Contract Law Questions - Essay Example

Contract Questions Yes, Mrs. Lowrie has concluded a contract with Jerry through the signed agreement d April 4th Jerry’s initial contract would constitute the offer, however since Mrs Lowrie has changed the terms, the original offer is rejected and a counter offer has take its place according to Mrs. Lowrie’s terms, as was also the case in Hyde v Wrench.2 It has been held that a contract cannot be imposed on an offerree by deeming that silence constitutes acceptance.3 However, Jerry &Co has commenced performing the terms of the contract through construction despite the fact that they have not communicated their acceptance in writing, hence there is an objective reference that may be drawn that they have accepted the contract with the additional provisions inserted by Mrs. Lowrie, as per the precedent in Brogden v Metropolitan Railway3 where performance of the contract was deemed to constitute unconditional, final and unqualified acceptance, motivated by the offeree’s knowledge of the offer.4 In the case of G. Percy Trentham Ltd v Archital Luxfer6 it was held that the Courts should take into consideration the fact that English law approach to contract formation measures it by the yardstick of the reasonable expectations of sensible businessmen. Therefore, in a dispute between the two parties on price, the written transactions between them will hold more weight and Jerry’s performance of amended contractual terms will render them final and accepted. Hence, the contractual terms will be a contractual price of 150,000 pounds with 6000 pounds withheld subject to conditions stated by Mrs Lowrie. 2. The document signed on April 4 represents substantially, the terms between the parties, since Mrs. Lowrie has set out some terms which have not been rebutted before performance7. However, there are also provisions spelt out in the standard form building contract, as per Clause 4 of the April 4 document, which will be additional contractual documents. (b) (1) This oral statement may be considered to be only a representation, since it was not later spelt out in writing8. Moreover, since this issue was not spelt out in writing, the Court may draw the conclusion that the parties did not intended them to be contractual terms9 and therefore not actionable. (b) (2) (3) These statements will be considered to be contractual terms, since they have been instrumental in inducing Mrs Lowrie into entering the contract.10 Moreover, since these statements have been made very close to the actual date of the contract, which is August 4th, they will be deemed to be contractual terms11. 3. If it is assumed that Jerry’s oral representations are contractual terms,12 they will be misrepresentations and an actionable misrepresentation will render Jerry liable to pay damages or for Mrs Lowrie to rescind the contract altogether. On this basis, Jerry’s statement about Sloghit guttering could be held to be a mere false statement of opinion rather than a misrepresentation, so he will not be liable.13 However, the statement about the Building regulation could fall under the category of a half truth and therefore a misrepresentation.14 The statements on starting and completion date will be false opinion and in view of delays that habitually affect construction activity due to extraneous factors, the Court may not hold Jerry liable. Therefore, at the most Jerry may be required to pay some damages to Mrs Lowrie for his oral representations which were not fulfilled. 4. There may be some terms that will be implied by statute, in the agreement between Jerry and Mrs Lowrie. Section 14(2) of the Sale of Goods Act of 1979 includes an implicit provision about the quality of goods supplied. Section 14(3) implies that the seller is supplying goods that are reasonably fit for the purpose they are being supplied for. According to Section 15, the material supplied is to be free from defects. Section 13 of the Sale of Goods Act also implies that where a supplier is carrying out a service it will be done with reasonable care and skill. Section 14 provides that where a specific time has not been agreed to by the parties and set out in the contract, then the service is to be carried out within a reasonable time frame. 5. Illegality could be an issue where the performance of a contract could be specifically forbidden by a statutory provision, and therefore contrary to public policy. For example, the failure to comply with building regulations could fall under the category of leading to corruption15 or prejudicial to public safety. Hence on this basis, illegality could be an issue in this contract for failure to comply with building regulations. 