Offer and Acceptance: Creating Legal Relations - Essay Example

?Common Law Part Question Offer and Acceptance The offer and acceptance typically take place during the negotiations for a contract. The courts analyse the offer and acceptance to determine whether or not the parties indeed negotiated and concluded a legally binding contract.1 The exchange of offer and acceptance between Tom and Belinda depend on whether or not the offer and acceptance formed a legally binding agreement. In this regard an offer and acceptance will form the basis of a legally binding and enforceable contract if from an objective perspective it can be said that Belinda believed that genuine offer was made.2 Belinda accepted both the offer to purchase her home for 100 pounds and her car for 500 pounds. A survey was conducted and thus it objectively appears that the offer was genuine and that Belinda believed that the offer was genuine. The offer and acceptance also appear to meet the requirement that a valid acceptance must mirror the terms of the offer.3 On the facts of the case for discussion, Belinda accepted Tom’s offer as they were presented to her. Therefore it can be argued that a valid offer and acceptance was made. The question is therefore whether or not Belinda was free to withdraw her acceptance. Only if the acceptance was subject to the condition that Belinda receives a satisfactory survey would allow her to withdraw her acceptance. However the condition must be clearly stated as a prerequisite for acceptance.4 Based on the facts of the case for discussion, the offer and acceptance were both unconditional. Given that the offer and acceptance were both made pursuant to the common law rules for valid offer and acceptance, Belinda has entered into legally binding contract with Tom. However, the absence of consideration will render each party free of the agreement.5 In other words, although the offer and acceptance met the requirements for the formation of a legally binding contract, there was no consideration and as such a legally binding contract was not formed. Question 2: Intention to Create Legal Relations The legal issue for Matt, Mark, Luke and Jon is whether or not there was an intention to create legal relations when they formed the lottery syndicate. If there was intention to create legal relations, the lottery syndicate is a binding contract and Jon is obliged to share the winnings with Matt, Mark and Luke. There is a presumption however, that agreements between social and family groups are not generally binding contracts.6 In Balfour v Balfour, it was held however, that where there are arrangements and agreements between close members of a social or family group, the presumption that there is no intention to create legal relations is a rebuttable presumption.7 The presumption can be rebutted by evidence to the contrary.8 The loan syndicate between Matt, Mark, Luke and Jon is arguably an arrangement between a close social group as they are colleagues and the arrangement has nothing to do with their work. The presumption that as a social group there is no intention to create legal relations can be rebutted if it can be shown that by joining the syndicate and trusting the ticket purchases and collection of winnings to another member of the syndicate, the parties were putting themselves at a disadvantage. The disadvantage arises because, they could have purchased the winning lottery ticket themselves and collected their own winnings. It was held in Parker v Clark that the presumption can be rebutted where a party to the agreement is disadvantaged by the agreement.9 A similar arrangement occurred in Simpkins v Pays. In this case, a woman together with her granddaughter and tenant agreed to enter a competition as one entrant under the woman’s name and that any winnings would be shared between them. However, when the woman collected the winnings she decided against paying the tenant a share of the receipts. It was held that when the parties shared the competition fee there was an intention to create legal relations and thus there was a legally binding contract.10 It therefore follows that the lottery syndicate between Matt, Mark, Luke and Jon is a legally binding agreement as the pooling of funds to purchase lottery tickets and the promise to split the winnings demonstrates an intention to create legal relations. Question 3: The Binding Terms and Conditions of Contract and Promissory Estoppel The agreement to purchase a quantity of fabric by Bell Plc. from Grant Plc. appears to be represented on two different standard forms (Bell’s standard order form and Grant’s standard order form). One standard form (Bell’s) requires that the exact order is complied with whereas the other standard order form (Grant’s ) allows for a deviation from the original order should the need arise. Ordinarily, once an offer is made, it is generally required that the acceptance is only binding if it mirrors the original offer. In the event the acceptance deviates from the original offer, it is regarded as a counter-offer.11 Therefore when Grant responded to Bell’s order form with its standard form allowing for deviation from the original order, Grant effectively rejected Bell’s offer and made an offer of its own. The main question is therefore whether or not Bell accepted Grant’s counter offer. In order for an acceptance to be valid, it must be communicated to the offeror. In this regard, acceptance of an offer can be communicated by word or by conduct.12 It would appear that Grant, acting on the terms of the counteroffer was supplying the fabric to Bell for 6 months before a dispute arose over the weight of the fabric supplied. Although silence will not automatically amount to acceptance, the length of time that passed since Grant acted on its counteroffer is a strong indication that Bell accepted the counteroffer. 