Liabilities In Post Contractual Benefit - Essay Example

LIABILITIES IN POST CONTRACTUAL BENEFIT I Issues Raised 1. Whether there existed a valid contract? 2. Whether Mr. Jack Horner can be held liable for misrepresentation? 3. Whether Amanda and Patrick can legally decline to abide by the contract? 4. Whether Amanda and Patrick are entitled to compensation? II Arguments Submitted 1. Issue: Whether There Existed A Valid Contract? I. There was no valid contract between Mr. Jack Horner and Amanda/ Partrick. It is most respectfully submitted that there did not exist any valid contract providing for 20% deduction, on the total cost of function to be held at Avoca Haven, between Mr. Jack Horner and Amanda/ Partrick. I.A There was no Offer and Acceptance.. In order to determine whether an agreement has actually been concluded, it is essential to inquire whether in the negotiations which have taken place between the parties there has been a definite offer by one party, and an equally definite acceptance of that offer by the other.1 This is not the situation in the present case. The ‘offer’ of 20% deduction, was made for the first time and much later [over 37 days later] by Mr. Jack Horner on July 23rd 2005, from the date of conclusion of a separate and altogether different contract between Mr. Jack Horner and Amanda/ Partrick. The latter contract was concluded as early as on June 15th 2005. Besides, the ‘offer’ of 20% deduction, was a means of luring the general public who had still not availed of the benefits of Avoca Haven till then and hence by logic excluded from its purview all those who had already availed of Avoca Haven under its earlier terms and conditions. I.A i There was no offer but only an “invitation to treat” Even if it were accepted that the ‘offer’ of 20% deduction extended to Patrick/Amanda, it is highlighted that it was only an “invitation to treat” and not an “offer” in its legal connotation.2 “Offer” in this case has to be made by Amanda and Patrick to Mr. Jack Horner, and acceptance of the same is within Mr. Horner’s sole discretion---he may or may not accept it and cannot be forced to accept the same.3 I.B There was no consideration paid. The deposit of $ 500 that Amanda/Patrick paid to Mr. Horner, was in lieu of a contract to avail of Avoca Haven as per its earlier terms and conditions, which was in itself a separate contract clearly distinguishable from the latter invitation of 20% deduction. Since no ‘consideration’ was paid to avail the 20% deduction, no valid contract effecting the same can be concluded. This is so, because consideration is a formal necessity, which serves to distinguish those promises by which the promisor intends to be legally bound from those which are not seriously meant.4 I.C There was no contractual intention between the parties. The contract that was concluded on June 15th 2005 did not contain any clause relating to a 20% discount on the total cost of reserving Avoca Haven. Hence a question regarding the enforceability of the “20% discount” offer does not arise at all. It is respectfully submitted that the primary test is of “contractual intention”, that is whether there is evidence of an intention by one or both parties that there should be contractual liability in respect of the accuracy of the statement.5 The question therefore is: on the totality of evidence, must the person making the statement be taken to have warranted its accuracy, that is promised to make it good? If only the facts of the case are such as to show this positive intention6 the Court may construe as a term of the contract a statement or assurance made anterior [or posterior] to the final agreement7. A close scrutiny of the facts of the case would reveal that Mr. Horner at no point of time warranted the 20% discount offer to either Amanda or Patrick hence the liability regarding the enforcement of the same cannot be imputed on him. II Linking the two agreements would result in absurdity If the specific contract [which had no clause offering 20% deduction] concluded between the couple and Mr. Horner is not treated separately and allowed to be linked with the latter 20% deduction invitation, such that the deduction is made available to Patrick and Amanda, it would result in absurdity and chaos, since then everyone who had booked Avaca Haven, would be entitled to the discount irrespective of when they concluded the contract with Avoca Haven before or after July 23rd 2005. Surely to provide a discount to all, without any reasonable criteria, could not have been the motive of Avoca Haven. Such an ‘absurd’ interpretation would hit at the very core objective of Avoca Haven in providing for a discount only for bookings made between July 23rd 2005-30th August 2005 and hence the same absurd interpretation, of linking the benefits of the two contracts cannot be made enforceable. 