Elements of A Contract - Assignment Example

Elements of A Contract Part I – Question 1 An agreement between two persons will be viewed and decided as a contract if it has the following elements: There is an offer made – An offer can qualify as an offer if it has a promise that goes along with it. A promise to do or act upon something in exchange for the acceptance of the offer being made. An offer goes with the willingness to bind oneself into a legal agreement, to enter into a bargain to another party, with the understanding that the other party to whom the offer is being made is the one that will conclude the agreement (_________Contract - Elements of A Contract, 2010). The acceptance of the offer – the acceptance of the offer is the absolute agreement of the offeree to a specific terms specified or made by the offeror. The validity of the acceptance depends on the full knowledge of the offerre of the offer. There must be an undeniable and unconditional expression of the acceptance. The acceptance must be expressed or carried out based on the terms of the offer (_________Contract - Elements of a Contract, 2010). Citing the two most common elements of a contract, it can be said in few simple words that a court may decide that an agreement made by two persons or two parties is a contract if it has the element of an offer and acceptance of the offer. A classic example of a contract is the case of Carlill v. Carbolic Smoke Ball Company in 1893 (___ICLR 2002). The defendants who were the property owners and vendors of the carbolic smoke ball, a medical preparation made to cure or protect its users from having influenza and any diseases that is caused by taking cold advertized their product by inserting into Pall Mall Gazette in November 13, 1891, and other news papers this statement: “£100 reward will be paid by the Carbolic Smoke Ball Company to any person who contracts the increasing epidemic influenza, colds, or any disease caused by taking cold, after having used the ball three times daily for two weeks according to the printed directions supplied with each ball. £1000 is deposited with the Alliance Bank, Regent Street, shewing our sincerity in the matter”. Along with that statement was the claim that during the last outbreak of influenza, there were thousands of smoke balls sold, and those that were using it were not found to have contracted influenza. The advertisement went on to say that a carbolic smoke ball could last for months in one family, making it therefore the cheapest cure in the world. The smoke ball can be refilled at £5 at the address, Carbolic Smoke Ball Company, 27, Princes Street, Hanover Square, London. One lady whom later became the plaintiff bought one smoke ball believing what was said by the advertisement and used it according to the instruction from November 20, 1891, to January 17, 1892 during which time she was inflicted by influenza. J Hawkins held that she was entitled to £100 for which the defendants made an appeal. Finlay, Q.C., and T. Terrell, for the dependants pointed out that there was no evidence of a binding contract (______ ICLR 2002). The contract was “too vague to be enforced” according to the defendants because of the following reasons (______ ICLR 2002): It was just an invitation to treaty There was no limit of time fixed for the catching of influenza and its scope was wide and if to be taken seriously, it could include those who have caught influenza even before the advertisement was launched. The advertisement was meant nothing but a boast or puff from the dependants Three Lord Justices who have handled and concluded the case may differ in their views slightly from one another, however they all arrived at the same conclusion. The Carbolic Smoke Ball Company made an offer to each of the prospective buyer and user of their product by declaring ““£100 reward will be paid by the Carbolic Smoke Ball Company to any person who contracts the increasing epidemic influenza, colds, or any disease caused by taking cold, after having used the ball three times daily for two weeks according to the printed directions supplied with each ball. It was a clear offer that goes with a promise to act upon something in the event that their claims would fail, like a guarantee. To prove the sincerity of the offer they deposited an amount of £1000 in Alliance Bank, Regent Street. This act clearly demonstrated the intention to enter into agreement. When the lady plaintiff Mrs. Carlill bought the product and used it because she believed in the product and the manufacturer of the carbolic smoke ball and all that were written in the advertisement, she accepted the offer being made. Although the offer was made to the public and to the entire world, the contract has been made to be effective when an offeree accepted the offer. In this case, there was an exact and explicit offer made and it was accepted (_________Contracts-Elements-Contract 2010). Question 2 - Consider the enforceability of the agreements of the given case examples: Answer to case (A) Albert & Francis – According to the law ‘Births and Deaths Registration Amendment Act’ (No 1 of 2002), a person who is under the age 18 is a minor (Net Lawman 2009). In order to enter into a legally binding agreement people must be in anyways competent to enter into agreement. The law however assumes that not all people are competent to enter into a contract, therefore there are exemptions, and these