13 In addition, it appears that the doctrine of promissory estoppel will arise to: …hold promisors to their word and prevent them going back on their promise where it would be unjust or inequitable.14 Given that Grant provided the fabric to Bell for six months before Bell took issue with the exact weight of the fabric, it would be unfair and unjust to allow Bell to go back on the agreement which was essentially based on its acceptance of the counteroffer provided by Grant. For all intents and purposes, Bell promised to purchase fabric from Grant based on Grant’s counteroffer. This is evidenced by the continued acceptance of the fabric for 6 months. All Grant has to do in order to establish promissory estoppel is that in reliance on Bell’s promise, Grant’s position was modified. In proving that Grant’s position was modified, it would not necessarily have to be proof of detrimental reliance on Bell’s promise. Grant will merely have to prove that it altered its position in reliance on the promise made by Bell. This means proving that Grant acted differently or in a way that it would not have acted had it not been for the agreement with and promise made by Bell.15 Grant may therefore argue, that had it not been for Bell’s promise, it could have used its resources to provide fabric to another customer and instead used its resources to supply Bell with the fabric. It therefore follows that Bell’s continued acceptance of the fabric from Bell for six months complicates its dispute in two main ways. First, the continued acceptance of the fabric for six months represents an acceptance of the fabric based on Grant’s counteroffer and therefore forming the terms and conditions of a legally binding contract. Secondly, waiting six months to complain about the fabric’s weight gives rise to promissory estoppel which would prevent Bell reneging on the terms and conditions of the contract based on the Grant’s counteroffer. Question 4: Holiday Booking 1. Holiday Brochure The holiday brochure for an all-inclusive holiday package to Turkey offered by Thomas Cooke describes the features and amenities for a holiday booked with Thomas Cooke at Hilton Dalaman Resort and Spa on the Lycian Coast in Turkey. The brochure promises “spectacular mountain and sea views”, a luxury spa, easy access to the airport, access to beaches, outdoor activities and goes on to describe in-flight amenities. Thus the brochure is not an offer as an offer cannot be made to the world at large.16 Therefore the brochure is merely an invitation to treat.17 Advertisements are usually regarded as invitations to treat and the brochure can only be viewed as an advertisement and as such an invitation to treat. If a consumer is enticed by the advertisement/brochure and books the holiday, they will be making an offer. Once the offer is made based on the advertisement, the consumer can expect to receive that which was advertised. However, where an advertisement represents a genuine intent to satisfy a promise, it will be regarded as an offer rather than an invitation to treat.18 Therefore since the holiday package is presented as one of the many packages available at Thomas Cooke, it can be viewed as a genuine offer and thus may not be treated as an invitation to treat, but a genuine offer to provide the holiday package. If the same package is presented online, it will likewise be viewed as an offer and not an invitation to treat. It is important that the person booking the holiday is at least 18 years old because minors cannot usually be legally bound to contracts.19 Two of the positive obligations of party booking the holiday are the obligation to pay for the holiday booked according to the terms and conditions of the offer and to take out a policy of insurance. The obligation to pay for the holiday is a mere condition of the terms of acceptance and failure to pay for the holiday will permit the booking agency to withdraw the offer. The obligation to take out an insurance policy is a condition of the contract indicating that the travel party is responsible for his or her own injuries and illnesses occurring on the holiday. Failure to meet this condition (insurance) will render the party personally liable for any emergencies, illnesses or injuries incurred on holiday. The booking agency has a positive obligation to ensure that the holiday sold is as promised or described prior to the traveller leaving the UK. This is therefore a warranty rendering the agent liable in damages for failure to comply with this positive obligation.20 The booking agency also has a positive obligation to ensure the safety of the travellers while participating in any part of the travel programme. For example, the booking agency assumes liability for death or injury in the event the traveller suffers injury or death on an excursion booked as a part of the holiday package. This is positive obligation is therefore a warranty. The holiday package contains an exclusion clause excluding Thomas Cooke from liability for changes to the holiday as a result of circumstances beyond the agency’s control. These circumstances include war, epidemics, airport closures and other factors that would normally frustrate a contract. The exclusion clause is effective as it is prominently displayed in