6. Sloghit Enterprises may not be legally liable to Mrs Lowrie, since they have not entered into a contract with her and would therefore she would qualify as a third party to the contract between Jerry and Sloghit. In the case of Dunlop Tyre Co v Selfridge,16 Lord Haldane clearly stated that “only a person who is a party to a contract can sue on it.” This was also the case in Tweddle v Atkinson17 therefore it appears unlikely that Sloghit will be liable to Mrs. Lowrie. Moreover, it is questionable whether Sloghit will even be liable to Jerry for the defective material supplied, since Clause 3 of the contract between them specifically includes an exclusion clause and in the case of contracts drawn up between businesses – which also incorporate an exclusion clause – these exclusion clauses have generally been upheld.18 Therefore, it appears that it is Jerry who may be liable, since he is the one who has a contract with Mrs. Lowrie. 7. Clause 5 of the contract between Jerry and Mrs Lowrie is an exclusion clause, specifically excluding liability for defective goods. Since Mrs Lowrie has signed the document containing the exclusion clause, it will automatically form part of the contract and therefore enforceable.19 However, where the question is one of negligence, then very clear words are required in the clause to exclude liability and ambiguous words will not exclude liability.20 Words such as “for which of that kind are commonly bought” could be held to be ambiguous. Moreover, liability for Jerry will not be excluded if the purpose of the exclusion clause is repugnant or inconsistent with the main purpose of the contract.21 Since it may be noted that the general purpose of the contract as laid out under Clause 3 is to complete the work in a thorough and workmanlike manner, the installation of defective guttering implies a lack of thoroughness and belies the general purpose of the contract. On this basis, the Court may strike down such an exclusion clause.22 Hence, if the exclusion clause is upheld, Mrs Lowrie’s claim will be automatically negated, but if the Court strikes down the clause as being repugnant to the general context of the contract, then she may be able to recover damages. 8. In general, when a statement is included within a contract, it becomes a contractual term23. However, the date of completion is more likely to be held to be a warranty. A condition is vital to the contract and a breach entitles the party to claim damages and repudiate the contract.24 However, in view of the fact that Clause 6 of the contract also excludes liability for delays, it is unlikely the parties intended this warranty to be a binding term. Breaching a warranty only entitles the injured party to damages, not entire repudiation of the contract.25 9. Mrs. Lowrie has recovered compensation on the basis of her contract with Jerry. However, in the case of the contract between Hard Knutt and Jerry, clause 3 provides a specific clause absolving the company of liability. Moreover since the two parties have equal bargaining power, the Court may uphold the exclusion clause negating liability.26 Moreover, it must be noted that since the same terms and conditions of sale have been executed by the two parties before without any contest, therefore the natural inference that must be drawn is that the terms of the contract have been used and found acceptable by Jerry.27 This could be the primary defense that could be relied upon by Hard Knutt, since the contract with the exclusion clause has not only been signed by Jerry but has also not been contested or refuted by Jerry in earlier transactions, therefore it must have been suitable and acceptable. Since Jerry & Co has agreed to the exclusion clause, it may be the free will of the parties that will be allowed precedence in the Courts, especially since there is no unconscionability involved in the transaction, rather it is a question of ordinary business risks sustained by Jerry & Co. Moreover Jerry & Co did not attempt to protect itself against such losses earlier by revising the sale terms, therefore it may be deemed to have accepted the risk as well It is possible that Jerry can rely on the provisions of the Sale of Goods Act of 1982, which contains implied terms about the quality of the goods under Sections 3, 14 and 15. The terms as stated in the exclusion clause no: 3 is directly in contravention of this statutory implied requirement of quality, since the clause states that no undertaking is supplied that the goods are “of satisfactory quality” or that they will be fit for the purpose they are to be used for. Hence, this clause could be held to be unreasonable in its terms, since it contravenes statutory implications about quality of goods supplied. In some cases, where the parties’ intent behind formation of the contract is not clear, then such contractual provisions could possibly be