part B - the law of obligations.pdf

PART B : THE LAW OF OBLIGATIONS FORMATION OF CONTRACT I definition of contract valid contract - legally binding agreement formed by mutual consent of two parties parties are judge based on what...

PART B : THE LAW OF OBLIGATIONS FORMATION OF CONTRACT I definition of contract valid contract - legally binding agreement formed by mutual consent of two parties parties are judge based on what they write not on whats in their minds factors affecting the modern contract inequality of bargaining power the standard form contract 💡 what is the standard form of contract? document prepared by many large organisations setting out the terms which they have contract with their customers. electricity consumer protection 1. consumer protection agencies - include organisations such as the financial conduct authority 2. legislation battle of the forms PART B : THE LAW OF OBLIGATIONS 1  the electronic contract the essential of contract offer and acceptance must be an agreement made by offer and acceptance consideration must be a bargain by which obligations assumed by one party are supported by consideration (value) given by other intention to legal relation parties must have an intention to create legal relation between them. 3.1. validity factors 1. capacity - whether the person have the capacity i.e, mental 2. minors - i.e, under 18. cannot enter the contract 3. form - some contracts must be made in a particular form 4. content - in general the parties may enter into a contract on whatever terms they choose. some terms may not be expressed by the parties may be implied terms. some terms which the parties may express overridden by statutory rules 5. genuine consent - a mistake or misrepresentation made by the parties may effect the validility of the contract. 6. legality form of contract contract may be made in any form. contracts usually do not have to be in writing, except in the following circumstamces : PART B : THE LAW OF OBLIGATIONS 2  1. some contract must be by deed 2. some contract must be in writing 3. some contract must be evidenced in writing contract by deed must be in writing must be signed delivery must take place delivery is conduct indicating that the person executing the deeds intends to be bound by it. deed is as follows - leases ( 3 years or more ) - conveyance / transfer of legal estate in land ( including mortgage ) - promise not supported by consideration (such as covenant, ie a promise to pay a sum of money to a charity) contract must be in writing transfer of shares in a limited company consumer credit contracts bill of exchanged and cheque the sale or disposition of an interest in land contract must be evidenced in writing contract of guarantee offer definite promise to be bound on a specific terms PART B : THE LAW OF OBLIGATIONS 3  definite offer does not have to be made to a particular person can be made to a class of person or the world at large 💡 Carlill vs carbolic smoke ball - advertisement decision : court disagreed a) smoke ball must protect the user during the period of use - the offer was not vague b) such an offer was possible, as it could be compared to reward cases advertisement is not an offer , but carlill case was an exception 💡 gunthing vs lynn 1831 the offeror offered to pay a further sum for a horse if it was 'lucky' - decision : the offer was too vague and no contract should be form. 5.1 supply of information Harvey vs facey 1893 Facts : claimant telegraphed to the defendant decision : the defendant telegram respond was merely statement of his minimum price if a sale were to be agreed. It was not an offer which claimant could accept bigg vs boyd gibbon 1971 decision : the defendant rejected the offer by the claimant PART B : THE LAW OF OBLIGATIONS 4  fact : in this case, the defendant must be treated as making offer which the claimant had accepted. 5.2 A statement of intention advertising - such as auction is not an offer to sell. 5.3 An invitation to treat auction sales bid - offer ( which the auctioneer is free to reject or accept ) auction - contract for the sale of property, which offers are made by bidder. - acceptance - fall of the auctioneer's hammer (bid) advertisement ( price list, newspaper advertisement) Partridge v crittenden 1968 facts : bramblefinch cockc, bramblefinch hens, 25s each. decision : the conviction was reject/quashed. although they had sale in the contravention of the act, the prosecution cannot rely on the offence of ' offering for sales ', advertisement only constituted an invitation to threat. circulation of price list displaying goods in shop window open shelf self - service shop advertising goods for sales exhibition of goods for sale Fish v Bell 1961 facts : shopkeeper being prosecuted for offering for sales an offensive weapon ny exhibiting flick knife in his shop window. PART B : THE LAW OF OBLIGATIONS 5  decision : the display