-pools.php) **[Agreements made in a social and domestic context:]** The vast majority of social and domestic agreements does not amount to contract and therefore are not legally bounding. Ex: going out for a drink. There are 3 main areas where social and domestic agreement tends to arise. **[Husband and wife]** The general rule is that they are left to themselves, and the courts do not intervene. The general rule is that it is not legally binding. It is only a presumption, and it can be rebutted. **Case: Balfour v Balfour (1919)** The husband left his wife to work abroad. He promised his wife a 30 pounds allowance per week. The husband did not pay. The wife later petitioned for divorce and claim the allowance. The court rejected her argument. **The claim failed because the court held that the agreement had been breached at a pt where their relationship was still amicable**. They were not in contemplation of divorce at the time the agreement was made. Therefore, the court held that it was a purely domestic agreement and not legally enforceable. **Facts of the Case:** Mr. Balfour and Mrs. Balfour were a married couple. Mr. Balfour worked overseas, and while he was away, he promised to pay his wife **£30 per month** for her living expenses. However, their relationship later deteriorated, and they separated. Mrs. Balfour then sued Mr. Balfour to enforce the **monthly payments** he had promised. **Issue:** The main legal issue was whether Mr. Balfour\'s promise to pay his wife was **legally enforceable** as a contract. **Decision:** The court ruled that **Mr. Balfour's promise was not a binding contract**. It was decided that agreements between spouses are generally made in the context of personal relationships, not with the intention of creating legal obligations. **Principle:** This case established the principle that **domestic agreements** (like those between husbands and wives) **are presumed not to be legally binding** unless there is clear evidence of an intention to create legal relations. The case has to be distinguished with the case of : **Case: Meritt v Meritt (1970)** **Facts** Mr. and Mrs. Merritt were married and jointly owned a house. In 1966, Mr. Merritt left to live with another woman. The couple agreed that Mr. Merritt would pay Mrs. Merritt £40 per month and, once the mortgage was paid off, he would transfer the house to her sole ownership. This agreement was put in writing and signed by Mr. Merritt. **Issue** The main issue was whether the agreement between Mr. and Mrs. Merritt was intended to create legal relations, making it enforceable. **Rule** In contract law, there is a general presumption that agreements between spouses are not intended to create legal relations, especially in domestic contexts. However, this presumption can be rebutted if there is clear evidence to the contrary, such as when the parties are separated or in the process of separating. **Application** The court found that since Mr. and Mrs. Merritt were separated at the time of the agreement, the presumption of no intention to create legal relations did not apply. The written and signed agreement indicated a clear intention to create legal relations. Additionally, Mrs. Merritt's act of paying off the mortgage provided sufficient consideration for the agreement. 1. **Intention to Create Legal Relations**: When spouses are separated or in the process of separating, the presumption that their agreements are not intended to create legal relations is weaker. The court recognized that separated spouses are more likely to intend their agreements to be legally binding, as they are often settling financial, and property matters formally. **[Agreements made between parents and children.]** It is possible for families to make contracts which appear to be formal contract but the courts will need to look at the real purpose of the agreement in order to det if the agreements are legally binding or not. **Case: Jones and Padavatton (1969)** **Facts** - Mrs. Jones, the mother, wanted her daughter, Mrs. Padavatton, to leave her job in New York and study for the bar. - Mrs. Padavatton moved to England to study, but found the allowance provided by her mother insufficient. - Mrs. Jones then bought a house for her daughter to live in, with the understanding that the other half of the house would be rented out. - After five years, Mrs. Jones sought to repossess the house, arguing there was never any intention to create a legal relationship. **Issue** The main issues were: 1. Whether there was an intention to create legal relations between Mrs. Jones and Mrs. Padavatton. 2. Whether the agreement was too ambiguous to be considered a valid contract. **Rule** In contract law, there is a general presumption that family arrangements are not intended to create legal relations. This presumption can be rebutted if there is clear evidence to the contrary. Additionally, for a contract to be valid, its terms must be clear and certain. **Application** - **Intention to Create Legal Relations**: The Court of Appeal found that the agreement was made in a domestic context and lacked the formality typically associated with legally binding contracts. The court agreed with Mrs. Jones that there was no intention of creating legal relations, especially since the agreement was contingent on Mrs. Padavatton passing the bar, which she did not. - **Ambiguity**: The court also held that the terms of the agreement were too ambiguous to constitute a valid contract. The arrangement was based on mutual trust and family ties, which generally do not create legal obligations. **Conclusion** The Court of Appeal concluded that the agreement between Mrs. Jones and Mrs. Padavatton was not legally enforceable. The agreement was considered a family arrangement without the intention of creating legal relations, and the terms were too ambiguous to be a valid contract **[Other social arrangements:]** **Case: Simpkins v Pays (1955)** **Facts** Ms. Simpkins, a lodger, lived with Ms. Pays and her granddaughter. They regularly participated in a Sunday newspaper competition, where each person made predictions, but the entry was submitted in Ms. Pays' name. They agreed to share any winnings equally. When one of the entries won £750, Ms. Pays refused to share the prize, leading Ms. Simpkins to sue for her share. **Issue** The main issue was whether the informal agreement to share the prize money constituted a legally binding contract, demonstrating an intention to create legal relations. **Rule** In contract law, there is a general presumption that social and domestic agreements are not intended to create legal relations. However, this presumption can be rebutted if there is clear evidence of mutual intention to be legally bound. **Application** The court found that despite the domestic context, the arrangement had mutual obligations and was not merely a social agreement. The regular participation, shared costs, and explicit agreement to share any winnings indicated an intention to create legal relations. The court applied the objective test to determine that a reasonable person would conclude that the parties intended to be legally bound by their agreement. **Conclusion** The court held that the agreement was legally binding, and Ms. Simpkins was entitled to one-third of the prize money. [The mutual arrangement, despite being informal, constituted a legally enforceable contrac](https://www.lawteacher.net/cases/simpkins-v-pays.php)t **Case: Wilson v Barnett (2007)** **Facts** Three women, including Ms. Wilson and Ms. Burnett, regularly attended bingo together. They had a casual conversation about sharing any significant winnings. Ms. Burnett won a large prize at bingo, and Ms. Wilson claimed they had an oral agreement to share the winnings equally. Ms. Burnett denied this, leading to a legal dispute. **Issue** The main issue was whether the casual conversation constituted a binding oral agreement to share the bingo winnings. **Rule** In contract law, for an agreement to be legally binding, there must be an intention to create **legal relations, clear terms, and consideration**. Social and informal agreements typically do not create legal obligations unless there is clear evidence of such intention. **Application** The court examined the evidence and found that the conversation about sharing winnings was too vague and informal to constitute a binding agreement. The court noted that the claimants' account of the agreement was not sufficiently detailed or consistent to establish a clear intention to create legal relations. **Conclusion** The Court of Appeal held that there was insufficient evidence to prove a binding oral agreement. [The casual nature of the conversation and the lack of clear terms meant that the agreement was not legally enforceable](https://swarb.co.uk/wilson-and-another-v-burnett-ca-24-oct-2007/) **Consideration** The mere fact of having an agreement alone does not make a contract. Both parties must provide consideration. Each side must promise to give or do something for the other. Consideration can take many forms; money, an object, a service, a promise to do something or a promise to refrain to do something. For example, if you're buying my car for rs 1m , and you give the money. This is consideration. **There are 6 rules on consideration.