Contract Law: Legal Right for Buying Car

1. Connor urgently needed cash. So he decided to sell his car by parking it outside his house with a notice on the windscreen stating: “For sale. Excellent condition-one owner. $26,000 or nearest offer. Please call here at my home number 48 or phone 100 333 only”.

On Monday at 9am Dolly saw the car but decided not to stop as she was late for work. She phoned from work and told Connor that she would give him $23,000 for his car. Connor said he would consider it.

Eileen saw the car and called at number 48 on Monday at 11am. However, the only person there was Connor’s daughter, Hetti. Eileen wrote a note saying: “Monday 11.05 am. Please keep the car for me. Here is my cheque for $26,000—Eileen”. Hetti left the note on Connor’s desk in his study.

On Monday afternoon Connor decided to sell the car to Dolly for $23,000. He posted a letter at 2.30pm that day to Dolly’s business address stating: “I agree to sell you my car on your terms”. This letter was received by Dolly on Wednesday at 10am.

At 4.30pm on Monday Connor read Eileen’s note. He immediately phoned Dolly’s business address and left a message on her recorded answering service:” Ignore my letter that you will receive –the deal for my car is off”. Dolly was away on business and listened to the recorded message only on Wednesday evening at 8pm.

At 2.15pm on Monday Fiona saw the notice on the car and hurriedly posted a letter stating that she would buy the car for the price of $26,000. She sent a cheque with the letter and posted the letter just in time for the 3.30pm postal collection. Unfortunately, as Fiona failed to address the letter correctly it arrived only on Friday.

Advise:

a.Connor

b.Dolly

c.Eileen, and

d.Fiona

of their legal rights and obligations in relation to the above matters.

You are required to support your answer by reference to relevant legal authority.

2.  Dan took his dinner suit and his wife’s silk dress to the Toff Dry Cleaners, a firm his family used whenever they had dry cleaning to be done.

He was handed a docket and as usual he placed it in his wallet without reading it.

When Dan called to collect the clothing he was told that his dinner suit was missing and his wife’s silk dress was badly stained. No explanation was given about the stained dress. However, one of the assistants recalled handing the dinner suit to a customer who had apparently lost his docket but was able to identify the dinner suit when allowed to sort through the rack of dry cleaned clothing awaiting collection by customers.

Dan demanded compensation but the owner of Toff Dry Cleaners referred Dan to a clause on the docket which read: “We will not be liable for any loss or damage to clothing left for cleaning”. The owner also pointed to a sign at the back of the shop which had been displayed there for some time. The sign said: “We take all care in the dry cleaning of our customers’ clothing but we regret we cannot take any responsibility for loss or damage however caused”.

Dan protested that he had never read the sign or the docket.

1. Advise Dan whether he is entitled to compensation from Toff Dry Cleaners.(7 marks)

2. Would it make any difference if Dan had noticed the clause on the docket and theassistant had said: “That excludes liability for damage to buttons and zippers”(2 marks)

3. ASSUME that Dan is entitled to compensation for the loss of his dinner suit and the stainedsilk dress. He now tells you that because of what has happened his wife has sufferedemotional distress because the dress was a family heirloom. He also tells you that he andhis wife had to hire, at considerable expense, a dinner suit and a dress for a formal occasionbecause of the loss and damage.(3 marks).

You are required to support your answer by reference to relevant legal authority.

1. Issue

• The issue with respect to Connor is whether there is legal right he has for accepting any of the offers made by Dolly, Eileen, and Fiona?
• The issue with respect to Connor is that whether he can revoke his acceptance after the same has been made?
• The issue with Dolly is whether she can claim that there has been an acceptance of the offer by Connor?
• The issue with Eileen whether there has been valid since she has already given the consideration?
• The issue with Fiona since had already sent the offer for buying the car, but the same did not reach in time.

Law:

A contract which is valid requires that in the first place there should be a valid offer; the contracting parties should have the willingness which is similar to those that are defined by the specific terms of the contract. The intent that is there behind such terms is important mainly for ensuring that there is a binding effect of the offer on the individuals as soon as the acceptance of the same takes place.