with a price on it in a shop window - invitation to threat Pharmaceutical society of great britain v boots cash chemist facts : certain drugs could be sold under supervision of registered pharmacist. the claimant claimed that this rule has been broken by boots that they displayed the drugs in a self - service shop. boots contended that there were no sales until the customer brought the goods to the cash desk and offered to buy them. decision : the court found by boots and commented that if it were true that a customer accepted an offer to sell by removing goods from shelf, he could not then changed his mind and put them back as this would constitute breach of contract. invitation for tenders offer to supply specified goods and service at a stated cost or rate. when a supplier tenders for a contract they are making an offer to the purchaser who has advertised a contract as being available. the effect of an invitation to tender depends on the wording used : 1. if the invitation states that the purchaser will require the successful supplier to supply them, usually for a large 'one - off' supply, then acceptance of the tenders will form a binding contract 2. if the invitation states that the purchaser may require the successful supplier to supply them, then acceptance by the purchaser of the supplier's offer will form a standing offer. what is standing offer? - purchaser does not have to buy any goods from the supplier, but may not purchase goods from other supplier. - any purchase order that the purchaser made, are separate acceptance that form separate contract. - delivery must be made on time. stated on the standing offer PART B : THE LAW OF OBLIGATIONS 6  - unless there is a binding obligations to keep it open for a certain period of time the supplier may cancel/revoke a standing offer at any time, but must fulfil any order placed, since these created contractual obligations termination of offer rejection of offer 6.2 counter offer - final rejection of original offer 6.2.1 request for information - not a counter offer - it is possible to respond to an offer by making a request for information 💡 stevenson v McLean 1880 fact : the defendant offered to sell iron at $40 net cash per ton, open till monday. The claimant enquired whether the defendant would agree to delivery spread over two months. The defendant did not reply and within the stated time limit the claimant accepted the original offer. meanwhile the defendant sold this to other party. decision: there was a contract since the claimant had request for information lapse of time - offer may be expressed to last for a specified time. PART B : THE LAW OF OBLIGATIONS 7  - no express time limit. however, it still expires after reasonable time 💡 ramsgate victoria hotel v montefiore 1866 fact : in june, the defendant applied to the company for shares and paid a deposit. at the end of november the company sned him an acceptance by issue of a letter of allotment and requested payment of the balance due. the defendant contended that his offer had expired and could no loner be accepted. decision : the offer was valid for a reasonable time only and five months was too long if it is to long the offer was void/ not valid revocation by the offeror - the offeror/ the party who makes the offer can revoke/ cancel the offer at any time before acceptance. - if they undertake that their offer is open for acceptance for a specified time they can still cancel it within that time - unless by a separate contract, they agreed to keep it open. ( option contract ) - the cancellation of the contract does not take effect unless it is communicated to the offeree. 1. posting a letter of revocation is not sufficient to cancel the offer 2. cancellation of the offer may be communicated by any third party who is sufficiently reliable informant. failure of a condition to which the offer was subject - if the condition is not satisfied, the offer is not capable of acceptance PART B : THE LAW OF OBLIGATIONS 8  death acceptance acceptance is not effective until it is communicated to the offeror/ the party who makes the offer, except where the 'postal rule' applies, in which case acceptance is complete and effective as soon as it is posted positive act by an offeree/ the person who accepts the offer which brings the contract into effect the offeror cannot withdraw their offer and both parties will be bound by the terms that they agreed. may be express by words, action or inferred from conduct 7.1. silence - acceptance must be communicated - the contract is void 7.2 acceptance subject to contract - offeree/ the person who receive an offer agreed to the terms of offer but propose that the parties should negotiate a formal contract. - both of the party is not bound to the contract until the formal contract is signed. 