** **[1. Consideration must be sufficient but need not be adequate]** Sufficiency is that what is being supplied as consideration must be capable of supporting the contract. The courts will not enquire as to the adequacy of consideration. The focal pt is consideration must have some economic value not necessarily the right economic one. The courts will not delve into whether the contract is a good or bad bargaining. **Case: Thomas v Thomas (1842)** There was a husband and before dying he told his children he would like his wife to be able to live in the house and they agreed. And when he died they allowed her to stay and they charged her a nominal rent of 1 pound per year. Later on they try to remove the wife from the house and they could not because the rent was valid consideration for her to stay in the house. The court held that the one pound a year was valid consideration even tho it was a nominal rent. **Facts** Before his death, Mr. John Thomas expressed a wish that his wife, Mrs. Eleanor Thomas, should have a life interest in one of his houses. However, this wish was not included in his will. After his death, Mr. Thomas's executors, including his brother Samuel Thomas, agreed to let Mrs. Thomas live in the house for the rest of her life in exchange for a nominal rent of £1 per year and her promise to keep the house in good repair. **Issue** The main issue was whether the agreement between Mrs. Thomas and the executors was supported by valid consideration, making it legally enforceable. **Rule** In contract law, consideration is something of value exchanged between the parties. It must be sufficient but need not be adequate, meaning it does not have to be equal in value to what is received in return. **Application** The court found that the nominal rent of £1 per year and Mrs. Thomas's promise to keep the house in good repair constituted sufficient consideration. The court emphasized that consideration need not be economically adequate, as long as it is legally sufficient. The respect for Mr. Thomas's wishes was not considered valid consideration, but the nominal rent and the promise to maintain the house were. **Conclusion** The court held that the agreement was supported by valid consideration and was therefore legally enforceable. Mrs. [Thomas was entitled to live in the house for the rest of her life under the terms agreed upon^1^](https://caselawnotes.com/thomas-v-thomas-1842/)^(https://www.studentlawnotes.com/thomas-v-thomas-1842-2-qb-851-114-er-330)(https://briefspro.com/casebrief/thomas-v-thomas/)^. **Illustration** This case illustrates the principle that consideration in contract law must be legally sufficient but does not need to be economically adequate. Even a nominal amount, like £1 per year, can be sufficient consideration if it is part of a bargained-for exchange. **White v bluet 1853 ** **Case: Chapple v Nestle Co (1960)** Chocolate wrappers were found to have value for consideration. **Facts** Nestlé ran a promotion where customers could obtain a gramophone record by sending in three chocolate bar wrappers along with a small payment. Chappell & Co Ltd, who held the copyright to the music on the records, argued that this promotion breached their copyright because the wrappers were not valid consideration under the Copyright Act 1956, which required a royalty payment based on the "ordinary retail selling price." **Issue** The main issue was whether the chocolate bar wrappers constituted valid consideration for the sale of the records, thus affecting the calculation of royalties under the Copyright Act 1956. **Rule** In contract law, consideration must be sufficient but need not be adequate. This means that something of value must be exchanged, but it does not have to be equal in value to what is received in return. **Application** The House of Lords held that the chocolate bar wrappers did constitute valid consideration, even though they had no intrinsic economic value. The court emphasized that a contracting party can stipulate what consideration they choose, and it does not cease to be good consideration simply because it is of nominal value. Lord Somervell famously stated, "A peppercorn does not cease to be good consideration if it is established that the promisee does not like pepper and will throw away the corn." **Conclusion** The House of Lords concluded that the wrappers were part of the consideration for the sale of the records. [Therefore, the sale was not covered by the specific provisions of the Copyright Act 1956 regarding retail sales, and the Lords found in favor of Nestlé^1^](https://www.lawteacher.net/cases/chappell-v-nestle.php)^(https://en.wikipedia.org/wiki/Chappell_%26_Co_Ltd_v_Nestle_Co_Ltd)(https://careerinlaw.net/uk/case-summary-chappell-co-v-nestle-1960-ac-87)^. **Illustration This** case illustrates the principle that consideration in contract law must be sufficient but need not be adequate. Even items with no intrinsic economic value, like chocolate bar wrappers, can constitute valid consideration if they are part of a bargained-for exchange. **2. Consideration must not be passed**. This means that no consideration must not be given before the agreement. The consideration must come after the contract has been formed. If the consideration comes before the agreement is formed there is no proof that a bargain actually existed and therefore there is no contract. **Case: Re Mc Ardle (1951)** **Facts:** William McArdle left a house to his five children. Marjorie McArdle, the wife of one of the children, did some repairs on the house. After finishing the work, she got the children to sign a promise to repay her for the repairs. **Issue:** Was the promise to repay Marjorie enforceable? **Judgment:** The court said no. The promise was not enforceable because the work was already done before the promise was made. In contract law, the consideration (something of value) must be given at the same time as the promise or after it, not before. **Key Point:** - Past Consideration: If you do something before a promise is made, it doesn't count as valid consideration for a contract. ** ** The court can employ a rule where past consideration is enforced but for that to happen there must be an earlier request to carry out the act. Exception case: **Case: Lampleigh v Braithwaite (1615)** **Facts:** Thomas Braithwaite killed someone and asked Anthony Lampleigh to get him a royal pardon. Lampleigh worked hard and traveled a lot to get the pardon. After Lampleigh succeeded, Braithwaite promised to pay him £100 but later refused to pay. **Issue:** Was Braithwaite's promise to pay enforceable, even though Lampleigh's work was done before the promise? **Judgment:** The court decided in favor of Lampleigh. Here's more detail on the judgment: 1. **Request and Promise**: The court noted that when Braithwaite asked Lampleigh to get the pardon, it was implied that he would be paid for his efforts. This request created an expectation of payment. 2. **Implied Promise:** Even though the promise to pay came after the work was done, the court held that the initial request and the subsequent promise were connected. The request implied a promise to pay, making the later promise enforceable. 3. **Consideration:** The court recognized that Lampleigh's efforts were valuable and done at Braithwaite's request. This made the promise to pay valid, even though it was made after the work was completed. **Key Point:** - Past Consideration: If you do something because someone asked you to, and they promise to pay you afterward, the promise can be valid because the initial request implies a promise to pay. **TODAY CLASS 14/10** **3. Consideration must rule from the promisee** **Privity of contract rule. You cannot sue or be sued in a contract that you are not a party yourself unless you provide consideration** **Case: Twiddle v Atkinson (1861)** **FACTS** **Two fathers made a deal to give money to their children who were getting married. Before they could give the money, one of the fathers died. The groom, William Tweddle, tried to get the money from the other father's estate (the person who manages the dead father's money).