Legal Advice on Ryan v Indybooks - Essay Example

?England Contract Law Module Module Number: Academic Year: Seminar Essay Question: Legal Advice on Ryan v IndyBooks Number: Ryan v IndyBooks Limited Ryan v IndyBooks Limited is an example of a current contract law cases involving the use of modern technology tools. There are a number of issues arising in this case as follows: whether; email communications and ignorance of terms of contract by a party voids an agreement; either party breached the contract – Lily by withdrawing her membership fee and IndyBooks by poor site maintenance and eventual withholding of Lily’s monthly earnings; Ryan has any basis to claim breach of the contract; contract dispute resolution mechanisms in the contract document can be implemented; the High Court has the jurisdiction to hear the case, the summary judgment on Lily’s claims has any basis in law, and; the flowery messages on the company’s website amounted to an invitation to treat. The appeal case will deal with two primary issues; whether the IndyBooks Ltd. adhered to the doctrine of incorporation; and whether an e-mail notification can be taken as form of acceptance of a contract. Doctrine of Incorporation The doctrine of incorporation in English law Contract Law refers to the attaching of terms and conditions to such agreements in a manner that the court acknowledges them as legitimate. For terms to be viewed as incorporated the following three conditions must be met: a) the offerer of the contract must notify the other party of the terms prior to or in the course of entering into the contract; b) the terms and conditions must be attached to the document containing the contract; and c) the originator of the terms must act “reasonably” to ensure that the terms are within the reach of the other party. These rules are however not statutory1. In this case, IndyBooks Limited met the three conditions by notifying Ryan of the terms and conditions during the registration process. The company also made sure that the terms and conditions were attached to the registration form of the contract, and that Lily or any other seller could not complete the registration process before agreeing to the terms. Finally, IndyBooks acted reasonably by ensuring that the terms were within Ryan reach. She could read the terms and conditions or even download them but she ignored them. Ignoring terms of a contract is no defence to unawareness of the terms. Contractual document The second condition for incorporation of contract articles is that the terms must be written on a form that is planned to be the binding document. In this case the terms were part of the contract document that Ryan had filled and submitted online. Therefore, the defendant acted reasonably to meet this condition, and is likely to win in the appeal. In the United States, the rule of “minimum contacts” is used to decide most of online contract cases, especially those that are made by a party who is in the country and the other is outside of the country. In the case of Pres-Kap, Inc. v. System One, Direct Access, Inc., [1994] 636 So.3d 1351, for example, the court invoked the rule in arriving at the decision of the case2. In the case, Pres-Kap a party based in New York, chartered System One's automated airline booking system with computer systems situated in Miami, Florida, but encountered problems with the transaction due to system failure. He then opted to not send the funds and System One filed claims for violation of the agreement in Florida. The court decided that a contractual agreement between two parties in which one party is out of the country does not meet the “minimum contacts” doctrine for personal jurisdiction. The local company that owned the server was also inadequately prepared to corroborate this. Otherwise, by granting the plaintiff’s prayers, the court predicted that future users of Internet-based services will jam courtrooms wherever particular servers were located. In light of the decision on Pres-Kap, Inc. v. System One, Direct Access, Inc., the court may rule in favour of IndyBooks Limited, because both parties in the Ryan v Indybooks had not met the “minimum contacts” rule in the contract to warrant claims for damages. Informing the other party Informing Ryan raises a duty on the part the company. However, IndyBooks made reasonable steps to bring the terms to the attention of Ryan, but she opted to ignore reading the terms. The precedent to this effect was made in the case of Parker v South Eastern Railway Company [1877] 2 CPD 416, in which the court decided that whether or not the other party to a contract reads the terms in not a defence against supposedly unfair terms of a contract. What matters is the offerer taking "reasonable steps" to put the terms where the other party can access them. In another recent case in which the court overruled ignorance to the terms of conditions in a contract was the Spencer v Secretary of State for Defence [2012] EWHC 120. The court followed the earlier precedent in its decision, which if applied in this case clearly leaves the Ryan with no defence. In the case law, the High Court indicated that when creating contracts, business people must be cognizant of the terms and read them because by making the terms available to them the law assumes that they have read them and will comply with them fully. Acceptance of contract Acceptance may points to a valid or an invalid contract. By claiming that the contract was casual, and that the communication of the acceptance of the contact by e-mail had no basis in law, Ryan is wrong. E-mail notifications have become prominent and are admissible in courts of law as a form of acceptance. This is especially true when the contract will implemented online such as the case between Ryan v IndyBooks Limited. Notably, the company had validated the contract by adhering to the basic rule of communication – sending an acceptance link through an e-mail notification to Ryan. Although, the law has does not clearly spell out when such a communication has been passed to the other party, IndyBooks made sure that Ryan had received the communication by clicking on the link in the mailbox to complete the contract process3. Moreover, the casualness of the contract does not arise when there is a clear path of communication between two parties to a contract like it is in this case. It is evident that communication did happen when Ryan pressed the 'submit' button at the bottom of the contract page; when she received the congratulatory message on the company’s site after submitting the form; and when she