2 . Whether Mr. Jack Horner can be held liable for misrepresentation? I. A Mr. Jack Horner had no duty to disclose about the 20% discount Even if it were presumed that Mr. Jack Horner had previous knowledge about the 20% discount in the offing, under the general rule of common law he was under no duty to disclose8 the same to Amanda or Patrick, when he concluded the contract with them on June 15th 2005. I.B Mr. Jack Horner made no misleading statements during the negotiation. It is humbly submitted that there must be some positive statement, or some conduct from which a statement can be implied,9 in order to amount to an operative misrepresentation. Mere silence does not therefore constitute a misrepresentation.10 The facts of the case do not reveal any conduct or positive statement made by Mr. Horner to the effect that 20% discount would not be in the offing in the near future in relation to booking of Avoca Haven and thus Mr. Horner cannot be held liable for misrepresentation. 3. Whether Amanda and Patrick legally decline to abide by the contract? I.A. Amanda and Partrick have to abide by the contract. The law is clear on the point that failure to disclose even a material fact, which might influence the mind of a prudent contractor, does not give the right to avoid the contract.11 The parties must look out for their own interest and ensure that they acquire information necessary to avoid a bad bargain.12 Amanda and Patrick thus cannot allege, non-disclosure of the discount offer by Mr. Horner would give them the right to avoid the contract. Hence Amanda/Patrick would have to abide by the contract and cannot demand their deposit of $500 if Mr. Horner is willing and ready to reserve Avoca Haven on the 10th of April 2006 for the couple’s wedding. 4 Whether Amanda and Patrick are entitled to compensation? I. A There is no “fundamental breach of contract”. Amanda and Patrick would be entitled to compensation only in a case of “fundamental breach of contract”. However, it is humbly submitted that nowhere in the facts of the case is it evident or implicit that Mr. Horner has refused to perform his part of the contract at any given point of time. In fact Mr. Horner was willing to reserve Avoca Haven on the 10th of April 2006 and never declined from the same. I.B There is no inconvenience or disappointment It is humbly submitted that no inconvenience or disappointment has been caused to Amanda/Patrick, due to the rejection of the 20% discount offer, since as has been argued aforesaid, the same was a separate, distinct, different and a much later offer bearing no relation whatsoever to the contract that was concluded between the couple and Mr. Horner. Attention may also be drawn to the fact that the “ agreement did not include any details as to the food, beverages, decorations, or order of proceedings. It did not include any agreement as to the costs on the day.” Thus the ‘expectation’ or ‘performance’ loss, consisting of what would have been received had the contract been duly performed13 is very low and since irrespective of this Mr. Horner is willing to perform his part of the contract, there arises no claim for compensation on behalf of the couple. Moreover allegations of distress, anxiety etc. against Mr. Horner would be no good, because damages are generally not recoverable for ‘any distress, frustration, anxiety, displeasure, vexation, tension or aggravation’14 Hence with reference to the aforesaid reasons, Amanda and Patrick will not be entitled to compensation. II Arguendo: Damages if levied against Mr. Horner cannot be punitive in nature. It is submitted that, even if by the remotest stretch of imagination, Mr. Horner is made liable to pay damages, such damages cannot be levied by way of punishment since ‘vindictive or ‘exemplary’ damages have no place in the law of contract15 III Conclusion Thus what appears from the above is that Mr. Horner has a strong case and in all probability cannot be made liable to extend the 20% discount offer to Amanda and Patrick. He also cannot be held liable for misrepresentation and for the payment of any compensation. This in turn then gives rise to the question as to:- Whether at all Amanda and Patrick have any recourse under the law? Amanda and Patrick can adopt the following course of action against Mr. Horner. 