Common Law - Intention to Create Legal Relations and Certainty - Essay Example

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Contents page: Topic page number Formation of Contract.............................................................................................................2 2- Intention to create legal relations and Certainty.....................................................................5 3- Exclusion clauses...................................................................................................................6 4- Applicability of Exclusion clauses...........................................................................................8 5- Vicarious Liability...................................................................................................................9 6- Occupiers Liability.................................................................................................................11 7- Strict Liability.........................................................................................................................12 8- Negligence and Vicarious Liability........................................................................................13 9- Bibliography..........................................................................................................................15 Total words: 3701. ****TASK 2B needs to be referenced**** ***By: Ajiya Butt*** ***STU-24620*** Task 1: 1a: Formation of contract: It is a contract based question in which we will discuss about invitation to treat, offer, counter offer, postal rule, acceptance and consideration. The law on each of these will be discussed and would be related to the facts and a conclusion would be made accordingly. The existence of a contract is not dependent upon it in being writing thus a contract can be existent if it oral or informal (Atiyah, 2006). The important decision in respect of contract can be said to be Smith v Hughes1, wherein the courts laid down the subjective as well as the objective test was laid down so as to determine whether a contract was existent or not. The subjective test deals with the intention of the parties to the contract whereas the objective test looks into what was said by the parties and the intention of such things done (Peel, 2007). As far as an offer is concerned it is defined as willingness by one party who is called an offeror so as to bind itself on stated subject to acceptance by the other party who is known as the offeree. In respect of invitation to treat it has been defined as an inducement to the other to enter into negotiations and have a definite offer at the end thus an invitation to treat can be said to be a party’s readiness to start negotiations thus it cannot be said to be unequivocal thereby not having the intention that is required for an offer.. The main cases that differentiated between an offern and invitation to treat are Gibson v Manchester City Council2 and Storer v Manchester City Council3. In Gibson the courts found an invitation to treat by looking into the correspondence between the parties and because of the fact that the price was left blank. However, in Storer the courts held that there was a contract which existed and the parties had moved beyond negotiations (Mackendrick, 2009). In respect of display of goods in shop the criterion laid down by the courts is that such display is held to be an invitation to treat (Fisher v Bell)4. However, there have been cases where the courts have found display of goods to constitute as an offer but this was due to the different nature of the case (Chapleton v Barry)5. It has been held that the use of word offer would not make the case an offer and thus the criterion needs to be established (Furmston et al, 2007). As far as posts are concerned there is a special rule that had been laid down in the case of Adams v Lindsell6, wherein it was stated valid acceptance takes place where a letter is validly posted The next step after an offer is that of acceptance the requirement which is an unequivocal and unconditional acceptance by the offeree of the terms and conditions of the offeror (Holwell Securities v. Hughes7) (Elliott, 2007). The most important exception to the general rules of acceptance is that of the postal rule which stipulates that acceptance takes place when the letter is posted. Acceptance can also take place by conduct however, there is the requirement that the actions of the offeree were perform with the intent of acceptance which is determined objectively. (Day Morris Associates v. Voyce)8. If an offer is given and the other party imposes fresh conditions in that offer then the original offer is destroyed and a counter offer which is now the new offer comes into place. (Hyde v Wrench)9 (Mackendrick, 2009). The next criterion is that of consideration which gives the contract a badge of enforceability. The definition of consideration was given in Currie v. Misa10 as consideration which is of value and is considered in law as some right or interest which is acquired by one party and the other party suffers a loss or undertakes such loss. The courts are not concerned with the adequacy of consideration and the smallest of consideration can suffice ( Thomas v. Thomas)11. The rules of consideration are that it must by sufficient and need not be adequate. (Chappell & Co. v. Nestle)12 (Mackendrick, 2009). In respect of the facts it can be easily stated that the display that had been placed by Doris were not an offer and the use of word offer would not signify that it is an offer and thus such a display would be held to be an invitation to treat. One of the important reason for such is that there can be concurrent claims from various buyers. As far as the letter is concerned it is important to mention that the postal rule does not apply to offer. Thus because of the fact that such display of offer would not constitute to be an offer the postal rule would not apply and therefore Eddie would not have a claim against Doris as he merely made an offer which can either be accepted or rejected by Doris. As far as Frank is concerned Frank by virtue of his offer of ?400 has basically shown the intent and has made an offer, which in turn is countered by Doris which is then again countered by Frank, thus the offer of Doris has lapsed. Thus Frank by way of letter has merely made an offer which can be considered or rejected and thus there is no binding obligation on Doris to accept such offers. 