** **The Problem** **William Tweddle wasn't part of the original agreement between the fathers. The question was whether he could still get the money even though he wasn't directly involved in the deal.** **The Decision** **The court said no, William couldn't get the money. They decided that only the people who made the agreement (the two fathers) could enforce it. Since William didn't give anything in return (no consideration), he couldn't claim the money.** **Why It Matters** **This case shows that only people who are part of a contract can enforce it. It also highlights that you need to give something in return (consideration) to have a valid claim in a contract** **One exception to the rule of privity of contract, when there is a collateral contract running parallel to the main contract. For example, agency agreement.** **4. Existing public duty** **An existing public duty will not amount to public consideration. If a person is legally obliged to carry out an obligation, by its legal status or by operation of the law the performance of that obligation cannot amount to valid consideration.** **Case: Collins v Godefroy (1831)** **Facts** **Godefroy, the defendant, was involved in a court case and needed Collins, the plaintiff, to attend as a witness. Godefroy promised to pay Collins one guinea per day for his attendance. Collins attended court for six days but was not called to give evidence. After the trial, Collins asked for the payment, but Godefroy refused to pay**. **Issue** **The main issue was whether Collins could enforce the promise of payment, given that he was already legally required to attend court due to a subpoena.** **Court ruling** **The court decided that Collins could not enforce the promise. The reason was that Collins was under a public duty to attend court because of the subpoena. [Since he was already obligated by law to be there, his attendance did not count as valid consideration for Godefroy's promise to pay him^1^](https://www.lawteacher.net/cases/collins-v-godefroy.php)[^2^](https://www.e-lawresources.co.uk/Collins-v-Godefrey.php).** **Why It Matters** **This case illustrates that performing an existing public duty cannot be used as consideration for a new promise. [In other words, you can't claim extra payment for doing something you are already legally required to do](https://www.lawteacher.net/cases/collins-v-godefroy.php)** **BUT in 1925 there is a new case which made a distinction from the prey case.** **Case: Glasbrook Rose v Glamorgan County Council 1925** **Facts** **During a miners' strike, the manager of a colliery (a coal mine) asked the police for extra protection. The police agreed to provide additional officers but only if the colliery paid for the extra costs. The colliery manager agreed, but after the strike, they refused to pay, arguing that the police were already obligated to provide protection.** **Issue** **The main issue was whether the police could charge for the extra protection, given that maintaining public order is part of their public duty.** **Court Ruling** **The court decided that the police could charge for the extra protection. They ruled that while the police have a duty to maintain public order, the additional services provided went beyond their usual duty. [Therefore, the extra protection was considered valid consideration, making the colliery's promise to pay enforceable^1^](https://www.lawteacher.net/cases/glasbrook-v-glamorgan.php)[^2^](https://www.e-lawresources.co.uk/Glasbrook-Bros-v-Glamorgan-County-Council.php).** **Why It Matters-This case shows that if someone goes beyond their public duty to provide extra services, they can charge for those services. [It highlights that exceeding a public duty can be good consideration in a contract](https://www.lawteacher.net/cases/glasbrook-v-glamorgan.php)** **Case: Harris v shefield united football club ltd (1987)** **Facts** **Sheffield United Football Club needed police presence at their home games to maintain order. The police provided these services and later billed the club for the costs. The club refused to pay, arguing that maintaining public order was part of the police's duty and they shouldn't have to pay extra for it.** **Issue** **The main issue was whether the police services provided at the football matches were "special police services" that the club had to pay for, or if they were part of the police's general duty to maintain public order.** **Court ruling** **The court decided that the services provided by the police at the football matches were indeed "special police services." This meant that since the club had requested these additional services, they were required to pay for them. [The court noted that these services went beyond the normal duty of the police^1^](https://swarb.co.uk/harris-v-sheffield-united-football-club-ltd-ca-1987/)[^2^](https://vlex.co.uk/vid/harris-v-sheffield-united-793969669).** **Why It Matters** **This case is important because it clarifies that when police provide extra services beyond their usual duties, especially at the request of an organization, they can charge for those services. [It highlights the distinction between general public duties and special services that require additional resources](https://swarb.co.uk/harris-v-sheffield-united-football-club-ltd-ca-1987/)** **Same principle in this case** **5. The performance of an existing contractual duty cannot amount to sufficient consideration under a fresh contractual agreement.** **Case: Stilk v Merick** **Facts** **Stilk was a sailor on a ship owned by Myrick. During the voyage, two crew members deserted. The captain, Myrick, promised the remaining crew that they would share the deserters' wages if they continued to sail the ship back to London. However, once they returned, the captain refused to pay the extra wages.** **Issue** **The main issue was whether the captain's promise to pay extra wages was enforceable, given that the sailors were already contractually obligated to sail the ship.** **Court Ruling** **The court decided that the promise was not enforceable. The reason was that the sailors were already bound by their existing contract to sail the ship, even in emergencies. [Therefore, their continued service did not count as new consideration for the captain's promise of extra pay^1^](https://www.lawteacher.net/cases/stilk-v-myrick.php)[^2^](https://en.wikipedia.org/wiki/Stilk_v_Myrick).** **Why It Matters-This case established that performing an existing contractual duty cannot be used as consideration for a new promise. [It highlights the principle that for a promise to be enforceable, there must be new consideration provided](https://www.lawteacher.net/cases/stilk-v-myrick.php)** **Case: Hartly v Ponsonby (1857)** **What Happened** **Hartley was a sailor on a ship owned by Ponsonby. During the voyage, 17 out of 36 crew members deserted, leaving the ship dangerously undermanned. The captain, Ponsonby, promised the remaining crew extra wages if they continued the voyage. When they returned to port, Ponsonby refused to pay the extra wages.** **The Problem** **The main issue was whether the promise of extra wages was enforceable, given that the sailors were already contractually obligated to sail the ship.** **The Decision** **The court decided that the promise was enforceable. The reason was that the desertion of so many crew members made the voyage significantly more dangerous and increased the workload for the remaining sailors. This change in circumstances meant that the sailors' duties had altered so much that their original contract could be considered discharged. [Therefore, the promise of extra wages was supported by new consideration^1^](https://www.lawteacher.net/cases/hartley-v-ponsonby.php)[^2^](https://en.wikipedia.org/wiki/Hartley_v_Ponsonby).** **Why It Matters** **This case is important because it shows that if the duties under a contract change significantly, new promises made in response to those changes can be enforceable. [It highlights that significant changes in circumstances can create new consideration, making a new agreement valid](https://www.lawteacher.net/cases/hartley-v-ponsonby.php)** **6. Partial payment of the debt** **Payment of smaller sum rather that the debt itself can never relieve the liability of the debtor to pay the whole debt. Part payment of wtv cannot amount to consideration.** **Case: Foakes v Beer (1884)** **Facts** - **Dr. John Foakes owed Julia Beer a sum of £2,090 19s after a court judgment.** - **Beer agreed not to take action against Foakes for the debt if he paid an initial sum of £500 and then £150 twice yearly until the full amount was repaid.** - **Foakes made these payments but did not pay any interest on the judgment debt, which Beer was entitled to under statute.