Intoxication as a Defense to an Express Contract - Assignment Example

Contract Law Name Grade course Institution Tutor Date Part 1 The case under consideration is Graham & Ors v Welch [2012] QCA 282.The case was located through the legal database available through the library page specifically the AUSTILII. The judges who determined the case are Muir, an appellate court judge and Atkinson and Applegarth who are judges. In this case, the original claim was made by one Florence Agnes Welch against her niece, Jane Graham. The Plaintiff was an old lady aged 76 years. Also enjoined were Jane Graham's husband Tim Graham who was a co-owner of the home where the alleged injury took place (AustLII 2012). The third defendant was NRMA Insurance Australia Limited. The third defendant should be the insurance company through which the property subject matter of the suit was insured. The matter ended up at the Queensland Court of Appeal after the trial judge found in favour of the Plaintiff which decision did not sit down well with the appellants who then decided to file the appeal with the aim of the trial judge's decision being overturned by the appellate court. In arriving at their decision, the judges made observation about the requirement for leave. The judges quoted section 118 of the District Court of Queensland Act 1967 which makes a provision for parties to seek leave of the Court of Appeal before filing an appeal in cases where the decision was made within the jurisdictional limit of the Magistrates Court. The court observed that in order for leave for an applicant to file an appeal to be granted, the court had a general discretion whether to grant or refuse such leave. The discretion of the court in granting or denying leave depended on the nature of each individual case. The court observed that the mere fact that a risk was foreseeable was not sufficient to dispose with the issue of breach of duty. However, the court went on to say that in deciding a breach of duty of care was present the tribunal ought to ask itself whether a reasonable person in the position of the defendant would have seen beforehand that his conduct posed a risk of injury to the plaintiff or to a class of persons including the plaintiff. If such a question was answered in the affirmative, the tribunal should determine the cause of action that would be taken by a reasonable person to avoid or minimize such risk (AustLII 2012). In perceiving what a reasonable man response would be like it is important that a consideration be made of the magnitude of the risk the likelihood of that occurrence of the risk and also how expense and difficult or inconvenient it would be in taking actions to alleviate such a risk. The tribunal should also consider what other responsibilities the defendant would have and which are conflicting (Radan & Gooley 2009, p.44). The court further stated that a court could only determine the proper response after balancing out such matter in order to determine the standard of response that a reasonable person in the position of the defendant would have taken. The court quoted with approval the words of Glesson CJ in Neindorf v Junkovic that nobody lives in premises that are risk free. The court observed that in some cases the risk could foreseeable but there would be no further steps required to eliminate it since the benefit outweighed the risk involved. The final decision of the court was allowing the appeal and the decision of the District Court was set aside. The appellate court entered judgment for the defendants and ordered that the respondent to pay the costs of the applicants in both the District Court and the also costs involved in prosecuting the appeal (AustLII 2012). Part 2 Short Problem Question 1 In this scenario, Hilda, while shopping in a local grocery store sees a sign which says "Special Offer Cabbage $2 each." Hilda picks a cabbage and puts it in the shopping basket she has at the grocery store. Hilda gets to the checkout with the intention of paying for the goods. The shopkeeper informs Hilda that the cabbage was going for $4 and was thus no longer on special offer. Hilda in reply states that she would not pay more than the price that was indicated on the sign. One of the issues here is whether the sign indicated that the cabbages are going $2 is an offer or if not whether it is an invitation to treat. The other issue is whether there is a contract formed by the time Hilda gets to the shopkeeper such that by refusing to sell at the indicated price, the shopkeeper would in essence be considered to be in breach of contract between him or her and Hilda. Hilda, goes ahead to threaten to institute a suit against the shopkeeper if she does not get the cabbage at the price that she saw indicated at the sign. This would raise the issue as to whether Hilda would be successful in her suit against the shopkeeper for what would be considered a breach of contract. The relevant precedents in this case is Fisher v Bell [1961] 1 QB 394 and Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd. Fish v Bell is an English law dealing with the issue of contract. The case specifically deals with the issue of offer and acceptance (Carter 2012, p.71). According to the case, displaying goods in a shop and such goods have price tag on them; the display can never be considered to be an offer but merely an