Business Law - Doctrine of Precedent and Laws of Tort and Contract - Coursework Example

? INTRODUCTION TO BUSINESS LAW ………………………….. College ……………………………… ……………….. Words count: 3234 Table of Contents Table of Contents 2 Part- I: Doctrine of precedent and Laws of Tort and Contract 3 Introduction 3 Judicial Law-Making and independent sources 3 Doctrine of Precedent 5 Negligent Misstatement and negligent misrepresentation 6 Conclusion 8 Part- 2: Case Analysis 9 Introduction 9 Contract and basic elements 9 Vitiating Factor and Misrepresentation 11 Gratuitous promise 12 Summary Analysis of the Case Law 12 Conclusion 13 References 14 Part- I: Doctrine of precedent and Laws of Tort and Contract Introduction According to the doctrine of precedent, Judges in the court are not expected to make decisions on a whim or feeling, but they have to follow previously decided and established legal cases so as to maintain uniformity in laws. Law of Contract and Law of Tort are the two major strands to English law. Though there are fundamental differences between tort and contract laws, it is argued that they are similar to one another and negligent misstatement and negligent misrepresentation are clear evidence for that. This part of the paper evaluates Doctrine of precedent in relation to Lord Radcliffe’s statement in his work ‘Not in Feather Beds’(1968) and discusses negligent misstatement under the law of tort and negligent misrepresentation under the law of contract to support the argument that they clearly indicate that both tort and contract laws are similar to one another. Judicial Law-Making and independent sources Lord Radcliffe (1968, p. 216) stated that ‘Judges should be cautious (in terms of making law or following precedent) not because the principles adopted by the Parliament are more satisfactory or more enlightened, but because it is unacceptable constitutionally that there should be two independent sources of law-making at work at the same time’. This statement highlights the unacceptability of depending on two different sources of law-making at same time and emphasizes the need for uniformity among laws. It is not easy for omnipotent legislator to reconcile with judicial creativity and therefore judges have to conceal their contribution to law. Judges are to be more cautious to discover and declare the law that they want to express in front of the legislator, but not to make it. Whether judges should make new laws or they should simply declare what the law is has been a major topic of academic debate. In today’s legal systems, it is generally recognized that judges do make new laws when resolving certain disputes even though they often disagree about the extent of their law-making power (Mothersole and Ridley, 1999, p. 41). The doctrine of precedent, which states that courts must use decisions concluded in earlier legal-cases, has provoked serious debates about the precise role and rights of judiciary in developing common law. Are Judges just decision-makers who simply discover the law and declare it in the courts or they actually make new law with their power to do so. Some researchers have seriously claimed that judges have no more power than finding and applying existing legal principles. From Lord Radcliffe’s statement, it seems that he agreed that a Judge can either depend on decisions made in earlier legal-cases or make law, but he needs to be cautious because it is constitutionally unacceptable that there should be two independent sources at the same time. The two complimentary sources of law-making are Judicial and Legislature processes. Though there are disputed regarding whether a Judge creates law or perfectly follow decisions made in earlier cases, it is generally agreed that a Judge has the power of law-making. Both Judge and Legislature have to understand the respective functions and limitations related to judiciary and legislature. Zander (2004, p. 332) stressed that Judges do not reverse principles that are already well established, but they usually modify, extend or restrict them or refute their acceptability to the combination in hand. Thus, judicial law is reinterpretation of principles in the lights of new combination of legal facts out of which some of the very relevant ones or those that are un-provable by evidence are current beliefs of the society. When it comes to legislature processing, as Zander (2004, p. 332) pointed, parliament does anything quite different in its law-making processes and this can be very evident from certain phrases such as ‘it is not for us, but for the legislature’. As far as legislature is concerned, there are some areas of public interest that are the matter of current concerns and they do affect law-making. When there are public interest or such concerns are at the hand, Zander (2004, p. 332) stressed that the Judges must be very cautious in the use of their power of declaring the law because there cannot be two independent sources of law-making. Sampford and Preston (1996, p. 39) explained why Judges must be more cautious than legislators. Judges have to approach legal problems by seeking order in and guidance from the decisions and conclusions that are already settled and precedents of the legal system whereas also by striving to reach