Aspects of Contracts and Negligence - Assignment Example

Aspects of Contracts and Negligence Task One Meaning of the following terminologies Non-assignable: lack of rights to transfer Revoke: to invali a contract Hereby: In this case scenario Furnish: to fully provide or satisfy FOB: (Free on board) Contract, where the seller is to deliver goods by ship with notification of buyer, who then pays freights, associated costs and takes responsibility for potential transportation damages from the moment of loading onto the ship Indemnify: to restore back to original financial status Proprietary: the ownership process Confidential relationship: a connection or association that cannot be disclosed to 3rd parties Liens and encumbrances: encumbrance means a right over a given real estate property while liens means the right bestowed on a creditor to take over the property in case of default or violation of agreement in the contract. Void: invalid Winding up order: liquidator collects the assets, pays debts and distributes any surplus to company members in accordance with their rights Deemed: considered Construed: to be interpreted as Executed: to be signed Be binding on: Be required by law or obligated to Task 2: Principles of contract law Question 1: Four Elements of contract law Offer For a valid contract there must be an offer which refers to the proposition to do something or provide a something in exchange for a favor or another thing. The offer must be addressed to a specific person or group of persons hence invitation to treat cannot be considered as an offer. It must then be accepted or rejected by another party. If it is accepted then a contract is made. In Gibson v Manchester City Council - CA [1978] 1 WLR 520, Manchester City council was being managed by Conservative Party which worked with a policy of selling city council’s premises. Gibson made an application for information of his house and terms of mortgage on the council’s form (McKendrick, 2005; p. 47). The council replied by stating that it was prepared to sell the house at a purchase price of £2,725 less 20% = £2,180 which was not to be taken as an offer. Gibson filed in the application form with the exception of the purchase price and took it back to the council. The labor party took over and stopped all the sales where Gibson was informed that he could not complete the contract. Gibson sued the council on claims that the contract was already executable. It was ruled by the House of Lords there existed no contract because the parties had not come to a material agreement of the contract. Acceptance For a valid contract to be executed, the offer must be accepted by the other party. The acceptance must be conveyed to the offeree, the agreement must be assured and the terms of accepting the offer must be precisely the same to the terms contained in the offer. In Entores v Miles Far East [1955] 2 QB 327 the plaintiff delivered a telex message from England promising to buy 100 tons of Cathodes from Miles Far East in Holland. A telex message was sent back to the petitioner from Holland to England accepting the terms of the offer (McKendrick, 2005; p. 51). The issue was for the court to determine the point at which the contract was executable. In case the acceptance was valid from the time the telex message was delivered the contract was created in Holland hence Dutch law would come into force. In case the telex message of acceptance took place upon the receipt in England the agreement would be presided over by English law. It was held that; to amount to a valid acceptance the acceptance was required to be communicated to the offeree hence the contract was made in England which means the English law was put into force. Consideration of an offer It is an item or something of value offered by the promisor to the promisee in substitute for another item of value offered by a promisee to promisor. Normally this is payment or might be an act when it is privileged to. The consideration does not need to meet to any form of test. Hence a [arty who wants to enforce a contrast must provide evidence that they have introduced an item, service or anything of value to the table which has the picture of value according to the law. For example in Thomas v. Thomas (1842) 2 QB 851, 859 the husband to the plaintiff had a dying wish that his wife should have either £100 or the house in which he lived. The information was passed to the brothers of the plaintiff and they consented to enforce the intent. She made an agreement to pay on yearly basis £ 1 for ground rent and maintain the house through repair. The defendant brought an action of banishment upon the death of their brother. It was ruled that consideration equality does not need to be equal for the contract to be valid hence the plaintiff had a valid contract (McKendrick, 2005; p. 49). Intention to enter legal relations For a valid contract the parties involved must have intentions to get into a legally enforceable deal. That is to say the parties getting into the contract must have intentions to create legal association and should know that the contract can be legally enforceable. The intent to establish a lawful connection is put into account hence the contract does not need to state expressly that one knows and understands and has intentions to follow the legal consequences of the agreement. In case the parties to the contract make a choice not to be lawful, bound this should be evidently stated in the agreement for it not to be legally bound. For example in Balfour v Balfour [1919] 2 KB 571 A civil engineer Mr. Balfour worked for the