There is, however, a difference which needs to be made between an invitation to treat and an offer. On being accepted an offer will lead to a contract that is binding, however, there cannot be an acceptance of the invitation to treat; it is merely an invitation to make offers (Beale, Bishop, & Furmston, 2008). 

It was opined in the case of Pharmaceutical Society of Great Britain v Boots Cash Chemicals (Pharmaceutical Society of Great Britain v Boots Cash Chemicals, 1953) that the display of the products by the shop is only for the customers to be able to choose from. However, there would only be an offer in the case where the customer makes an offer for buying these products. It would then be the store keeper to either accept or reject the offer that has been made. As has been held in the case of Partridge v Crittenden (Partridge v Crittenden, 1968) advertisements, in general, are invitations to treat.

Upon there being an acceptance that is a valid a contract which is binding in nature is formed. Therefore it is essential to know what constitutes an acceptance that is valid for establishing if the agreement has a binding effect on the parties. There are essentially three important rules which relate to acceptance. The first is that there has to be communication of the acceptance (Chen-Wishart, 2005). The second is that the terms of the offer and acceptance should match with each other. A certain agreement must be there. In the case where it has been agreed that the means of post would be used for the transaction then the post rule shall be applicable. It has been stated in the postal rules that where there is proper addressing on the letter and the same is stamped it would be regarded as acceptance when it is in the post box that such acceptance has been placed.

In the case of Adams v. Lindsell (Adams v. Lindsell, 1818) where the letter got delayed in the post. The claimant on the receipt of this letter posted an acceptance letter the very same. Since there had been a delay, it was assumed by the defendant that the claimant was no longer interested in buying the wool, and it was to a third party that the same was sold it (Kramer, n.d.). A suit was the breach of contract was made by the claimant. The court opined that upon the posting of the letter, the acceptance would become effective (Neyers, Bronaugh, & Pitel, 2009).

With respect to consideration, there is a general rule that if only there is an attachment of a consideration will there be an enforceable promise where consideration has been attached to it. It is required for this consideration to be something which in the eyes of law has some value and that which has been made against there being a promise which has been exchanged for it. Where there is an agreement between both the parties for exchanging of certain money or goods, there would the existence of consideration (Griffith, 2009). Each person in a contract is required to give something up (Fafinski & Finch, 2010).

 A legal intention needs to exist for creating a contract that is valid. Where it is in the context of commercial transaction, a presumption is raised by law that there was an intention by the parties to create a legal relationship (Esso Petroleum v Commissioners of Customs & Excise, 1976).

It is to be noted that under English authority there is no clear authority with respect to revocation of acceptance. Though there has been an acceptance and it has been permitted that a revocation of the acceptance may be made. The landmark case of Scotland Dunmore v Alexander (1830) it seems that there has been the permission that has been granted for such revocation by means that are speedier (Dunmore v Alexander, 1830). 

Application of Law

In relation to Connor, it is evident that there was only an invitation to treat by way of his advertisement (Partridge v Crittenden, 1968). As observed in the case of Pharmaceutical Society of Great Britain v Boots Cash Chemicals the person who wants to buy the car has to make the offer, and it would be upon Connor to accept the offer. Thus Connor can accept any of the offers which have been made to him. 

The postal rule states that once the acceptance has been addressed and stamped and sent to the post office, it would be deemed to be an acceptance (Adams v. Lindsell, 1818). There was also an intention that was there for creating a relationship that was legally enforceable. However, there is no clear authority in the English whether there can be revocation of this offer though in the case of Dunmore v Alexander (1830) there seems to be a permission which has been granted. Thus it may be so that this revocation of the offer may be accepted in court.

In the case of Dolly a valid offer has been made by her upon seeing Connor’s invitation to treat. This offer has been accepted by Connor by way of postal rule. However, there has been an attempt by Connor to revoke the contract. It must be noted that the postal rule does not allow the revocation of a contract using faster communication (Bazaars (Pty) Ltd v Minister of Agriculture (1974)). There also existed on the part of Connor an intention to create a legal relationship.

