Issues in Valid Contracts - Essay Example

? Assignment By Due Answer The essentials of a valid contract include offer as the first and most important constituent. An offer is a clear statement of the terms on which one party (the offeror) is prepared to do business with another party (the offeree). In the given case, on Monday, Eddie asked Adele for a quote on the price of wild boar piglets. This is not an offer but a mere inquiry. Simple queries for information do not amount to offers. Adele replied that the piglets would cost ?13,350 including delivery charges. Eddie said that the price was acceptable. This means that Eddie did not accept the price. There is a huge difference between accepted and acceptable. He further asked if Adele could deliver the piglets on Wednesday. This is again not an offer but a statement made in negotiation. Such offers also do not amount to offers. In Harvey V Facey [1893] AC 552, the plaintiff was interested in buying some land from the defendant. He asked the defendant the minimum price that he would accept. The defendant replied with a price. The plaintiff attempted to accept that price but the defendant refused to sell. It was held that the defendant’s reply was just a step in negotiation and not an offer. Adele told Eddie that she would fax her answer on the next morning i.e. Tuesday. Adele faxed her answer as promised but Eddie was not his office. Adele had agreed to deliver the piglets on Wednesday at the same cost. Adele did not wait for Eddie’s response and sent her driver to deliver the piglets. Adele might claim that as she was prepared to deliver the piglets on Wednesday, she had fulfilled the condition attached with Eddie’s offer. As a general rule, the formation of a contract depends on the objective intentions of the parties; what they make each other believe assuming that both parties are reasonable. In Smith v Hughes (1871) LR 6 QB 597, the plaintiff brought a sample of oats to the defendant, a horse trainer. The defendant ordered forty to fifty quarters of oats at 34 shillings a quarter. The plaintiff delivered sixteen quarters at first but the defendant said that they were not types of oats that he thought they were. The oats were not of the type that racehorses could eat. The defendant refused to pay for them. A suit was brought by the plaintiff for breach of contract. It was held that the mistake made by the defendant did not entitle him to breach the contract. It was because his conduct was such that a reasonable person could have easily believed that he wanted the same oats as he was shown as a sample. Also in Plate v. Durst (1896) 32 LRA 404, the defendant was promised ?1000 and a diamond ring if she would remain his domestic servant for 10 years. She fulfilled the promise. It turned out that the defendant intended his statement to be a joke. It was held that the parties had entered into a contract because the defendant’s statement was such that a reasonable person could have easily construed it as a promise. The above mentioned case helps in determination of the fact whether a contract has been made between Eddie and Adele. From the facts, it can be seen that Eddie never made an offer to Adele clearly. It can be seen that Eddie wanted the piglets to be delivered on Wednesday but there is no statement that can establish the fact that if Adele could deliver the piglets on time, Eddie was ready to purchase them from her. His statement is just a step in negotiation; an intimation of his intentions. Eddie’s contract with Peter is not a breach of contract with Adele because there was no contract formed with her. The relationship between Eddie and Adele is devoid of the essentials of a valid contract. Therefore, Eddie would not be held liable for damages and the additional ?400. Answer 2 According to the given facts, Adele was hit by a fork-lift truck at Bambi Stores. The truck was being driven by Reggie, an employee of the store. Bambi Stores claim to have no liability for loss caused to Adele because they had written an exemption clause behind their cash desk. Whether an exemption clause can be used to avoid the liability for negligence, the following criteria must be satisfied: i. It must be incorporated in the contract; ii. It must be clear and unambiguous; and iii. It must satisfy statutory requirements. In the given case, the notice was given behind the cash desk and it was the last thing that Adele saw. As a general rule, in order to incorporate an exemption clause into a contract, it is essential that the person relying on it takes reasonable steps to draw it to the attention of the customers. Here, Bambi Stores must have taken reasonable steps to draw the clause to the attention of the customers. The facts state that the notice was the last thing that Adele saw. If that is the case, it is obvious that Bambi Stores failed to take reasonable steps. In Parker v South Eastern Railway [1877] 2 CPD 416, the plaintiff’s bag was lost from the cloakroom of the railway station. The railway company argued that there was a statement on the back of the ticket that exempted them from any liability. It was held that the notice was insufficient as reasonable steps were not taken to bring it to the attention of the customer. A railway ticket is generally believed to be just a receipt of payment and it was reasonable on plaintiff’s part to ignore it. Also, the notice was given after the contract had been made. It must have been given earlier. Also in Thornton v Shoe Lane Parking Ltd [1971] 2 QB 163, the exemption clause given by the parking company was nullified due to the fact that it was not brought to the plaintiff’s attention before the formation of the contract. It was also established in this case that the more onerous the clause, the better notice is needed to be given. Bambi Stores had fork-lift trucks driven in the area where