state in Ceylon as an irrigation director. He lived with Mrs. Balfour. During Mr. Balfour’s leave they all came back home but Mrs. Balfour acquired rheumatic arthritis. She was advised by the doctor to stay on claim that the jungle climate was not favorable. Prior to sailing of their boat, Mr. Balfour promised to pay a monthly amount of £30. She later received a declaration nisi and later on an order for alimony. It was held that there was a rebuttable presumption over the intent to establish a lawfully executable contract when the contract or the agreement was domestic in nature (McKendrick, 2005; p. 48). Question Two: Contracts enforceable over minors Minors are legally tied in cases where an agreement to supply them with necessaries or services which are considered to be necessity or beneficial to their lives or existence. This is specified under Sale of Goods Act 1979 section 3. For instance in Peters v Fleming (1840) 151 ER 314 it was established that a gold ring as well as a watch chain were necessaries for a minor whose parents were members of the parliament even though it might not be necessaries where the needs of the child are adequately fulfilled or where the agreement or purchase can be considered as irrelevant. In addition in Nash v Inman [1902] 2 KB 1 the claim by a tailor that the purchase made a child of 11 waistcoats was for the child necessaries was denied on the rationality that the child had already enough clothing (ACCA, 2007; p. 59). A child can also enter into an employment contract and be legally bound by it in cases where it is for the general benefit of the child. In scenario where a child opt to work under conditions that would reduce compensation he might have gotten for injury, this is apparently to the disadvantage of the child hence such a contract cannot hold water. Similarly where a professional boxer while still a child was denied of compensation for a fight amounting £ 3000 for infringement of standard boxing rules such approval is legally binding as the requirement for respecting the sporting standards are beneficial to him in general. For example in Doyle v White City Stadium Ltd (1935) 1 KB 110 where a contract to train a boxer was brought before the court. There was no compensation even though the agreement was legally binding as it was reasoned that the agreement was beneficial due to training (ACCA, 2007; p. 59). In cases where a child agrees to purchase or lease land which has with it a continuous duty like purchase of shares such an agreement is legally binding after the minor attains the majority age in case they choose not to repudiate the contract within a rational time period. The financial responsibilities which fall prior to repudiation are legally binding on the minors. For example in Steinberg v Scala (Leeds) Ltd [1923] 2 Ch D 452 a minor made an application for shares in a firm. He paid an amount obligated on allotment and first call established on the securities. 18 Months after the agreement, the minor renounced the contract and asked to recover the money paid. It was held that the minor was not entitled to the money. Although no dividends were declared, the firm had done its duty and the minor would have received some value by disposing the shares (McKendrick, 2005; p. 47). Question 3 In contract law liquidated damages is the amount of money that the individuals in the contract abides to pay in the event one breaks or breaches the terms contained in the contract. The purpose or intentions of this is to secure performance as stated in the agreement or to make sure that the value to be paid in lieu of performance is done. On the other hand unliquidated damages refer to the amount that cannot be calculated or that is difficult to determine. The damages in general are those which are determined by s court as a result of infringement of the contract of one party in the agreement. Question 4 A contract or agreement can be put in express terms hence express contract and implied terms hence implied term contract. An express term in a contract is the phrase or terms that made verbally or in writing. An implied term in a contract is one which has some terms not put in words or in writing. Question Five Boilerplate refers to an explanation of language applied often in legally binding documents that has a specific, standardized meaning in a similar situation that indicates that the terms have not been personally twisted to deal with the presented legal case or issues. For example in the Question 6: An individual will choose to use arbitration system when the matters under contention are highly technical hence the need for expertise in the field. Arbitration also tends to offer quick solution compared to court system. Moreover, compared to judicial system arbitration is much cheaper and more flexible for business activities. There is also some sense of confidentiality with arbitration and the awards are made privately. There also very constrained platforms for appeals in arbitration awards. On the other hand it is difficult to waive the attorneys’ fees making it hard for the employees and consumers to receive legal representation compared to court system which has such privileges. In case it is compulsory for arbitration the individuals involve waive the rights to access the court system and a jury decides their case. There might be cases of impartiality in ruling for the employees and consumers compared to judicial system where there is fairness. Question 7: Harmonization according to EU is the procedure of establishing a mutual standard over the internal market where through every member