invitation to treat. It is the customer who makes the offer on presenting the item to the cashier. When the cashier accepts the payment that is when acceptance would be said to take place. In this case, the defendant had put on display a type of a knife at the window of a shop which he was running. There was an Act known as the Restriction of Offensive Weapons Act 1959 which made it illegal to carry out some activities such as selling, hiring, manufacturing and offering for sale a knife which had a blade which opened automatically on pressure being applied by the hand to a button on such a knife (Story & Grigsby 2006, p.41). This particular knife on display bore the words "Ejector knife-4s." A chief inspector of police charge the defendant on contravention of the relevant section of the above stated Act since he had offered for sale a flick knife to be sold. At the High Court, the prosecutor argued that the defendant had, by displaying the knife, offered it for sale in contravention of section 1(1) of the Act. It was the contention of the defendant that such a display could not be held as constituting a sufficient offer. The court of the first instances agreed with the defendant that such a display constituted an invitation to treat only and he bore no responsibility. On appeal, the Court of Appeal stated that to lay people such a display would be taken to mean that people are invited to purchase (Greig & Davis 1987, p.52). The court rubbished such a thought and the court was categorical that the law in the country was clear that displaying an item was merely an invitation to treat. The court noted that the legislation failed to include the words "offering or exposing for sale." Lack of the stated words meant that the court could not convict the accused person under the said Act and what the legislature could do was to amend the relevant law. The appeal was therefore dismissed. The famous English case of Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd is important when it comes to the issue of offer in contracts. In this case, the holding of the court was that displaying a product in a store should not be considered as an offer regardless of the fact that there may be a price tag on the goods (Elliott & Quinn 2007, p.64). The facts of this case were that Boots Cash Chemist introduced a new way through which customers could purchase a number of types of medicines. Shopper at the stores would pick the drugs they wanted from the shelves and would pay for such drugs at a given point. Before the introduction of this system, people would purchase drugs from a person behind the counter. The Pharmaceutical Society of Great Britain did not like this new method terming it illegal since there was a statutory requirement that supervision by a pharmacist was necessary at the point sale was effected (Carter & Harland 1995, p.43). This was in reference to products list in the schedule to the Act as poisons. The society advanced the argument that such display amounted to offer and that when the shopper selected the goods, then that amounted to acceptance. Boots made their counterargument that a sale was only effective at the till where payment was made (Carter & Harland 1998, p.31). The High Court and the Court of Appeal found in favour of Boots. In this case, Hilda goes to a store and finds cabbage with a price tag indicating that it is being sold for $2 but on reaching the cashier she get irritated to find that the price is twice as much. She then threatens to take legal action against the proprietor of the store. It is clear from the above cases that the display of the cabbage and the price tag only amounts to an invitation to treat (Carter 2012, p.21). By picking the cabbage, Hilda was then making an offer when she got to the cashier. The contract would only be binding if the cashier accepted the offer from Hilda but this does not happen since they disagree as to the price. Therefore, even if Hilda decided to bring an action against the proprietor of the grocery store she would not succeed since she would be hard pressed to prove that there was a contract between her and the grocery store. Short Problem Question 2 In this scenario Johan is a sickly man who makes a promise to his niece, Rosa, and her husband, Claude, that if they move to Australia to look after him, he would give them his house. Relying on his promise, Rosa and Claude leave their jobs and their home in New Zealand and move to Australia to look after Johan. The arrangement works only for only 18 months and subsequently a quarrel ensues following which Johan order Rosa and her husband to move out of his house and further alleges that he has rescinded his earlier decision to give them his house. The first issue is whether there was a binding contract. If there was a contract, has Johan breached the provisions of the said contract? The other issue is whether the two parties adversely affected in this scenario have suffered any loss as a result of the breach of contract. The issue of estoppels also arises from the facts of the case. It is relevant to establish whether Johan is precluded from making a denial as to the fact that he made the promise to the couple to leave their employment positions and a stable home back in New Zealand to go and live with him in Australia. The motivation for the couple to move out of New Zealand