was notified of the need to complete the registration process by clicking on the link in her e-mail, which she all did. English case law has of late given prominence to e-mail notifications, clearing the way to the use of the method to communicate legal documents. In the recent case of Golden Ocean Group Limited v. Salgaocar Mining Industries PVT & Ano., [2011] EWHC 56, Golden Ocean alleged that a charterer had breached the contract by failing to complete delivery of a container under an agreement whose value was about $50 million. In response, the defendants alleged the issue was not formally covered in a contract or a legal guarantee despite verbal communication and a series e-mails to them. In its decision, the court invoked the Statute of Frauds 1677 (section 4), which specifies that non-formal contracts require only to be written with adequate detail so as to be binding and enforceable. The defendants pointed out that the guarantee was inadequate as it was written in several emails which could not be joined together as required by law. Moreover, the plain names of the parties could not be construed to mean signatures. The last e-mail notification was also made to appear as if there was an official contract being implemented which was never the case. Nonetheless, the Court of Appeal restated the High Court verdict in its decision of the case in favour of claimants by arguing that the series of negotiated e-mail notifications promptly authenticated the contract, even though they were largely informal due to the lack of signatures. The court validated the e-mails containing the first name, nickname or initials, insisting that they would form an enforceable contract. The basic factor which the courts considered was that both parties had an intention to have a binding arrangement regardless of the fact that the official contract form which was anticipated to be signed was never really completed. The court’s decision really lowered the bar for e-mail communications and other online contracts by settling for the basic rule of intent to have a binding agreement in which each party would gain mutual benefits. In light of this judgment, Ryan does not stand a chance to refuse having received a communication formalizing the contract between herself and IndyBooks. She cannot therefore run away from the fact that she did not intend to increase her business sales by entering into a contract with IndyBooks4. In another case dispelling the alleged casualness of Ryan’s contract negotiation and authentication of the contract which lasted for a record four minutes, Nicholas Prestige Homes v. Neal [2010] EWCA Civ 1552 upholds the credibility of emails. The case was decided by the U.K Court of Appeal in which the judges argued that an obligatory contract was established by a series of emails containing an agency agreement which a property owner received from a Property Agency and replied in the affirmative. The property firm was successful in its damage claims for violation of contract when they learnt that they had lost control of the property following its sale by the owner through another agency. Arbitration Clause An arbitration clause normally allows for out-of-court settlements for any breach of contract by either party. In the case of Ryan v IndyBooks Limited, Article 13 of the terms and conditions provided such a mechanism. It was therefore unreasonable to bring to the attention of Ryan, the Article in isolation, during the making of the contract. In this case, had Ryan read the terms, she would have known that all grievances stemming from the implementation of the contract were supposed to be addressed to a facility in Texas, US. By checking in the terms and conditions box, Ryan is assumed to have entered into a binding agreement to follow the laid-down procedures. But instead, she is attempting to use the rule of separability to impeach Article 13, which deals with arbitration in the contract. The doctrine of separability provides for an arbitration clause to be analysed distinctly from the basic contract document that contains it. This is vital where issues about the implementation of the basic agreement exist. Despite the validity in the potential application of the doctrine of separability in this case, and as stipulated in the Arbitration Act 1996 (section 7), the practical impact of the doctrine is that the implementation of the basic contract does not routinely render an arbitration clause invalid. Without the doctrine, an arbitral body would not have the jurisdiction to hear any row raising an issue about the weight or presence of the agreement in which the arbitration agreement was enshrined. In view of the law, Ryan’s attempt to invalidate the arbitration clause in the agreement must result in a direct impeachment of Article 13 of the terms of the contract. In other words, she must table before the court, independent issues that seek to specifically annul the clause. In the UK, an arbitration agreement such as the one in Article 13 can only be directly voided if its implementation affects public policy5. The issue then would be whether or not the Article 13 of the contact terms could stand on its own if the contract was invalidated or whether the implementation of the Article helps to foster or avoid of an illegality in the UK, or the circumvention of a foreign legislation. In this case, however, an impeachment would violate the provisions of the English contract law by eliminating the importance of terms of a contract. In conclusion, the case favours IndyBooks because the plaintiff has ignored the terms and conditions in the contract form; and she was the first party to breach the contract by withholding membership fee instead of following the right arbitration procedure. As far as the case is concerned, the contract between Ryan and IndyBooks is valid and enforceable. Bibliography Gavrilovic, Nenad, (2013), “Unfair Consumer Contract Terms Under Macedonian Law: How the Old and the New Function in Practice,” Journal of Consumer Policy, 36(3), pp.315-328 Helberger et al, (2013), “Digital Content Contracts for Consumers,” Journal of Consumer Policy, 36(1), pp.37-57 Marshall, Brooke Adele, (2012), “Reconsidering the proper law of the contract,” Melbourne Journal of International Law, 13(1), p.505 Percival, Lynn C., (2011), “Public policy favoritism in the online world: contract voidability meets the communications decency act,” Texas Wesleyan Law Review, 17, p.165. Rosenberg, Anat, (2013),”Contract's meaning and the histories of classical contract law,” McGill Law Journal, 59(1), pp.165-207 Read More