the brochure informing that it forms a part of the contract and it does not attempt to exclude Thomas Cooke from liability for death or personal injuries due to its negligence.21 Part II. Question 1: Employee and Public Liability Insurance Betty is being asked to obtain employee and public liability insurance to ensure that she is able to cover any liability that might accrue to her as a result of damages for negligence in her new business. Since she is opening a business that will serve members of the public and will involve employees carrying out that service she will not only owe a duty of care to the members of the public that she will be serving, but will owe a duty of care to her employees. This duty toward the members of the public with whom she will come into contact with in the course of her business and her employees is founded on the neighbour principle enunciated in Donoghue v Stevenson. Based on the neighbour principle, a duty of care is owned to those with whom we have a relatively close relationship with and the risk of harm is within our contemplation.22 By statute, the employer is also required to ensure that employees are provided with a safe and healthy workplace and will be liable for any injuries incurred by employees if they fail to provide a healthy and safe workplace and equipment.23 In addition to the possible liability for harm to employees, as an employer Betty will also be vicariously liable for any harm that her employees may negligently cause her customers or anyone else during the course of their duties as her employees.24 Given the breadth of Betty’s potential for liability for her employees, on behalf of her employees and with respect to members of the public, employee and public liability insurance is as much for her protection as it is for employees and members of the public. Question 2: Liability for Negligence I. Occupiers’ Liability Since Jack is in the shop with his mother they are both lawful visitors and as such the Occupiers’ Liability Act 1957 applies. Accordingly, occupiers owe a duty of care to ensure the safety of all those who are on their property and classified as lawful visitors.25 Specifically, an occupier owes lawful visitors what is characterized as a “common duty of care to all his visitors” if the duty is not discharged by virtue of an agreement or a waiver or by a restriction.26 There is nothing on the facts of the case suggesting that Betty has waived or restricted or otherwise entered into an agreement with her lawful visitors to restrict liability for defective premises or for damages incurred by her visitors while lawfully on her premises. Whether or not Betty is the owner of the building in which the shop is located is also immaterial as it will not function to exclude her from liability. An occupier is an individual or organization or agency that exercises control over the premises at issue.27 Thus it is entirely possible for several persons and bodies to be designated as occupiers of a single building.28 Even an employee who exercises the requisite control over a building may be found to be an occupier for the purposes of the Occupiers’ Liability Act 1957. The actual owner who does not exercise control over the building will be liable for damages as well.29 It therefore follows that Betty may be liable either jointly or severally or solely for the damages incurred by Jack. If Betty is the sole owner of the building she will be solely liable as she also controls the premises as it is her place of business. The applicable duty of care is found in Section 2(2) of the Occupiers’ Liability Act 1957 Act. In this regard, Betty has a duty to use reasonable care in ensuring that the building is safe for lawful visitors to the building.30 Where there are latent defects or dangers in the building, such as the step-down stair and the likelihood that lawful visitors will gain access to the defect it is possible to discharge the duty of care by placing warning signs that clearly caution visitors of the danger to their safety.31 In this regard, a sign that warns that care must be taken as a result of a step down could be sufficient to discharge Betty of the duty to take reasonable care with respect to the possible exposure to danger by lawful visitors to her shop.32 Despite the warning sign however, a 6 year old Jack wandered down to the step and arguably either could not read the sign or did not understand what it meant to convey. Therefore it is questionable whether or not the sign left by Betty was sufficient to discharge the duty of care as prescribed by the Occupiers’ Liability Act 1957.33 Moreover, it has also been established that when children are on the premises, there is a special duty of care to protect children from harm. This would necessarily require ensuring that certain dangers were not “allurements” to children.34 This is particularly so since Section 2(3)(a) of the Occupiers Liability Act 1957 specifically states that occupiers are required to be “prepared for children to be less careful than adults”.35 There are two mitigating factors that might help Betty to escape liability. First, it may be argued that the drop down step in a hairdresser’s shop was not an allurement to a child. Secondly, it has been argued that parents are responsible for the supervision of their children and may not shift that responsibility onto the occupiers of premises when a parent is present.36 II. Providing a Safe System of Work and Competent Staff It appears that the junior employee’s failure to remove a broken glass from the sink and the more