Contract Law: Terms of the Contract - Assignment Example

CONTRACT LAW---TERMS OF THE CONTRACT PART A “The Law of Contract is intended to ensure that what a man has been led to expect shall come to pass andthat what has been promised to him shall be performed.” 1 (Anson, 2002: p 3) A legal contract requires some specific terms for its proper implication. Sec 2(h) of the Law of contract defines the term contract in these words: “An agreement enforceable at law is a contract.” Hence, a legal contract contains the following elements: Two or more persons or parties, which must be competent to entering into a contract, and there must be some agreement that is enforceable at Law. There should be some lawful consideration, and the proposal and acceptance must be made in a proper mode. The acceptance must be made within appropriate period of time from the making of a proposal. Both the proposal and acceptance must be communicated in a prescribed way Hence, in a valid contract, the terms can both be express and implied. If in an agreement, the proposal is made in words either spoken or written, it is called an express contract. “Express terms”, Wishart submits, “are those specifically agreed by the parties. Express terms can be in writing or oral or both.” 3 (2008: p 397) Express terms are considered as more valid in nature, due to the very reality that these terms contain evidence in them and could be presented before the court of law as documentary proof of a contract entered into by the parties to the contract. In addition, express terms also prove the validity of communication between the parties. According to Section 4 of the Law of Contract, “the communication of an offer is complete when it comes to the knowledge of the person to whom offer has been made.” Thence, the terms of a contract are more emphatically conveyed to the second party in express contract in comparison with the implied one. When an offer or proposal is made otherwise than words, it would be an implied contract. The terms of contract will be observed through conduct or performing of or abstinence from an act. For example, when a person boards on a bus or train, it simply means that he agrees with the fare of that transport to be charged from him during his journey. In addition, he is also expected to travel in that public transport without claiming special privileges or facilities, though the facilities should be same as described by the management of that transport. “Terms implied in law by the courts”, Peden Observes, “are defined as those terms that are consistently implied into all contracts of a particular type because of the nature of the contract, rather than the supposed intentions of the parties. Where terms have been consistently implied, the onus is on the defendant to prove that the term should not be implied into a specific contract that fits within the category of contract which the court considers relevant.”4 (2008: p126) Consequently, nature and clauses of an implied contract are kept in view by the courts of law while giving judgement in the contract law. In implied contracts, terms and conditions are considered to be understood and agreed upon, and do not require further elaborations. The main thing is the intention of the parties to the contract. In Oscar Chess v. Williams, the Denning LJ declared: “It is sometimes supposed that the tribunal must look into the minds of the parties to see what they themselves intended. That is a mistake… The question of whether a warranty was intended depends on the conduct of the parties.”5 (Koffman & Macdonald, 2007: p 109) In the same way, the enforceability of the terms of an implied contract depends upon the statements comprehended with by the parties. “A contract (especially a consumer or business contract) will often be concluded by a document which purports to contain the terms of the contract.”6 (Wishart, 2008: p 398) Here appears an other imperative issue i.e. in an express contract, clauses are manifestly mentioned in words, either written or oral; whereas in implied contract, particularly the consumer contract, the clauses are thought to be agreed upon, which can be observed by performance and conduct of the parties. The same clauses are to be presented in the court of law. In many cases of the implied contracts, the consumers are not aware of all the terms of the contract; rather, they only get acquaintance with few only. Some of such terms may be unpleasant for them, but the escape from these terms is not possible. For instance, a drycleaner is not responsible for the safety of the material not taken by the customer within fortnight or so. Hence, it is the fault of the customer if he enters into such implied contracts without taking serious notice of them. “An example of a similar approach”, Stone observes, “is found in