decisions consonant to that body of settled law. Thus, judicial law-making has been structured in a different way that legislative law-making is not, because Judges are obliged to be very faithful to the law in a way that legislators are not. There are certain occasions that both Judges and Legislators alike are to consider the same kinds of public interest, but still, judges are more obliged to be cautious than how legislators to be. Doctrine of Precedent Judges, who were assigned with the task of dealing with disputes in earlier monarchs in England, came to realize that similar situations should be resolved in the same way and this provided foundation to the doctrine of precedent. This principle allows for efficiency in administering justice, enabling people to predict case-outcomes and more importantly to treating people equally. Doctrine of precedent states that judicial decision creates a rule of law binding upon later cases with similar facts (Blum, 2007, p. 37). Principle of precedent states that judges should make law according to previously decided cases and not according to their feelings. In English law, Judge-made law play significant role as judges and lawyers have to find what has been decided in these cases. In a large numbers of legal issues, judges have only to apply established principles and provided that these principles are very clear, they never have to make new law. There are two types of precedent, one is, Binding Precedent in which court is obliged to follow a decision even if the court disagrees with it and the second is Persuasive Precedent in which the court is not obliged to follow the decision, but the court may choose to use the case as a guide (Miller, 2012, p. 6). Negligent Misstatement and negligent misrepresentation Negligent misstatement is a representation a fact carelessly made by a claimant and is then relied on by him to his own disadvantage. In a claim for negligent misstatement, the claimant is required to prove duty of care, breach and causation. Negligent misstatement in the common law in tort is a claim or action that is brought by one party against another with a statement that can be considered as negligent and the party who brought this claim relied on this statement and thus suffered a loss due to this statement. Negligent misrepresentation under the law of contract, on the other hand, is the misrepresentation of a fact made a party expecting that another party will rely on the misrepresentation but without realizing whether the fact is true. Miller (2012, p. 110) described that negligent misrepresentation requires only that the party who makes a statement or omits a fact didn’t have reasonable basis for believing its truthfulness. When there is negligent misrepresentation, a cause of action lies when the circumstances are that the defendant was responsible to speak the truth knowing that the plaintiff might rely on that statement. When a person entered in to a contract in which a misrepresentation has been made by another party on him and as a result he has suffered a loss, then that party will be considered liable that the misrepresentation was not made fraudulently unless he had a reasonable ground believe that fact (Mothersole and Ridley, 1999, p. 391). Negligent misstatement under law of tort and negligent misrepresentation under contract law are treated almost in a similar way and based on this, many literatures have argued that this similarity is arguably another evidence for that both contract law and tort law are similar tone another. Misstatement leads to misrepresentation, as is very evident from Miller’s (2012, p. 109) words. He stressed that misrepresentation leads another person to believe in a condition that is quite different from the true or actual condition. Misrepresentation occurs through a false statement which is often termed as misstatement. Even though people often make false statements or misrepresentations accidently due to that they are unaware of the existing truth, the tort of misrepresentation involves intentional deceit for personal gains. Contract law provides facilitation and reinforcement of voluntary exchange of goods or services whereas tort law is concerned with imposition of standards of behaviour regardless of whether the standards are linked to a transaction or voluntary exchange of goods or services (Stone, 2013, p. 15). As generally discussed, both law of contract and law of tort are part of civil law in England, but the obligations imposed in the contract under the law of contract have been agreed to by both the parties when they entered in to the contract itself whereas the law of tort concerns involuntary obligations that are imposed upon parties by the law (Jones, 2013, p. 346). This is the major difference between the laws of contract and tort. However, the matter of misstatement under tort and misrepresentation under law of contract are more or less clear indication for the similarity between law of tort and law of contract. Negligent misrepresentation was not evident until 1960s, but any misrepresentation that was not fraudulent was considered as ‘innocent’. Lack of specific form of misrepresentation covering negligent misstatement was considered as problematic because a victim of innocent