Dilemmas in Legal Practice - Case Study Example

The above scenario requires discussion on the law regarding prices advertised in brochures and whether an advertised price would be a contractually agreed price or an invitation to treat. There also needs to be discussion about the effect of counter offers and the battle of forms principle that is used to decide when a contract has been accepted. It will also be necessary to examine the postal rule in order to determine the date at which the contract should be regarded as valid from. This will specifically require discussion on the use of electronic communications such as emails and faxes. The section on the acceptance of the price increase midway through the contract will require an examination on the law of economic duress. For the final part there will need to be a discussion on whether the police are entitled to charge extra for carrying out their normal duties. Invitation to treat Items advertised in newspapers, brochures1 and shop windows are classified as an invitation to treat2. It is regarded in law as the seller inviting the customer to make the seller an offer to buy the items. Acceptance of the offer occurs when the goods are presented for payment. The seller is entitled to accept the customers offer to buy the item or reject the offer3. This rule applies to goods in a shop as well as to items listed in a brochure or newspaper4. The advert is regarded as an invitation to treat until the buyer offers to buy the advertised item5. As the price in the brochure is an invitation to treat the seller is not bound to sell the item at the advertised price as no acceptance occurs until the buyer offers to buy and the seller accepts the offer6. When the buyer contacts the seller to arrange to purchase the item the buyer is accepting the invitation to treat7 and if the seller accepts the offer to pay then the acceptance element of the contract is complete8. If the goods had been dispatched to the seller without querying the price quoted then an acceptance of the offer can be inferred9. Counter offer and battle of the forms A counter occurs where the parties are still in negotiation as to the agreed price for the item. In the scenario above L & H made an offer to PW to supply the lengths of tube. The communication from PW, asking if a lower price would be considered, amounts to a counter offer. As this is a counter offer no contract has been entered into until the seller accepts the counter offer10. When deciding if a contract has been formed between the buyer and the seller the courts will examine all the communications between the parties to ascertain if there has ever been an agreement between the parties on the same terms11. In general terms the courts will take the view that where there are continual counter offers the final document in the series will be evidence of when the contract is fully created12. In the above L & H did not respond to the counter offer. The courts would infer from this that the seller was rejecting the counter offer and therefore the court would hold that no contract existed between the parties. Postal rule The postal rule was established by the case of Adams v Lindsell13 when the court was asked to decide when a contract is deemed to have been formed if acceptance is communicated by post. The court found difficulty with this due to postal delays and the parties not being simultaneously aware of the communications. In the case of Adams the court stated that “Where the circumstances are such that it must have been within the contemplation of the parties that, according to the ordinary usages of mankind, the post might be used as a means of communicating the acceptance of an offer, the acceptance is complete as soon as it is posted14”. In this particular circumstance the acceptance was communicated via a fax, which was not received as the fax message fell behind the fax machine. Acceptance by fax is regarded in the same manner as acceptance by telephone. Although the parties are not in close proximity to each other it has been accepted by the courts that a fax or telephone call is essentially ‘substantially instantaneous as a two-way communication.’ Article 15 of the UNICTRAL makes the point that an electronic record is deemed to be sent when it is properly addressed or directed to a recipient and when it us out of the control of the sender. The courts generally hold the date of sending as being the effective date for the acceptance to have been communicated to the vendor. In this above case this would mean that the contract would have been deemed to have been created immediately after the fax had been sent. The sale of the items to a third party would therefore be regarded as a breach of contract and as specific performance cannot be ordered as the goods have been sold to another the courts would award compensation to the plaintiff for the breach. Economic duress Economic duress has been defined as wrongful or unlawful conduct that creates fear of economic hardship which prevents the exercise of free will in engaging in a business transaction. When deciding whether the plaintiff has been