AEG (UK) Ltd v. Logic Resource Ltd.”7 (2005: p 199) In this case above-mentioned, the defendants received an invoice from the claimants against £3,783.50 and the holding charge £5 per transparency per day. The defendants refused to pay the amount and pleaded that they had not been informed regarding the holding charge, though the claimants had clearly defined the price of the invoice. “The Court of Appeal ruled that Condition 2 was an unreasonable and extortionate clause, which the claimants had not brought to the attention of the defendants, and therefore it did not become part of the contract and the defendants were not bound by it.”8 (Retrieved from selbornechambers.co.uk). Consequently, the law of contract does not allow the implication of such clauses, which have wilfully been concealed before the clients and customers. “Courts seem reluctant to consider new types of relationships that do not fit within the traditional norms. For example, in Ashmore v. Corporation of Lloyds (No. 2) 26 Gatehouse J. was asked to imply a term into a contract between Lloyds and a Name. The plaintiff suggested that this contract came within a type or category of relationship described as “regulator and regulated.”9 (Peden, 2008: p 130) To conclude, it becomes evident that courts look into the nature and situation of the implied contract before announcing its decision in favour of either of the party to the contract. And the customers can be deceived and exploited in the name of law. Thus, they are not bound to comply with all these terms of implied contract they have entered into. On the contrary, if a court finds that the terms of implied law have been neglected wilfully, it may issue order for compensation to the aggrieved party. And if the parties to the contract have shown any kind of malafide intention, the court can order fine and compensation to be paid to he aggrieved party. PART B In the case under study Jonathon & Ricky intend to sue Cowell Enterprises Ltd, which created breach of contract on the bass of the terms of Implied Contract. The following legal issues have been raised in this case: i) whether the company to be sued at the court of law can completely rely upon the clauses of the terms & conditions it has mentioned in its tickets; ii) whether Jonathon & Ricky can be prevented from bringing an action by the rules on privity of contract. These two issues shall be considered here separately in turn. Exclusion clauses Jonathan and Ricky must present before the court of law the very reality that alteration in the programme is a different thing, and must pray to the court of law that changing of programme does not mean such kind of conduct that may put the spirit of the contract at stake altogether; as did by the Cowell Enterprises Ltd by excluding all international stars from the programme on the one hand, and altering the song contest to the performance of one local singer only. Alteration of the programme should not mean the complete deprivation of the entertainment. It is therefore, the case comes under the fold of breach of contract. According to the implied terms of Law of Contract, there could be some alterations in the performing of some act relevant to the expected one, but no change could be made that destroys the rights of the second party to the contract. A party enters into contract against some specific consideration in order to obtain the privileges of its own choice. And if that party gets nothing positive and fruitful out of the contract, but mere physical and financial hurt and losses respectively, then it has unconditional rights to seek the help of law as remedy against the breach of contract inflicted by the other party. Hence, the severe negligence committed by Cowell Enterprises Ltd cannot be declared as an exemption clause. On the contrary, an exemption clause that part of a contract, which purports to exclude the liability of one of the parties in particular circumstances or situation. Consequently, Cowell Enterprises Ltd can only rely on the clause if it has been incorporated into the contract, the clause covers the breach, and the clause does not fall foul of the statutory regulations. Incorporation According to the statutes of the Law of Contract, if a clause has been included in the contract that challenges the very rights of either of the parties to the contract, that clause would not be effective one. On the contrary, the preservation of rights and obligation is the basic motive behind the formulation of a valid contract. Cowell Enterprises Ltd has manifestly written the terms and conditions, clauses (5) & (6) of which are relevant to the case under study, which state: “5. a. Cowell Enterprises Ltd. accepts no liability for death or personal injury howsoever caused. b. Cowell Enterprises Ltd. accepts no liability for loss or damage to customers’ goods or property during the performance of this contract. c. Notwithstanding the terms and conditions above, Cowell Enterprises Ltd. limits its liability to £100 per customer. 