was definitely the fact that they would get the house and probably have a higher quality of living in addition to being humane by deciding to take care of their sickly relative. The first thing should be establishing whether there was a valid agreement between the parties. From the facts of the case, it is clear that there was an agreement. An offer was made by Johan and accepted by Rosa and Claude. Consideration is present which the house belonging to Johan and the couple leaving New Zealand and taking care of the sick gentleman. The parties clearly had capacity to enter into this contract (Carter & Harland 1995, p.75). There was genuine consent since no misrepresentation can be alleged and finally the object of the contract was legal. There are a number of cases which are relevant to this scenario. The first case is the Central London Property Trust Ltd v High Trees House Ltd [1947] KB 130 which is popularly known as the High Trees case. This case is important in relation to the doctrine of promissory estoppel in contract law. Denning J, as he then was, made a good determination as to what constituted a promissory estoppels. In this particular case, High Trees House Ltd leased a block of flats for a certain amount of rent per year from Central London Property Trust Ltd. There was an agreement to reduce rent by half over the World War II period and afterwards Central London sued for full rent from June 1945. The judgment was that full rent could be paid from mid 1945 onwards (Greig & Davis 1987, p.59). This could be related to this scenario in that the principle that was established makes it clear when an offer is made another person acts on it then the person making the order is bound. Therefore, Johan is bound to give the house to his niece and her husband. The other important case is Walton’s Stores (Interstate) Ltd v Maher (1988) 164 CLR 387, 62 ALJ 110. Maher who owned some property negotiated with Walton stores who wanted the existing building to be demolished and a new one erected. On reliance of the representations, Maher demolished the old building and started putting up a new one. The High Court rules that Walton's behaviour was unconscionable and should be estopped from denying the existence of the contract. In this scenario, Johan should be estopped from denying that there was a valid contract between him on the one hand and his niece and her husband on the other (Jesser 2012). Short Problem Question 3 In this scenario, the person who is central is James who is seventeen years old who runs away with the circus. James settles in Rockhampton and signs a two year lease on a flat in an exclusive new apartment block in town (Halson 2001). Though the rent required is a substantial amount of money, James nevertheless gets into the contract and he does in fact have money from his work in the circus. He is thus able to raise the amount for the bond and in addition pay rent for two months. James is interested in being comfortable and he gets to a discount furniture store and acquires a flat screen television set on terms which allows him to pay within a period of 12 months. After two months, which coincides with his 18th birthday, James reconciles with his parents who collect him and take him to continue his studies at Brisbane. James wants to avoid the lease and also return the television set. Among the legal issues in this scenario is whether James can enter into a binding contract bearing in mind that he is a minor. The other issue is whether he cannot avoid both contracts and one of them and if so which one. The scenario deals with the subject of the if and when minors can enter into binding contract and what are the consequences of entering into contract with a person knowing very well that that he or she is minor and lacks legal contractual capacity as we know it (Story & Grigsby 2006, p.61). According to Carter and Harland (1995, p.55) the general policy is that people have the freedom to freely get into contract. However, there are classes of people who are exempted from entering into contracts freely since they are considered as not capable of entering into agreements which are legally binding. These people include lunatics and persons who are intoxicated. In our scenario we have a third category of people who suffer incapacity and these are the minor as in the case of James. Contracts in which there is a party who is a minor can be voided at the option of the minor. A minor cannot be bound by a contract he or she enters into unless it is a contract for necessities as well as necessary services. In cases where a contract has been entered into between a minor and an adult, the contract can be voided because a minor is allowed to escape from his or her contractual obligations (Elliot & Quinn 2007, p.42). People who are minors are allowed by the law to ratify a contract upon attaining the age of majority. However, in cases where a contracted is an executed one, and the minor has benefited from the contract, such a minor is not allowed to avoid obligations under the contract. The only exception to this is where the benefit obtained by the minor was of no value. Carter and Harland (1998 p.66) note that a minor is able to disaffirm the contract which had been made regardless of the kind of contract entered into. The requirement is that the minor should disaffirm the whole contract