state of EU, the members have a fundamental accountability for the regulation of most issues within the powers and eventually every state has its own laws and regulations. Question 8: British Westinghouse Electrical and Manufacturing Co Limited v Underground Electrical Railways Company London Limited [1912] AC 673. Is a case that is important in the contract law in the sense that it deals with the obligation to mitigate one’s loss after the infringement of a contract. The plaintiff was supplied with turbines by the defendant where in breach of the agreement they were lacking in power. The petitioner accepted and utilized the turbines yet reserved their privilege to claim for damages. Later on the turbines were replaced with other more efficient turbines compared to the ones supplied by the defendant. The plaintiff sought to claim and recover the costs of the replacement of the turbines in damages. It was held that the obligation to mitigate was not to assume any step which a rational and reasonable person would not in any normal case take in the business process. One reasonable steps were deemed to be considered in this case. Question 9: Damages for misrepresentation Where a party has entered into an agreement upon misrepresentation has already been made on the party by another person and has suffered loss or injury the party making the misrepresentation will be accountable for damages due to fraudulent misrepresentation. The individual who made the misrepresentation will be responsible for damages unless he proves the misrepresentation was not created fraudulently and the facts made were factual. For example in Royscot Trust Ltd v Rogerson [1991] 2 QB 297 it was ruled that the relevant measure for the damages were similar to those of common law under fraudulent acts or for damages related to all losses coming from the misrepresentation on top of the unforeseeable losses as under Section 2(1) of the Misrepresentation Act 1967 of the UK Parliament. Task 3:1 (130 words) Advertising----Clause 7 Applicable Law---- Clause 30 Assignment ---clause 28 Availability—Clause 20 Cancelation----clause 13 Competitive equipment---- clause 5 Date of effectiveness----- clause 24 Delay----Clause 12 Distribution Right ------ clause 1 Drawings and data---- clause 16 Entire Agreement----- clause 29 Equipment acceptance----- clause 10 Equipment warranty-----clause 18 Indemnity ------ clause 27 Independence of parties---- clause 26 Misuse of equipment--- clause 19 Notice or communication---- clause 23 Patent indemnity----- clause 15 Payment terms----- clause 3 Prices----clause 2 Purchase orders--- clause 9 Relationship of parties--- clause 25 Sales --- clause 6 Severable provisions--- clause 31 Shipment term---- clause 11 Term---clause 21 Termination-----clause 22 Equipment ---clause 4 Title to Equipment---- clause 4 Title to Product and Doc. Package --- clause 17 Training ---- clause 8 Use of company name --- clause 14 Task 3:2 Question1: The contract starts 21st February, 2014 when it was signed and ends after 5 years unless terminated earlier. Question 2 If the Distributor pays an invoice of GBP 100,000 thirty-one days after the invoice date the financed charge will be (1/360*25%* the number of days* purchase order) = 1/360*25%*31*GBP 100,000 = £ 2,152.78. Question 3 The purpose of the ROT clause is to allow the supplier or distributor to retain title of goods till the conditions have been met on the goods. In the Distributor Agreement the ROT clause is clause 4 Question 4 Under clause 11 the distributor bears the risk of damage after the company has delivered the equipment to a common carrier for shipment under FOB. Question 5 If the Distributor cancels a GBP 100,000 order three weeks before the scheduled shipment date the company will retain the title of the goods till full payment is paid under clause 4. Question 6: Under clause 18 the company will provide repair or replacement of the equipment in the event it found to have manufacturing fault once it is proved that it was not of the distributor’s making. Question 7 If the Distributor hires a new managing director who has a criminal record for fraud he or she will be liable because under clause 26 the distributor has no power to represent the company in any manner hence all risks will be passed to him. Question 8 Under clause 29 the general agreement can be altered and implemented by the authorized agents but it must be made in writing. Task 4: Upon the analysis of the Distributor Agreement and the knowledge gained in class the contract is balanced given that both parties; the company and the distributor have their benefits as well as risks to incur in the eventuality that any of them breach their own part of the bargain. The distributor has an opportunity to cancel the delivery of the equipment three to four weeks before the process. Besides, the distributor enjoys warranty provided on the products where the any fault found in the goods such as manufacturing fault can be repaired without any cost or replaced. The company also enjoys some benefits from the contract given that all risks passes to the distributor once the goods are delivered hence any risk causing loss that arises to them will be absorbed by the distributor. Moreover the company has a privilege to demand a finance charge of the invoice is not paid after 30 days of delivery. This ensures that the distributor pays for the goods promptly. Bibliography Ewan McKendrick, (2005) Contract Law - Text, Cases and Materials. Oxford University Press ACCA: for exams in December 2007 and June 2008. (2007). Coventry: Get Through Guides. Read More