** - **Beer sued Foakes for the interest.** **Issue** - **Whether part payment of a debt can be considered sufficient consideration to discharge the entire debt, including interest.** **Decision** - **The House of Lords ruled that part payment of a debt is not sufficient consideration to discharge the entire debt.** - **They upheld the principle from Pinnel's Case (1602) that "payment of a lesser sum on the day cannot be any satisfaction of the whole."** - **[The court decided that since Foakes had not provided any new consideration, Beer's promise not to enforce the judgment was not binding^1^](https://www.lawteacher.net/cases/foakes-v-beer.php)[^2^](https://en.wikipedia.org/wiki/Foakes_v_Beer).** **Why It Matters** **This case reinforces the rule that part payment of a debt does not constitute valid consideration for a promise to forgo the remainder of the debt. [It highlights the importance of providing new consideration for any modification of contractual obligations](https://www.lawteacher.net/cases/foakes-v-beer.php)** **Exception to that rule on part payment of debt: accord and satisfaction** **This occurs where a contract is discharged in return of a diff consideration from the original obligation.** **Case: British Russian Gazette v associated newpapers (1993)** **Facts** - **The British Russian Gazette and Trade Outlook Ltd. entered into an agreement with Associated Newspapers Ltd.** - **The agreement involved certain promises made by both parties, but the specific details of the promises are not provided in the summary.** **Issue** - **Whether an executory promise (a promise to do something in the future) can be considered valid consideration to make the agreement enforceable.** **Decision** - **The court held that an executory promise can be valid consideration. This means that a promise to do something in the future can be enough to make a contract enforceable.** - **[The court emphasized that the agreement was enforceable because the promises made by both parties were considered valuable consideration^1^](https://publications.parliament.uk/pa/ld199899/ldjudgmt/jd981216/james03.htm)[^2^](https://www.lawteacher.net/free-law-essays/contract-law/different-ways-a-contract-is-discharged-contract-law-essay.php).** **Why It Matters** **This case is important because it clarifies that future promises can be valid consideration in a contract. [It highlights that as long as there is a mutual exchange of promises, the contract can be enforceable](https://publications.parliament.uk/pa/ld199899/ldjudgmt/jd981216/james03.htm)** **Capacity** Parties to a contract must have the ability to enter a contract. There is legislation that is in place in order to protect people who are entering in contracts that are not beneficials to them. There are 2 main categories of ppl protected: **1. Minors** **There are 3 main categories of contracts with minors:** **i. contracts which are valid and enforceable** The law states that minors should be able to enter into contracts, they should be allowed to contract with other people. They should be able to pay for goods and services which are supplied to them, and which are classified as necessary according to their station in life and their current needs. The term necessary does not have the same meaning as the term necessity. The necessity will depend on the minor's background. Example, what may be necessary to a prince may not be necessary to another child. **Case: Chappel v Cooper (1844)** **Facts** - A young widow, under the age of 21, ordered funeral services for her late husband. - The widow's husband had died without leaving any property. - The undertaker, Chappel, provided the funeral services and later sued the widow, Cooper, for the costs. **Issue** - Whether the widow, being a minor, was liable for the funeral expenses of her husband. **Decision** - The court held that the widow was liable for the funeral expenses. - The ruling was based on the principle that funeral expenses are considered "necessaries" for the widow, even though she was a minor. [The court reasoned that it was morally and socially necessary for her to arrange the funeral^1^](https://vlex.co.uk/vid/chapple-v-anne-cooper-805649901)[^2^](https://www.studocu.com/en-au/document/victoria-university/business-law/capacity-to-contract-case-summary/2262594). **Why It Matters** This case is important because it establishes that certain obligations, like funeral expenses, can be considered necessaries, making minors liable for them. [It highlights the broader interpretation of what constitutes necessaries beyond personal needs to include moral and social obligations](https://vlex.co.uk/vid/chapple-v-anne-cooper-805649901) **Case: Nash v Inman (1808)** **Facts** - Nash, a tailor, supplied 13 waistcoats and other clothing items to Inman, a minor and a student at Cambridge University. - Inman refused to pay for the goods, and Nash sued to recover the cost. - Inman argued that he was a minor and already had sufficient clothing, so the items were not necessary. **Issue** - Whether the goods supplied to Inman were considered necessaries, making the contract enforceable despite Inman's minority. **Decision** - The court held that Nash could not recover the money because the goods were not necessaries. - [The ruling emphasized that for goods to be considered necessaries, they must be suitable to the minor's condition in life and not already sufficiently supplied^1^](https://indiancaselaw.in/nash-v-inman/)[^2^](https://en.wikipedia.org/wiki/Nash_v_Inman). **Why It Matters** This case is important because it clarifies that minors are only liable for contracts involving necessaries. [It highlights that the burden of proof is on the supplier to show that the goods were necessary and that the minor did not already have enough of them](https://indiancaselaw.in/nash-v-inman/) **Need to be able to support themselves financially. They need to enter into employment contract. But the terms of an employment contract must substantially benefit the minor.** **Case: Clements v London and North Western Railway Company (1894)** **Facts** - A young railway porter, Clements, agreed to join an insurance scheme provided by his employer, the London and North Western Railway Company. - By joining the scheme, Clements agreed to forgo any claims he might have under the Employers' Liability Act 1880. - The insurance scheme covered him for injuries, including those not due to the employer's negligence. **Issue** - Whether the contract was enforceable, given that Clements was a minor and had relinquished his statutory rights under the Employers' Liability Act. **Decision** - The court held that the contract was enforceable because it was beneficial to Clements as a whole. - [The insurance scheme provided broader coverage than the statutory scheme, making the contract advantageous for Clements^1^](https://www.lawteacher.net/lecture-notes/capacity-lecture.php)[^2^](https://www.lawyersnjurists.com/article/capacity-of-minors-in-contracts/)**.** **Why It Matters** This case is important because it demonstrates that contracts entered into by minors can be enforceable if they are beneficial to the minor. [It highlights the principle that the overall benefit to the minor is a key factor in determining the enforceability of such contracts](https://www.lawteacher.net/lecture-notes/capacity-lecture.php) **Case: De Francesco v Barnum (1890)** **Facts** - A 14-year-old girl, Barnum, entered into a seven-year apprenticeship agreement with De Francesco to be trained in stage dancing. - The contract included terms that were highly restrictive: - Barnum could only work if De Francesco chose to employ her. - She was not allowed to marry during the apprenticeship. - She had to be entirely at De Francesco's disposal. **Issue** - Whether the contract was enforceable, given the harsh and restrictive terms imposed on the minor. **Decision** - The court held that the contract was not enforceable. - The ruling emphasized that the terms were excessively harsh and one-sided, making the contract unconscionable. - [The court decided that such a contract could not bind a minor, as it was not for her benefit^1^](https://www.lawteacher.net/free-law-essays/contract-law/the-concept-of-agreement-contract-law-essay.php)[^2^](https://www.legum.app/courses/law-of-contract/cases/case-briefs/GtcZJ7dnKTDwcrzJrQSV). **Why It Matters** This case is important because it highlights the protection of minors in contract law. [It shows that courts will not enforce contracts with minors if the terms are overly harsh or not in the minor's best interest](https://www.lawteacher.net/free-law-essays/contract-law/the-concept-of-agreement-contract-law-essay.php) **[In these two cases, the court has