Contract between Sportswear World Ltd and Hi Q Manufacturers - Assignment Example

Student Name: Tutor: Title: Case study Course: Institution: Case study Question 1 Issue Is there a legally binding contract between Sportswear World Ltd and Hi Q Manufacturers Ltd? Rule Basically, a legally biding contract has the fundamental elements but it should also have capacity as well as legal purpose. The elements of a contract consist of mutual consent, consideration, offer and acceptance. Any contract lacking these aspects or capacity and legal purpose is not a legally binding contract. The most crucial aspect of a contract is that a party makes an offer while the other party accepts the offer1. Mutual consent is reached though offer and acceptance. Application In this case, Sportswear World Ltd and HI Q Manufacturer Ltd both reached a mutual consent when HI Q Manufacturer Ltd accepted the offer from Sportswear World Ltd. In addition, HI Q Manufacturer Ltd agreed in to terms that Sportswear World Ltd presented for the formation of the contract between the two. However, the sale did not go through and this means that there was no consideration in this contract. Consideration refers to something of value offered by a promissory to a promisee in exchange of something valuable that the promisee gives to the promissory. In the case, Hamer v. Sidway, 124 N.Y. 538, it was decided that respondent’s forbearance of legal rights on the promises of future benefit made by Petitioner could make up legal consideration2. On the contrary, in this case, there was no consideration between the contracting parties, Sportswear World Ltd and HI Q Manufacturer Ltd and hence this is not a legally binding contract. A contract should also indicate the intention to be legally bound. In general, there is an assumption that in all commercial contracts, parties have the intention of being legally bound, unless the contract parties expressly indicate that they do not wish to be bound. An example is Merrit v Merrit case where the court ruled that there was an agreement between the Mr. Merrit and Mrs. Merrit since even though married again, the agreement was made when they were separated and hence both parties made the agreement with the intent of creating legal relations3. Similarly in this case, HI Q Manufacturer Ltd and Sportswear World Ltd had the intention of forming a legal contract and this can be depicted by the signing of documents during contract formation between the two parties4. Generally, a contract implied through the parties’ acts can be implied in fact or in law, and whether in writing or oral it might be legally biding. In Australia, all contracts that are subject to legislation equivalent to the Statute of frauds, it is not an obligation for the contract to be in writing. In case the contract is within a written form and a person signs the contract, the signer is basically bound by the contractual terms as long as the contract is contractual in nature5. Accordingly, in this case, HI Q Manufacturer Ltd agreed to the contractual terms presented by Sportswear World Ltd and therefore a contract was formed between the two parties in this regard. In case the terms of the contract are not certain or are not complete, according to the law, the parties have not formed a contract yet. An agreement to agree doesn’t make a contract and incapacity to reach an agreement on major matters, which might consist of things like cost, may result to the failing of the entire contract6. Accordingly, in the contract between HI Q Manufacturer Ltd and Sportswear World Ltd, the two parties did not complete the contract since the transaction fell through and there was no agreement on things such as price and therefore there was no legally binding in this perspective. Conclusion Consequently, since the contract between HI Q Manufacturer Ltd and Sportswear World Ltd there was uncertainty and also there was no consideration in the contract which led to the failing of the contract, the was no a legally biding contract between the two. Question 2 Issue Do you have an action in negligence against Hi Q Manufacturer Ltd? In order to sue against negligence, all elements must be proved and they mainly include, breach, causation and pecuniary damages7. Rule In duty of care, Donoghue v. Stevenson [1932] case is a good example. Donoghue took ginger beer that a friend had offered her and had purchased it from a shop. The company known as Stevenson has supplied the beer. Donoghue discovered remains of a decomposed slug and as a result sued the