Kyle and George and Delicious Hamburgers Issue - Assignment Example

BUSINESS LAW STUDENT NAME PROFESSOR’S NAME COURSE TITLE DATE Question 1 Issue The issues for determination in this case are; whether there was an element of agreement for the formation of a contract and secondly whether Delicious Hamburgers (DH) are obliged to provide Kyle and George with Mazda CX-7 each. Rule A contract is a legally binding agreement between two or more parties, a breach of which entitles the innocent party to sue for damages or any other remedies.1 In Gibson v Manchester City Council2 the court defined an offer as an intention to be legally bound upon acceptance of the proposal with clear unequivocal terms. The court in Carlill v Carbolic Smoke Ball Co3 stated that acceptance of a contract is implied by conduct of the party that intends to be bound by the terms of the contract. Further the case of Carlill v Carbolic Smoke Ball Co emphasised the fact that an offer may be made to the whole world. There is a general rule in contract law that acceptance of an offer must be communicated and if acceptance is by performance then it is implied by conduct as held in Felthouse v Bindley4. An advertisement in placed in the newspaper or in a classified section or in the internet dies not bind a seller however if one sells to all those accepting the offer then they will be liable in contract as held in Grainger v Gough5. In Partridge v Crittenden6 the court held that advertisement are invitations to treat and those who reply to the advertisement make an offer which can be accepted or rejected. When is an offer terminated? In the case of Payne v Cove7 the court held that an offer may be withdrawn at any time up until it is accepted. It is not sufficient to not only withdraw but the revocation or withdrawal of an offer must be communicated as held in Bryne & Co v Leon Van Tienhoven8. However an offer to enter into a unilateral contract such as that anticipated in Carlill v Carbolic Smoke Ball cannot be revoked once the offeree has commenced performance as held in Errington v Errington9. Application In this case, DH had advertised that it was running a promotion that if 25 coupons were collected inside a Double Beef Burger bod then it could be redeemed for a scratch ticket. The advertisement stated: “Scratch a ticket with a gold car, present it to the Delicious Hamburgers head office and win the grand prize of a Mazda CX-7. Hurry, as it is only available for a limited time.” This amounts to a unilateral contract as contemplated in the case of Carlill v Carbolic Smoke Ball. The fact that George had performed the contract implies that he had accepted the terms of the contract as stipulated by the advertisement and his mode of acceptance was by conduct as held in Felthouse v Bindley. While Kylie was at the receptionists a notice was posted as follows: “Due to a printers’ error, faulty scratch tickets were included in the Chicken dinner promotion. Delicious Hamburgers regrets to advise that these tickets are null and void and as a consequence it will not be honouring any prize claimed. Delicious Hamburgers apologies for any inconvenience and expects to announce an exciting new prize competition soon.” This notice would not apply to George, because the revocation of the offer came after George had commenced performance of a contract because there was a binding offer and acceptance by conduct by George hence the notice was in breach of contract. In applying Errington v Errington10 in George’s situation a unilateral contract cannot be revoked once acceptance has commenced. In my opinion, there is a contract between Kylie and DH because Kylie undertaken to find the coupons. DH does not state how the coupons were to be collected, hence Kylie had performed the terms of the offer and there was an implied acceptance of the contract terms. As held in Errington v Errington11 DH cannot purport to revoke a unilateral contract once performance had been affected. Conclusion Just as it was held in Carlill v Carbolic Smoke Ball Co both Kylie and George had a binding agreement with DH and are entitled to damages or other remedies in contract law. Question 2 Issue The issue in this case is whether Extreme Printers can rely on the exclusion clause in the contract. The second issue is what are the express terms agreed in regards to the contract. Rule A term in a contract sets out the duties of the parties in the contract and can either be expressed or implied.12Terms in a contractual agreement includes warranties, conditions and innominate terms. In Wallis v Pratt13 the court held that a condition is a crucial term where if there is breach, then it entitles the innocent party to repudiate the contract while a breach of warranty entitles one to damages. A condition in an agreement is a term while a warranty is a promise in a contract by one party.14 In Bannerman v White15the court held that a statement is important to a party when the party would not have otherwise entered into the contract if the term or statement would not have been there. Further in Dick Bentley Productions v Harold Smith Motors Ltd16 the court held that if a statement is made by a party with special knowledge and expertise on a matter then the statement would be deemed a term of a contract. The breach of a condition attracts a serious consequence if breached.17 An exclusion clause or an exemption clause in contract aims at reducing or excluding the liabilities of a party’s conduct that would otherwise constitute to a breach of contract.18In common law and in old English cases, the court held clearly that whether or not there existed an exclusion clause, the guilty party would be liable when there was a fundamental breach in performance of the contract as held in Karsales (Harrow) Ltd v Wallis19. In Darlington Futures v Delco Australia20 the court held that in interpreting an exemption clause then one has to give it due weight including the nature of the contract and