subjected to economic duress the courts will consider whether the circumstances are part of the "rough and tumble of the pressures of normal commercial bargaining” as was decided by Dyson J in DSND Subsea Limited v Petroleum Geo-Services ASA15. It has been suggested that because the courts are not keen to get involved in contractual arguments with commercial parties that plaintiff’s would be best advised to pursue a claim for unjust enrichment. One of the first cases to consider the notion of economic duress was The Sibeon and The Sibotre16. In this case the courts recognised that commercial pressure could amount to economic duress in certain circumstances, but that commercial pressure alone was insufficient. Kerr J in this case felt that there must be some other factor within the contract which could be regarded as a coercion of his will so as to vitiate his consent. This was followed in 1979 by the case of North Ocean Shipping v Hyundai Construction (The Atlantic Baron)17 where the courts held that fear of economic hardship can by regarded as economic duress as such a fear could demonstrate coercion by forcing the party to perform rather then risk financial hardship. In Pao On v Lau Yiu Long18 Lord Scarman agreed with the judgment of Kerr in The Sibeon and The Sibotre stating that duress whatever form it takes is a coercion of the will so as to vitiate consent. Lord Wilberforce and Lord Simon of Glaisdale reinforced this notion in Barton v Armstrong19, stating that in determining whether there was a coercion of will such that there was no true consent, it is material to enquire whether the person alleged to have been coerced did or did not protest; whether at the time he was allegedly coerced into making the contract, he did or did not have an alternative course open to him such as an adequate legal remedy; whether he was independently advised; and whether after entering the contract he took steps to avoid it. It was held in Pao On that there was no coercion of Lau’s will stating that there had been commercial pressure but the actions of Lau made it so that the court could not accept that there had been coercion. The court stated in this case that Lau had considered the matter thoroughly and had chosen not to bring litigation proceedings and that by doing this the court were unable to find that coercion had occurred. In the case of North Ocean Shipping Co Ltd v Hyundai Construction Co Ltd20 Mocatta J stated that the pressure must be such that the victim’s consent to the contract was not a voluntary act on his part. The judge went onto say that such evidence of economic duress may render a contract voidable. In 1982 the case of Universe Tankships v ITWF (The Universe Sentinel21 the judge did not regard it as a requirement to show that the claimant’s will and consent had been overborne by pressure. Cases such as Atlas Express Ltd v Kafco (Importers and Distributors) Ltd22 and Vantage Navigation Corp v Bahwan Building Materials (The Alev)23 demonstrates that for the court to be satisfied that economic duress has occurred the plaintiff only needs to show that there has been a suppression of their will or consent. This pressure must be improper in the eyes of the law (Dimskal Shipping Co v ITWF (The Evia Luck)24. In DSND Subsea Limited v Petroleum Geo-Services ASA [2000]) ("DSND") the court held that there was no economic duress. The law on economic duress was phrased in the following terms by Justice Dyson The ingredients of actionable duress are that there must be pressure, (a) whose practical effect is that there is compulsion on, or a lack of practical choice for, the victim, (b) which is illegitimate, and (c) which is a significant cause inducing the claimant to enter into the contract... In determining whether there has been illegitimate pressure, the court takes into account a range of factors. These include whether there has been an actual or threatened breach of contract; whether the person allegedly exerting the pressure had acted in good or bad faith; whether the victim protested at the time; and whether he affirmed and sought to rely on the contract. These are all relevant factors. In making his decision Dyson J found that the suspension of the work by DSND was not equivalent to illegitimate pressure and also found that other reasonable alternatives were available to PGS. Dyson J considered that the meetings leading up to the signing of the contract should properly be regarded as typical of all commercial negotiations and stated that he did not believe that PGS believed at any time that they were signing the contract under duress. By contrast in Carillion Construction Limited v Felix (UK) Limited25 the judge did find economic duress to be averred. In this case the plaintiff’s had been contracted to build an office in London. The plaintiff’s subcontracted the work to the defendant’s but the plaintiff remained liable to the contracting party of the project was late in delivery. The defendant’s were behind in the work but still managed to force the plaintiff to sign an agreement in relation to the defendant’s final account by refusing to deliver the