7.3 letters of intent - indication of one party to another that they may place a contract with them - worded - not to create any legal obligation. - includes an invitation to commence preliminary work PART B : THE LAW OF OBLIGATIONS 9  - creates an obligation to pay for that work. 7.4 acceptance of tender a) tender to perform one task - building a new hospital, offer which can be accepted. b) tender to supply or perform a series of things - such as the supply of vegetables daily to a restaurant, is not accepted until an order is placed. - it is standing offer. - each other placed by the offeree is an individual act of acceptance creating a separate. - 7.5 counter - offers and request for information communication of acceptance collateral contract FORMATION OF CONTRACT II consideration adequacy and sufficiency of consideration promissory estoppel intention to create legal relations privity of contract the electronic contract CONTENT OF CONTRACT PART B : THE LAW OF OBLIGATIONS 10  contract terms express terms and implied terms conditions and warranties exclusion clauses - common law rules the unfair contract terms Act 1977 the consumer right Act 2015 BREACH OF CONTRACT AND REMEDIES discharge of contract breach of contract damages remoteness of damage measure of damage liquidated damages and penalty clauses other common law remedies equitable remedies THE LAW OF TORTS AND PROFESSIONAL NEGLIGENCE tort and other wrongs 1.1 tort - civil wrong - the person wronged sues in a civil court for compensation or injunction - the claimant's claim generally is that they have suffered loss such as personal injury at the hands of the defendant and the defendant has to pay damages. - no previous or transaction or contractual relationship needs to be existed PART B : THE LAW OF OBLIGATIONS 11  - the parties may be complete strangers 1.2 Types of tort passing off negligence passing off use of a name, mark or description by one business that misleads a consumer to think that their business is if another. occurs when expensive products are copied and sold as 'originals' to unsuspecting customers negligence carelessness of an individual or company which cause damages ( physical or financial) to the claimant negligent act tends to be inadvertent or reckless, but not normally intentional the tort of negligence defendant had a duty of care to avoid causing injury, damage or loss breach of duty by the defendant claimant suffered injury, damage, loss duty of care a person might owe a duty of care to another with whom they had no contractual relationship decided by court PART B : THE LAW OF OBLIGATIONS 12  case by case basis two stages must be tested : 1. was the harm reasonably foreseeable 2. was there a relationship of proximity between the parties 3. is it fair, just and reasonable to impose duty of care? breach of duty of care the person should concerned based on what reasonable man should do a) Probability of injury when the risk is higher, the defendant should do more to meet their duty glasgow corporation v taylor 1922 - local authority was held to be negligent when children ate poisonous berries in a park. - warning notice is not considered to be sufficient to protect children. b) seriousness of the risk - young, old or disabled may be prone to more serious injury than a healthy/ fit able - bodied person. egg - shell skull - you must take your victim as they are - risk to be vulnerable is high, level of care required high c) issues of practicality and cost d) common practice e) social benefit f) professions and skill res ipsa loquitor PART B : THE LAW OF OBLIGATIONS 13  facts speaks for themselves the thing speaks for itself If an accident occurs which appears to be most likely caused by negligence, the court may apply this maxim and infer negligence from mere proof of facts. burden of proof - reversed and defendant must prove that they were not negligence claimant must demonstrate the following to rely on this principle : 1. the thing which caused the injury was under the management and control of the defendant 2. the accident that would not occur if it was in proper control/ care. causality and remoteness of damage 1. damage or loss claim - compensation , will not succeed if the damage or loss is not proved. a person will be compensated if they have suffered actual loss, injury, damage, or harm as a consequence of another's action. example of loss as follows : - personal injury - damage to property - financial loss - directly to personal injury - pure financial loss is rarely recoverable 2. pure financial loss economic loss unconnected with physical damage PART B : THE LAW OF OBLIGATIONS 14  usually not recoverable 'But for' test to satisfy the requirement that harms must be caused by other's action if it was not 'but for' the other action the claimant must proved that they have not suffered damage. Multiple cause the courts often have difficulty in determining the causation where there are number of possible causes of injury including