M100 LLB Law

1. Issue

Were any contractual obligation raised in this case, or not?

Rule

A contract is a document, which has the power of binding the parties in a legal manner and can be drawn in a written or an oral manner. The only difference between the two forms is in the formation. In the former, the terms on which the entire discussion of contract takes place, is put on the document, which is consequently signed by all the parties of the contract. In the latter, these terms are mutually exchanged in a verbal manner. A contract denotes that a promise has been made, to fulfill an obligation, in exchange for the receipt of the amount of consideration, decided amidst the parties. To form a contract, there are six key elements. These include, an offer, which has to be compulsorily followed by an acceptance, and the other elements include consideration, intention, capacity and clarity. In case even one of these elements is absent, an agreement would be formed instead of a contract. The difference between the two lies in the fact that the former is not lawfully binding, where as the later is. Hence, for a contract to have legality, it must have all the requisite elements stated above.

The initiating point of the process of contract is an offer. An offer shows that the party is willing to enter into, or create lawful relationship, which will hold them binding. It is important that the offer is properly distinguished from an invitation to treat. An invitation to treat, unlike an offer, shows that the party is willing to negotiate upon the very terms which form the basis of an offer. So, an offer highlights the willingness to initiate a contract, whilst an invitation to treat highlights the willingness to initiate the negotiations for the contract.

The advertisements which are placed in the news papers or in the magazines, in general, are considered to be an invitation to treat. And in such cases, the individual is not under any obligation to complete the sale as posted in the news paper article or in the magazine. This was seen in the case of Partridge v Crittenden. However, there are cases, when the opposite is true and where the advertisements are considered as an offer. These are such cases, where the advertisements contain a unilateral offer, which the reader can accept by performing the terms contained in the advertisements. Hence, such advertisements become an offer. And a prime example of this phenomenon was noticed in Carlill v Carbolic Smoke Ball Company. In the matter of Harvey v Facey, an interest had been indicated by the property owner to sell at lowest possible price, the Bumper Hall Pen. This was an invitation to treat as per the court. This was because in the first telegram, the willingness to sell of the pen was inquired by Facey, which was never answered in the telegram which followed. So, the price which was stated in the telegram which followed was response to information which was requested and not an offer.

The acceptance is the next requirement for forming a contract. The acceptance denotes that the terms which have been offered by the offering party, are acceptable to the other party and through this acceptance, both the parties have reached a mutual agreement with regards to the terms on which the contract is to be based. It is important that the offer is accepted in the exact manner in which the offering party made it. If such happens, that while communicating the acceptance, the terms or conditions of the offer are changed, irrespective of the degree of such change, it is taken to be a counter offer and not an acceptance. This was seen in Hyde v. Wrench. When a counter offer is made, the original offer expires and on this counter offer, an acceptance has to be garnered by the original offering party.

As per the instantaneous rules of acceptance, the offer is considered to be accepted only when the same is communicated properly and when the communication reaches the offering party. Though, this rule has one exception, and this exception lies in the postal rules of acceptance. As per the postal rules of acceptance, the offer is deemed to be accepted, the moment it is posted by the accepting party. The rationale behind this is that the postal office is considered to the implied agent of the acceptance party. The date of receipt is irrelevant in cases of postal rules of acceptance. In the matter brought to the court in Adams v. Lindsell, the postal rules of acceptance were applied by the court of law and it was held that the contract was enforceable.

The consideration also needs to be a part of the contract being formed and it needs to have an economic value. The consideration is decided between the parties and it has to be sufficient not adequate. Further, past consideration is not valid. When a partial payment is made under a contract, it is crucial that the remaining amount is paid, as per the original promise. In Penny v Cole, famously known as Pinnel’s case, it was held that by part payment of the contract, the liability to pay the remaining amount is not extinguished. In Chappell & Co Ltd v Nestle Co Ltd, the three wrappers, owing t the condition precedent, Lord Somervell accepted that the consideration had an economic value, which was required as being an essential element for contract formation.

The other elements of the contract are also required to be present to form the contract. So, the contract needs to have clarity. In other words, the parties must be clear with regards to the terms of the contract. The parties also need to have the capacity to enter into a contract, by way of being of sane mind and of legal age. Lastly, there is a need for the parties to have an intention to create or form the lawful relations.