In relation to Eileen, though the consideration which has been given by her is valid in the eyes of law, however, since this is only an invitation to treat this consideration would only be an offer which Connor would be free to accept or reject.

In relation to Fiona, since there was a failure on her part for addressing the letter correctly and also it had been mentioned clearly in the invitation to offer that offer for purchase must be made only by calling at the house or at a number mentioned. Further, it was only an offer to an invitation offer, there is no proof of acceptance by Connor or any intention on his part to enter into a legally binding contract.

2. Issue

The main issues that have been raised in this case are:

• Whether Dan is entitled to compensation from Toff Dry Cleaners?
• What difference would it make if Dan had observed the clause on the docket and had asked assistant regarding it and he would have stated that it excludes liability for damage to buttons and zippers?
• Would there be any damages given to Dan for emotional distress and other related issues due to the damage caused to the clothes?

Law

Exclusion Clause, terms are deemed to be in nature contractual when they are implied either before or during contract formation either orally or in writing. It has been opined in the case of Olley v. Marlborough Court case that for a term to considered to have been incorporated in the contract it is important that it's noticed should be giver either before the contract has been formed or at the time of the formation of the contract for it to be considered that it is a part of the contract (Olley v. Marlborough Court, 1949). Further in the case of Parker v. SE Railway Co., it was opined by the jury that in the case where the conditions on a ticket had not been read it would not be considered to be a part of the contract since this was only a receipt and receipt is not a contract’s party and it is only in a contract that an exclusion clause can be incorporated (Parker v. SE Railway Co., 1877).

In the situation where in reliance is being placed on an exclusion clause, it is necessary to demonstrate that there was reasonable notice that was given to the individual. In the case of Thompson v London, Midland and Scotland Railway Co. Court of Appeal there was the injury which was caused to the claimant while he was getting off the train (Thompson v London, Midland and Scotland Railway Co, 1930). There were prominent notices which had been displayed by the railway company for an exclusion of liability for any damage caused to property or any personal injury due to any kind of negligence on the platform (Adams & Brownsword, 2007). The court opined that there was an incorporation of the clause (Beale, Bishop, & Furmston, 2008). The only requirement which was there was off taking steps that are reasonable for bringing to the attention of a reasonable person the clause. It was not the railway company's duty to make every traveler aware with respect to the clause.

In the situation wherein a misrepresentation has been made with respect to a clause then, in the said case, it would not be considered that such clause is effective. In the Curtis v Chemical Cleaning case, the claimant had taken a wedding dress to the cleaners. A form was asked to be signed by him. When she inquired at the time she was signing as to what is was that she was signing, the assistant informed her that it was an exclusion for liability to any damage that may be caused to the beads (Curtis v Chemical Cleaning, 1951). There was in fact, in the form an exclusion from any kind of liability for any damage which was caused howsoever. The claimant got the dress back in a state that was extremely stained badly state. The Court of Appeal opined in this case that a misrepresentation on the assistant's part had been made with respect to the effect which would be had by the clause, and thus no reliance can be placed upon the clause in the form even in the case where the signature of the claimant has been obtained on it (Stone & Cunnington, 2007).

 In the claims for negligence, it is important in the first place to establish that there existed a duty of care. There is a duty of care which exists when there is the proximity of relationship between the defendant and the plaintiff. A test for reasonable foreseeability is there for duty of care being established (Adams & Brownsword, 2007). 

A duty of care will be owed towards the plaintiff by the defendant in the situation where it can reasonably foresee the harm which might be cased due to act or omissions of the defendant to the plaintiff (Donoghue v Stevenson, 1932). The “product liability" principle was established in the case of Donoghue v. Stevenson in which it had been stated that a duty of care was in existence even in the situation where no proximity or contract between the parties. It was stated further in this case that there should be reasonable care that needs to be taken for avoiding any kind of acts or omission which can be reasonably foreseen and which is likely to cause an injury to the neighbor.  Under the law, neighbors are those who are effected closely and directly by an act (Donoghue v Stevenson, 1932).