the negligence of act. the courts must decide on the facts if the negligence act was the one that most likely caused the injury novus actus interveniens defendants will not be liable when the chain of events is broken three types of intervening act that will break the chain of causation: 1. act of the claimant 2. act of a third party 3. natural events act of the claimant rule - act is reasonable rule - act is in the ordinary course of things act of a third party PART B : THE LAW OF OBLIGATIONS 15  third party intervenes in the course of events that the defendants will normally be liable for damage until the intervention police officer case natural events the chain causality is not automatically broken due to an intervening natural events the breach puts the claimant risk of additional damage caused by natural event the chain will not be broken. however, the natural event is unforeseeable, the chain will be broken. remoteness of damage negligence claim can still fail if the damage is too remote liability is limited to the damage that a reasonable man could have foreseen. jolley v london borough of sutton - remoteness test can be passed if some harm is foreseeable even if the exact nature of the injuries is not be. defences to negligence contributory negligence volenti non fit injuria vicarious liability contributory negligence PART B : THE LAW OF OBLIGATIONS 16  court may reduce the amount of damages paid to the claimant if the defendant established that they contributed to their own injury or loss if the defendants proves that the claimant was at least partially at fault, the court will reduce the damages awarded to them by percentage that is just and reasonable. this percentage is calculated based on what is the claimant's share of the blame typically it will be range of 10%, 75%. however, it is possible to reduce the claim up to 100%. volenti non fit injuria voluntary acceptance of the risk of injury defence is available to the defendant where both parties have expressly consented to the risk (waiver forms signed by those taking part in dangerous sport) implied by the conduct of the claimant. for defence to be successful, the defendant must prove that the claimant was fully informed of the risk and they consented to them vicarious liability employment situations, an employee can avoid liability for negligence if they were acting acting on employer's business at the time of the incident for employer to be vicariously liable, the employee must follow the employer's instruction, even if the manner of how they were carrying them out was not how the employer asked them to do so. PART B : THE LAW OF OBLIGATIONS 17  professional advice professional individual and organisations have a special relationship with their clients and those who rely on their work. 1. development sfkdhsfjkhdsf 2. special relationship any liability for careless statements was limited in scope and depended upon the existence of the contractual or fiduciary relationship between the parties. to establish special relationship the person who made the statement must have done so in some professional or expert capacity which made it likely that others would rely on what they said. ie, bankers, accountant, solicitor or surveyor. the caparo decision auditors do not owe a general duty of care to the public at large or to shareholders increasing their stakes in the company in question two different situation facing a person giving professional advice: 1. preparing information in the knowledge that a particular person was contemplating a transaction and would rely on the information in deciding whether or not to proceed with the transaction ( the 'special relationship') 2. preparing a statement in general circulation, which could be forseeably be relied upon by persons unknown to the professional for a variety of different purposes. it was necessary to examine each cases as follows: 1. foreseeability 2. proximity PART B : THE LAW OF OBLIGATIONS 18  3. fairness matters to be taken into account in considering this : 1. the purpose for which the statement was made 2. the purpose for which the statement was communicated 3. the relationship between the maker of the statement, the recipient and any third party 4. the size of any class to which the recipient belonged 5. the state of knowledge of the maker 6. any reliance by the recipient. non - audit role directors and financial advisors of the target company in a contested takeover bid owe a duty of care to a known takeover bidder in respect of express representations made about the financial statements prepares for the purpose of contesting the bid on which they knew the bidder would rely. law since caparo the court was specifically concerned with the purpose of statement made at the meeting. extension of liability to third parties auditor can owe duty of care in limited circumstances PART B : THE LAW OF OBLIGATIONS 19