Contract between Andrew and Books for All - Case Study Example

Business Law Andrew vs “Books for All” Ahmed almaamari Contents Contents 2 Contract between Andrew and “Books for all” 3 (Was it broken by either party) 3 REMEDIES TO ANDREW 6 ‘TERMS OF CONTRACT’ TO BE DETERMINED BY LAW COURTS 7 Contract between Andrew and “Books for all” (Was it broken by either party) A contract exists and is formed in law only when there is an agreement (i.e. offer and acceptance), a consideration and an intention. An offer is an account of intent by the offeror to perform according to the terms of the offer if it is accepted and therefore be bound to the contract that will exist on acceptance. Also the offer should be brought into the knowledge of the concern for it to be valid ( Taylor v Laird) and should have been made equally to one person or the whole world (Carlil v The Carbolic Smoke Ball Co). In this case of Andrew and Book for All, the latter offered discount to Andrew on the purchase of books by where the terms were that the buyer would purchase books from a list of titles which would be at a significant discount from the rates at which other shopkeepers sell. Andrew quickly accepted the terms and also became a member of the club. This is a case of ‘an offer of bargain’ which is applicable only until it is accepted by the latter (Eliason v Henshaw) which was duly acknowledged by ‘Books for all’. Similarly as in Eliason v Henshaw, the offer of bargain was made by the seller to the buyer but the acceptance was wrongly sent to a place other than that stated in the offer which made the offer of bargain not enforceable. In case of Andrew and bookshop however, there was an offer and so was its acceptance. The doctrine of consideration states that something must be either given or promised in return for a promise in order to make it binding. A promise is not binding and not legally enforceable, without consideration. Consideration can be understood as ‘price of promise’ (Janet O’Sullivan and Jonathan Hilliard). Without the price, the promisor’s promise cannot be enforceable. The issue here is how a promise made by A can be supported and enforced B’s reciprocal promise. The three essential elements of consideration which are Benefit/ Detriment Requirement ascertain that either a benefit to the promisor or a detriment to the promisee incurred (Bolton v Madden). This can be explained as the price of the promise is received by the promisor and given by the promisee. Consideration has to be provided in order to make these promises legally enforceable. Also, The ‘Bargain’ Requirement (Dunlop Pneumatic Tyre Co Ltd v Selfridge and Co Ltd ) states that as ‘An act or forbearance of the one party, or the promise thereof is the price for which the promise is bought.’ Most contracts require the benefit conferred on the promisor or the detriment suffered by the promisee must be given in return for the promise. Quid pro quo (this for that), is the consideration in the form of a price in return for the exchange of a promise. Then to be seen is that a consideration should be Sufficient but need not be adequate (Woolworths Ltd v Kelly). As long as the ‘something’ that the law regards as valuable, it is a good and sufficient consideration. The ‘price of promise’ is no need to be economic equivalent of the promise (Chappell & Co Ltd v Nestlé Co Ltd). It is because the law of contract does not play any role to make sure any parties of getting a good deal and it is against the economic freedom. The ‘price of promise’ cannot be determined by any law. The ‘something’ can be worth more than the price one would want to pay, but at the same time it can be worth nothing other than a piece of rubbish to someone else. As parties to this contract, it is essential to determine which role each person adopts within the contract, as the respective roles, carries with it a distinctive set of rights, obligations and remedies. In the interest of clarity, we will assume that “Books for All” is the promisee has engaged Andrew (the promisor) to purchase books at a special discounted rate from a list of titles. In this case, “Books for all” have made an offer to a selected group of people to purchase books at a discounted price provided the books are from a list of titles issued. The same is valid as it was brought to notice of the concerned populace. Also the same was duly endorsed by Andrew who makes the agreement enforceable. The offer had a valid consideration on both sides. One party gets the benefit of reduced price on the list price of books accorded and the detriment or the discount is being borne by the bookshop and thus fulfils the bargain requirement also. Also, both the parties had an intention to enter into a contract as the conditions set out in the initial offer was followed by both, thus making a valid contract exist between the two as qualified for offer, acceptance, consideration as well as intention (Balfour v Balfour, 1919). Balfour v Balfour clarifies that a promise doesn’t culminate into contract until there is absence of intention that the agreement is to be legally enforceable. Although, the law of contract does not play any role to make sure any parties of getting a good deal and it is against the economic freedom wherein as already stated, the price of promise cannot be determined by law; the contact seems to have been broken by “Books for All”. This is so because the bookshop clearly stated in its terms that the discounted rate would be significantly lower than prices at other bookshops which means that it would be at a significantly lower price from the then prevailing rates. However, the