Application

In the given case study, an advertisement was posted in the Moorgate Metro by Abdul whereby he showed his interest of selling off his brand new Hi-Tech driverless car for £20,000. On the basis of Partridge v Crittenden, this would be deemed as an invitation to treat and hence, Abdul would not be under an obligation to sell the car to the person who notifies him by May 12^th, 2017. This is because there was an absence of a unilateral offer in this case like Carlill v Carbolic Smoke Ball Company. However, it can be deemed as a unilateral offer, in case the other party notifies him before the said date with the payment of the amount quoted. This is because if the amount quoted by Abdul is paid by the other party, it would be deemed as performance of the term of the contract and hence, acceptance. Hence, for a person who is ready to pay the quoted amount of £20,000, the newspaper advertisement would be deemed as an offer.

Castro

The communication of Castro dated February 27^th, 2017 would be deemed as a counter offer, on the basis of Hyde v. Wrench, as he offers to purchase the car at £12,000, instead of £20,000. Once Castro realizes that all the cars have been sold by GLM, he returns to Abdul and shows his interest in purchasing the car at £20,000, which was the original price. However, the original offer expires with the counter offer of Castro. Hence, this offer for £20,000 would be deemed as an offer by Castro, which can be accepted by Abdul. And till the time it is accepted, a contract was not formed between the two. So, Abdul is not under an obligation to sell the car to Castro.

Trump

The communication send by Trump on March 13^th, 2017 would be deemed as a request for information on the basis of Harvey v Facey. So, the offer contained in the newspaper was never accepted. And hence, a contract was not formed in this case.

Merkel

The communication sent by Merkel on March 15^th would also be deemed as a request for information on the basis of Harvey v Facey. Hence, a contract was not formed in this case also.

Xi

The communication which Xi sent on March 20^th, would be deemed as a counter offer, as the mode of payment is being negotiated here. The date of sending the email would be deemed as the date of counter offer. This counter offer was not accepted by Abdul; hence a contract was also not formed here.

May

The communication sent by May on March 24^th, after negotiating through emails with Abdul, would be deemed as a counter offer, as it is accompanied with a condition to wait for his business partner, which was not covered in the original or the subsequent communications. Hence, due to lack of proper acceptance, on the term to wait for the business partner, a contract was not formed between May and Abdul.

Hollande

The cheque of £20,000 sent by Hollande on May 4^th would be deemed as an acceptance as the offer has been performed upon through the payment of money. On the basis of postal rules of acceptance, May 4^th is the date of acceptance. And on the basis of Adams v. Lindsell, the contract would be enforceable in this case.

Putin

The communication sent by Putin on May 6^th would also be deemed as a separate contract, which was accepted by Abdul as per which, by paying £1,000, the car was blocked or booked for Putin till May 31^st. This would be deemed as a pre-contract, to book this contract. The terms of this contract was to book the car, which Abdul did. Hence, Abdul is not required to refund the £1,000 to Putin.

Corbyn

The communication sent by Corbyn dated May 6^th, would be deemed as an acceptance and the date of acceptance would be May 6^th only. Hence, a contract was formed between the two.

As a contract was already formed on May 4^th of Abdul and Hollande, Abdul would have to sell the car to Corbyn on the basis of the advertisement.

Conclusion:

To conclude, certain contractual obligations were indeed formed in this case.

2. Unliquidated damages denote such a sum of money, which cannot be assessed or foreseen through a fixed formula. When the subject is of an unforeseen event or where the amount of damages cannot be calculated, the damages are classified as unliquidatable. In the matter of Philips v Ward, Lord Denning offered his landmark judgment. In this case, reliance had been made by the plaintiff on the negligent survey for making purchase of a property. This report was silent on the fact that the timbers of the property had been badly affected owing to the death watch beetle, as well as, worm. Due to these reasons, the only possible course was to replace the roof and to build the timbers again. £21,000 was the stated market value of all this. Once the work was initiated and it progressed, it was discovered that another £1,000 would be required for putting the property back in the condition, as was stated in the report. The cost of repairs was claimed by the plaintiff when the trial took place and was awarded £4,000 by the Official Referee. This was stated to be the difference in the value of the property as it was described and as it was meant to be described.

The ratio is what makes this case more popular. Lord Denning stated that the proper measure of damages was such sum of money which would put the plaintiff in such a good position, which would have been, had the surveying contract been properly fulfilled. Had the surveyor carried out the contract properly, the bad state of the timbers would have been properly reported. And this report would have enabled Phillips to refuse to do anything with the house, due to which he would not have suffered any damages; or he could have brought the report for the sum, so as to represent the fair value of the house in the bad condition in which it was, as a result of which, he would have to pay very less amount. Hence, Denning LJ believed that the proper measure was the difference between the assumed good’s condition value, and the bad condition value, which should have been actually reported to the client. Denning also stated that the general principle under the English law was that the damages had to be assessed on the date on which the damages took place, which is usually the same as the date on which the cause of action took place.