misrepresentation could withdraw the contract. This has been changed after the case of Hedley Byne & Co Ltd v Heller and Partners Ltd wherein the House of Lords made a new category of misrepresentation to cover negligent misstatement (Roach, 2012, p. 223). Both tort and contract laws deal with a duty that has been breached by either party. As far as contract violation is concerned, the breach is to be dealt with the duties that are already mentioned in the contract whereas most tort violations usually involve certain extents of breach of duty and therefore it is argued that tort law and contract law share many similarities. The way legal systems deal with negligent misstatements in the tort law and negligent misrepresentation in the contract law highlight the suggestion that contract law and tort law are similar to one another. Conclusion Judicial process plays pivotal role in English law since judges and lawyers have to find out what has already been decided on similar cases previously so as to maintain uniformity and to maintain justice among the public. This paper has supported the argument that judges should be cautious in making law or following precedent and has discussed in detail how negligent misstatement and negligent misrepresentation support the argument that law of contract and law of tort are seemingly similar to one another. Part- 2: Case Analysis Introduction This part of the paper analyzes a legal case and evaluates various significant aspects of law of contract that are evident in the case. According to the case, Ali offered to sell his car to Cameron for ?15,000, and since Cameron was away, his wife replied that she promised to inform Cameron about it. Ali responded that he could wait for Cameron’s return, however, Cameron returned earlier than expected and he accepted the offer through an e-mail. Ali replied by the fax that he already sold the car to Cameron, but the fax was delayed. Being frustrated of no response back from Cameron, Ali promised to give his car to his daughter, Nurul on the condition that she could leave the job, but, when she resigned the job and came back, Ali told her that ‘It was not for real, but for joke’. This paper explains legal aspects of offer, acceptance, promise, breach etc in relation to the case above and to advise the parties involved in it to clarify their contractual positions. Contract and basic elements A contract is an agreement that can be enforced in court and is formed by two or more parties who agree to perform or agree to refrain from doing something in the future (Miller, 2012, p. 194). Contractual relationship is fundamental to the business mainly because the contract is legally binding as it involves a promise of future performance and whenever there is a breach from performing it, there can be disputes. Though people generally think of contract as written document or a signed agreement, according to the legal aspects, contract is either an oral or written agreement between two parties (Jones, 2011, p. 83). Over the years, contract law has developed a number of requirements certain promises must meet before they are considered as a contract. In order for an agreement to be considered as contract, a voluntary agreement is required to be made up of an offer and an acceptance of that offer. A consideration to support each party’s promise is also required. Apart from these, the contract must be between parties who have capacity to fulfill the promises and the objective must be legally binding as well. English law asks the person who breaks an agreement to pay compensation to the other party, only if the agreement involves essential features such as intention to create legal relation, agreement, consideration, form, definite terms and legality (Marsh and Soulsby, 2002, p. 107). The court will take no action or even legal point unless the court could realize that the parties to the contract have intended the agreement to be legally binding. The court needs to be satisfied that the parties had reached to an agreement and that they are not still negotiating on it. An agreement that is complete only will be considered for action in the court. When the first person offers to do something such as selling or providing a service to the second person, a consideration is expected from the second person in response to the offer. English law recognizes a bargain only and not a mere promise. Therefore, a contract needs to be two-sided affair because each side has to promise some consideration in response to the offering of the other. Certain exceptional types of agreement are only valid if made in a particular form. For instance, a written agreement, a telephonic agreement etc. It is also required for the court to recognize what the parties to the agreement have agreed upon. Vague or unambiguous terms will not be considered. Certain types of agreements are often contrary to the public policy, and therefore, court will not have to take any action in such circumstances since there is no legality (Marsh and Soulsby, 2002, p. 107) When it comes to the case of contract between Ali and Cameron, it is evident Ali has promised to sell the car to Cameron for a consideration of ?15,000. Ali’s offer is very clear and it can be considered legally binding since