The Basics of Business Law and Contract Law - Assignment Example

?Section A Question Martin Issue: Martin saw an advert indicating that the ?100 A1 cameras were going for ?50 at the shop. He phoned the shop and asales person confirmed the availability of the camera for ?50. When he got to the shop he was told the cameras go for ?100. He claims that it is his right to buy the cameras at ?50. The issue is whether the advertised price reduction and the salesperson's confirmation constituted an offer to Martin or not. Rules: A binding contract is formed when one party makes an offer in return for some consideration and the other party accepts the offer and agrees to give the consideration required by the offeror (the one who makes the original offer). The offeror cannot just cancel an offer once it is made. When an offer is made, the offeree (the one the offer is made to) can decide whether to take it or not within a reasonable timeframe. Since an offer puts some kinds of obligations on the offeror, there is the need to define what constitutes an offer. In this definition, there are some exceptions to the rule. When a person makes an indication that another person can enter negotiations for a contract, this is not an offer, it is an invitation to treat. A typical example of an invitation to treat is the case of the display of goods in a shop window. In Pharmaceutical Society of Great Britain V Boots Cash Chemists (1953) it was held that goods displayed in a shop does not constitute an offer but an invitation to treat. Additionally, the declaration of an intent is not an offer. In Harris V Nickerson (1873), an auctioneer advertised the sale of goods in an auction. However, he refused to hold the auction on the said date. A prospective attendant sued for a breach. It was held that the advert was simply a declaration of intent but not an offer. Application In this, the advertisement by Gift House that they have reduced their A1 cameras was not an offer. It can be considered an invitation to treat. It is only when a customer comes in to make an offer that the process of forming a contract can begin. Also, the positive response to the request for information about availability of A1 cameras at ?50 instead of ?100 can be seen as a declaration of intent rather than an offer in itself. Conclusion The advert and response of sales person do not constitute offers. They are mere invitation to treat and declaration of intent respectively. Due to this, Martin does not have the right to purchase the camera at ?50. Davina Issue Davina gets informed that the A1 Camera (which sells for ?100) goes for ?50 in the shop. The shop also states that if anyone purchases goods worth ?500 by 1st December, there will be a free television. Davina mails an order for the camera and the goods totaling ?500 and indicates she wants the free television on 30th November. Davina receives the goods but finds out that she was charged ?100 for the camera and she did not get the television which was promised. The issue is whether the postal order created a legal contract that gives her rights to the camera at ?100 as well as the television set. Rule In Carlill V Carbolic Smoke Ball (1893), the defendants advertised to pay ?100 to anyone who caught flu after using smoke their smokeballs. Mrs Carlill used the smoke balls but caught flu. She argued that she was entitled to the ?100 promised. It was held that the offer was one that a reasonable person could take seriously. Secondly, the postal rule is established in the case of Adams V Lindsell (1818). It states that acceptance of an offer takes effect once the acceptance letter is posted. Application In this case, Davina saw a catalogue that advertised two things: the sale of a camera at ?50 and an offer of a free TV when a customer shops to the tune of ?500. This is something that the average person could take seriously and follow up. Davina followed up by making an order through post on the 30th of November. This order was a valid claim for the A1 Camera at ?50 and the TV prize since she shopped to the tune of ?500. According to the postal rule, this postage gave Davina some rights. First of all, she was entitled to the ?50 camera if stocks existed on the 30th of November. Secondly, since Davina's postage of the order took place before the offer ended, she was entitled to the TV set. Although some circumstances could potentially negate Davina's claim, the postal rule gave her the right to claim those two items. Conclusion Davina has the right to get the camera at ?50 and the TV set because she met the ?500 order condition. However, if there were no stocks of the ?50 A1 camera on the 30th of November, then the shop can decline to give Davina the camera at that price. However, the might need to prove this. However, for the TV, Davina has the right to acquire it. Section B Question 4 There are six main sources of law in the English Legal System: 1. Common Law 2. Equity 3. Jurisprudence 4. Statute 5. Delegated Legislation and 6. European Union Law Common Law was developed after the Normans conquest in 1280. It involves a conscious effort to consolidate and unify the local laws that existed in different parts of Britain. Common Law involves the integration of various rules into law to govern criminal and civil conduct. Over the ears, the concept of equity developed. Equity sought to provide some kind of mercy or humanism to the strict interpretation of Common Law. Thus the two streams of law: Common Law and Equity worked side-by-side and the English legal system developed. This led to the creation of landmark cases and judicial rulings that guide future cases and matters. In Britain today, the main law making body is Parliament. This is supported by the principle of Parliamentary Sovereignty. Lord Dicey stated that: “The principle of Parliamentary sovereignty means neither more nor less than this, namely, that Parliament….has, under the English constitution, the right to make or unmake any law whatsoever; and further, that no person or body is recognised by the law of England as having a right to override or set aside the legislation of Parliament.” (Dicey, 1885) Under this rule, three things can be deduced. First of all, parliament can make any law it deems fit and appropriate. Secondly, an Act of Parliament cannot be questioned by any group in Britain. Thirdly, no parliament can prevent any future parliament form making certain rules. Parliament makes rules by following certain steps. First of all, a Bill is raised before Parliament by an interest group. A bill can be prompted by the Law Commission, Private Members, Royal Commission, National Emergency crises or through Party manifesto. When the bill is presented, the government publishes a green paper. The civil servants in the relevant government department considers comments and draft the White Paper. The Minister and Department concerned considers comments and publishes the White Paper. Parliamentary draftsmen use the White Paper to write the Bill which is presented to parliament. There is a first reading at House of Commons. There is no debate afterwards. The second reading involves an explanation by the minister and a debate is commenced. Afterwards, the bill goes to the committee stage where 16 – 50 MPs deliberate over the bill and come up with a report on it. After that, there is a third reading of the bill to the House of Commons and a final vote is cast on it. If it is accepted, six MPs can request a further debate on the Bill. If the law is accepted, it moves on to the House of Lords. Any necessary amendments by the House of Lords are referred back to the House of Commons. If there is none, the bill is sent to the Queen for a Royal Assent after which it becomes a law. Aside the Parliament, there are some law making bodies in the UK which operate according to delegated legislation. This include amongst other things: 1. Statutory instruments – Issued by government ministers 2. Bye Laws – Issued by local authorities of communities 3. Orders in Council – The privy council can make certain emergency laws without parliament's involvement. 