1-b Intentions to create legal relations and certainty: The courts have held that it is necessary for the parties to an agreement to have an intent to be legally bound by the terms and conditions of the contract. Thus the parties agree to the binding nature of the contract and to avail recourse for enforceability of the contract. The important distinguishing point is looking into whether the contract was a domestic or a commercial agreement. The criterion for determination of the intent is an objective one (Edwards v. Lawson)13(Mackendrick, 2009). The important case in respect of social and domestic arrangement is that of Balfour v. Balfour14 wherein the husband promised to pay the wife a sum of money each month, and after separation an action was bought by the wife in this respect, however, the courts rejected the action on the basis that it ‘it was not intended by either party to be attended by legal consequences’. The presumption was rebutted in Merritt v. Merritt15 wherein the spouses were already separated and so intent was found. The general criterion for commercial agreements is that there is a presumption of the intent to create legal relations (Esso Petroleum Ltd. v. Commissioners of Customs and Excise)16. In respect of the facts at hand, clearly it was a commercial agreement and thus there was an intention to create legal relations between the parties, it can in no way be classified as a domestic arrangement (Mackendrick, 2009). As far as certainty is concerned, the courts have laid down certain requirement, which include the fact that the party to the contract must not be a minor. Furthermore he should be an adult of sane mind. In respect of the facts at hand there is no such detail provided and thus capacity to contract is present (Elliott, 2007). Task 2: 2-a Exclusion clauses: In respect of exclusion clauses the courts have generally had an approach not to interfere with such clause if certain criterion is met. The first and foremost aspect is the fact that the courts look into the fact that the exclusion clause has been effectively incorporated. It can be by way of inclusion in a document which has been signed by the other party (L’Estrange v. Graucob)17.The courts have held that the party even if it does not read the clause or understood it would be bound by it unless there has been a misrepresentation to the effect of the clause (Curtis v. Chemical Cleaning & Dyeing Co.)18. The second aspect is that the document which has not been signed can be incorporate provided reasonable notice was given at or before contracting. However, notice after contract will not be effective (Olley v. Marlborough Court Hotel)19. What is reasonable has been considered by court and it had been stated that it was not necessary for the clause to be within the contract mere pointing out to its existence would suffice. Furthermore, the document should be something more than a receipt. (Chapelton v. Barry). The courts have held that the more onerous a clause the more must be done to point out to the clause (Elliott, 2007). After establishment of the fact that the clause is a part of the contract the clause is considered to see whether it covers the breach. The courts were initially strict in this respect however, after introduction of legislative provisions the courts have adopted a less strained construction approach (Mackendrick, 2009). The courts had developed a criteria wherein it was stipulated that there could be no exclusion for a fundamental breach which has been divided into two categories. The first being where the exclusion deals with a fastidious duty vital to the agreement. (Karsales (Harrow) Ltd. v. Wallis)20. The next type is where the consequence of breach is exceptionally serious. (Harbutt v. Plasticine Ltd. v. Wayne Tank and Co. Ltd.)21. This has been reviewed by the House of Lords in Suisse Atlantique Societe d’Armament Maritime SA v. NY Rotterdamsche Kolen Centrale22 whereby the courts stated that the construction should be looked into and not the fact of fundamental breach. This is justified on the basis that statute now protects in respect of exclusion clauses. (Elliott, 2007). The important legislation in respect of the exclusion clauses is that of Unfair Contract Terms Act 1977 which is operational alongside the common law. The basic area of the Act is to deal with exclusion and limitation clauses which deal with mostly business liability that is liabilities resulting in a course of business. UCTA deals with attempted exclusion clauses due to negligence in section 2. The contractual liability aspect is covered in section 3 which applies in two situations that is where one party acts as a consumer (s.12), where one party deals on other’s standard written terms of business. If it comes under one of the category then the clause would need to satisfy the test of reasonableness (s.3(2)). Section 11 says that fairness and reasonableness of the clause should be looked into along with the circumstances for it to be included in the contract and the contemplation of the parties. The reasonableness is therefore of inclusion and not of reasonableness to allow reliance. The decision Smith v Eric S Bush23 was where reasonableness was discussed, wherein the court discussed bargaining power, availability of alternate resources, difficulty of task and practical results of allowing or rejecting exclusion (Mackemdrick, 2009). Another important aspect is the Unfair terms in Consumer Contracts Regulation 1999 which was introduced as a result of a European Directive and applies only to consumer contract. The regulation provides a test of fairness and says that it would be fair if found to be contrary to the requirement of good faith and causes significant imbalance which was considered in Director General of Fair Trading v. First National Bank Plc. A list of unfair terms is also provided in the Regulation. There is a requirement of the contract to be in plain and intelligible language (Finch, 2007). 