company. However, since it is the friend who had bought the beer, there was no contract between her and Stevenson and hence the doctrine of privity prevented a direct action against the company8. Application However, in this case, the swimwear was bought directly from HI Q Manufacturer Ltd and hence HI Q Manufacturer Ltd owes the duty of care. After establishing the HI Q Manufacturer Ltd owns a duty of care, the subject regarding if the duty was breached should be settled. Basically, the breach of duty test is both subjective and objective. A defendant who on purpose (subjective) exposes the claimant to a considerable harm is considered as having breached the duty. Additionally, if the defendant does not realize the considerable harm or risk of loss to the claimant which any reasonable individual within a similar state would clearly realize is also considered to have breached the duty9. Nonetheless, in this case HI Q Manufacturer Ltd breached the duty of care because the trace chemicals left in the swimwear during the manufacturing process cause the skin infection. Normally, any reasonable person should know that the trace chemicals can harm the purchasers and hence HI Q Manufacturer Ltd should have ensured that the swimwear did not have any trace chemicals prior to reaching the buyers. An example is illustrated within the Bolton v Stone case. In the case, a cricket ball hit Miss Stone on the head when she was standing outside her house. Usually, cricket balls were not hit far enough to pose a risk to individuals standing as far as Miss Stone was standing. Even if she was injured, the ruling was that Miss Stone lacked a valid claim since the risk was not sufficiently foreseeable10. But in HI Q Manufacturer Ltd case, the danger of trace chemicals harming the wearers is a sufficiently foreseeable risk. The third element in negligence is factual causation. In order for HI Q Manufacturer Ltd to be held liable, it should be demonstrated that certain act or omission resulted to the skin infection. It is evident that the skin infection would not have occurred had HI Q Manufacturer Ltd not left trace chemicals in the swimming wear. The fundamental test in factual causation is asking if the harm would have ensued if HI Q Manufacturer Ltd had not breached the duty owned to the party that was harmed. Generally, in case a breaching party materially increases the risk of harm to another, it is possible to sue the breaching party to the value of harm that was caused11. As a result, since HI Q Manufacturer Ltd breached the duty and the harm resulted from a direct action from HI Q Manufacturer Ltd, the company can be sued of negligence. Legal causation or remoteness normally focuses on that if no one can forecast the risk and hence take required care to avoid it, no one is responsible. In Australia, remoteness concept in negligence was tested in Jaensch v. Coffey case. Mrs. Coffey who was a policeman’s wife got a nervous shock injury after a vehicle injury even if she was not at the accident scene during the accident. The court’s ruling was that there was an adequate proximity between the claimant and the defendant who caused the accident and that it was reasonable foreseeable that Mrs. Coffey could have suffered such an injury12. Similarly, in this case, it was reasonable foreseeable that the swimwear would cause harm to the wearers due to the left trace elements in addition to proximity since the buyer had to wear the swimwear, which directly caused the skin infection. Harm is also another negligence element. One should be able to give evidence that the defendant’s breach resulted into the injury13. In this case, HI Q Manufacturer Ltd’s breach evidently led to the skin infection, where treating the infection results into pecuniary loss. Conclusion As a result, since all elements of negligence can be proved, there is an action in negligence against Hi Q Manufacturer Ltd. Bibliography Books Atiyah, S, The Rise and Fall of Freedom of Contract (Clarendon Press, 1979). Ewan, M, Contract Law - Text, Cases and Materials (Oxford University Press, 2005). Jay, F, Law 101 (Oxford University Press, 2010) Randy, E, Contracts (Aspen Publishers, 2003) Scott, F, "Reciprocal Altruism as the Basis for Contract, (University of Louisville Law Review 489, 2009). Wilmot, G, Contract Law, (Oxford University Press, ed. 4, 2009). Cases Donoghue v. Stevenson [1932] AC 532 Bolton v. Stone, [1951] A.C. 850 Jaensch v. Coffee (1984) 155 CLR 578 Hamer v. Sidway, 124 N.Y. 538 Merritt v. Merritt [1970] 2 All ER 760; [1970] Read More