Does Jane and Dan Have a Legally Binding Business Contract - Case Study Example

Foundation of Business Law [Name] [Professor Name] [Course] [Date] [Words 1497] Introduction This paper presents a case analysis to determine the existence of a legally binding contract and how injured parties can claim for damages for negligence against a manufacturer. First, elements of a binding contract are examined. Second, elements to bring successfully action for claims in negligence are examined. Question 1: What is Jane situation in relation to a) Dan and b) Disco John? Issues a): Does Jane and Dan have a legally binding business contract? b) Is there a legally binding contract between Jane and Disco John? Law: An agreement must have six essential elements to be enforceable or legally binding. A contract that possesses all the essential elements is said to be valid. In case an essential element is absent, then the contract is void or unenforceable1. The six essential elements include; offer, acceptance, consideration, intention to create legal relations, capacity and certainty2. i) Offer A contract must have an offer or a promise to do something. In addition, both must be definite or clearly stated as was demonstrated in the case Barry v Davies3. The offer will however lapse when the time for acceptance runs out, if the offer or promise is withdrawn before acceptance and lastly, after a reasonable period in the circumstance. ii) Acceptance There must be acceptance from the other party who been provided with an offer. Therefore, the offer has to be accepted in exactly the same conditions it was offered. In any case, it is not consequential to make the final offer. Rather, it is the acceptance of the offer that will end the negotiation through establishing terms and conditions of the contract. The acceptance may be given verbally or written4. It may also be inferred by action that clearly evidences acceptance. Further, the acceptance must comply with the method set down by the party that made the contract for the contract to be effective. These were demonstrated in the case Barry v Davies5. iii) Consideration For the contract to be enforceable, it must be backed by consideration as was determined in the case Williams v Roffey Bros & Nicholls6. Consideration implies that the parties negotiating the contract would be giving something in return. This means that one party (the offeree) promises to do something or perform a task in return for an offer or a promise made by the party (offerer) who provides benefit of value, or consideration7. iv) Intention to create legal relations A contract specifies that the parties have an intention to enter into a legally binding contract. This means that the parties who are entering into a contract must be set to create legal relations and that understand that the agreement can be legally binding8. However, since the intention to create legal relations is presumed by the law court, it means that the contract does not have to be stated expressly that the parties understand and intend that legal consequences will follow. In any case, if the parties choose not to be legally bound, then it must be clearly stated in the contract so that it cannot be legally enforceable9. Such facts were demonstrated in the case Storer v Manchester City Council10. v) Certainty The element of certainty is also important. It implies that the terms and regulations of the contract should be stated clearly in a way that both parties negotiating the contract can understand11. Otherwise, if the agreement is not certain, then it would not be valid as was determined in the case Attorney General of Belize v Belize Telecom Ltd12. Vii) Consent For the contract to bind, the contracting parties must give their consent freely. Further, the parties must agree on the subject matter of the agreement at the same time and in the same sense. By the consent being free, it means the agreement is not subject to coercion or undue influence, mistake, fraud, misrepresentation or mistake. Such facts were held in the case Spice Girls Ltd v Aprilia World Service BV13. Authority: As specified above Application: a) Jane had made an offer to Dan to use Dan’s barn as the venue of the party. The terms of the agreement were discussed and Dan agreed to rent the ban to Jane for $2,000, on condition that she left a $6,000 bond within the next two weeks, this means that offer and no acceptance exists. At this stage however, there will be no contract since Jane and Dan are still negotiating the terms of the contract. This means that consideration exists. Jane promised to provide the money within a week. Before the end of the week, Dan informs Jane that the barn has already been rented to a group of businessmen. Based on this fact, it is clear that the offer was cancelled before the time of acceptance runs out. b) Jane made an offer to Disco John requesting for necessary entertainment for her party. Disco John accepted to provide the entertainment for $1000 payable on the night. This implies there was offer and acceptance. Further, the terms and regulations of the contract should be stated clearly (providing the entertainment for $1000 payable on the night). Jane and Disco John also entered the contract on their own free will. Conclusion: Jane and Dan have no legally binding contract, since Dan