accepted the view that contracts must substantially benefit the minor but in contrast]** **Case: Doyle v White city stadium(1935)** **Facts** - Doyle, a minor, was a professional boxer. - He entered into a contract with White City Stadium Ltd, agreeing to abide by the rules of the British Boxing Board of Control. - The contract included a clause that if Doyle was disqualified, he would forfeit his earnings from the match. **Issue** - Whether the contract was enforceable, given that Doyle was a minor and the terms required him to forfeit his earnings if disqualified. **Decision** - The court held that the contract was enforceable. - The ruling emphasized that the contract was beneficial to Doyle as it allowed him to earn a living through boxing. - [The court decided that since the contract was for Doyle's benefit, it was binding despite his minority^1^](https://www.legum.app/courses/law-of-contract/cases/case-briefs/HFb397tvXCa3LYCfDJWE)[^2^](https://bing.com/search?q=Doyle+v+White+city+stadium%281935%29). **Why It Matters** **This case is significant because it demonstrates that contracts involving minors can be enforceable if they are beneficial to the minor. [It highlights the principle that beneficial contracts, even with restrictive terms, can be binding on minors](https://www.legum.app/courses/law-of-contract/cases/case-briefs/HFb397tvXCa3LYCfDJWE)** **ii. contracts that minors can enter into or can also back out from the contract, they are known as voidable contracts.** These are contracts that the minor can enter into but they also can repudiate that contract while still being a minor or shortly after reaching the age of 18. Examples of these contract include leases of property, buying shares, partnerships and marriage settlements. **iii. Unenforceable contract against minors. (void)** The minors act 1997, uk law, states that any contract except the 2 categories are unenforceable against minors. That is -- contract for necessaries and benefician contract can be enforceable for minors. **1. [Ppl with mental difficulties (limited capacities in other)]** Ppl may also temporarily be incapacitated to enter a contract through alcohol or drugs. There are certain circumstances where a party does not have the legal capacity to make the contract binding. Examples: corporations, people of unsound mind or people who are drunk. Some companies may limit their capacities to enter contracts, they can limit themselves from what type of contract they can enter. They will be acting outside their control power. People of unsound minds. When considering whether a party to a contract has legal capacity, the court must determine whether that party was suffering from a recognized mental disability at the time of contracting to the extent that they were incapable of understanding the nature of their act when forming the contract. If they were incapable at the time of formation of the contract, the contract becomes [ ***voidable***] (by **the party who has the disorder)**, they can back out of it. For the contract to be voidable, **the other party must be aware.** There are circumstances when some people may lapse into periods of mental incapacity and then have periods of lucidity(clear-minded). if the contract is form during a period of lucidity then it will be binding on the mental ill person even if they lapse back**(becomes mentally incapable)** It will still be binding because it was entered into when the person was lucid. **2. [People who are intoxicated through alcochol or drugs]** **If a person is intoxicated; 2 requirements** **1.** He does not know the quality of his actions when the contract was formed 2\. His state of intoxication is known to the other party then the contract is voidable when he becomes sober again. **CLASS 13/10/24** ***Types of Terms*** Once it is determined that there is a contract, one needs to find out what the parties have agreed to. **They can either be expressed or implied**. These terms form conditions or warranties. When the parties to a contract agree upon certain terms, they are known as **[expressed terms]**. These terms are stated orally or in written. There are some contractual obligations that are not necessarily limited to those that have been agreed upon. These terms may arise through implications, that is an **[implied term].** In certain commercial situations, there may be certain obligations that arise through statutes. This is an example of a term that may be implied. **[Expressed terms]** When the contract is made in complete oral form, the amin task of the judge will be to find out: 1. **Which exact words were used by looking at the evidence.** 2. **Whether these words were representations or terms.** **[There are five criteria the court will consider determining whether a statement is an expressed term of a contract or not.]** 1. ***Timing.*** If there is a significant gap between the making if the statement, courts will be more reluctant to incorporate that statement in the contract. *Routledge v McKay (1954)* *A motorcycle was registered in 1939, but the registration book started in 1941. The owner, unaware of this mistake, told the buyer that the motorcycle\'s age matched the registration. The written contract didn't mention age. When the buyer later found out the real age, he sued for breach of contract. However, the court ruled against the buyer, saying that too much time had passed between the statement and the discovery (a week), so it wasn't enough to create a binding claim based on that statement.* 2. ***Importance of the term.*** A statement is likely to be a term if its importance is such that the buyer would not have entered a contract but for that statement. (induced the buyer to enter into contract) If that statement were to be made, the buyer would not have entered a contract. This goes back to the [principle of the intention of the party]. When a party asks for specific details about the agreement, it can indicate that the importance must be attached to the answer. *Bannerman v White (1861)* Negotiations were taking place for the purchase of hops, the buyer stated that if the hops were treated with sulfur, he is not interested. The seller the assurance that they are not treated with sulfur. A contract is formed, and the buyer finds out that the hops have been treated with sulfur. He thus repudiates the contract. The claimant, who is the seller in the case, stated that it was only preliminary to the contract. The court claimed that the stipulation regarding sulfur amounted to a condition and therefore the contract has been breached. A statement may even be considered as a term of a contract even if it is in conflict with a previously written statement. ***Couchman v Hill (1947)*** It was about the sale of a heifer, which is a young female cow. The conditions of sale contained a clause stating that it was sold with all flaws, faults and imperfections. The sale describes the heifer as not having been used for breeding. The claimant asked the seller that the statement was true. They both gave their reassurances, and the claimant birth the heifer. They soon found out that the heifer was pregnant and died giving birth. The court states that they could recover damages since the documents were part of the contract. 3. ***The reduction of terms in writing.*** *Birch v Paramount Estates (Liverpool Ltd) (1956)* In this case, a couple bought a house from a developer on the basis on the assurance that it could as be good as the showhouse. It was not as good as the showhouse. The court agreed that it was so essential to agreement that it had been incorporated in the contract. 4. ***Special knowledge and skills.*** Courts are willing to accept that statements made by parties with specific expertise relevant to the contract can be relied upon. There is no need in such circumstances to check the accuracy of the statement. Since the party has a special expertise in that area, that statement can be relied upon. *Oscar Chess Ltd v Williams (1957)* The defendant was a layperson, and he sold his car to motor dealers for 290 pounds. The car was a 1948 Morris Ten. The defendant honestly believed that it was true. It was later discovered that the car was a 1939 model of lesser value. The claimant in this case claims breach of contract because the defendant had no special knowledge in that sector, but the buyer did. *Dick Bentley Productions v Harold Smith (Motors Ltd) (1965)* The claimant bought a Bentley from the defendant who is a car dealership. The defendant stated that it had only 20 000 miles when it had done over 100 000 miles. In this case, because the defendant had specialist knowledge in cars, they knew what mileage was, the claimant was successful. It was claimed to be a breach of contract. 