industry benchmark prices are to be determined while taking up the case of the above breach. REMEDIES TO ANDREW Remedy available to Andrew will be in the form of liquidated damages. Equitable relief, in the form of a trust, was highly regarded in nearly all the judgments in Trident (where, Trident is a law firm) and is available to Andrew if it can be established that the benefit of the discounted book, was held for him. Another equitable solution can be found in estoppel (where estoppel is a series of equitable doctrines in law) which is not curbed by the rules governing The Doctrine of Privity of contract. Here, if “Books for All has unconscionably induced Andrew to believe (Expectation loss) that he will be able to avail a discount price on books bought by him under the offer made to him, and Andrew has relied on this promise to his detriment and to the knowledge of the inducer, then Andrew could bring an action against that party by having an equitable interest in the main contract (Waltons Stores (Interstate) Ltd v Maher). Walton Stores v Maher is an Australian case where even through by oversight, Waltons Stores did not sign the lease based on which a contract was finalised with Maher, the reliance interested was defended and the expectation interest was protected by court. As “Books for All” and Andrew are the parties to the main contract, they exercise the contractual rights and obligations to one another that are commonly found in a standard two-party contract. At its most basic, Andrew has a contractual right to sue “Books for All” for failure to provide the promised benefit of the book at discounted price at a price lesser than other book stores. Remedies include damages, specific performance and injunction. Here as regard to terms of liquidated damages, a fixed amount payable in the event of this breach of contract will be decided by the court. An action for damages is particularly problematical as the object of damages is to compensate the plaintiff for any loss suffered. As stated before, the reasoning behind conferring the benefit now becomes an issue for the courts. The view of the court here is: if the promisee has suffered no measurable loss, damages are nominal. Only if Andrew has suffered a detriment due to the breach, such as a debt owing to a third party, will Andrew be entitled to substantial damages. ‘TERMS OF CONTRACT’ TO BE DETERMINED BY LAW COURTS The ‘Parol evidence rule’ will govern the contract between Andrew and “Books for all” because the contract offer and terms therein were expressly and in return as acceptance, Andrew had taken the membership of the club which too records the transaction in a document to provide extrinsic evidence of the same. The parol evidence will thus bring in certainty by binding the parties who entered into contract to the writing in the contract document (GH Treitel). GH Treitel is the author of the book ‘The Law of Contract’ and has laid down several imperatives of offer, acceptance and contract. Now, while determining the terms of contract, ascertaining the statements made by both the parties during the course of negotiation and this will establish the representation or terms. In order to determine the same, intention is the ultimate indicator of whether a statement is a term of contract or not (Heilbut, Symons & Co v Bucleton). Here, Bucleton sued for warranty breach as the shares he bought in Heilbut Co. Was told to be for rubber but were actually not. Here the statement that the shares are for a rubber co was made by Heilbut and became the indicator of intention which was held by court as misrepresentation. The four factors that will be considered by court while deciding intention will be timing, importance of the statement, reduction of terms to writing and Special Knowledge/Skills. Also seen by the court while determining the terms of contract would be the conditions, warranties and intermediate terms. The condition is the major criteria to be fulfilled in any contract and the contract stands valid as long as those events are in place (Poussard v Speirs) and in breach of condition, the contract can be repudiated. Warranty is a milder term than condition, and in case of its breach damages can be claimed but not nullification of contract (Bettini v Gye). Intermediate terms or innominate terms, as also known as, are those terms which are not initially classified as warranty or condition. However, in case of breach, they may even lead to repudiation of contract if severe damages or loss are incurred. Also would be seen are implied terms by the court, which define the primary obligations of the parties in contract and can be implied by custom, court or statute. In conclusion, the case between Andrew and “Books for All’, does qualify to be contested as a valid contract due to fulfilment of the essential elements of contract which are agreement, consideration and intention. As already illustrated, the contract cannot be deemed to have been broken by either party as Andrew put forth regarding the discounted price being more than prices at other stores. The same is because the price of promise is a subjective notion and cannot be determined by law. What is valuable for one may be worthless for some other person. However, under the Law of Contract, since a valid contract exists between the two, Andre can claim to contest against the bookshop in the court of law. However, books at a discount than the other stores can be categorized as a misrepresentation and does amount to claim of damages by Andrew. Since the loss is not severe, the damages will only be to the extent of loss suffered. Read More