and not a part. If there are goods which are still in possession of the minor, then the minor would be required to return such goods. For disaffirmation to be considered as valid, it must be done within a timely manner. On attaining the age of majority a person who got into a contract as a minor cannot be allowed to disaffirm where the contract goes on for a period of a further two years. Misrepresenting one's age does not bar him or her from disaffirming a contract. A minor will be held liable where the contract was for items or services necessary for the existence of the minor. The value of the goods or services contracted by the minor should be reflected the prevailing standards of living or the financial status. A minor is required to be living on their own and thus the absence of a parent or a legal guardian who should be taking care of such a minor is a prerequisite. A minor could also be held liable for purchasing luxury items. Ratification entails accepting an obligation and this gives such obligation legal force. Ratification is done upon the minor attaining the age of majority. Ratification could express or implied. Express ratification is where the person affected makes it clear in writing or orally that he or she has the intention to be bound by the contract entered into during minority. There is also implied ratification whereby the person's behaviour does not show that they intend to repudiate the contract. Courts usually look at whether the minor has had adequate time and opportunity so as to appreciate the kind of obligations that he or she had bound himself or herself to fulfill (Carter 2012, p.53). There are cases which relate to the scenario above. In Lewis v Alleyne (1888) 4 TLR 560, the holding of the court was that where a minor obtained property under a contract which cannot be enforced such a minor, then an adult person who is party to the contract who cannot sue to recover the price or get back the property may face injustice (Elliot & Quinn 2007, p.18). Even in circumstances where a minor has lied about his or her age, the minor cannot be sued for deceit and the minor also cannot be estopped from asserting what his or her true age is. An adult could recover under equity where the contract involves loaning of money where the minor intended to buy necessaries and the minor did actually purchase the necessities (Jesser 2012). Where a minor had a guarantor, it would be possible to enforce such a contract against the guarantor even if it is not possible to enforce the contract against the minor. However, if a contract cannot be enforced against the minor as a result of misrepresentation, or even cases of duress by a party who are an adult then it would not be of any help trying to sue a guarantor. This is because the party seeking to enforce the contract would already have engaged in some illegal act which would entitle the injured party to rescind the contract (Halson 2001, p.21). From the above facts and the precedents it is clear that James did not have capacity to enter into a contract (Radan & Gooley 2009). However, by getting into a contract to occupy a house would be considered as binding because a shelter is a basic need. However, it is difficult to reconcile the fact that the young man chooses some very good apartment. However, the apartment's owner could seek to enforce his or her rights on the basis that James had been used to a certain standard of living. On the other hand James went to a store and acquired some television since he wanted to have some luxury while living alone. It is highly unlikely that the people who sold him the television set would seek to enforce their rights under the contract since a television set is clearly not a necessity (Dudley 1999, p.37). What the company would do is perhaps get back their television set in whatever condition that it might be in and have no legal recourse against James. The distinction between the acquisition of the two properties is that shelter would is a necessity of life and as such James should be held liable under that contract. For the people who sold him the luxurious television set would have to count their losses and try to mitigate them by perhaps getting back the used set which could be resold at a lower price. References AustLII . 2012. Graham. Retrieved from http://www.austlii.edu.au/au/cases on 09/12/2012 Carter, J. W. 2012, ‘Cases and materials on contract law in Australia. Chatswood’, N.S.W., LexisNexis Butterworths. Carter, J. W., & Harland, D. J. 1995, ‘Contract law in Australia’, Sydney, Butterworths. Carter, J. W., & Harland, D. J. 1998, ‘Cases and materials on contract law in Australia’, Sydney, Butterworths. Dudley, S 1999. ‘Intoxication as a Defense to an Express Contract’, University of Pennsylvania Law Review vol 62, no. 1, pp 37-38. Elliott, C., & Quinn, F. 2007, ‘Contract law’, Harlow, Pearson Longman. Greig, D. W., & Davis, J. L. R. 1987, ‘The law of contract’, Sydney, Law Book Co. Halson, R 2001, ‘Contract law’, Harlow, Longman. Jesser, D.2012, ‘Graham & Ors v Welch. McInnes Wilson Lawyers, Australia’, Retrieved from< http://www.lexology.com> on 09/12/2012 Radan, P., & Gooley, J. 2009, ‘Principles of Australian contract law’, Chatswood, N.S.W., LexisNexis Butterworths. Story, J., & Grigsby, W. E. 2006, ‘Commentaries on Equity Jurisprudence’, Lawbook Exchange Ltd Read More