1. Amanda and Patrick can allege innocent misrepresentation against Mr. Horner: They can forcefully argue that when Mr. Horner made the offer of 20% discount at the exhibition, in July 2005 surely he must have had the knowledge of the same when he concluded the contract with Amanda and Patrick in June 2005, by virtue of his being the “Managing Director” of Avoca Haven Pty Ltd. However he both purposely or innocently chose not to disclose such information and thus misrepresented facts to Amanda and Patrick. In fact the Sec.2 of the Misrepresentation Act, 1967 permits compensation even for innocent misrepresentation. Besides they could also claim compensation under the law of torts specifically with regard to commission of fraud by Mr. Horner. Though generally it is the duty of the parties to inquire and gather information as regard a particular contract such that they do not enter into a bad bargain, it is respectfully submitted that information as regard the 20% discount offer was an information exclusively within the domain of the company and could not by any stretch of imagination be availed from the public domain. Hence Mr. Horner was under a specific duty to disclose the same and his non-disclosure amounted to misrepresentation. 2. Amanda and Patrick are entitled to compensation for misrepresentation and disappointment. Case law entails that compensation is recoverable in cases of misrepresentation and disappointment16 especially in cases where the contract is one to provide enjoyment. Moreover it is humbly submitted that such compensation may be punitive in nature.17 3. Amanda and Patrick are entitled to recover the deposit of $500 It is humbly submitted that if one party is entitled to be treated as discharged from further performance of the contract by reason of the other party’s breach18/ misrepresentation etc. [as is the present case], any money paid by that party to the other party under the contract could be recovered19 and hence in the present case Amanda/Patrick are entitled to recover their consideration of $500. Excepting for the limited aforesaid arguments and an effective persuasion of the same before the Court, Amanda and Patrick stand a weak chance to prove their case. In the context of the facts of the case, it would be advisable that Amanda/Patrick refrain from taking the matter before the Court, as the elements of contract be it, consent, agreement, capacity to enter into a contract, intention to create a legal relationship and privity of contract are only present in relation to the contract concluded on June 15th 2005. The ‘offer’ of 20% discounts by itself forms a new, distinct and altogether a different contract and cannot in any manner be linked to the contract of June 15th 2005. Thus any efforts to link the benefits of the two contracts would be futile in law. Bibliography Books J.Beatson, Anson’s Law of Contract, 27th edition, Oxford (1998), p.126 Smith and Thomas, A Casebook on Contract, 2nd edn. (1961), p. 126. Articles Burrows (1983) 99 L.Q.R. 217 Ellison Kahn (1955) 72 S.A.L.J. 246 Friedman (1995) 111 L.Q.R. 628 Fuller and Perdue (1936-7) 46 Yale L.J, 52, 573 Mcbride (1995) 24 Anglo-Americal Law Review 369 Taylor (1982) 45 M.L.R. 139 Winfield (1939) 55 L.Q.R 499 List of Cases 4. Addis v Gramaphone Ltd. [1909] A.C 488 5. Bailey v Bullock [1950] 2 All E.R 1167 6. Bell v Lever Bros. Ltd. [1932] A.C. 161 7. Bliss v S.E Thames R.H.A [1987] I.C.R 700 8. Branchett v Beaney [1992] 3 All E.R 910 9. Co-operative Insurance Society Ltd. v Argyll Stores (Holdings) Ltd. [1997] 2 W.L.R 898 (H.L). 10. Esso Petroleum Ltd. v Commissioners of Customs and Excise [1976] W.L.R 11. Fisher v Bell [1961] 1 QB 394 12. Grainger & Son v Gough [1896] A.C 325 13. Hayes v James & Charles Dodd [1990] 2 All. E.R 815 14. Heilbut, Symons & Co. v Buckleton [1913] A.C 30, at 51 15. Jarvis v Swan Tours Ltd. [1973] Q.B 233 16. R. v Charles [1977] A.C 177 17. R. v Lambie [1982] A.C. 449 18. Ruxley Electronics & Constructions Ltd. v Forsyth [1996] A.C 344 19. Seacarriers A/S v Aoteraroa International Ltd. [1985] 2 Lloyd’s Rep. 419 20. Smith v Hughes (1871) L.R. 6 Q.B. 597. 21. Timothy v Simpson (1834) 6 C. & P 499 22. Walters v Morgan (1861) 3 De G.F & J. 718 23. Watts v Morrow [1991] W.L.R 1421 Read More