5. ***The Parol evidence rule.*** Written evidence is more powerful and convincing than spoken words. If a contract is made in a written document, and a statement orally made between the parties and that statement is not incorporated into the written contract, generally the court will infer that the oral statement was not meant to be in the contract. There are times when a party to contract will claim that the written document does not fully reflect the actual terms of the agreement. This is where the parol evidence rule applies. The rule is: *[any oral or other external evidence used to change, add to, or contradict the terms of the written contract is not allowed in court.]* There are two reasons for such a rule: 1. If a contract is in written form, it is only logical for it to contain all the terms. Anything omitted was not intended to be included. 2. To do otherwise will just create uncertainty. **[Implied terms]** In general, the parties to a contract would have expressed all the terms that they want to be included to the contract. Sometimes, the law needs to fill in the gap left by the parties. There are three ways for the law to fill these gaps: 1. ***By customs**.* If something happened in a particular way over a long period of time, it is possible to establish that it has become an enforceable right. These customs can be implied by virtue of local customs or trade usage. ***Hutton v Warren (1836)*** In this case, there was a longstanding custom to the effect that the tenant is entitled to an allowance for the seed and the labor they had invested into crops that they had not yet been able to harvest at the time of the termination of their tenancy. The court held in this case that the custom was valid. 2. ***By the court.*** There are circumstances where a contract is rendered meaningless and unworkable, without the inclusion of a particular term in the contract, even if the parties have failed to include expressly in the agreement. In such circumstances, the court is prepared to imply the term in the contract, for it to make sense and become workable. However, there are two strict limitations to the courts' power to imply terms: 1. **The courts will not write the contract for the parties.** 2. **If there are a great number of details, courts will be reluctant to imply a term.** *Moorcock (1889)*The defendant owned a wharf with a jetty on the Thames. He had an agreement with the claimant that he could board his boat and unload his cargo. There was a low tide and as a result the boat was damaged. The defendant agreed that there was no express term for the safety of the boat. The court claims that there was an implied term of safety, otherwise it would defy the purpose of existence of the contract. To read: *Spring v National Amalgamated Stevedores and Dockers Society (1956)* *Shell UK Ltd v Lostock Garage Ltd (1977)* 3. ***By statutes.*** Certain obligations that have originally been implied by the courts as part of the common law have since become statutory. Those statutes are generally guided towards consumer protection. Eventually, the laws have evolved, and the government has created laws to protect employees. Those laws implied particular terms. In an employment contract, it is implied that if you want to terminate an employee's agreement, he must receive at least one month's notice. The agreement must be respected. In Mauritian law, some terms implied by statutes are found in the Landlord and Tenant Act and the Workers' Rights Act. In the UK law, there is the Sales of Good Act 1979, section 12: "The owner of a good has the right to sell that good." and section 13: "The item must match its description." **There are [two] types of terms:** 1. ***Conditions are critical and go to the heart of the contract.*** They are on such important terms that if they are breached, they render the contract meaningless. It gives the claimant the right to claim the fullest of remedies if conditions are breached, which is repudiate the contract and claim damages. ***Poussard v Spears and Pond (1879)*** An actress was contracted to appear in an opera but got ill and was unable to attend the first part. The agency gave the role to another actress. The first actress sued for a breach of contract and lost. Since her performance was crucial to the production, the agency was forced to repudiate the contract. 2. ***Warranties may cause damage but will not end the contract.*** They are minor terms of the contract. The contract may continue if a warranty is breached. They are usually of a secondary purpose to a contract. As a result, the only remedy is damage. ***Bettini v Guy (1876)***A singer was contracted to appear in a variety of theaters. The contract stated that he must attend rehearsal for six days but was absent for three days. When he showed up and found out he was replaced. The court claimed that the requirement was ancillary for the main purpose of the contract. The breach only required damages and did not repudiate the contract. This case established the principle that not every breach of contract entitles the aggrieved party to terminate the contract. The court must determine whether the term breached is essential to the contract (a condition) or incidental (a warranty) **13/11/24** **Exemption clauses** Exemption clauses, also known as exclusion or limitation clauses, have for purpose to limit or exempt one of the parties from liability in the contract or in tort. An exemption clause is subject to all rules concerning expressed or implied terms. In the UK, the courts are generally concerned with protecting the weaker party against whom an exemption clause is imposed without bargaining or negotiation, in a contract especially when the party has more bargaining power than the other. The courts have developed a three-stage test to determine whether an exemption clause can be relied upon: **1**. **It must be shown that it is the actual term of the contract.** **a. The rules of incorporation.** **L'Estrange v Graucob (1934)** **Deals with the enforcement of exclusion clauses in signed contracts.** [A party who has signed an agreement is bound by it even if they have not read it. ] - Mrs. L\'Estrange purchased a cigarette vending machine from Graucob Ltd. - She signed an order form that included an exclusion clause in small print: **\"Any express or implied condition, statement, or warranty, statutory or otherwise, is hereby excluded.\"** - The vending machine was defective, and Mrs. L\'Estrange sought to reject it for not being of merchantable quality. **Issue:** The key issue was whether Mrs. L\'Estrange was bound by the exclusion clause, even though she had not read it. **Court\'s Decision:** - The Court of Appeal ruled that Mrs. L\'Estrange was bound by the terms of the contract, including the exclusion clause, because she had signed the document. - **Scrutton LJ** stated that, when a person signs a document, they are bound by its terms, whether they have read them or not, unless there is misrepresentation or fraud. **Significance:** This case established the principle that a party who signs a contract is bound by its terms, reinforcing the importance of reading and understanding contracts before signing. It highlights the enforceability of exclusion clauses and the emphasis on the signature as a binding commitment to the contract\'s terms. **Impact on Contract Law:** - It emphasizes the need for parties to be aware of what they are agreeing to when they sign a contract. - It supports the enforceability of written terms, provided there is no fraud or misrepresentation involved. **Alley v Marlborough Court (1949)** **This case is a landmark decision in English contract law regarding the enforceability of exclusion clauses.