The principle of causation requires that a necessary condition of harm should be negligence and that it is within defendant’s the scope of legal responsibility that the harm falls. The issue of causation and remoteness are tended to separately, the test that is key to causation is the "but for" test which questions basically whether the loss could have been sustained ‘but for’ the negligence of the defendant. A leading case in this regard is the Barnett v. Chelsea and Kensington HMC (1969) (Barnett v. Chelsea and Kensington HMC, 1969).

Application

The strongest point for Dan is the fact that the exclusion clause was not included in the contract at the time when it was being made, and it was only after the consideration had been given that the docket was given to Dan. This docket according to the case of Parkers would only be a receipt and since receipt is not contractual in nature the exclusion clause in this docket would not have any binding effect. Due to this point, the Toff Dry Cleaners would have to compensate for the damages which have been caused and this point becomes the weakest for Toff Dry Cleaners.

However, it must be observed that  the strongest point for Toff Drycleaners is that there was board which had been put by the dry cleaners with respect to the exclusion as in the case of Thompson v London, Midland and Scotland Railway Co it can be stated that there was reasonable effort made by the company to intimate regarding the exclusion and hence there would be incorporation of the clause. This becomes the weakest point for Dan.

Further in the case wherein Dan observes that there is a clause that is mentioned on the docket, and he enquires about it from the assistant and is informed that it excludes the liability for damage caused to beads it would be considered to be a misrepresentation as in the case of Curtis v. Chemical and cannot be relied on.

In the case of distress suffered by Dan and his wife, it could have been reasonably foreseen that damage caused to the goods would lead to distress to both of them thus there is a duty of care that the dry cleaners had. Also, application of the ‘but for' test indicates that had it not been for the damage that had been caused by the dry cleaners they would not have suffered.

Conclusion

The Dan can argue that he had not been intimated regarding the exclusion clause and the docket was only a receipt which is not a contract and it was only after the contract had been made and the compensation that the docket was given hence the exclusion clause was not a part of the contract.

The argument that Toff Drycleaners can make is that they had placed boards regarding the exclusion and it was not possible for them to intimate regarding the same ot each and every customer.

In the third situation where there is misinformation provided by the assistant it would then be a misrepresentation and the clause would not be accepted as an exclusion clause.

Damages can be claim by Dan and his wife for the harm that has been caused to them.

References

Adams v. Lindsell, 1 B & Ald 681 (1818).

Adams, J. & Brownsword, R. (2007). Understanding contract law. London: Sweet & Maxwell.

Barnett v. Chelsea and Kensington HMC, 1 QB 428 (1969).

Beale, H., Bishop, W., & Furmston, M. (2008). Contract. Oxford: Oxford University Press.

Chen-Wishart, M. (2005). Contract law. Oxford [UK]: Oxford University Press.

Curtis v Chemical Cleaning, 1 KB 805 (1951).

Donoghue v Stevenson, UKHL 100 (1932).

Dunmore v Alexander (1830).

Esso Petroleum v Commissioners of Customs & Excise, 1 WLR 1 (1976).

Fafinski, S. & Finch, E. (2010). Contract law. Harlow: Longman.

Griffith, R. (2009). Elements of a valid consent to treatment in capable adults. J Paramed Pract, 1(5), 196-203. http://dx.doi.org/10.12968/jpar.2009.1.5.42062

Kramer, A. The law of contract damages.

Neyers, J., Bronaugh, R., & Pitel, S. (2009). Exploring contract law. Oxford: Hart Pub.

Olley v. Marlborough Court, 1 KB 532 (1949).

Parker v. SE Railway Co., 2 CPD 416 (1877).

Partridge v Crittenden, 2 All ER 425 (1968).

Pharmaceutical Society of Great Britain v Boots Cash Chemicals, EWCA Civ 6 (1953).

Stone, R. & Cunnington, R. (2007). Text, cases and materials on contract law. London: Routledge-Cavendish.

Taylor, R. & Taylor, D. (2009). Contract law. Oxford: Oxford University Press.

Thompson v London, Midland and Scotland Railway Co, 1 KB 41 (Court of Appeal 1930).

Young, M. (2010). Understanding contract law. Milton Park, Abingdon, Oxon: Routledge-Cavendish.