construing the clause contra proferentum where the clause is ambiguous. Application The terms informing Delicious Hamburgers (‘DH’) to enter into a contractual agreement with Extreme Printers (‘EP’) was on the premise that EP are ‘the best printers in the country’ and secondly ‘ensures that they would exercise reasonable care in proof-reading all materials’. In negotiating the contract both DH and EP made it clear that a term of the contract is that ‘all reasonable care must be taken to ensure that all materials are delivered without errors’ and secondly, ‘all materials would be proof-read before delivery’. These terms are crucial and important in the contract between EP and DH a breach which would entitle the innocent party to repudiate the contract and sue for damages as held in Wallis v Pratt21 and in Dick Bentley Productions v Harold Smith Motors Ltd. The exclusion clause is improperly incorporated into the contract. The exclusion clause in the contract between Delicious hamburgers and Extreme printers read “Extreme Printers accepts no responsibility for any loss or damage whatsoever caused by errors in printing, resulting from defective typesetting work by the printer or any of its employees.” The exclusion clause excludes a term which is fundamental and that the parties would not have intended it to be excused under the contract. The exclusion clause intends to vary the terms of the agreement and in using the contra proferentum rule in Darlington Futures v Delco Australia22 the exclusion clause is inapplicable because it intends to exclude the important terms of the contract which the parties would not have wanted excluded. Conclusion In conclusion, there is a contract between EP and DH stipulating that EP will take due care and skill in printing of the advertisement and that it will undertake to proof read the documents. EP has fundamentally breached the contract and the exclusion clause will not apply because it sought to vary the terms of the contract as negotiated by the parties. Part B The issue is whether a judge from a lower court is bound to follow decisions made by a judge in a higher court in Australia. The doctrine of legal precedent is important in legal practice and how judges give verdicts or decisions in cases.23 The doctrine of precedents provide that a judge ought to decide cases of similar issues and facts in the same way in what is referred to as stare decisis.24 Precedent and stare decisis doctrine aim at ensuring that there is continuity and predictability in interpreting the law and in maintaining the public confidence and the rule of law in the judicial system. In Garcia v National Australian Bank Ltd25 the court held that it is not the entirety of the judicial decision that binds the lower court but the ratio decidendi of the decision of the majority. This means that the obiter dictum that is opinions of dissenting judges and remarks of the judges considered general in character are not part of binding precedents.26 Where there are multiple concurring judgments, the ratio is drawn from the essential areas of the decisions within the reasoning of judges of the majority. In the case of Farah Constructions Pty Ltd v Say-Dee Pty Ltd27 the issue of precedents were explored. In this case the court stated that though lower courts are bound by the decision of the lower courts, they were bound by certain elements of the reasoning and not all the others.28Secondly the implications of the case were that the Court of Appeal in one territory was bound to follow the decisions of the Court of Appeal in another territory or state and that the courts were also bound by serious obiter dicta of the High Court29. Legally then one has to consider whether the High Court or a Superior Court is bound by its own decision, the current position of the law in Australia shows that the High Court is not bound by its own decisions. This is illustrated in Imbree v McNeilly30 and in Cook v Cook31. The High Court overruled the decision in Cook v Cook in Imbree v McNeilly despite the fact that this was a case raising similar facts without a clear framework of overruling their own decisions. In this case, the lower courts are bound by the decisions made by superior courts in Australia as rendered in the decision of Garcia v National Australian Bank Ltd32 that is impermissible for any Australian court sitting on appeal or during trail to doubt, disregard, ignore or qualify the rule stated in the reasoning of the superior court’s decision. The justification for adherence to the doctrine of stare decisis is that similar cases should be treated in the same manner, the need for predictability, creating certainty of the law and making people aware of the law. In conclusion the decisions of the higher courts such as the High Court of Australia bind lower courts within the same hierarchy because lower courts decisions are persuasive are not binding because they are subject to appeals and reviews. However the lower courts have to consider whether the facts are similar, the decision is that of the majority and that it is not overreaching the moral foundations of the rule of law. REFERENCES Books / Articles Justice Michael Kirby, Precedent-Report on Australia, International Academy of Comparative Law Conference, Urtecht, The Netherlands (17 July 2006) Michael Meek, The Australian Legal System (4th edn, Law Book Company, 1999 ) Latimer P , Australian Business Law (CCH Australia Ltd, Canberra 2012) Peter Gillies, Concise Contract Law: Concise Series (Federation Press, 1988) T Ciro, V Goldwasser, R Verma, Law and Business (Oxford University Press, Melbourne 2011) Cases Carlill v Carbolic Smoke Ball Co (1893) 1 QB 256 Cook v Cook [1986] HCA 73 Darlington Futures v Delco Australia (1986) 161 CLR 500 Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22 Garcia v National Australian Bank Ltd (1998) 194 CLR 395 Gibson v Manchester City Council (1979) 1 All ER 972 Imbree v McNeilly [2008] HCA 40 Read More