are: children less than seven years, a person who is not mentally capable, and people who are intoxicated with drugs or alcohol. Thus, a minor can legally enter into a contract. However the law maintains that anything that has been contracted with a minor is voidable. The law does not require a minor to have any justifiable reason for voiding an agreement, and this is because the law assumes that a minor does not have the intellectual capacity to understand the legal implication of a contract. In addition, a minor has the benefit of immunity with regards to a contract even if it is disadvantageous to the other party (Net Lawman, 2009). The only way a person can have a hold on the liability of the minor is to have a guardian (in any case the parent would be the best) involved in the agreement. Even the involvement of the parent is not a guarantee unless there is an absolute proof of the parent’s knowledge of the agreement made. Take the case of Fluck v. Tollemache 1 C. & P. 5 (182:?)1, heard by Burrough, Justice of the King’s bench. This involved a fifteen year old cadet at Woolwich whose father was living at Oxbridge. The plaintiff had written the father of the minor to pay for the clothes he supplied to the defendant’s son. The defendant refused to pay for whatever the plaintiff has supplied for his son for the reason that he had no knowledge whatsoever of the transaction the plaintiff had with his son. Justice Burrough told the jury that the defendant cannot be held responsible for his son’s action unless he ordered for the clothes himself for his son, or upon learning of the agreement his son made with the plaintiff had adopted the responsibility to himself (Parsons T. 1893). With regards to the case of Albert who is underage who barrows money from Francis clearly without the consent or authority from his parents as it is clearly demonstrated by lying about his age, a contract cannot therefore be enforced. Answer to case (B) Albert and Charles – What happened here in the case of Albert and Charles is called unilateral mistake. A unilateral mistake is when one party is mistaken and the other party knows about it, and is taking advantage of that mistake. In case of unilateral mistake the agreement is void and cannot be enforced (Gillhams 2008). A case study that can be cited is the Hartog v Colin and Shields (1939). Collin and Shields talked about selling Mr. Hartog hare skins. The agreed price was 10d per skin, however, upon putting it into writing a mistake has been made by Colin & Shields and have the price made 10d per lb. Mr. Hartog took advantage of this mistake and tried to make the defendants liable for the contract. Justice Singleton however decided that a contract between Hartog and Collin & Shields did not really exist, because Mr. Hartog knew that there was mistake and opted to take advantage of it (Hartog v Colin & Shields (1939) 3 All ER 566.). Question 4 – A Consideration is an important element of a contract, the basic requirement in English contract law. Currie v Misa (1875) was an English case that has defined consideration, “some right, interest, profit or benefit accruing to the one party or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the other (Duhaime L _____).” In other words, a consideration is a promise consideration (offer) of one party in exchange for the acceptance of the offer; an acceptance that goes hand in hand with a consideration of fulfilling what was required in the offer. Executory Consideration – is a promise of an act that will be done in the future in lieu of consideration in the contract. Executed Consideration – is something that has been done already, like a service that has been rendered in performance of the consideration of one party and therefore making the other party (the offeror) liable to deliver his or her part of consideration. Past Consideration – is the consideration already performed even before the contract has existed. This does not bind anyone to a contract. An outstanding example is Eastwood v. Kenyon (1840), 11 Ad. & E. 438, 113 E.R. 482. The plaintiff raised Sarah from infanthood acting as a guardian. The plaintiff acquired a loan from a certain Blackburn and secured it with a note. The money was spent for Sarah’s education and welfare. When Sarah reached maturity she promised a repayment for what was done for her, and in fact paid a year of interest of the loan. When Sarah got married, her husband promised the plaintiff that he would pay for the note but he did not, for which he was sued. It was held by Lord Denman that past consideration cannot be considered as a consideration. The judgment therefore was for the defendant (Demeyere 2004). B – I. In the case of Manson and Lyn if Manson is a jobbing gardener who dug up a garden for Lyn, and while the work was being done there was no mention of payment, yet when the job was finished Lyn promised to pay £35. While Lyn must have felt a moral obligation and therefore made a promise after Manson has dug up a garden for her, she could not be held liable for the promise made. The consideration is not of the present, and cannot be recognized as consideration. There was no agreement whatsoever prior to the digging of the garden. Case example: Eastwood v. Kenyon (1840), 11 Ad. & E. 438, 113 E.R. 482. B – II. In case of the same scenario for Manson and Lyn only on this case, Manson was a neighbor and a friend who is attracted to her; Lyn would still