Trends in Common Law Jurisdictions - Essay Example

Trends in Common Law Jurisdictions 1. Finbar had no valid contract with TV8 so he could not claim any monies from the latter. Practical considerations in relation to performance contract are not present. At a minimum, a contract should be in writing. While an oral contract may be valid, it is very difficult to enforce such that "an oral contract is not worth the paper it is written is on." Therefore, since the terms are not in writing, then Finbar may not have a cause of action in contract to rely on. Furthermore, a contract should be signed by both parties. Moreover, the following terms must be in the contract to be enforceable. First, it must specify the requirements pertinent to the service subject matter of the contract. This often includes the date, time and length of performance. (Each song must be in the length of 1-3 minutes). It is also important to clarify how many batches of songs is Finbar expected turn over before he gets paid. This can be expressed in terms of weeks or months. (Finbar should turn over three songs to TV8 on the first week of May. Finbar will get paid every two weeks for the ten weeks that the song will be used by TV8.) This will ensure that both TV8 and Finbar will know what is expected of Finbar to avoid disputes during the duration of the contract. The second thing a performance contract must contain is the manner of compensation for Finbar. This can be a guarantee ("TV8 will pay Finbar 60 Euros every week), incentive (TV8 will pay Finbar 5% of the total contract price if ratings of the children’s TV show rise by at least 2%). In this case, Finbar had no contract with TV8. There was no written agreement between him and Jenny McSwindle. McSwindle’s letter to Finbar could not be considered a contract. The letter was, at the very least, an offer to Finbar. Finbar did not expressly, and in writing, signify his assent or consent to the terms proposed by McSwindle in her letter. While it could be said that Finbar’s act of sending TV8 some material was an implied assent to the contract, the same act had actually no consequence. Jenny McSwindle had sent Finbar a letter withdrawing her “offer” on April 30 but Finbar apparently, unaware of this withdrawal, sent the material on May 01. From the foregoing, it could be said that there was “no meeting of the minds” between Finbar and Jenny McSwindle. McSwindle’s “offer” was not simultaneous with Finbar’s “acceptance.” Events which had transpired could be described only as a “negotiations” between the parties. Negotiations may or not end in a contract. In this case, it clearly did not end into a contract. Further, there was yet no finality on several terms pertinent to the contract. McSwindle’s letter left much to be desired on specifying requirements on several pertinent matters – the exact date when was Finbar was expected to turn over the songs and the duration when the songs were expected to playing. Further, Jenny McSwindle did not claim to be in acting for, and in behalf of, TV8. It is doubtful whether, in any contract she would have entered with Finbar would be binding on TV8. 2. No, Finbar is not entitled to an increased pay from 15 Euros a week to 60 Euros which was what Jenny McSwindle had originally offered to him. As previously discussed, there was no valid contract between Finbar and Jenny McSwindle. The 60 Euros a week payment which Jenny McSwindle discussed in her letter was merely an “offer” to Finbar which had not “ripened” into a contract. Finbar could obtain the 60 Euros per week only if such agreement was contained in a new agreement or contract between him and TV8 which contract should expressly contain the provision that Finbar would be getting 15 Euros a week and such sum would be increased to 60 Euros a week if, and as soon as, TV8 recover from its losses. Further, “recovery from losses” may be subject to differing interpretations. Parties may vary on what TV8 should earn in order that it could be considered to have recovered from its losses. To avoid disputes, the contract should also specify the factors to be considered to determine whether TV8 could be said to have finally recovered from its losses. 3. A strict interpretation of the agreement between the parties would show that the consideration of the contract whereby McSwindle buys the rights to Finbar’s songs is only 1000 Euros. Under this strict interpretation, Finbar is bound to receive only 1000 Euros, nothing more. However, Finbar could argue that the circumstances which he could not have anticipated and foreseen, gave him rights to compensation much higher than what was originally agreed. When the circumstances have changed such that the continuation of the contract in its original terms would result to a grave injustice, the Courts have the power to amend the terms thereof to reflect the present reality and give the parties their due. In the case of Elton John v. Dick James Music & This Record Company [1991] FSR 397, the Court ruled in favor of Elton John upon finding that he entered into a contract with the defendant without the deal having been explained to, or negotiated with him, and without the opportunity to take legal advice. In doing so, the Court held that undue influence was exercised by the defendant over Elton John and that under the doctrine of equitable intervention, Elton John could not have been fully apprised of the terms of the deal before entering into the agreement with the defendant. Accordingly, this vitiated Elton John’s consent to the agreement. The doctrine of undue influence which comes from equity enables the Court to set aside contracts whenever it appears that one party has not freely consented to the transaction and as a reason thereof, has become a “victim” of the other party. In some cases, the Courts have considered the party’s lack of legal training and his ignorance of the financial aspect of the business as indicative of his “victimization.” In the case of O’Sullivan and another v. Management Agency & Music Ltd. & Others (1984 3 WLR 448), singer Gilbert O’Sullivan managed to set aside the publishing and recording contracts which he had entered into when he was still relatively unknown, for being unduly restrictive. Equity requires all transactions between those persons to be justified by the party in whom confidence is placed. In this case, McSwindle must show that the sale of the rights to the songs was fairly and freely assented to by Finbar. In the alternative, Finbar could also use the principle of “unconscionable bargains” more widely used in Ireland. Where one party has contracted by distress or recklessness or wildness or want of care, the parties could not be said to be equal at the time of the agreement. In this case, Finbar could argue that he was in dire need of money or that he was reckless or negligent not to seek legal advice, at the time he entered into the agreement with McSwindle. The Irish case of Fry v. Lane (1888) 40 Ch D 312 summarizes the jurisdiction to grant relief as depending upon three factors: (1) the poverty and ignorance of the plaintiff, (2) the consideration being at undervalue and (3) the absence of independent advice. All these elements are present in the case of Finbar. 