Contractual and Tortious Liability - Assignment Example

Contractual and Tortious Liability Name: Lecturer: Course: Date: Introduction Contract law comprises a set of rules that govern the relationship, the validity and the content of an agreement between two or more parties in regards to provision of services, sale or purchase of goods or change of ownership. A contract outlines the obligations and duties of parties bound to an agreement1. This paper examines a case study on contractual and tortious liability arising in business scenarios. 1. Bart's potential contractual liability to Poppy Issue: In determining Bart’s contractual liability, the key issue is whether a contract really exists between Bart and Poppy. Law: For a contract to exists, four elements must be fulfilled. These include the existence of an offer, acceptance, intention to create legal relations and consideration. Existence of the four elements would imply that Bart has a contractual liability of selling the art to Poppy. Offer and acceptance With regard to an offer, one of the parties has to have indicated the willingness to enter into a contract on precise terms2. As demonstrated in the case Powercor Australia Ltd v Pacific Power, the offer would become binding once there is an acceptance by the offeree3. Under the common law, acceptance would imply that an agreement has been created. As was showed in the case Brogden v Metropolitan Rail Company, acceptance can be made in writing, verbally or through performance of some consented deeds4. Consideration Consideration refers to something valuable promised in return for a particular action. It can be inform of effort or money or in some case a promise to undertake an obligation or non-action. For a contract to be valid there must be consideration. Such facts were demonstrated in the case Jones v. Padavatton5. It consists of detriment on the part of the one party and benefit on the part of the other party. Therefore, two parties taking part in forming the consideration are called the promisor and the promise. Nonexistence of consideration implies that no promise has been enforced and therefore the parties have no contractual liability6. Intention to create legal relations The parties entering into an agreement must show intention to be bound by it. This is effective in ensuring that parties entering into negotiation and who do not intend to be legally bound by it are not tied to the contract as demonstrated in the case Clarke and Tucker v Tucker7. Application: Basing on the facts provided by the case study, Poppy visits Bart’s antique shop. He then makes an offer to buy a displayed painting. However, Bart does not consent to sell the painting. This means that although there is an offer, there is no acceptance. Since there is no acceptance, an intention to create legal relations on the part of Bart does not exist. Hence, he cannot be tied to the contract. This means that a contract does not exist. Additionally, although Poppy shows an intention to make a consideration in terms of money, no promise has been made to accept the consideration. Nonexistence of consideration implies that no promise has been enforced and therefore Bart has no contractual liability. Conclusion: In conclusion, Bart should be advised that he has no contractual liability to Poppy as elements of the contract such as offer, acceptance, intention to create legal relations and consideration do not exist. 2. Lovely Lighting Ltd's liability to Bart under the law of contract AND tort. Issue: In determining whether Lovely Lighting Ltd has a liability to Bart and whether Bart can successfully bring an action for tort of negligence, the central legal issue is whether the effects of exemption clauses can exclude Lovely Lighting Ltd from having the liability. Law: The exemption clauses limit or exclude liabilities of the parties to a contract. Under the common law, they can be included into the term of contract when there is a notice displayed and a notice in signature, document and course of dealings. A clause may be incorporated into a contract with the aim of limiting or excluding a party’s liability for tort of negligence or breach of contract. The party intending to rely on the clause has to demonstrate that it is part of the contract. The clause can be incorporated into the contract by course of dealing, notice or signature. Once the other party signs the document that has contractual effect that contains exclusion clause, then it will become part of the contract as was demonstrated in the case L'Estrange v Graucob8. After it is determined that an exclusion clause has been incorporated, the entire contract will be interpreted to further determine if its covers the tort of negligence of breach that has happened. If there is uncertainty or vagueness concerning the meaning of the clause, then courts will often be willing to hold the contract as contra proferentem, or not in favor of the person who inserted it as was held in the case Baldry v Marshall9. Application: In the case, Bart has a contract with Lovely Lighting Ltd, where the company is promises to sell him a sign consisting of the name Artybarty. Bart signs a sales agreement which he has not read. However, Lovely Lighting Ltd has incorporated an exemption clause into the contract with the aim of limiting its liability for tort of negligence or breach of contract in relation to the quality of products produced. Since Bart has signed the document that contains exclusion clause, then the clause becomes part of the contract. Hence, liability of Lovely Lighting Ltd is limited with regard to the quality of the sign supplied to Bart. Conclusion: In conclusion, Bart should be advised that Lovely Lighting Ltd has no contractual liability and that he cannot successfully bring tort of negligence against the company for the defective sign. 3. Bart's potential contractual liability to Rosie Issue: The central legal issue concerning Bart’s potential contractual liability to Rosie is based on whether the promise to reward $50 to anyone who returns the dog can make him liable. Law: For a contract to exist there has to be an existence of an offer, acceptance, intention to create legal relations and consideration. Offer and acceptance While one party makes an offer, the other has to accept the offer to make the contract legally enforceable. Under the common law, acceptance shows that an agreement has been created10. Consideration A valuable thing has to be promised in return for an exacting action, which can be in form of effort or money or in some cases, a promise to undertake an obligation or non-action. For a contract to be valid, there must be consideration. The parties to a contract must both provide something in consideration, such as a promise to give something in return. Nonexistence of consideration implies that no promise has been enforced and therefore the parties have no contractual liability11. Intention to create legal relations The parties entering into an agreement must show intention to be bound by it. Other concerns Under the common law, a contract containing the four elements is legally enforceable, while absence of the elements makes the contract voidable. In addition, an exclusion clause may be incorporated into unsigned documents such as; a notice or a ticket to limit the liability of a party. Absence of the clause makes a party to be liable. Under this circumstance, adequate notice of the existence of the clause should be given. For this to hold, the clause must be contained in the contractual document that can be assumed by any reasonable person to be containing terms of contract. Such facts were demonstrated in the case Parker v SE Railway Co12. The other party should be informed of the clause at the time or before the contract such as was demonstrated in the case Chappleton v Barry UDC13. Application: In the case, Bart made an offer to reward £50 for the return of Digby. However, Rosie only saw the offer after delivering the dog and leaving the shop, meaning she did not accept the offer. There was also no consideration as they did not provide something in consideration, such as a promise to give something in return to each other. The parties also never showed intention to be bound by it, as Rosie only saw the poster after handing over the dog and after being thanked, signaling an end of their transaction. Conclusion: To conclude, Bart has no contractual liability to pay Rosie £50 for returning the dog. Conclusion Bart should be advised that he has no contractual liability to Poppy as elements of the contract such as offer, acceptance, intention to create legal relations and consideration do not exist. He should also be advised that Lovely Lighting Ltd has no contractual liability and that he cannot successfully bring tort of negligence against the company for the defective sign. In addition, he has no contractual liability to pay Rosie £50 for returning the dog. References Articles, Books and Journals Catharine MacMillan and Richard Stone, Elements of the Law of Contract (University of London, 2012) Christian von Bar and Ulrich Drobnig, The Interaction of Contract Law and Tort and Property Law in Europe: A Comparative Study (European Law Publishers, 2004). Daniel O’Gorman, "Redefining Offer in Contract Law," [2013] 82.6 Mississippi Law Journal 1050, 1096 Case Laws Brogden v Metropolitan Railway Company [1876–77] L.R. 2 App. Cas. 666 Chapelton v Barry UDC [1940] 1 KB 532 Clarke et al v Tucker [1958-60] 2 Barb. L.R. 245 Jones v Padavatton [1968] EWCA Civ 4 Parker v SE Railway Co [1877] 2 CPD 416 Powercor Australia Ltd v Pacific Power - [1999] VSC 110 Read More