Law of Obligation and the Doctrine of Consideration - Essay Example

Law of Obligations Q1(a) The problem at hand is concerned with the issue of offer and acceptance. An offer consists of the terms issued by a party respecting the conditions to which his offer is subject to. The validity of the offer is conditioned on the clarity and understandability of the terms by the parties to the agreement. The principles of European Contract Law dictate that an offer must have the following elements: the intention of resulting into a contract if accepted, and; has enough definite terms to form into a contract. 1 An offer made ripens only into an agreement if the offer is accepted but if the other party alters the term of his acceptance, it becomes a counter-offer and has the effect of effacing the original offer. The second party then becomes the offeror and the first party the acceptor. If the counter-offer is accepted, then the agreement is concluded. 2 The principle in English law is that “an acceptance which is not the mirror image of an offer does not give rise to a contract – it is regarded as a counter-offer, not an acceptance” 3 This principle was first enunciated and laid down by the courts in the case of Hyde v. Wench.4 In the aforesaid case, a party offered to sell a piece of land he owns for £1,200 to another but was declined by the latter. He made another offer, lowering it to £1,000 to which the other party responded by offering to pay the same for £950. The first party asked for time to reconsider and several days after wrote a letter to the first party declaring that he would make a definite answer on a fixed future. A day after the fixed date, the first party refused, in a letter, the offer of the second party. The second party wrote back stating that he is accepting the earlier offer in which the selling price is at £1000. The Court, after appraisal of the facts of the case said that the effect of a counter-proposal is an implied rejection of the offer to which it is responding to: Under the circumstances stated in this bill, I think there exists no valid binding contract between the parties for the purchase of the property. The defendant offered to sell it for £1,000 and, if that had at once been unconditionally accepted, there would have been a perfect binding contract; instead of that, the plaintiff made an offer of his own, to purchase the property for £950 and he thereby rejected the offer previously made by the defendant. I think that it was not afterwards competent of him to revive the proposal of the defendant, by tendering an acceptance of it; and that therefore there exists no obligation of any sort between the parties; the demurrer must be allowed.5 Applying the above principle to the case at hand, the first advertisement becomes the first offer but since Justine wanted to lower the price at £2,250 from the original price of £3,000, then the original offer was vacated and the new offer is the one proffered by Justine. There was no acceptance by Charles but yet another offer at the price of £2,500 to which Justine did not immediately accept. When Justine finally accepted, it was several days after through a telephone message. This did not however reach Charles because the message was inadvertently erased by his nephew who was playing around with the phone. The existing doctrine in acceptance is that it becomes valid only when the acceptor has communicated his acceptance directly to the offeror which on the other hand is subject to certain exceptions like the postal rule, 6 and in this case through the telephone. Furthermore, the Receipt Rule under the English contract law requires that the acceptance (or withdrawal) is not effective unless it was received by the offeror (or offeree) and its effect is that once received there can be no more withdrawal from the party because it would be tantamount to breach. 7 The implication of these principles is that since the acceptance was not directly communicated by Justine to Charles, then it should have somehow fall under the exceptions which require that Charles actually received such acceptance but since Charles never did, then there is no valid acceptance. Unlike the Postal Rule where acceptance takes effect immediately on the day a letter of acceptance is posted, a telephone message requires actual knowledge of the offeror. The fact that Charles sold off the furniture even before the lapse of the number of days he granted to Justine to accept is of no moment. The commitment of Charles to keep the offer open until a certain number of days is not binding because it was not a contract in itself, the elements of contract not having been met. In this case, the element of consideration is missing. The implication in this case is that the prevailing condition is still one of a nudum pactum and therefore not binding which leaves the Charles the option to sell the furniture to another and not necessarily to Justine. Under English law, the offeror is always granted the prerogative to withdraw his offer at any time before a valid acceptance has been made regardless of periods he granted to the acceptor or whether that period has not yet lapsed. In the parallel case of Dickinson v Dodds, 8 a party wrote to another offering him a piece of property for a certain amount, which party was open until the 12th of June. The day before the 12th, the second party decided to accept but postponed actual acceptance until the end of the period given. Before the day passed, however, he heard that the first party was negotiating with a third person for the sale of the subject property. That evening he went to the first party’s house to communicate his acceptance but since the latter was not home, he left a document of acceptance which never found its way to the first party’s hands. The Court held in this case that no contract exists until an acceptance has been conveyed to the offeror and neither is the grant of period a contract in itself as no consideration was involved