Whether Karter or Noonan Must Pay Jimmy the 1000 USD - Essay Example

INTRODUCTION The question on whether Karter or Noonan must pay Jimmy the $1000 USD that he has lost will depend on the legal facts behind this case. A legal justification will also be at hand before any responsibility can be shifted to Jimmy, Karter and Vincent on who is liable for the paintings. Even though Jimmy had Karter to purchase the paintings, he had revoked his offer before Karter purchased the paintings from Vincent. This has the point when he (Karter) called Jimmy and started pleading with him to purchase the painting of which Jimmy refused. By this time Karter had not parted with the money to purchase the paintings. Therefore Karter purchases the paintings knowing very well that Jimmy had repudiated his offer and was not going to make any good payment of them. 1 In Dickinson Vs Dodds, 1876, the defendant gave the plaintiff a written offer to sell him his house for 800 on Wednesday. The offer was to be left open until next Friday 9 a.m. On Thursday the defendant sold the house to someone else. On that very evening, the plaintiff was told of the sale by a third party, but before 9 a.m. on Friday the plaintiff delivered his acceptance to the defendant which the defendant refused to receive. It was held by the court that there was a proper revocation of the offer and the plaintiff could not accept it. 2 Even though Karter had revoked his offer of purchasing the paintings, the revocation / refusal was not procedurally done legally. Under the rules governing any revocation of an offer, that withdrawal must be committed to the person to whom it was made. It means that had Karter not taken the initiative of calling Jimmy would have continued to be silent of his withdrawn intention to purchase the paintings. 3 On the other hand, Karter would be to blame because he had acted outside the agreed terms of their agreement with Karter. According to their agreement Jimmy had expressly told Karter not to spend more than $ 1,000 USD. These terms were very certain but Karter ignored them and purchase paintings worth $5,000 USD. The expression by Jimmy to Karter to only spend $1,000 USD was in fact a term that was too "heavy" to be overlooked. This is because: - (a) Jimmy would not have entered into the contract if the statement was not made. The statement was important because it showed the maximum amount of money that he had and which he was willing to spend on paintings. (b) The statement was made immediately alongside the other agreements meaning that the representer highly regarded its importance. But Karter can still argue that he had thought that the statement was not a term of the contract since it was not followed by a written agreement. Jimmy could have reduced his oral expression into writing. Though he did not expressly state that he could not purchase the paintings if they cost over $1,000 USD, it was implied that he was not going to spend over $1,000 USD in paintings. These are implied terms that parties probably had in mind but did not bother to express. They have to be implied by the courts. Additionally, the parties would have expresses this agreement in writing if they had foreseen the difficulty occurring. Such terms the parties could have expressed in writing had they seen the difficulties are implied by the courts because of the court's view of fairness or public policy. Vincent acted in good faith in selling his painting and cannot be held responsible. He was made to believe in statements that were not true. He was in fact misrepresented by Karter who told him that he had been authorized to purchase the painting on behalf of Jimmy. Misrepresentation renders the contract voidable at the option of the innocent party. The statement was made are the time the contract was made and it induced Vincent into the contract. 4 Vincent could not have entered into the contract if: - (i) He knew that Karter's statement was false. (ii) He would have made the contract despite the misrepresentation. (iii) He did not know that there had been a misrepresentation i.e. after entering into the contract. Had Karter not known that he was acting on behalf of Jimmy at that time then this would have amounted to innocent misrepresentation of which he would not have become liable. In Derry Vs Peek A company stated in its prospectus that it would operate steam trams in plymath. The directors, when they issued the prospectus honestly believed they would have no difficulty in obtaining the necessary authority from the board of trade to run the trams. However, authority was not given and the company was wound up. The plaintiff brought an action against the directors for fraud. It was held that the directors were not liable in damages since the misrepresentation was innocent. In Hedley Byrene Vs Heller D who were bankers and P who were advertising agents. They had a mutual client, E Ltd, who wished to place advertisements on T.V E requested credit from P. So P asked D for reference. D stated that E was a respectably constituted firm and was considered good although the statement was made without responsibility on their part. P incurred personal liability on several advertisement contracts. E then went into liquidation and P was unable to recover over 17,000 owed to them. P sued D on his negligent statements that E was a respectable firm. It was held that he did not have a possible action and he would have succeeded but for the disclaimer of responsibility. 5 In order to for Vincent to escape responsibility for the price of the paintings he must prove that: 1) He relied on special skills and judgement / opinions of Karter. 2) That Karter knew or ought to have known of this reliance and this accepted responsibility for making the statement carefully. The agreement/ contract between Vincent and Karter had been executed in all the aspects save for consideration that was a little bit high. He parted with his Sunflower and in turn was paid the consideration ($5,000). It doesn't matter whether he had been paid the exact amount or even overcharged since consideration need not be exact but real. This was held in the case of Thomas Vs Thomas. In this case, the executors agreed to convey a matrimonial home to a widow provided he paid 1 per year and kept the house in repair. In action for the promise to convey the house, it was held that the act of payment and doing the repairs were valuable consideration. 