4. There is a trend in common law jurisdictions especially in Hong Kong to rebut the presumption in commercial contracts that the parties intend it to be legally binding. The question of whether or not there is a binding contract depends on the intention of the parties and could be inferred from the language used and from the circumstances in which they are used: Parker v. Clark (1960) and Simpkins v. Pays (1955). In commercial transactions, there is a rebuttable presumption that legal relations are intended: Carlill v. Carbolic Smoke Ball Co. (above); Esso Petroleum v. Commissioners for Customs and Excise (1976); Edwards v. Skyways Ltd. (1964). Rebutting this presumption is difficult and can only be done by clear agreement of the parties: Rose and Frank Co. v Crompton Bros. (1925) involving “Honourable Pledge Clause”. Under UK law in fact, an agreement with consideration will not be enough to create a legally binding contract, it must be shown that the parties also have an intention to create legal relations which intention is expressly stated by the contracting parties. In other situations, the intention is readily implied by the sheer nature of the commercial transactions. Thus, the mere existence of consideration indicates the intention of the parties to create legal relations, though in some situations, the presumption of the intention can be rebutted. In such cases, there is no contract and no legal liability. Summarizing the rule under Hong Kong law therefore, there can be no valid contract when the parties do not intend to create a legal relation. Significantly, the law has created a rebuttable presumption that when agreements are made between family members, or friends or between spouses, the agreement is not intended to create a legal relation (see Balfour, Jones, Sun Er Jo cases). On the other hand, if the agreement is of commercial nature, the presumption is reversed (see Edwards, New World Development Co Ltd cases). The party seeking to rebut the presumption will have the burden of proof. In commercial agreements, there is a rebuttable presumption to the opposite and are presumed to be legally binding: Edwards v Skyways [1964] 1 WLR 349. For commercial agreements, it is much harder to rebut the presumption. The onus is on the party seeking to rebut: New World Development Co Ltd v Sun Hung Kai Securities Ltd [2006] 3 HKLRD 345 (CFA). The parties must expressly state that they have no intention of forming legal relations to avoid this presumption to set in: Rose and Frank Co v JR Crompton and Bros Ltd [1925] AC 445; or that the parties should stipulate that the agreement is still subject to a contract: Humphrey’s Estate (Queen’s Garden) Ltd v Attorney General [1986] HKLR 669 (CA). The disclaimer, however, must be clear and unambiguous: Edwards v Skyways Ltd [1964] 1 WLR 349. If the parties have signed a contract without such disclaimers it is impossible that there was no intention to form legal relations: Ma Ip v Lai Chuen [1957] HKLR 32 (SC). The judiciary will have to examine all the evidence presented to determine whether an intent to create legal relations exists. In Hong Kong, however, the following factors have to be considered as stated in World Food Fair Ltd v Hong Kong Island Development Ltd [2005] 1 HKC 594: “(1) Agreement on essential terms may indicate that a legally binding contract was intended. In the context of a lease, it may generally be said that such terms include the identity of the parties, the identity of the premises, the commencement and duration of the lease and the rent payable. However, it is important to bear in mind that just because there may be agreement on these matters, it does not necessarily follow that a legally binding contract has been created. The law is not quite so mechanical. The judge below referred to Kwan Siu Man v Yaacov Ozer [1999] 1 HKC 150, (1997-1998) HKCFAR 343, in particular the judgment of Litton PJ, to illustrate this. The exercise for the court is to ascertain whether the parties truly intended to create legal relations with one another. (2) Another indication that the parties intended to contract with one another is if there has been some performance, even partially, of the contract or in furtherance of it. In many ways, this is often the clearest indication of an intention to contract. And, in the present case, this factor is in my view decisive.” However, on the second factor, the approach adopted by the Court of Appeal was put into serious doubt. Upon appeal of the World Food Fair Ltd v Hong Kong Island Development Ltd [2007] 1 HKC 387 (CFA), it was stated, at para 27-28 that: “27. In my view, there is a circularity inherent in the Court of Appeal’s approach. In regarding payment of the deposit and the giving of possession for fitting out works as ‘performance’ which decisively proved the existence of a concluded contract, the Court of Appeal implicitly assumes that there existed a concluded contract of which such acts constituted ‘performance’, which ‘performance’ is then relied upon to prove the existence of that very contract. 28. Such acts are no doubt consistent with the existence of a concluded contract but they do not prove its existence. They are no less consistent with being acts done in anticipation of a legally binding agreement which the parties confidently expected to enter into but which never materialised…” It must be emphasized that in collective agreements between employees or labour unions and their employers, courts of Hong Kong have been too reluctant to find a binding intention to create legal relations, although there is no presumption one way or the other: Hong Kong Air Crew Officers Association v Cathay Pacific Airways Ltd [1994] 2 HKLR 367 (HC). Read More