which implies that the offeror can take back his offer any time before acceptance was actually conveyed to him. The Court said “It appears to me that there is neither principle nor authority for the proposition that there must be an express and actual withdrawal of the offer, or what is called a retraction. If there was not a continuing offer, then the acceptance comes to nothing” Q1(b) The Doctrine of Consideration was already prominent as far back as the 15th or 16th century but it was in the last third of the 19th century that it was revolutionized by the English and American legal theorists resulting in the entrenchment of the requirement of consideration as one of the most distinct features of the common law. It also became a distinguishing feature of the English law as against the rest of the European law. There were two purposes for revolutionizing the doctrine. The first was to purge it of extraneous matters and simplifying it to answer just one question: which promises should be enforceable by law. The second reason was to make it the central axis to which all the other features of the contract law revolve. 9 However, the reason why the English law insists on the doctrine of consideration is not only to distinguish between enforceable and unenforceable promises but also to make contracts essentially private and stripped, if possible, of anything that is beyond calculated individual control. Although the setting of consideration as an essential element of contracts would seem like a limitation on the individuals’ right to contract and a limitation on the state’s intervention in enforcing an agreement, the doctrine enables the party to set the terms of their agreement and evades state prescription of the terms of the agreement. Thus, in this sense the doctrine of consideration is a tool by which individual parties take control of the terms of their agreement. 10 The book Just Interpretations puts it another way: the doctrine of consideration, not only exemplifies the dichotomy between legal and moral obligation, it also appears to play an active role in establishing and maintaining (reestablishing) it. [...] Thus, the operation of the doctrine of consideration seems to demonstrate how law strives to carve out an independent existence for itself, by ascending to a level of abstract formalism from which it can negate (or differentiate itself from) both history and morality. 11 Q2(a) In the case of F v West Berkshire,12 Lord Goff of Chieveley demurred to the use of the adjective ‘hostile’ as a qualification to the crime of battery. According to him there are many acts that are unlawful and yet are not inherently hostile. For example, a doctor who performs on a patient he mistakenly thought to have given his consent or a mischievous prank gone haywire. To attach the word ‘hostile’ as a precondition to battery is incompatible with the doctrine that any kind of touching done on a person’s body would possibly amount to battery and trespass if made without lawful excuse. In the aforesaid case, a mentally incapacitated person “F”, who is a 36-year old voluntary in-patient at a mental hospital, is to undergo sterilisation procedure. The health authorities however demurred to this operation because her incapacity disqualifies her from giving valid consent. If the authorities will push through with the operation, they may be found guilty of battery or trespass. In emphasizing this point, Lord Goff cited Cardozo J. in the case of Schoendorff v. Society of New York13 who said that “Every human being of adult years and sound mind has a right to determine what shall be done with his own body, and a surgeon who performs an operation without the patient’s consent commits an assault.” The issue with respect to giving medical treatment of mentally unsound individuals is that the state’s parens patriae jurisdiction over them had been removed in 1960 from being vested in the courts by Royal Warrant, and therefore no other authority, not even a statute, can be invoked to justify a medical procedure on the mentally incapacitated like the one at hand. According to Lord Goff, resort can be made to a common law doctrine called principle of necessity specifically on the third group after cases of public necessity and cases of private necessity – the necessity to assist another person without his consent. To differentiate the three kinds of necessity, Lord Goff illustrated the first kind with the example of a man intervening in the property of another by destroying it so fire wouldn’t spread out to its immediate vicinity; the second by a man who trespasses on another person’s property to prevent fire from spreading into his own property which is adjacent or near that of the burning property. The third kind, which Lord Goff used to justify the herein proposed medical procedure, can be illustrated by a man who forcibly takes another from the direct path of an incoming vehicle to save him from being hit by it.14 There are two elements that are basic to the third kind of necessity: one, “necessity to act when it is not practicable to communicate with the assisted person” and; “the action taken must be such as a reasonable person would all in the circumstances take, acting in the best interests of the assisted persons.”15 Therefore, under the principle of necessity of the third kind, the operation of sterilisation of “F” can be done by the doctors without the consent of the latter. Q2(b) Negligence is a kind of tort that was born out of the precedent-setting case of Donoghue v. Stephenson. 