customers were standing. That makes it a dangerous place and if Bambi Stores wanted to use the exemption clause, they should have taken reasonable steps to bring the notice to attention of all the customers. It must have been the first thing that the customers saw. The notice is clear and unambiguous but this attribute is dwarfed due to non-compliance with the first requirement. Moreover, S.2 (1) of Unfair Contract Terms Act, 1977, prohibits the usage of exemption clauses to guard against liability arising due to negligence. It states that, “A person cannot by reference to any contract term or to a notice given to persons generally or to particular persons exclude or restrict his liability for death or personal injury resulting from negligence.” Therefore, the notice fails to comply with statutory requirements. Even if Adele had read it, it cannot be automatically construed that she conferred with it. S.2 (3) of UCTA, 1977, clearly states that, “Where a contract term or notice purports to exclude or restrict liability for negligence a person’s agreement to or awareness of it is not of itself to be taken as indicating his voluntary acceptance of any risk.” Hence, the exclusion clause of Bambi Stores is ineffective. Provided that Bambi Stores fail to supply a valid defense of their non-liability, they would have to compensate Adele up to a reasonable amount which would not include damages for her bag and the Patek Philip watch. Answer 3 Given facts explain that Eddie and Jane sold “a range of organic and homemade produce including meat, vegetables along with bread, chutney and wine from a vineyard.” Their primary field of trade was for food that was intended to be consumed by human beings and not animals. Samir came to The Eagle Pub to ask for and purchase some food that would be suitable for his championship poodle Petski Pouch III. He was attended by the sales assistant of The Eagle Pub, Beryl. She showed him prime organic cuts of meat on display and notified him that she was not sure if they were suitable for dogs. In matters related to sale of goods, there is an implied condition that the goods would be fit for the purpose that the buyer requires them for. Breach of this condition entitles the buyer to treat the contract as repudiated. But there is an exception to this rule. When the seller is not dealing in the course of business, it is deemed unreasonable for the buyer to rely on the seller’s judgment and skill. According to S.14 (3) of Sale of Goods Act, 1979, “…there is an implied condition that the goods supplied under the contract are reasonably fit for that purpose, whether or not that is a purpose for which such goods are commonly supplied, except where the circumstances show that the buyer does not rely, or that it is unreasonable for him to rely, on the skill or judgment of the seller or credit broker.” It was not suitable for Samir to rely on Beryl’s judgment and skill. Beryl, being an agent, did not act in the course of business when she dealt with Samir. Her normal course of dealing concerned food for humans and Samir asked for food for his dog. However, in Priest v Last (1903) 2 K.B 148 CA., the seller was held liable for damages when the buyer’s wife was injured due to bursting of a hot water bottle. This is an exception to the rule of Caveat Emptor (Buyer beware). S. 14 (5) of SOGA, 1979, notifies of an exception to the implied conditions as to the fitness of purpose of goods. It states that there is no implied condition, “… (if an agent) is not selling in the course of a business and either the buyer knows that fact or reasonable steps are taken to bring it to the notice of the buyer before the contract is made.” Beryl did notify that she was not dealing in the course of business but from Priest v Last, we know that reliance on seller’s skill and judgment is readily applied when the seller makes a selection for the buyer. Samir did not know that the meat was not suitable for his dog. In Ingham v Emes (1955) 2 All. E.R. 740, it was held that it was a duty of a customer to disclose known peculiarities when she was allergic to a particular hair-dye. In Samir’s case, he did not know of the peculiarities about his dog so he will be excused of this duty. Also, there is an implied condition that goods sold must be wholesome and sound. In Frost v Avlesbury Dairy Co. Ltd. (1905) 1 K.B. 608, the seller was held liable for damages when buyer’s wife contracted typhoid and died by drinking contaminated milk. In the given case, it has been proved that the meat was not wholesome. Therefore, The Eagle Pub would be held liable. Eddie and Jane, being the owners of The Eagle Pub, acted as principals of Beryl. As between the principal and agents, Beryl would not be held liable for any loss caused to Eddie and Jane because she acted with reasonable care and diligence. The meat sold was inorganic but unless it would have been tested in a laboratory, a naked eye could never have been able to indicate that it was inorganic. Neither Beryl nor Samir could have judged it. Beryl acted with due diligence and care and such acts by an agent bind the principal (Taylor v. Werner Enters., Inc., 329 Ore. 461 (Or. 1999)). Therefore, Beryl would be excused from any liability and Samir would be entitled to claim damages from The Eagle Pub, Eddie and Jane. References 1. Frost v Avlesbury Dairy Co. Ltd. [1905] 1 K.B. 608. 2. Harvey V Facey [1893] AC 552. 3. Ingham v Emes [1955] 2 All. E.R. 740. 4. Parker v South Eastern Railway [1877] 2 CPD 416. 5. Plate v. Durst [1896] 32 LRA 404. 6. Priest v Last [1903] 2 K.B 148 CA. 7. Sale of Goods Act, 1979. (UK) s 14 (3). 8. Sale of Goods Act, 1979. (UK) s 14 (5). 9. Smith v Hughes [1871] LR 6 QB 597. 10. Unfair Contract Terms Act 1977. (UK) s 2 (1). 11. Unfair Contract Terms Act 1977. (UK) s 2 (3). 12. Thornton v Shoe Lane Parking Ltd [1971] 2 QB 163. Read More