6 The contract between Vincent and Karter had been sealed when he parted with the Sunflower painting and inconsideration received the payment. Vincent knows no contract between himself and Jimmy or between himself and Noonan. As far as he is concerned, these are third parties who should not enforce any rights in his contract between himself and Karter. One of the principles of contract law is that a contract creates rights and obligations only between parties associated to be imposed on a party not privy to a contract. Fundamentally, no party can sue or be sued on a contract unless that party is associated with such a contract. This was held in the case of Dunlop pneumatic Tyre Co. Vs Selfridge. In this case, the plaintiff agreed with X -dealers in tyres manufactured by the plaintiff to buy the tyres below Dunlop's list prices. He also entered into another agreement that as the agent of Dunlop, they were to secure similar contracts with any other party who dealt with Dunlop's tyres. X - entered into such an agreement with Selfridge. Selfridge later breached this agreement and Dunlop sued him for breach of contract. It was held that the action must fail as Dunlop was a stranger to the contract between X and Selfridge. 7 But as this principle holds, the question is, was Karter not acting on Jimmy's behalf Where the relationship of principle agent exists, the principal is bound by contracts entered into the agent with the third parties. Similarly, where an agent contracts without authority on behalf of a named principal, a person named as principal may ratify the contract so that it becomes a contract between himself and the third party. Similarly where an agent contracts with third parties without disclosing the existence of his principal, a contract exists between the principal and the third party. In this case, the following facts can be asserted:- 1) At first there was that agency relationship between Karter and Jimmy whereby Karter was acting on behalf of Jimmy. Therefore, initially, Vincent was bound by the agency relationship between Jimmy and Karter but not before Jimmy expressed his refusal to purchase the paintings. 2) His authority on behalf of Jimmy then ceased when Jimmy withdrew his interest on the paintings. 3) Unless, Jimmy ratifies the agency agreement is when he might legally succeed in a suit to recover his money from Vincent. But since Jimmy has not ratified the contract, no responsibility can be attached to Vincent for the price of the paintings. Karter ought to return the debt he had collected from Noonan to Jimmy because of the following legal issues. 1) Traceability: - In no any way is the debt related to the contract to purchase the paintings. These two 'monies' trace to two different contracts. He should first return the $1,000 USD as a separate issue. 2) There was no any way express agreement whether written or oral, that Karter was to take the $1,000 in case. 8 On the part of Noonan, he acted negligently by giving Karter the $1,000 USD because he was under instructions from Jimmy not to do so. He failed to exercise his standard of care safeguarding Jimmy's debt and making that payment only of Jimmy. A person with close relations with another must ensure that his actions do not injure that other person lest he would be liable for his actions. And for the plaintiff must also prove breach of such standard of care subsequent loss. Noonan breached this duty of care by remitting his debt to Jimmy through Karter despite the former instructions not to do the same. 9 Consequently, Karter who had an ill motive of disappearing with the money made good his ill thoughts and disappeared with the money which he later spent and never submitted to Jimmy. This saw Jimmy losing his money through Noonan's negligence. Therefore since all the ingredients of negligence can be proved on the part of Noonan, he is required to compel Karter to make good the payment to Jimmy failure to which he should reimburse Jimmy from his own pocket. What might complicate the settlement being enforced through Noonan is the issue of reasonable foreseeability. Noonan can argue that he could not foresee the fact that Karter could disappear with the money meant for Jimmy. This is reinforced also by the more fact that Noonan did not have any knowledge regarding the contract between Jimmy and blame but he did not act in good faith since he gave Karter the money because of his dislike of Jimmy. 10 From the above discussion, it can be inferenced that both Karter and Noonan had a role to play in the loss of $ 1,000 USD that Jimmy lost. And that Noonan, because of his negligent acts should ensure that Karter pays Jimmy the money failure to which he should pay by himself. Karter has the first responsibility of paying the debt because as discussed above it had no correlation with his first agreement with Jimmy. The more fact that he bought the flowers to Jimmy cannot further deny him the blame for the subsequent loss of money because: - 1) Jimmy had in the first place withdrawn his intention to buy the paintings before eve Karter had purchased them but Karter went ahead to purchase them. 2) He had not informed Karter of his intention to return the sunflowers. Instead he just placed them in the hallway of Jimmy's apartment and fled. 3) He contravened the rule that under the sale of good Act, both the buyer and the seller must be willing to enter into the sale agreement. However, in this case Jimmy was not willing to enter into the sale agreement as the price had been changed. Karter did not approach Vincent for the purchase of his paintings out of his own volition. It is Jimmy who had requested him to do so. He cannot therefore turn back and deny responsibility of the painting. Conclusion In conclusion, Vincent remains as the only party with no responsibility at all either towards the paintings or the $1,000 USD debt. Karter is primarily responsible for this debt even thought Noonan also acted negligently in giving him the money against Jimmy's instructions. Jimmy cannot be held responsible for the paintings. It is again Karter to take that responsibility because Jimmy had repudiated his offer. But Karter went ahead to purchase them even at a price which he had not agreed upon with Jimmy. References Emanuel, S. L. (2004): Fundamental of Business Law, 4th Edn, , Educational Publisher, Sydney Emerson R. W (2003): Business Law, 5th Edn, Educational Publisher, Sydney Fehr, E., S. Gchter and G. Kirchsteiger (1997): Reciprocity as Contract Enforcement Device. 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