** **Facts of the Case:** - **Olley** booked into the **Marlborough Court Hotel** and paid for her stay at the reception desk. - Upon entering her room, she noticed a notice on the back of the door stating that the hotel would not be responsible for any items lost or stolen unless handed to them for safekeeping. - Olley\'s fur coat was stolen from her room, and she sought damages from the hotel. **Issue:** The main issue was whether the exclusion clause on the notice in the hotel room was part of the contract between Olley and the hotel. **Court\'s Decision:** - The Court of Appeal held that the exclusion clause was not part of the contract because the contract was formed at the reception desk, and the notice was only seen after the contract was made. - **Denning LJ** stated that for an exclusion clause to be incorporated into a contract, it must be brought to the notice of the other party before or at the time the contract is made. **Significance:** This case established the principle that an [exclusion clause cannot be incorporated into a contract if it is presented to the parties after the contract is formed.] It emphasizes the importance of ensuring that all terms, especially exclusion clauses, are clearly communicated and agreed upon before the contract is concluded. **There is an exception to be made, and that is the case below:** **Spurling(J) Ltd v Bradshaw (1956)** **[If the parties have dealt on similar terms in the past, then it is possible to imply knowledge of the court]**. Bradshaw had given Spurling's warehouse eight barrels of orange juice to store. After a few days, Spurling sent Bradshaw a receipt, which included terms saying Spurling was not responsible if anything happened to the goods. But when Bradshaw went to get the barrels back, he found that the juice had gone bad. He wanted Spurling to pay for the loss, arguing he hadn't been properly told about these terms. The main question for the court was whether the exclusion clause on the receipt (sent after Bradshaw handed over the goods) was part of the contract and could protect Spurling from paying for the spoiled juice. The court, led by Lord Denning, decided that the clause was indeed part of the contract. Since Bradshaw had dealt with Spurling many times before on similar terms, he should have known about the clause. This case highlighted what became known as the \"red hand rule,\" [meaning that any unusual or strict term in a contract needs to be clearly shown to the other party], especially if it takes away or limits their usual rights. *Spurling v. Bradshaw* also showed that if two people have a history of doing business together with certain terms, those terms can be considered part of their future contracts, even if they aren't stated every time. **For businesses, this case underscores the importance of clearly informing customers about any terms that limit liability. It also helps protect customers by requiring that unusual terms be made very clear.** The courts will not generally accept an exemption clause incorporated into a contract unless the affected party has been made aware of it, before the contract is formed before the time it has been formed. The party who is invoking the exemption clause does not need to prove the exemption clause to the knowledge of the other party but only that he took reasonable steps to bring it to his attention. **Cases:** **a. Parker v Southeastern Railway Co. (1877)** **b. Thompson v LMS Railway (1930)** If the exemption clause is contained in a document that would ordinarily not be deemed as being a contractual document or a document having contractual significance, the exemption clause will not be incorporated in the contract. **Chapelton v Barry Urban District Council (1940)** **case in English contract law, particularly regarding exclusion clauses and the formation of contracts.** **Facts of the Case:** - **Mr. Chapelton** hired a deck chair from Barry Urban District Council (BUDC) while at the beach. - There was a notice next to the deck chairs stating the hire cost and requesting customers to obtain tickets. - Chapelton bought a ticket, which had an exclusion clause on the back, excluding liability for personal injury. - The deck chair broke, causing Chapelton to be injured. - He sued BUDC, and they tried to rely on the exclusion clause. **Issue:** The main issue was whether the exclusion clause was part of the contract and whether Chapelton had been given sufficient notice of it. **Court\'s Decision:** - The Court of Appeal ruled in favor of Chapelton. - They held that the ticket was merely a receipt and not part of the contract. - The exclusion clause was not incorporated into the contract because it was not clearly communicated to Chapelton before or at the time the contract was made. **Significance:** **This case established that for an exclusion clause to be valid, it must be clearly communicated to the other party before or at the time the contract is formed. It also emphasized that a ticket given after the contract is made is considered a receipt, not a contract containing terms** **Thornton v Shoelace Parking Ltd (1971)** **significant case in English contract law that deals with the incorporation of exclusion clauses into contracts.** **Facts of the Case:** - Mr. Thornton drove his car into a multi-storey car park operated by Shoe Lane Parking Ltd. - He inserted money into an automatic ticket machine, which issued a ticket stating that the contract was subject to conditions displayed on the premises. - Inside the car park, there was a notice excluding liability for personal injuries. - Mr. Thornton had an accident and sought damages from Shoe Lane Parking Ltd. **Issue:** The main issue was whether the exclusion clause was part of the contract and whether Mr. Thornton had been given sufficient notice of it before or at the time the contract was made. **Court\'s Decision:** - The Court of Appeal held that the exclusion clause was not incorporated into the contract. - The court ruled that the contract was already formed when Mr. Thornton inserted money into the machine, and the ticket was merely a receipt. - The notice inside the car park came too late to be part of the contract. **Significance:** **This case established that for an exclusion clause to be valid, it must be clearly communicated to the other party before or at the time the contract is formed. It also emphasized that a ticket issued after the contract is made is considered a receipt, not a contract containing terms.** **[To apply an exemption clause there need to be steps taken to bring it to the attention of the party.]** The claimant weas injured in a car park, and a notice claimed that any injury was at the owner's risk. **2**. **It needs to be determined whether it attempts to protect the party inserting it into the contract.** **3. There are several tests that are designed to restrict the use of exemption clauses.** **Vitiating Factors** Even if you have a contract which may seem valid, there are **[two factors]** that may render these contracts invalid: **1. Misrepresentation** It is a statement that is made before or at the time of formation of a contract. If this representation is incorporated in a contract, it becomes a term of the contract. A falsely made representation is a misrepresentation. There are three types of misrepresentation: **18/11/24** Even if the misrepresentation is not a term of the contract it may still have contractual significance even if is not incorporated into the contract. In order for the isr4epresentation to be actionable that statement must be false, and it must have induced the other party(innocent) to enter into the contract. If a contract is formed because of a misrepresentation that contract may be voidable. The innocent party has the right to repudiate the contract. **There are 6 elements to misrepresentation. Elements to misrepresentation** 1. **A statement of material facts. Cannot be an opinion.** The expression of an opinion will not generally amount to misrepresentation. Case: Bisset v Willkinson (1927) **This landmark case in English contract law addresses the distinction between factual representations and expressions of opinion.** **Factual Background** - **Claim**: Mr. Bisset suggested that the land could support 2,000 sheep. - **Discovery**: After purchase, Mr. Wilkinson found the land could not sustain this number of sheep without substantial improvements. - **Action**: Mr. Wilkinson sought to rescind the contract, alleging misrepresentation. **Legal Issue** - **Central Question**: Was Mr. Bisset's statement a factual representation or merely an opinion? **Judicial Analysis** 1. **Nature of the Statement**: - The court assessed whether the statement was a fact or opinion. 2. **Expertise Factor**: - Mr. Bisset was not an expert in sheep farming, so the court classified his statement as an opinion rather than a factual claim. **Judgment** - **Privy Council Ruling**: - The statement was deemed an opinion, not a misrepresentation. **Legal Significance** - The case sets a precedent that opinions, especially from non-experts, do not amount to misrepresentation. 1. **Impact on Contract Law**: - It clarified the treatment of statements in contracts, influencing future cases regarding the line between factual representation and opinion. This case highlights the importance of understanding the speaker's expertise and the nature of statements in contractual dealings. **Mere Puff- statements made during sales or advertising that are exaggerated and not meant to be taken literally. They are not legally binding as they are recofnized as hyperbole intended to attract customers rather than factual claims** Example red bull. **2.Must be made from one party to another party.