Another landmark ruling of Denning J was given in the matter of Jarvis v Swan Tours. In this case, the plaintiff was an advocate who made a booking for a fifteen day skiing holding with Swan tours for the Christmas period. Several claims were made in the brochure where the holiday had been advertised, with regards to different provisions to the like of friendly welcome from English spoken owners of hotel, house parties, Yodler evening, afternoon cakes and tea and a range of ski runs. The majority of these were not as they were described or did not take place. Hence, the plaintiff sued the defendant for a breach of contract on the basis of being disappointed. When the matter went to trial, £30 were awarded to the plaintiff by the judge as the damages and these were based on the notion that he had been given half of what he had made the payment and that the damages could not be recovered for the disappoint he suffered. However, the plaintiff decided to appeal against this decision. It was held by Lord Denning MR that the plaintiff could not only recover the cost of his holiday, but also the amount of damages for the frustration, upset, distress and the disappointment which the plaintiff suffered due to the breach. The limitation on damages for disappointment and distress were said to be out of date by Lord Denning. And due to these reasons, the plaintiff was awarded £165. The rationale behind awarding this amount was given to be the purpose for which the contract was entered into. And this was for entertainment and enjoyment of the plaintiff, which could not be done due to the breach of contract in providing the promised entertainment or enjoyment.

Both these cases highlight the significant contributions which have been made by Lord Denning with regards to unliquidated damages. He has not only provided landmark rulings through the judgments given in this case, along with the ratio of these cases, but has also rejected the outdated standards, in order to give full justice to the aggrieved party, based on the circumstances of the case in this progressed age. And due to these reasons, the rulings given by Lord Denning have been able to uphold the purpose of law as being just and fair.

Bibliography:

Primary Sources

Table of Cases

Adams v. Lindsell (1818) 106 ER 250

Carlill v Carbolic Smoke Ball Company  [1892] EWCA Civ 1

Chappell & Co Ltd v Nestle Co Ltd [1960] AC 87

Harvey v Facey [1893] UKPC 1, AC 552

Hyde v. Wrench (1840) 3 Beav 334

Jarvis v Swan Tours [1972] 3 WLR 954

Partridge v Crittenden [1968] 1 WLR 1204

Penny v Cole [1602] 5 Co. Rep. 117a

Philips v Ward [1956] 1 WLR 471, 474

Statutes and statutory instruments

Contract Law

Secondary Sources

Books

Andrews N, Contract Law (2nd edn, Cambridge University Press 2015)

Davies PS, JC Smith's the Law of Contract (Oxford University Press 2016)

Elliott C, and Quinn F, Contract Law (9th edn, Pearson Education Limited 2013)

Furmston M, and Tolhurst GJ, Contract Formation: Law and Practice (Oxford University Press, 2010)

Macdonald E, and Atkins R, Koffman & Macdonald's Law of Contract (8^th edn, Oxford University Press 2014)

McKendrick E, Contract Law (11th edn, Pearson Education Limited 2015)

Mulcahy L, Contract Law in Perspective (5th edn, Routledge 2008)

Poole J, Casebook on Contract Law (Oxford University Press 2016)

Websites and blogs

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Brotherton M, ‘Damages’ (Solicitors Journal, 29 March 2016) <https://www.solicitorsjournal.com/case-reports/damages> accessed on 26 June 2017

E-Law Resources, ‘Jarvis v Swan Tours [1972] 3 WLR 954 Court of Appeal’ (2017) <http://www.e-lawresources.co.uk/cases/Jarvis-v-Swan-Tours-1972.php> accessed on 26 June 2017

O’Brien R, ‘Analysis of the Postal Rule’ (2007) 13 Cork Online Law Review <http://corkonlinelawreview.com/editions/2007/COLR%202007%2013%20O'Brien.pdf > accessed 26 June 2017

Swarb, ‘Philips v Ward: CA 1956’ (10 July 2015) <http://swarb.co.uk/philips-v-ward-ca-1956/> accessed on 26 June 2017

University of Trier, ‘Formation of the contract’ (24 February 2007) <https://www.uni-trier.de/fileadmin/fb5/FFA/KURSUNTERLAGEN/Anglo-Amerikanisches_Recht/Contract_Law/Siry_WS_2011-12/Koffman_ch02.pdf> accessed 26 June 2017