6. The Management accepts no liability if changes are made to the programme without prior notice.” In Smith v. Hughes11, where the plaintiff offered to sell to the defendant oats, and in sample exhibited old oats, on the basis of which the defendant ordered for the same against the price of 34 per quarter. The defendant afterwards refused to accept the oats on the ground that they were new, and he thought he was buying old oats; nothing, however, was said at the time the sample was shown as to their being old; but the price was very high for new oats. It was held that though it was not declared by the plaintiff that the quality would be one and the same, yet it was considered to be as same according to the sample exhibited to the customer. “If the contract”, Furmston et al. state, “is wholly on the word of mouth, its contents are a matter of evidence normally submitted to a judge sitting on a jury. It must be found as a fact exactly what it was that the parties said, as in Smith v Hughes, where the question was whether the subject matter of a contract of sale was described by the vendor as ‘good oats or good old oats.’” (2007: p 158) Hence, nature of the implied contract is paid proper heed rather than the words, conduct or intention of the parties to the contract. “It has been suggested that a court should not imply a term creating a contractual duty to exercise care when the party concerned is already subject to a tortious duty of care.71 However, concurrent obligations are common today. And theoretically, since the contract provides the circumstances giving rise to the tortious obligation, it would not be logical for the tort to oust a contractual term that would otherwise be imposed.”12 (Peden, 2005) In the light of the judgement described in the cases above-mentioned, it becomes crystal clear that Jonathan and Ricky have every right to sue against the damages occurred due to the serious negligence and malafide intention of Cowell Enterprise Ltd, and they can seek the support of law in the light of the precedents made by the courts of law at different occasions. The court can ask the Cowell Enterprise to pay compensation against the financial and physical losses and damages occurred due to the ill intention of the company. Footnotes: 1. Anson. Contract Law, 2002 2. Law Of Contract Section 2 (a), (b), (c) & (d) 3. Wishart, 2008 Express and Implied Contract p 397 4. Peden Contracts; Implied terms; Public policy *L.Q.R. 459 5. Koffman & Macdonald Oscar Chess v. Williams [1957] 1 WLR 370 6. Wishart, 2008 Implied Contract p 398 7. Stone 2005: p 199 AEG (UK) Ltd v. Logic Resource Ltd 8. AEG (UK) Ltd v. Logic Resource Ltd (selbornechambers.co.uk) 9. Peden Contracts; Implied terms; Public policy *L.Q.R. 462 10. Ibid p 138 11. 12. Ibid p 140 BIBLIOGRAPHY: Anson, Sir William. (2002) Law of Contract 28th Edition Oxford University Press ISBN 0199256039 p 3 (Retrieved from http://www.reportbd.com/articles/38/1/Contracts/Page1.html) Biers, Sam (Ct. of App. 1876) Dickinson v Dodds (Retrieved from://www.4lawschool.com/contracts/dodds.htm) Furmston, M. P., Cheshire, Geoffrey Chevalier, & Fifoot, Cecil Herbert Stuart (2007) Law of Contract Oxford University Press ISBN 0199287562 pp 156-159 Hare, J. I. Clark. (2003) The Law of Contracts Published by The Law Book Exchange, Ltd., ISBN 1584773111, 9781584773115 p 309 Koffman, Laurence & Macdonald, Elizabeth. (2007) The Law of Contract 6th Edition Oxford University Press pp 109-133 Peden, Elisabeth. (2008) Contracts; Implied terms; Public policy *L.Q.R. 459-471 pp 121-134 Stone, Richard (2005) The Modern Law of Contract 6th Edition Cavendish Publishing pp 198-217 Wishart, Windy-Chen. (2008) Contract Law 2nd Edition Oxford University Press pp 395-485 Federal Trade Commission—Facts for Business Sachdeva & Gupta. (2002) Mercantile and Industrial Law Ajanta Prakashan Publishers, Delhi pp 8-38 Singh, Avtar (2005) Law of Contract Sixth Edition Mansoor Book Publishers Urdu Bazaar Delhi pp 19-31 The Lectric Law Librarys Lexicon Understanding the Magnuson-Moss  Warranty Act AEG (UK) Ltd v. Logic Resource Ltd (Retrieved from http://www.selbornechambers.co.uk/publications/documents/May2006.pdf) www pkykwong.com Lave, J. (1988) Cognition in Practice, Cambridge: Cambridge University Press. Noonan, Rinke. (2005) Law for Laymen (Retrieved from http://www.rnoon.com/index.html) http://www.reportbd.com/articles/38/1/Contracts/Page1.html Know your law: Offer and its essentials (Retrieved from http://www.ourkarnataka.com/Articles/law/offer.htm) http://www.swarb.co.uk/lisc/Agenc19301959.php http://www.swarb.co.uk/lisc/Famly19701979.php Read More