** There is no misrepresentation if it is by a third party. **Exception**-An agent is someone who has the authority to contract for someone else. **3. Must take place before the contract is formed. During negotiations** It cannot be made after the contract is formed. If a misrepresentation is made after the contract is formed, this statement has no involvement in the contract formation, **Case law: Roscorla v Thomas (1842)** This case is a significant precedent in English contract law, concerning the principle of consideration. **Facts** - Mr. Roscorla purchased a horse from Mr. Thomas. - After the sale was completed, Mr. Thomas assured Mr. Roscorla that the horse was free from vice (bad habits or defects). - Mr. Roscorla later discovered that the horse was vicious and sued Mr. Thomas for breach of contract. **Legal Issue** - The main legal question was whether Mr. Thomas\'s post-sale assurance could be considered valid consideration for a new contractual promise. **Judgment** - The Court of Queen\'s Bench ruled in favor of Mr. Thomas. Lord Denman CJ stated that a promise made after a contract has been completed cannot be supported by past consideration1. - The court held that the consideration for the sale of the horse had already been provided, and Mr. Thomas\'s subsequent promise was not supported by any new consideration. **Significance** - **This case established the principle that past consideration is not valid consideration for a new promise.** - **It reinforced the importance of providing fresh consideration for any new promises or modifications to a contract.** **D. That misrepresentation must persuade the other party to enter the contract** For a misrepresentation to affect a contract, it must convince the other person to agree to it. The false statement must be important enough to influence their decision. If the person doesn't know about the false statement, it cannot persuade them. Also, if they already know the statement is false, they cannot say it influenced them. To prove this, the person must show they relied on the false statement when deciding to make the contract. If they didn't rely on it, there's no misrepresentation. **Case: Attwood v Small (1838)** **concerning misrepresentation and the rescission of contracts.** **Facts** - Mr. Attwood purchased the Corngreaves estate from Mr. Small, which included mining land, iron works, and various properties. - Before finalizing the purchase, Mr. Attwood agreed to verify the accuracy of the accounts and reports provided by Mr. Small. - After the purchase, Mr. Attwood discovered that the accounts had greatly exaggerated the estate\'s income. **Legal Issue** - The main legal question was whether Mr. Attwood could rescind the contract based on the misrepresentations contained in the reports and accounts provided by Mr. Small. **Judgment** - The House of Lords ruled against Mr. Attwood. They held that by having his own accountants and directors verify the reports, Mr. Attwood did not rely on Mr. Small\'s representations1. - The court found that Mr. Attwood\'s decision to proceed with the purchase was based on his own judgment and verification, not on the misrepresentations made by Mr. Small. **Significance** - **This case established that a party cannot rescind a contract for misrepresentation if they have independently verified the information and relied on their own judgment.** - **It highlighted the importance of due diligence and independent verification in contract negotiations.** **E. The misrepresentation is not intended to be a binding obligation in the contract**. If is binding, then breach of contract. If the false statement is a term of the contract, the action does not lie in misrepresentation, it lies in breach. **F. It has to be untrue, false or incorrect.** If it is a true statement, there is no issue because it is true. The misrepresentation must be false whether made fraudulently, innocently or negligently. **There are 3 types of misrepresentation** **1. Fraudulent** **Case: Derry v Peek (1889)** **English contract law, particularly concerning fraudulent misrepresentation. Here\'s a summary:** **Facts** - The Plymouth, Devonport and District Tramways Company issued a prospectus stating that they had permission to use steam-powered trams. - In reality, the company did not have such permission, which was subject to approval by the Board of Trade. - The company\'s application for permission was later refused, and the company went into liquidation. **Legal Issue** - The shareholders who had purchased stakes in the company based on the prospectus sued the directors for fraudulent misrepresentation. **Judgment** - The House of Lords ruled in favor of the directors. They held that the directors honestly believed they would receive permission from the Board of Trade and did not knowingly make a false statement1. - Lord Herschell defined fraudulent misrepresentation as a statement made either knowing it to be false, without belief in its truth, or recklessly careless as to its truth. **Significance** - **This case established a high threshold for proving fraudulent misrepresentation, requiring proof of dishonesty rather than mere negligence.** - **It clarified the standards for fraudulent misrepresentation and influenced subsequent case law on the subject.** **Remedies for fraudulent misrepresentation** The method for assessing damage or fraudulent misrepresentation is according to the rules of tort. The claimant must be put in the situation he would have been had the contract never happened. **2. Negligent** Involve the statement which is made honestly but without any reasonable grounds to believe it. **Case: Hedley Byrne & Co Ltd v Hekker & Partners LTD (1964)** **landmark decision in English tort law, particularly concerning the liability for negligent misstatements and pure economic loss.** **Facts** - Hedley Byrne, an advertising agency, sought a credit reference from Heller & Partners, the bankers of their potential client, Easipower Ltd. - Heller & Partners provided a favorable reference but included a disclaimer stating that the information was given \"without responsibility on the part of this bank or its officials.\" - Easipower went into liquidation, and Hedley Byrne suffered financial losses, leading them to sue Heller & Partners for negligence. **Legal Issue** - The main legal question was whether Heller & Partners owed a duty of care to Hedley Byrne in providing the credit reference and whether they could be held liable for the resulting economic loss. **Judgment** - The House of Lords ruled that a duty of care could arise in situations where a party possesses special skills or knowledge and another party relies on that expertise. - **Conditions for Duty of Care: The court established that a duty of care arises if:** 1. **A fiduciary relationship of trust and confidence exists between the parties.** 2. **The party providing the information voluntarily assumes the risk.** 3. **The other party relies on the information.** 4. **Such reliance is reasonable in the circumstances.** - **Disclaimer**: In this case, the disclaimer provided by Heller & Partners was deemed sufficient to exclude liability. **Significance** - **This case established that pure economic loss could be recoverable in tort if a duty of care is established.** - **It highlighted the principle that a duty of care can arise from the assumption of responsibility, even in the absence of a contractual relationship** **[A claim in negligent misrepresentation requires the following elements: ]** *a. The person making the false statement must have some specialist knowledge* *b. There must be some proximity between the parties so that it is reasonable for the statement to be relied upon.* *c. The party to whom the statement is made relies on it* *d. The party making the statement must have known or ought to have known why the claimant needed that information and the party making the statement must have assumed responsibility to give advice and information.* [Only foreseeable loss will be awarded for negligent misrep. You must have all these elements except for the special relationship(proximity) among the parties. Not mandatory elements.] **3. Innocent** An innocent misrepresentation will occur when the representor genuinely believes the facts to be true and has reasonable grounds to believe those statements. It will be for the representor to prove that he has reasonable grounds to believe that statement. No disclosure does not amount to misrepresentation. Failing to give information will not amount to misrepresentation and there will be no action but there are a ***[number of situations where the information sup

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