contested on grounds of business efficacy.28 Since the exclusion clause contravenes the principles of good business, this could be further grounds to support its rejection by the Courts. It will however be difficult for Jerry to invoke the provisions of the Unfair Contract terms Act of 1977, since this is applicable in the case of individual customers and not in the case of Companies. However, despite these defenses that Hard Knutt can employ, the fact that Mrs Lowrie has won her suit could predispose the court to allow some recoveries for Jerry, under the implied terms of quality inherent within the statute. Any damages that Jerry has paid to Mrs. Lowrie could be recoverable from Hard Knutt since these can be shown to be the direct consequence of the defective guttering supplied by them. 10. In assessing damages due to breach of contract, it must first be noted that the provision of defective guttering which has caused some damages to the carpet will not entitle Mrs Lowrie to completely repudiate the contract, since she has also withheld 6000 pounds from Jerry. In the light of contravention of the implied quality of goods supplied as laid out under the sale of Goods Act of 1982, it is likely that Jerry may have to compensate Mrs Lowrie the cost of replacing the defective guttering and providing new carpets. Another aspect that may be taken into consideration by the Courts is the modifications now required to the building in view of its failure to comply with building regulations. Jerry’s oral statements about ensuring compliance with the regulations may be deemed to be warranties rather than a contractual term, however damages are likely to be provided by the Courts on this issue as well. Moreover, it may also be argued that Mrs Lowrie chose to enter into a contract with Jerry on the basis of his oral representations about compliance with building regulations, without which she might never have entered into the contract29. Therefore, the Court is likely to require that Jerry bear the cost of carrying out the modifications that are required in order to bring the building into compliance with building regulations. An additional aspect that must be considered in this case is the fact that no personal injury or harm has been caused to Mrs Lowrie. This case will not invoke the principles of tort law which involves substantial punitive damages for injuries caused due to wrongs. The major violations that have occurred on an overall basis in this contract are that oral representations have been made which have not been honored. Moreover, the Courts will also consider the exclusion clause that has been included in the contract which provides some protection for Jerry. There is also the question of the 6000 pounds which Mrs Lowrie has withheld, which will also be taken into account by the Courts. While determining the quantum of damages therefore, the Court will look into the issue of fairness for both parties, with damages as follows: (a) the cost of replacement of Mrs Lowrie’s Chinese carpet (b) the cost of carrying out repairs to walls and floors that may have been caused by water leakage (c) The cost of replacing the defective guttering with good quality material, including the cost of fixing any related parts. (d) The cost of carrying out all the modifications that are required by in order to bring the building on par with building regulations. (e) Deduction of 6000 withheld by Mrs Lowrie from the total amount of damages. 2186 words Bibliography * Bannerman v White (1861) CB(NS) 844 * Bettini v Gye (1876) 1 QBD 183. * Birch v Paramount Estates (1956) 167. * Bisset v Wilkinson (1927) AC 177; * Brogden v Metropolitan railway (1877) 2 App Cas 666 (HL) * Butler Machine Tool Co Ltd v Ex-Cell O Corporation(England) Ltd (1979) 1 WLR 401 CA * Couchman v Hill [1947] 1 All ER 103 * Dunlop Tyre Co v Selfridge [1915] AC 847 * Evans Ltd v Andrea Merzario Ltd [1976] 1 WLR 1078. * Felthouse v Bindley (1862) 11 CBNS 869 * Gibson v MCC (1979) 1 WLR 294 * Glynn v Margetson [1893] AC 351 * G. Percy Trentham Ltd v Archital Luxfer (1993) 1 Lloyds Report 25 CA * Heilbut, Symons and Co v Buckleton (1913) AC 30, * Hyde v Wrench (1840) 3 Beau 334 * LEstrange v Graucob [1934] 2 KB 394. * Museprime Properties v Adhill Properties [1990] 36 EG 114 * Nottingham Brick and Tile Co v Butler (1889) 16 QBD 778 * Parkinson v College of Ambulance (1925) 2 KB 1 * Poussard v Spiers (1876) 1 QBD 410. * R v Clarke (1927) 40 CLR 227 * Routledge v McKay (1954) 1 WLR 615 * Smith v land and House Property Corp (1884) 28 Ch D 7 * The Moorcock (1889) 14 PD 64. * Tweddle v Atkinson (1861) 1 B&S 393 * Watford Electronics Ltd v Sanderson CFL Ltd (2001) 1 All ER (Comm) 696 * White v John Warwick [1953] 1 WLR 1285. Read More

 

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