2-b Applicability of exclusion clauses: The first and foremost issue that needs to be considered is the fact that there had been incorporation. The clause had been incorporated in the sale document and therefore would be binding. The next aspect of incorporation would be considered wherein the fundamental breach would be considered, however protection by the Act and the reversal of the decision by the House of Lords would lead to the exclusion clause of Mix-o-Crete being effective. The next step would be to consider UCTA (unfair contract terms Act). (Elliott et al, 2007) The courts would look into the fact of consumer and clearly Bob was a consumer and Mix-o-Crete was dealing in the course of business. Thus the test of reasonableness that is the inclusion of such an exclusion clause being reasonable would be considered. Clearly the exclusion of any liability would be considered to be unreasonable even if it satisfies the criteria of the common law principle, thus the exclusion clause would not be effective. Finally the UTCCR (unfair terms in consumer contract regulations) would be considered wherein the fairness test would clearly go in favour of Bob and therefore the exclusion clause cannot be relied upon by Mix-o-Crete. (Furmston et al, 2007) Task 3: 3a Vicarious liability: The issue in this question related to vicarious liability which will be discussed herein. Vicarious liability is a form of liability wherein the employer is held liable to a third party for a tort that has been committed by his employee in the course of hi employment. It is important to establish that the person is an employee and not an independent contractor. Thus even though the employer may not be at fault he would still be held liable for the acts of his employee. The reason cited for such liability is the fact that the third party is given a better opportunity to seek compensation from a party who is in a better position to compensate him. There are many other reasons on the basis of which such liability is being imposed (Elliott et al, 2009). The first and foremost point that is considered by the courts when establishing vicarious liability is to ascertain whether a person is an employee. The matter is generally a mixture of fact and law. The distinguishing point between an employee and an independent contractor is based on the degree and right of control. The control test is an important criterion to be fulfilled. (WHPT Housing Association Ltd. v. Secretary of State for Social Services24. The contractual matrix is also looked into to distinguish a worker and an employee. The tests however are not necessarily conclusive. The courts made detailed analysis in Ready Mixed Concrete (South-East) Ltd v. Minister of Pensions and National Insurance25 wherein a contract of service defined (Markesinis et al, 2007). The next point is that the employee must have committed a tort. (Stavely Iron and Chemical Co. Ltd. v. Jones)26. Thus the requirement is that an employee must commit a tort in order for the employer to be liable (Markesinis et al 2007). The next element is the requirement of the employee committing the tort in the course of employment. One of the justifications is the fact that the policy factors have led to vicarious liability being imposed as the courts give employer’s incentives to control and limit risks so as to avoid liability. Another important is the commission of the tort within the scope of employment and this has numerous authorities on it and is a matter which is dependent on the facts of the case. There is the important need to distinguish between authorised and unauthorised acts. Intentional torts and the tests of sufficient consideration is an important tort. One of the instances is that of theft wherein the courts held the employer was liable on the basis that there was a breach of a non delegable duty as bailee for reward (Morris v. C.W. Martin & Sons Ltd.)27 (Rogers et al, 2006). In respect of deceit historically employer were not held liable, however, the position changed by the decision of the House of Lords in Lloyd v. Grace Smith & Co.28 wherein the solicitor was held for deceit by his managing clerk (Markesinis et al 2007). The courts used the test of sufficient consideration in respect of the liability of the employer for sexual assault torts by an employee. It is important to mention that both, the employer and the employee are held as join tortfeasors. 3-b Occupiers liability: The Occupier’s Liability Act 1957 and 1984 are different in application as the former applies to lawful visitors, while the latter applies to trespassers and those not covered under the former Act. In respect of the 1957 Act a common duty of care is owed to lawful visitors. It is not necessary that an owner of premises is the occupier under the Act. The important point is that of control which can be existent with or without physical possession. A detailed judgment in respect of an occupier was the case of Wheat v. Lacon29 (Markesinis et al 2007). Under section 1(2) of the Act a common duty of care is owed to lawful visitors. In respect of ostensible authority the court held that where such authority is given liability would be construed on the occupier (Ferguson v.Welsh). the courts have further held that mere presence of a dangerous thing on the occupier’s premises which would cause harm to children would not be sufficient, however, keeping it in a place where it is accessible to children may aid the inference of an implied license (Markesinis et al 2007). The common duty of care has been defined under section 2. There are special factors that have been laid down in s.2 (3) wherein two special factors were stated that is the fact that occupiers must be prepared that children would be less careful than adults and the fact that the occupier can expect that person who is called would guard against special risks which are incident to such calling (Markesinis et al 2007). In respect of children, Hamilton LJ in Latham v. R. Johnson & Nephew Ltd.30stated in respect of an infant, he can be trapped morally or physically and thus there can be a duty not only of not digging pitfalls but avoidance of temptation. Berries would present a temptation to children (Glasgow Corporation v. Taylor)31. The presence of an adequate warning by an occupier is one the different ways in which the occupier can discharge his duties. Contributory negligence and defence of consent are also valid defence (Markesinis et al 2007). As far as the 1984 Act is concerned it mainly deals with trespassers. The House of Lords in British Railways Board v. Herrington, the House of Lords held that an occupier would be liable in negligence to trespassers. The three requirements under that Act are that there must be awareness of the danger by the Defendant or reasonable grounds to believe of its existence; idea or reasonable grounds to ascertain that he is in an area or near an area of danger, and such a risk must be reasonably be expected to be protected against. In Swain v. Buri32 the courts stated ‘reasonable grounds to believe’ to be ‘actual knowledge of the facts’. The 1984 Act requires reasonable care to be taken in all circumstances (Markesinis et al 2007). 3-c Strict liability: Strict Liability is defined as a law or situation where absolute responsibility in law is held for an injury which is imposed upon the wrongdoer without proof of fault or negligence on the part of the wrongdoer. In other words mens rea is not required for strict liability. One of the examples of strict liability is product liability which does not look into the faults (Rogers et al 2006). The main difference between strict liability and fault based approach is the fact that the courts take into account the actions, then the mens rea and then look into defences. In respect of strict liability the court looks into the fact that an act has been committed and then goes on to defence and nothing else, thus the intention or recklessness of the party at fault is not important in strict liability. Strict liability does not taken into account the mens rea and therefore the mental element is absent in establishing strict liability in other words the actions would be sufficient to attribute liability to the extent that only the defence would be considered on the part of the defendant/respondent. The element of mens rea leads to difficult criteria that needs to be established for fault based wrong doing as compared with strict liability offences (Finch, 2007). Task 4: Negligence and Vicarious liability: The issue in this question relates to a discussion of negligence and vicarious liability. Each of these will be discussed and analysed along with the facts. The first and foremost point in respect of Mike would be the facts that were Mike and Jerry employees. In respect of Mike it is evident that he was an employee of the factory and not an independent contract. The next element that would be considered was that was he in the course of employed. As discussed in the aforementioned question it is evident that Mike was in the course of employment even though he was doing something that was different from his job. The courts have held that employers would be held liable if a tort is committed against a fellow employee and therefore even though Mike and the factory would be joint tortfeasors, the fact that Mike was assigned a responsibility in which he lacked the adequate skills would mean that the factory would be held liable for the tort committed. Thus Seamus would be able to claim under vicarious liability. Under the test of negligence the authority that is followed in respect of owing a duty of care is that of Murphy v. Brentwood District Council under which a three tier test had been adopted which states that there must be foreseeability of harm as well as a relationship of proximity and that it would be fair, just and reasonable to impose liability (Weir, 2006). In the facts it is evident that the third part of the test would be difficult to satisfy as it was the employers fault and not Mike’s of assigning him the responsibility and therefore there would be no duty of care. In respect of Jerry it is important to mention that there is doubt as to whether he had a contract of service or a contract for service and therefore the possibility of a claim would be dependent on that in respect of vicarious liability. Furthermore, even if he is an employee the fact that he has made the deliver and then crashed would make it difficult to establish that he was in the course of employment thus William would not be able to claim under vicarious liability. As far as duty of care is concerned there would be duty imposed according to Murphy as the three tier test would be fulfilled and thus a duty to protect pedestrians would be there which has been breached and therefore liability under negligence would be established (Markesinis et al, 2007). Bibliography: 1. MACKENDRICK, E. (2009). Contract law. Basingstoke, Palgrave Macmillan. 2. ATIYAH, P. S., & SMITH, S. A. (2006). Atiyah's introduction to the law of contract. Oxford [u.a.], Clarendon Press 3. FURMSTON, M. P., CHESHIRE, G. C., FIFOOT, C. H., & SIMPSON, A. W. B. (2007). Cheshire, Fifoot and Furmston's law of contract. Historical introduction / A. W. B. Simpson. Oxford [u.a.], Oxford Univ. Press 4. PEEL, E., & TREITEL, G. H. (2007). Treitel on the law of contract. London, Sweet & Maxwell 5. ELLIOTT, C., & QUINN, F. (2007). Contract law. Harlow (England), Pearson Longman 6. ELLIOTT, C., & QUINN, F. (2009). Tort law. Harlow, Pearson Longman. 7. MARKESINIS, B. S., JOHNSTON, A. C., & DEAKIN, S. F. (2007). Markesinis and Deakin's tort law. Oxford, Oxford University Press 8. WEIR, T. (2006). An introduction to tort law. Oxford, Oxford University Press. 9. ROGERS, W. V. H., JOLOWICZ, J. A., & WINFIELD, P. H. (2006). Winfield and Jolowicz on tort. London, Sweet & Maxwell. 10. FINCH, E. (2007). Tort law. Harlow, England, Pearson Education 11. HORSEY, K., & RACKLEY, E. (2009). Tort law. Oxford, Oxford University Press Read More