withdrew from the contract before the end of two weeks period the acceptance had to be fulfilled. Conversely, Jane and Disco John have a legally binding contract since all the elements of a legally binding contract exist in their relationship. Question 2: What claim if any can be made against Max for the poor sanitation and production of the beers. Issues: Can Jackie and Philip claim damages for negligence against Max? Law: To claim damages for negligence, Jackie and Philip must prove that Max owed them a duty of care and that Max breached that duty which but-for and proximately was responsible for Jackie and Philips losses and injury14. Five elements must be fulfilled, namely: Duty of Care Breach of Duty Cause in Fact Proximate Cause Damages i)Duty not to cause harm The outcome of negligence claims depends on whether the defendant owed a duty of care. The tests to be used are whether it was reasonable for Max to foresee that his company’s (Brew U’s) actions could have caused the injuries15. To prove this duty, it is the onus of the claimant to prove that the defendant owed him a duty of care. In the case Thomas v. Winchester, the court held that where bodily harm or death of an individual is caused by “natural and inevitable consequence” of the sale of alcohol, the manufacturer owes a duty not to cause injury or harm16. ii)Breach of duty The defendant is liable for negligence if he breaches the duty owed to the claimant. Such a duty is breached by failing to exercise reasonable care. Such facts were demonstrated in the case Walter v. Walmart17. iii) Cause in Fact Cause in fact requires the plaintiff to prove that the actions or omissions of the defendant caused the plaintiffs’ injury. It is often called “but-for” causation. In which case, if it were not for the actions of the defendant, the plaintiffs would not have suffered an injury or loss. Such facts were discussed in the case Home Office v Dorset Yacht Co18. iv) Proximate Cause Proximate cause links the responsibility of the defendant in the negligence and the injury of the claimant19. Under the common law, a defendant in negligence will only be held responsible for injuries that the defendant could have reasonably foreseen through his omissions of or actions. Such facts were demonstrated in the case Donoghue v Stevenson20. V)Damages It is the onus of the plaintiff to prove that the harm is legally recognized, usually a physical injury to an individual or property21. Authority: As stated above. Application Based on the facts of the case, Max owed Jackie and Phillips duty not to cause injury or harm. Max breached his duty not to cause the injuries to potential consumers of the alcohol by failing to exercise reasonable care. In “cause in effect,” it can indeed be established that Jackie and Phillips would not have become sick if they had not consumed the alcohol. With regard to proximate cause, it can be established that the defendant would have foreseen his omission or actions. Lastly, it can be established that Jackie and Phillips suffered damages, as they were admitted to hospital for severe food poisoning and would not be able to sit for their FBL exam, and hence not be able to graduate in time to start a new job that they were offered by a major accounting firm. Conclusion Jackie and Philip can claim for damages for negligence against Max’s company “Brew U.” Max was liable as his negligence caused the injuries and economic damages suffered by Jackie and Phillips. [Words 1497] References Books, Journals and Articles Anon, 2012, Formation of a Valid Contract, Ch3, viewed 7 Oct 2013, http://highered.mcgraw-hill.com/sites/dl/free/0070961379/580512/Willes_2Ce_03.pdf Capper, D 2008, "Common Mistake in Contract Law," Singapore Journal of Legal Studies, Vol 1, pp457–473 FindLaw 2013, Elements of a Negligence Case, viewed 7 Oct 2013, http://injury.findlaw.com/accident-injury-law/elements-of-a-negligence-case.html Galloway, KS, Legislating Conscience into Contract: Panacea of Pandora Box, viewed 7 Oct 2013, http://eprints.qut.edu.au/16337/1/Kathrine_Galloway_Thesis.pdf Gulati, B 2011, "‘Intention to Create Legal Relations’: A Contractual Necessity or an Illusory Concept," Beijing Law Review, Vol 2, pp127-133 LK Shields, 2012, The intention to create legal relations and agreements to agree, viewed 7 Oct 2013, http://www.lexology.com/library/detail.aspx?g=b0abb8a7-2b4e-47c6-8045-84bb82db77b1 MacMillan, C & Stone, R 2012, Elements of the law of contract, University of London International Programmes, London Newnham, H 2000, ‘When is a teacher or school liable in negligence?’Australian Journal of Teacher Education, Vol. 25 No. 1, pp.1-55 Yule, J 2008, ‘Negligent investigation by police : can a duty of care be found using the existing negligence principles in Australia?’ Journal of Australasian Law Teachers Association, Vol 1. pp. 379-389. Case Laws Attorney General of Belize v Belize Telecom Ltd [2009] UKPC 10 Barry v Davies (Trading as Heathcoat Ball & Co) [2000] 1 WLR 1962 Home Office v Dorset Yacht Co Ltd [1970] UKHL 2 Spice Girls Ltd v Aprilia World Service BV [2002] EWCA Civ 15 Storer v Manchester City Council [1974] 3 All ER 824 Thomas v. Winchester, 6 N.Y. 397 (1852) Walter v. Wal-Mart Stores, Inc. 2000 ME 63, 748 A.2d 961 Williams v Roffey Bros & Nicholls (Contractors) Ltd [1991] 1 QB 1 Read More