4. Court Rule Committees – Governs procedures in courtrooms 5. Professional regulations – By professional bodies in the country like Medical Society, Law Society, Chartered Accounting Bodies. However, the European Union is an important law making institution in the United Kingdom. The Council of Europe was set up in Strasbourg in 1949. The European Union Convention on human rights is a core tool that governs the conduct of people in the UK. The EU Human Rights convention is enforced by the European Court on Human Rights. It involves separate courts that have precedence over local UK courts. The EU Human Rights Laws supersede local UK Courts and this suggests that EU law breaches the theory of parliamentary sovereignty. Supporters of UK parliamentary sovereignty argue that the supremacy of the UK parliament is not replaced by EU law. This is because the UK parliament chose to allow the UK to join the EU. Thus, when the need arises, they will always have the right to opt out of the European Union. However, this is a power that is not likely to be exercised in any situation. Thus in practice, the EU human rights laws supersede UK parliament laws. The European Union has three main components. First of all the is the European Commission which is a executive and independent body that represents national governments. There is the Council of the European Union is made up of EU ministers of the nations. Also, the EU parliament is made up of 751 representatives that make law, supervise democratic institutions and approve budgets. The EU Court of Justice handles complaints of EU institutions and application of EU Law. EU legislation include treaties as well as regulations, directives, decisions and recommendations as well as opinions. Question 5 'Terms of contract' can be seen as the statements made by each party in a contract to encourage or induce the other to enter the contract. This is because the fundamental rule about contract is that a contract involves the exchange of considerations. One of the main requirements of contracts is that there should be some consideration or thing of value that proceeds from each of the party with the other. Considerations include contractual obligations. The terms of the contract is the implied or expressed versions of how considerations will proceed from either party to the other. It is the terms of the contract that set the parameters for the contract. In other words, the breach of a term in a contract will lead to litigation. There are two main types of terms in contracts. There are the express terms and the implied terms. The express terms are terms that are stated by the parties of the contract or written in the contractual document. Express terms of contract are the main portions of the contract that are agreed and laid down clearly before the commencement of the contract. There are implied terms of contracts too. Implied terms are viewed as collateral contracts that come up automatically when certain terms are expressly agreed upon. In other words, they are the expected terms and conditions that come up naturally when two people decide on certain terms. In the case of BP Refinery Western Port V Shire of Hastings (1977), there are five main pointers that determine the creation of implied terms. They are: 1. The logical and reasonable parts of a contracts that a rational human being might expect the other party to adhere to once the primary terms are agreed upon. 2. Implied terms of contracts are vital and necessary things that must be carried out for the discharge of the contract at hand. 3. The implied terms of contract are the natural and obvious things to be done in order to discharge the primary terms of the contract. 4. The implied terms of a contract are the expressions that an ordinary person can infer in his own wisdom without the need for a technically competent person. 5. Implied terms must be consistent with the express terms and must not contradict them (Young, 2010) Another approach to the classification of contractual terms is in relation to the importance of the term in relation to the essence of the contract. Under this classification, there are warranties and conditions. A condition is an important term that is necessary for the discharge of a contract. On the other hand, a warranty is a related component of the terms which although relevant to the contract is not a fundamental term of the contract. Warranties are often representations that are made which influence the formation of a contract. This therefore means that although a warranty might have a very strong effect on the creation of the contractual relationship, its accuracy or inaccuracy does not significantly influence the formation of the contract. A condition on the other hand is a fundamental element of the contract. It often relates to the existence of the subject matter of the contract. This therefore means that the condition of a contract is a very important term that can affect whether a contract is valid or not. The breach of a term will have a significant effect on the state of a contract. In other words if a term is false or cannot be discharged, the status of the contract will vary depending on whether the term is a condition or a warranty. Since a condition is a very fundamental aspect of a contract, it determines the validity of the contract. Thus, if a condition is breached, the contract can either be rendered void or voidable. A void contract is one which is invalid and the parties become as if they had never entered a contract in the first place. Thus, if a criminal sells something to another person who did not know that the item was stolen and later finds out, the contract is fundamentally flawed. This is because the criminal presented the product as his legal property. Thus, if it comes out that the police is looking for the criminal and the buyer finds out, the contract is void and the contract is invalid. The buyer has the right to demand his money back. In other cases, a breach of a major condition can lead to a voidable contract. In a voidable contract, the aggrieved party can choose to opt out of the contract or continue with it. On the other hand a warranty is a term that is not fundamentally critical to the contract although it might be an important part of the contract. An example is the misrepresentation of a party in the contract about the value of an item sold. Thus, if a person sells a model of a car which is a number of years older than what he claims it to be and it is discovered, the other party has been injured. It is therefore important for restitution to be made. A breach of warranty often ends up in the award of damages to compensate the aggrieved party. Damages are often assessed and awarded to people when their warranties are breached. Reference Dicey Venn (1885) The Law of the Constitution Indianapolis Liberty Books, 1982 Reprint Young Max (2010) Contract Law: The Basics London: Taylor & Francis Group. Read More