cladding as arranged. Dyson J in this case held that the threat to withhold delivery amounted to a threat to commit a breach and therefore should be properly recognised as constituting illegitimate pressure and economic duress. Dyson also commented that the defendant’s must have been aware that the delay would lead to the plaintiff incurring penalties for non completion of the contract and that the plaintiff would have inadequate time to find an alternative supplier. In DSND the court stated that as the contract is voidable rather than void the person claiming economic duress who wishes to rescind must do so within a reasonable time. If the plaintiff continues with the contract despite the illegitimate pressure the court could view the contract as affirmed and will disallow rescission of the contract. Charging for police services Under s25 of the Police Act 1996 it states that (1) The chief officer of police of a police force may provide, at the request of any person, special police services at any premises or in any locality in the police area for which the force is maintained, subject to the payment to the police authority of charges on such scales as may be determined by that authority. (2) In the application of this section to the metropolitan police force, for the reference in subsection (1) to the police authority there shall be substituted a reference to the Receiver for the Metropolitan Police District. It could be argued that the request by the Camox for the police to provide extra protection following the threat made by the animal rights protestors could be regarded as a request for special police services. If the courts take this view in this case this would mean that Camox would be liable for the payment of the invoice for the provision of the services. Camox could counter this argument on the grounds that they had a real fear that they are at risk of attack and that it is the duty of the police to provide such protection. In order to prove this Camox would have to prove that there was more than a mere possibility that the threats would be carried out. Conclusion It can be concluded from the above that in the case of BSL & L&H the brochure price was an invitation to treat and cannot be relied on by BSL to force L & H to sell the goods at the advertised price. With L & H and PW the contract was not fully constituted as L & H did not accept the counter offer for the tubes at the reduced price. With L & H and WSL the communication by fax and the subsequent posting of the acceptance that evening is sufficient for the court to find that the contract was accepted by the parties firstly by the fax communication but also confirmed by the posting of the acceptance on the same day. DSC may be able to prove economic duress in this particular situation as they were forced to accept the price increase in order to complete their business. Camox are likely to have to pay for the additional policing services unless they can show that there was a strong likelihood that the threats made would be carried out. Bibliography Treitel, G H, The Law of Contract, 10th Ed, 1999, weet and Maxwell Beale, HD, Bishop, WD, Furmston, MP, Contract Cases and Materials, 3rd Ed, 1995, Butterworths Civil Procedure Volume 2, The White Book Service, 2002, Sweet and Maxwell Rose, FD, Statutes on Contract, Tort & Restitution, 10th Ed, 2000, Blackstone’s Civil Procedure Volume 1 2002, Sweet & Maxwell Harvey, b & Marston , J . Cases & Commentary on Tort, 1998, 3rd Ed, Pitman Publishing Mozeley & Whiteley’s, Law Dictionary, 1993, 11th Ed, Butterworths Treitel, G H. Law of Contract, 1999, 10th Ed, Sweet & Maxwell Table of Cases Adams v Lindsell [1818] 1 B &Ald, 681 Atlas Express Ltd v Kafco (Importers and Distributors) Ltd [1989] 1 All ER 641 Barton v Armstrong [1976] AC 104 Carillion Construction Limited v Felix (UK) Limited [2001] BLR 1 Dimskal Shipping Co v ITWF (The Evia Luck [1991] 4 All ER 871 DSND Subsea Limited v Petroleum Geo-Services ASA [2000]) ("DSND") BLR 530 Grainger & Sons v Gough [1896] AC 235 Harvey v Johnston (1848) 6 CB 295 Henthorn v Fraser [1892] 2 Ch 27 at 33 Hussey v Horne-Payne (1878) 4 App Cas 311 Jones v Daniel [1894] 2 Ch 332 Lacis v Cashmarts Ltd [1969] 2 QB 400 Lasky v Economic Grocery Stores 65 NE 2d 305 (1946) Lefkowitz v Great Minneapolis Surplus Stores 86 NW 2d 689 (1957) North Ocean Shipping Co Ltd v Hyundai Construction Co Ltd [1978] 3 All ER 1170 North Ocean Shipping v Hyundai Construction (The Atlantic Baron) [1979] QB 705 Pao On v Lau Yiu Long [1980] AC 614 Partridge v Crittenden [1968] 1 WLR 1204 Pharmaceutical Society of Great Britain v Boots Cash Chemists Ltd [1952] 2 QB 401 Re Charge Card Services [1989] Ch 497 The Frotanorte [1996] 2 Lloyd’s Rep 461 The Kurnia Dewi [1997] 1 Lloyd’s Rep 533 The Sibeon and The Sibotre [1976] 1 Lloyds Rep 293. Timothy v Stephen (1834) 6 C & P 499; Fisher v Bell [1961} 1 QB 394 Universe Tankships v ITWF (The Universe Sentinel [1982] 2 All ER 67 Vantage Navigation Corp v Bahwan Building Materials (The Alev )[1989] 1 Lloyds Rep 138 Zambia Steel & Building Supplies Ltd v James Clark & Eaton Ltd [1986] 2 Lloyd’s Rep 225 Read More