16 In that case, the Court, through Lord Atkins, had an opportunity to define duty of care: “You must take reasonable care to avoid acts and omissions which you could reasonably foresee would be likely to injure your neighbor. Who then in law is my neighbor? .. any person so closely and directly affected by my act that I ought reasonably to have them in contemplation as being so affected when I am directing my mind to the acts and omissions which are called in question.”17 The effect of this pronouncement is that the duty of the court in cases of negligence is not to determine whether a party intended the ill effects of his acts on another party but whether the former should have done what he did which caused injury or damage to another.18 As can be seen, the Court’s declaration also essayed the so-called Neighbor Test. The doctrine held in the Donoghue case was refined in the case of Anns v Merton LBC19 through Lord Wilberforce who said that that there are two stages for establishing duty of care: a sufficient relationship of proximity between the culprit and the person injured by the former’s action such that through reasonable contemplation it can be deduced that the latter will be injured if the former will act carelessly, and; in the event that the first stage is answered in the affirmative, it must be determined whether there are considerations that affects by way of limiting, negating or reducing the duty of care owed, or the damage that was inflicted by the negligent act. Subsequently however, the House of Lords decided a string of cases which not only modified the Anns case but seemed to have rendered its ruling erroneous. This started with the case of Peabody Donation Fund Governors v Sir Lindsay Parkinson & Co. Ltd 20 then the Caparo PLC v. Dickman 21 and finally, as the icing on the cake, the Murphy v. Brentwood. 22 The case of Peabody Donation Fund Governors is very similar in all respect to the Anns case. In this case, it was held that “So in determining whether or not a duty of care of particular scope was incumbent upon a defendant it is material to take into consideration whether it is just and reasonable that it should be so.”23 In other words, duty of care is not determinable alone by proximity, foreseeability and the absence or presence of a public policy preventing assumption of duty of care but also by if it just and reasonable under the circumstances. The case of Caparo firmly established the three stage test to determine duty of care. In this case, “It is never sufficient to ask simply whether A owes B a duty of care. It is always necessary to determine the scope of the duty by reference to the kind of damage from which A must take care to save B harmless.”24 The implication of the Caparo case is that the presence of proximity and foreseeability is not enough to establish duty of care. There is an added requirement occasioned by this case which is to determine if the scope of duty includes that of the case at hand, in other words, if the imposition of duty is reasonable and just. Applying all the aforesaid relevant principles to the present case, thus: Bertie. In the case of Bertie, Algy is liable for the injuries suffered by him because as the driver of the get-away vehicle, he has the duty of care to drive carefully. In driving motor vehicles in roads and highways where the driver can never really anticipate road conditions or the presence of other motorists and pedestrians along the way, it is reasonable to presume that any act of carelessness or negligence will result in an accident and injury on the part of the passengers of the vehicle and of the pedestrians or other motorists. This is a foreseeable, proximal and a reasonable and just duty imposed on a driver of a vehicle. Cedric. Algy is likewise liable for the injuries suffered by Cedric under the same principle of duty of care pronounced in the Donoghue case. The foreseeability of an accident in the event of negligence in driving is a reasonable conclusion, the proximity of Cedric in the road as a co-motorist of Algy is determinable under the doctrine held in the Casparo case and the justness and reasonability of the duty of care owed by Algy in this case is firmly established. Daphne. Daphne cannot claim from Algy because the duty of care owed by the former to the latter cannot be established in accordance with the principles laid down in Donoghue and Casparo cases. As a driver, Algy’s duty of care extended only to those he can reasonably affect by his actions – the motorists and pedestrians on the street where he is driving. The foreseeability and proximity are absent in her case and therefore it is not just and reasonable to impose the duty of care in her case to Algy. Edgar. Algy should be liable for the loss that Edgar suffered as a result of the accident that he caused. This is not a case of pure economic loss in which recovery is not granted because the loss25 here is connected to the property of Edgar which had been carried by Cedric’s lorry and hit by Algy. References: Anns v Merton LBC[1978] AC 728. Beale, Hugh & Tallon, Denis. Contract Law: IUS Commune Casebooks for the Common Law of Europe. Hart Publishing, 2002 pp178-179. Bussani, Mauro & Palmer, Vernon Valentine. The Notion of Pure Economic Loss and its Settings. Pure Economic Loss in Europe. Mauro Bussani & Vernon Palmer (eds). Cambridge University Press. 2003, p 5 Chissick, Michael & Kelman, Alistair. Electronic Commerce: Law and Practice. Sweet & Maxwell, 2002, p 90. Caparo PLC v. Dickman [1990] 2 AC 605 Dickinson v Dodds [1876] 2 Ch Div 463 Dobson, Alan Paul, & Reddy, Dobson, K. J.. Commercial Law Q&A 2003-2004 3/e: 2003-2004. Routledge Cavendish, 2003, p 223 Donoghue v. Stephenson[1932] AC 562 F v West Berkshire [1991] UKHL 1, [1990] 2 AC 1 Henthorn v Fraser. [1892] 2 Ch 27. Hyde v. Wench [1840] 49 ER 132 RC Kelly, David & Holmes, Ann E. M. & Hayward, Ruth. Business Law. Routledge Cavendish, 2005 Kreitner, Roy. Calculating Promises: The Emergence of Modern American Contract Doctrine. Stanford University Press, 2007 Murphy v. Brentwood [1991] UKHL 2. Oughton, D W & Oughton, Davis. Sourcebook on Contract Law. Cavendish Publishing, 2000 p 42 Peabody Donation Fund Governors v Sir Lindsay Parkinson & Co. Ltd [1985] AAC 210 Rosenfeld, Michel. Just Interpretations: Law Between Ethics and Politics. University of California Press, 1998. Schoendorff v. Society of New York [1913] 105 NE 92, 93. Read More