it is made with an intention to come to an agreement and the consideration he requested can also valid since it is very specific. Legally, offers lapse and become no more capable of legal acceptance in four circumstance; 1) at the end of a stated or stipulated period, 2) after a reasonable time, 3) when the offeree dies, and 4) when the offeror dies when the contract is of personal nature (Kelly, Hayward, Hammer and Hendy, 2013, p. 239). Though Ali’s offer hasn’t been directly reached to Cameron, Ali promised to wait for two weeks until Cameron comes back when his wife contacted Ali. Therefore, the reasonable time in this agreement is two weeks as Ali promised to wait for two weeks. Ali received a fax from Cameron after he returned back within the stipulated time saying that Cameron was agreeing to buy it for ?15,000. Ali’s offer has been accepted by Cameron and therefore the contract is complete. It is because, when the offeree has assented to the terms of offered, a contract comes in to effect (Kelly, Hayward, Hammer and Hendy, 2013, p. 240) and therefore the agreement between Ali and Cameron is complete. This contractual relationship has fulfilled all the six criteria mentioned above, they are intention to create legal relation, completion of agreement, consideration, form, definite terms and legality. In short, Ali’s agreement with Cameron is still valid and that Cameron can continue further claiming for the Car for the agreed consideration or to legally go ahead with suing. Vitiating Factor and Misrepresentation Ali has also offered to sell his car to Derrick and he in return agreed to buy that on the same price. Though this agreement can be considered as complete, Ali made negligent misrepresentation because he believed that Cameron will not come back and accept his offer before the time. Ali made a false statement than he promised to sell his car to Derrick, believing that he could do so without reasonable ground for that belief. As he made negligent misrepresentation, the contract becomes void or voidable. Gratuitous promise A gift promise or gratuitous promise is unenforceable since it lacks a reasonable consideration. Ali’s promise to give his car to his daughter is a gift promise, but it involves a consideration that Ali’s daughter must resign from job and leave her job from Birmingham. A gift promise become legally enforceable when the promise offers to do something in return that can be considered a consideration. Though Ali’s promise to give his car to his daughter is enforceable due to that it is a gift promise along with a reasonable consideration, Ali still can argue that he made it not for real, but for fun. Therefore, it can be argued that the contract lacks intention to create legal relation which is one of the essential features of a valid contract and therefore it is not valid. Summary Analysis of the Case Law Ali has entered in to three agreements, out of which one is valid and the other two are void contracts. Ali agreed to Cameron to sell his car for ?15,000 and he accepted the promise within the stipulated time. It is a valid contract as it fulfills all the necessary elements to a contract such as intention of legal relationship, offer, agreement completion, consideration, acceptance, capability, legality and specific terms. Ali agreed to Derrick to sell his Car for ?15,000 and Derrick has accepted the offer. But, there was negligent misrepresentation as Ali believed that his contract with Cameron was not complete and valid, but Cameron has replied to Ali informing his acceptance. Ali made a gift promise to his daughter to give his car for a consideration of coming back from Birmingham to London after leaving the job there, but Ali was not really meaning to do so. Since this contractual relationship doesn’t involve an intention to create legal relationship, this contract cannot be considered as valid. Conclusion This part of the paper has analyzed a case of contractual relationship between Ali and other three parties namely Cameron, Derrick and Nurul. This paper has evaluated essential elements to a contract and examined how each of these elements is reflected in the contractual relationship between these parties. Based on this analysis, the contractual relationship between Ali and Cameron is a valid, whereas Ali’s agreements with Derrick as well as Nurul are voidable. References Blum, B.A, 2007, Contracts: Examples & Explanations, Aspen Publishers Online Jones, L, 2011, Introduction to Business Law, Oxford University Press Jones, L, 2013, Introduction to Business Law, Oxford University Press Kelly, D., Hayward, R., Hammer, R and Hendy, J., 2013, Business Law, Taylor & Francis Marsh, S.B and Soulsby, J, 2002, Business Law, Nelson Thornes Miller, R.L., 2012, Business Law Today: The Essentials, 10th Edition, Cengage Learning Mothersole, B and Ridley, A, 1999, A-level Law in Action, Cengage Learning EMEA Roach, L, 2012, Card & James' Business Law for Business, Accounting, & Finance Students, Oxford University Press Sampford, C.J.G and Preston, K, 1996, Interpreting Constitutions: Theories, Principles and Institutions, Federation Press Stone, R, 2013, The Modern Law of Contract, Routledge Zander, M, 2004, The Law-Making Process, Cambridge University Press Read More