experienced staff member’s failure to ensure that it was remove reflect both the failure to provide a safe system of work and competent staff. It was held in Wilsons and Clyde Coal Co. v English that an employer’s duty to provide a safe work system was an non-delegable duty. This non-delegable duty renders the employer liable for failing to provide competent staff, proper supervision and sufficient equipment.37Providing a safe system of work includes providing instructions for minimising the risk of harm to employees.38 There is obviously a lack of supervision among Betty’s employees and the absence of a safe system of work. The more experienced member of staff assumed that a broken glass would be removed by the junior member of staff and did nothing or said nothing about it. There are obviously no protocols for dealing with potentially dangerous situations and Betty is liable for the damages sustained by the junior member of staff for failing to provide a safe work system, proper supervision and arguably competent staff. III. Health and Safety at Work Complaints about the ventilation system at work may give rise to claims that Betty is failing to satisfy the duty to provide for health and safety at work. The duty to provide health and safety at work is an implied condition in the contract of employment.39 It is not altogether clear what the complaint about the ventilation is. However, if it turns out that the ventilation system is associated with a danger to the health of the employees, Betty will be liable for damages for failure to provide a healthy and safe workplace. Under the Health and Safety at Work Act 1974, requires that employers must take all reasonable steps to minimize or eliminate any risk to health and safety at work.40 This means that Betty has a duty to investigate the complaint and if it is found that the ventilation system poses a risk of harm to her employees and members of the public that frequent the shop. If it is discovered that there is a risk to employee health, Betty will only be required to take those steps that are reasonable in her specific circumstances for minimizing or removing the risk of harm. For example if Betty cannot afford the cost involved in reducing or removing the risk of harm, she will have complied with the Health and Safety at Work Act 1974. Nevertheless, EC Directive 89/391 specifically provides that: Employer shall have a duty to ensure the health and safety of workers in every aspect related to work.41 Based on the Directive liability appears to be strict for employers who fail to provide a healthy and safe work environment. Betty may only escape liability if it can be shown that the risk of harm is outside of her control.42 However, under the EC Directive, employers are compulsorily required to take “the measures necessary for the safety and health protection of workers” and this includes preventing “occupational risks” and providing training and information.43 Betty is therefore advised to conduct a risk assessment immediately and take the steps necessary for reducing or removing the risk. IV. Vicarious Liability It is not revealed in the facts of the case for discussion whether or not Betty or one of her staff members applied the perm to the customer. Regardless, Betty would be liable for the damages either vicariously or personally. It was held in Lister v Hall Ltd. employers are .liable for the torts committed by his or her employees working in the course of their employers.44 If it can be established that the customer’s hair loss is linked to Betty’s shop, Betty will be liable for the damages. If it is found however that an employee committed the tort resulting in the hair loss suffered by the customer, Betty will only escape responsibility if it can be shown that the employee was not authorized to perm the customer’s hair or was not authorized to give the customer a perm, she will not be liable for the tort of the employee.45 This would mean that the employee was not working in the course of his/her employment. However, if Betty performed the perm herself, she will not escape liability. Bibliography Alan & Co. ltd. v El Nasr Co.[1972] 2 All ER 127. Balfour v Balfour [1919] 2 KB 571. Branca v Cobarro [1947] KB 854. Brinkibon Ltd. v Staghag Stahl und Stahlwarengesellschaft mbH [1983] 2 AC 34. Carbolic Smoke Ball Co.,[1893] 1 QB 256. Chitty, J. (2012). Chitty on Contracts, Vol. 1. London, UK: Sweet and Maxwell. Dickinson v Dodds [1876] 2 Ch. D. 463. Donoghue v Stevenson [1932] UKHL 100. Dyer v Metropolitan Policy Commissioner [1998] 3 All ER 442. EC Directive 89/391. Employer’s Liability(Defective Equipment) Act 1969. Felthouse v Bindly [1862] 142 ER 1037. General Cleaning Contractors v Christmas [1953] AC 180. Gibson v Manchester City Council [1978] 1 WLR 520. Glasgow Corp v Taylor [1922] 1 AC 44. Hall v Lorimer [1993] EWCA Civ 25. Harpwood, V. (2009). Modern Tort Law, Oxon, UK: Routledge-Cavendish, 7th Edition. Harvey v Facey [1893] AC 552. Health and Safety at Work Act 1974. Hyde v Wench [1840] 49 ER 132. Lister v Hesley Hall Ltd [2001] UKHL 22. Jones v Padavatton [1968] EWCA Civ 4. Mulcahy, L. and Tillotson, J. (2004) Contract Law in Perspective, London, UK: Cavendish Publishing Limited. Occupiers’ Liability Act 1957. Parker v Clark [1960] 1 WLR 286. Pharmaceutical Society v Boots Chemists [1952] 2 All ER 456. Phipps v Rochester Corporation[1955] 1 QB 450. Simpkins v Pays [1955] 1 W.L.R. 975. Wheat v E Lacon & Co. Ltd [1966] AC 522. White v Blackmore [1972] 3 All ER 158. Wilsons and Clyde Coal Co. v English [1937] UKHL 2. Read More