not be held liable for a promise made after the gardening job was done. It is for the same reason that there was no prior agreement between them. There was no offer made, and there was no acceptance of the offer. Case example: Roscorla v Thomas (1842) 3 AB 234 C –III. In Simeon Nicholas’ case after seeing an advert in a shop in his local area “painter required in a church hall – full remuneration”, went ahead and painted the church hall without consulting the Pastor and after then demanded for £50 remuneration. What happened here is an invitation to treat; an invitation to treat is a declaration of someone that he or she is willing to consider or entertain an offer in exchange for a thing or service. There was no offer made, an important element in order to form a binding contract (Duhaime L _____). Case example: Partridge v Crittenden [1968] 1 WLR 1204 Task 2-Question A. Consumer credit act of 1974 The Consumer Credit Act of 1974 is very wide in its scope. Understanding the whole legislation is not very easy; nevertheless its goal is for the benefits and protection of the consumer. Consumer Credit Act governs and controls majority of all credit transactions, with some other exemptions. The CCA regulates the finance option agreement of a purchase, hire purchase agreements, hire agreements, and additional sale agreements (Consumer Act 2008). The CCA have recently impose strictly that information should be presented to the consumers clearly in a way that they are fully aware of what they committing to, and so will be able to compare different credit providers and commit to whom they think can serve them best. Under CCA the consumers are informed of every important detail they need, including their right of cancellation. They are made aware also of their credit limit, duration of the agreement, the total amount they are going to pay, the APR, the cash price of the goods or service and the different interest rates. All these details must be legibly presented within the period of seven days; otherwise the agreement may possibly be unenforceable (Consumer Act 2008). Cooling off and cancelations are especially beneficial for customers buying on line which is under Distance Selling Regulations. In general there is provision of seven days during which the customer has the right to cancel. The supplier must provide the consumer a written document as confirmation of the product that has been delivered and received, if there is a failure on this matter, the cooling period will start and be effective only until they provide the said confirmation and may be extended until three months (Cooling off and Cancelations 2008). Case example: A certain James asked ‘What Consumer’ about the hire purchase he made for a car. A salesman came to his house and James signed a HP agreement. After the salesman took James’ insurance details etc., just after few hours James was able to collect the car from the place of the dealer. He did not sign there in the dealer’s place and he was not sent either a separate document of a cooling off period of 5days. He then asks the ‘What Consumer’ if the agreement is unenforceable. According to ‘What Consumer’ he can only have a cooling off period for agreements that were agreed upon face to face and signed away in the premises of the dealer; otherwise the agreement is legally unenforceable (Consumer Credit Act 2008). Task 2-Question B. Online store or mail order Sale of Goods Act 1979 can be said as the most practical and relevant when it comes to consumer’s rights, especially so with agreements made online or by mail. Sale of Goods Act deals with the three statutory rights which are 1) the seller has the right to sell 2) is it what you expected? 3) Satisfactory quality. It should be expected that the seller has the right to sell to anyone items which he has full ownership and that can be transferred to any prospective buyer. If the item is not owned by the seller, he must acquire a permission to sell that item from the owner. In the absence of that permission the agreement is not valid. The buyer of the product has the right to expect that the item that has been sold to him is in accordance with the sample description he has been told, and the one that he expects. Anything that does not conform to the specific description of the product he bought, he has the right for a full refund, to reject the item, and to claim damages. Lastly, and the most contested is the quality that is satisfactory (Sale of Goods Act (1979) 2008). Case example: Natalie’s mother bought a carpet, not long after the carpet was fitted she discovered there was a fault to its weave that covers a large area. She contacted the carpet shop and was told that it was the manufacturer’s duty to deal with the matter. The questions raised were, can Natalie’s mother ask for a better quality product and can she ask for a different style? Can she opt for a refund? Is she entitled for a full refund? ‘What Consumer’ answers that if it can be confirmed that the retailer of the product is at fault, Natalie’s mother can expect that the damaged area be replaced, however if it cannot be done the whole carpet must be replaced. She is entitled for a full refund of the money if at first it was discussed in the agreement. She can ask for a different carpet if there is a proof that it is not as described (Returning Faulty or Damaged Goods 2008) Consumer Protection Act 1987 – this Act deals with the products which are not safe to use or consume. A consumer in order to be able to claim for damages and compensation, it must be first proven the 1) the product is defective 2) the damage caused death, personal injury, and damaged to property that exceeds £275 3) the damage has been caused by the defect 4) the producer can be identified. It must be proven that the product has been used according to its purpose and not otherwise. It must be proven that the consumer did not neglect any detail of the safety instructions. If the product is specifically intended for an expert user and the one who use it at the time of the injury or incident was not a novice. The right of the consumer to sue does not apply with the damage or loss of the product. Under the Consumer Protection Act, the producer of the product, or the person or organization whose name appears as the trademark of the product or gives the impression as the producer of the product will be liable for whatever damaged done as a direct result of the use of the product (Consumer Protection Act). Data Protection Act 1998 mainly protects the personal information of an individual from abusive use. Under Data Protection Act 1998, organizations and companies are under legal obligation to use personal information of an individual in a rightful manner namely (Data Protection Act): Personal information must be lawfully processed and not excessively For limited purposes only Must be up to date and precise Must not be kept longer that what was required Must be used in line with the individual’s rights Secure Cannot be transferred to another country without a right and adequate protection. (Data Protection Act _____) An excessive use of someone’s data resulting to junk mails and cold calls is a violation of an individual’s right under the DPA. Case example: A company has phoned Ewan for three separate occasions, regarding his contents insurance. They have phoned him discussing thing without first establishing if Ewan was the right person. Is this a violation of DPA1998? According to ‘What Consumer’ if the personal data has not been unlawfully processed it is not a violation of DPA1998. Task 2-Question C. Make recommendations as to how this organization can become more efficient by complying with these laws? Complying with laws such as what have been discussed, like the Sale of Goods Act 1979 can established the name of an on line store or any mail order store. This will have a direct implication on the name of the company or organization which could result to a better sales and marketing outcome. A name is as good as the product one is selling. A good quality product is equivalent to a good name. The compliance with the Consumer Protection Act 1987 has direct implication on the company performance and revenue. Companies and organizations with “safety first policy” are companies with bright future. People and consumers who are now using the convenience of on line marketing are the consumers who are most vulnerable to DPA 1998 violation. However, organizations that are careful and honest in using people’s personal information will sure be honored by loyalty of its clientele. Therefore all the compliance with law is always beneficial to the organization. Works Cited: ________“Contract - Elements of a Contract”, accessed January 2, 2010 at http://law.jrank.org/pages/5690/Contracts-Elements-Contract.html. _______Consumer Protection Act 1987, Accessed January 2, 2010 at http://www.berr.gov.uk/whatwedo/consumers/fact-sheets/page38253.html _______Cooling off and Cancellation 2008, Accessed January 2, 2010 http://whatconsumer.co.uk/cooling-off-and-cancellations/ _______Consumer Credit Act 2008, Accessed Jnuary 2, 2010 at http://whatconsumer.co.uk/consumer-credit-act-1974/ Currie v Misa (1875) LR 10 Exch 153 at 162, Ex C Duhaime L. _____ Barrister, Solicitor, Attorney and Lawyer, “Consideration& Deeds”, Accessed January 2, 2010 at http://duhaime.org/LegalResources/Contracts/LawArticle-88/Part-3-Consideration-Deeds.aspx. Duahaime L. ____ Barrister, Solicitor, Attorney and Lawyer, “Offer & Acceptance”. Accessed January 2, 2010 at duhaime.org/LegalResources/Contracts/tabid/339/articleType/ArticleView/articleId/89/Part-4-Offer--Acceptance.aspx Gillhams Lawyers 2008 “The Law of Mistake in the UK” Accessed January 2, 2010 at http://www.gillhams.com/articles/393.cfm Hartog v Colin & Shields (1939) 3 All ER 566. _______How Does the Consumer Act Protect Me? Accessed January 2, 2010 at http://www.uswitch.com/loans/loans-guide/#step8 _________“ICLR 2002). Accessed January 2, 2010 at http://www.lawreports.co.uk/Publications/siforward.htm#I. Accessed January 2, 2010 Net Lawmen 2009 “Entering into a contract with a minor”. Accessed January 2, 2010 at http://www.netlawman.co.uk/info/entering-contract-minor.php Parsons T. 1893 ‘Laws of Contract’ Section II The Obligation of Parents In Respect to infant Children Part 2. Accessede January 2, 2010 at http://chestofbooks.com/business/law/Law-Of-Contracts-2/Of-The-Obligations-Of-Parents-In-Respect-To-Infant-Children-Part-2.html ______Returning Faulty and Damaged Goods 2008, Accessed January 2, 2010 at http://whatconsumer.co.uk/returning-damaged-or-faulty-goods/ _______Sale of Goods Act 1979, ch.54, p.5,Accessed January2, 2010 at http://www.opsi.gov.uk/acts/acts1979/pdf/ukpga_19790054_en.pdf _______Sale of Goods Act 2008, Accessed January 2, 2010 at http://whatconsumer.co.uk/the-sale-of-goods-act/ Read More