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tort and contract law Solved

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Task 1

Requirements for the formation of a valid contract:

While there are various requirements of a valid contract, the vital elements of a valid contract are being discussed as under:

Offer and Acceptance:

For a valid contract to exist between two persons entering into an agreement a “lawful offer” must be made by one party and the same should be “lawfully accepted” by the other party without making any changes in the terms of the contract (Adams, 2009).

Presence of an intention to create legal relationship:

If the common objective of the parties to produce a legal relationship does not exist, then, the contract ceases to continue. This is the reason why the agreements which are of a social or domestic nature do not qualify to be legally binding (Cheshire, Fifoot and Furmston, 1972). The example of the application of this requirement is the case of Balfour v Balfour (Balfour v Balfour [1919] 2 KB 571).

Consideration:

As per the views of Blackstone, a consideration is the recompense that is given by one party in a contract to another. It is the price which is paid for bringing the promise of one party to the contract towards the other party.

Legal Capacity:

The parties to the agreement should be competent to enter into the contract. If any one of the contracting parties is not in a position to fulfill the legal requirements, then, the contract ceases to exist (Collins, 1993). The incompetent parties to enter in a contract are the minors, the persons of insane mind and those who are disqualified under law to enter into any contract.

Free Consent:

By free consent it is meant that the parties to the contract should agree towards the terms of the contract under same notion and should rely upon it in the same sense. Free consent is said to remain absent when there are the forces of coercion, undue influence, fraud, misrepresentation or mistake exist. A contract should be entered into keeping aside all these factors.

Lawful Object:

The object behind an agreement must be a valid one. There are certain objects which have been identified as being unlawful. These are the ones that have been forbidden by law or are of a fraudulent nature or involve an injury that may be caused to another person or have been regarded as being immoral or against the public policy (Richards, 2006).

Dave’s situation

In the given scenario, Dave sees an advertisement in a magazine which was published by the government and it stated that a reward of $100,000 would be given to any person who would give the customs and excise department information about a successful conviction of any person who is involved in unlicensed ivory import. Based on this advertisement, he sends information about his suspected colleague but he is refused the award because the term of the advertisement had expired.

In the light of the above given scenario, we will look into the rules of offer, acceptance and consideration and then look into the aspect whether Dave can have any action against the government for refusing him the reward money.

Rules of offer and acceptance:

Generally, the contractual agreements are governed by the rules of offer and acceptance. The party which makes an offer puts in simple terms what he wants out of the contract and the party accepting the offer accepts all the terms of the offer made by the offeror (Hillman, 1997). Thus, a binding contract between the two is created. Now, there are certain basic points of difference between an offer and an invitation to treat. For understanding this aspect and making a clear distinction between what constitutes an offer and what is an invitation to treat, we shall take into account the case of Carlill v Carbolic Smoke Ball Company (Carlill v. Carbolic Smoke Ball Co., [1893]).

In an offer, the offeror should display an intention to remain bound by the contract. An invitation to treat cannot be taken to be binding as it cannot be accepted by others. It is merely an invitation for the offers.

Generally, advertisements are considered to be invitations to treat as established in the case of Partridge v Crittenden (Partridge v Crittenden (1968) 2 ALL ER 425, [1968]). But, in certain instances, advertisements do amount to offer and this was established in the case of Carlill v Carbolic Smoke Ball Company (Carlill v. Carbolic Smoke Ball Co., [1893]).

In the case of Carlill, the defendant had placed an advertisement in the newspaper and stated that a reward of £100 will be paid to any person who contracts influenza after using the smoke ball thrice a day as manufactured by the company. They also stated that they had deposited £1000 with the Alliance Bank in order to show their sincerity in the matter. Mrs Carlill purchased the smoke balls and consumed them in the same manner as given in the medicine and even then, she contacted influenza. She sued the company for the reward which was rejected by the defendants. The court established the following rulings and stated that all that was given in the advertisement did constitute an offer and was not merely an invitation to treat. The reasons established were as follows:

  • The statement which showed that they had deposited £1000 with the bank to authenticate their claim itself was enough to show that they had an intention to create legal relation and hence it was not simply a puff.
  • Further, since it was a unilateral contract, there is o requirement that they had to communicate the intention to accept the offer. Mrs Carlill had shown acceptance in the matter by showing her full performance.

Conclusion

Thus, applying the above rules in the given situation, we can say that Dave is entitled to receive the award of $100,000 as he accepted the offer made by the government and performed on it. He also gave proper information about the illegal imports and hence, he is supposed to get the claim. The government cannot refuse him the payment of the award money.

Task 2

Exclusion clause:

When a person deals in goods or services, there are several things that might go wrong. This has the effect of making a person liable to compensate the buyer if the wrong actually happens. For instance, one might become responsible if the delivery of goods get late or after reaching the buyer they are found to be defective. In such matters, the seller can make himself free from all liability by stating in the contract that he shall not be responsible if the goods are delivered late. These types of clause s in a contract are called “exclusion clauses”.

Thus, an exclusion clause is something that has the effect of totally excluding the liability of the damages if any breach occurs in the contract.

Effect of valid exclusion clause:

Generally, a valid exclusion clause has the effect of making the seller not responsible for any damages. An exclusion clause must be clearly written in the contract while it is being entered into. The language used in the exclusion clause should be clear and unambiguous. The rule of contra proferentum generally applies when the exclusion clause has any latent defects in it. The rule provides that if the clause has any ambiguity in its language, then the same will be used against the party seeking the advantage of it (Freyer, 2014). The Unfair Contract Terms Act provides that an exclusion clause never has the effect of overriding liability in case of death or personal injury caused or on breach of statutory implied terms in contracts.

Standard form contract:

A standard form contract is an agreement entered among two parties in which the terms and conditions of the agreement are generated by one party and the other party there has got no tights to say anything or modify the terms of the contract or negotiate for favorable terms in it (Richards, 2009).

Examples of standard form contracts are the insurance contracts. In every contract of insurance, the decisions as to what shall be included in the contract and what shall be the terms in the contract are taken by the insurer while the insured only can accept the terms failing which he is not allowed to enter into the contract. Another example is the contract entered into with the government agencies where there are certain clauses that are to be mandatorily included by virtue of law in the contract.

Regulation of standard form contracts:

As far as standard form contracts are concerned, in order to protect the interest of the consumers, a regulatory body is necessary to ensure that none of the parties to the contract are left without any protection. There are various governments that have passed definite laws relating to the standard form of contracts. These laws are usually passed in the state level to protect the interest of the consumers (Kelly, Holmes and Hayward, 2005). There are certain jurisdictions that provide that a notice should be sent for these clauses to make them effective while there are other jurisdictions that totally prohibit the unfair terms of these standard form contracts. In the United Kingdom, section 3 of the Unfair Terms Act, 1977 imposes a limitation on the ability of the draftsmen to draft those clauses which seek to give unfair advantages to the party (Bainbridge and Bainbridge, 2009).

Hence, it is felt that a regulation of the unfair terms of the contract is very much essential.

Courts and statutes in ensuring fairness of exclusion clauses

The statutes governing the fairness of the exclusion clauses are the Unfair Contracts Terms Act 1977 and the Unfair Terms in Consumer Contracts Regulations 1999. Section 2 of the Act provides that any ongoing business cannot restrict liability for having caused death or personal injury to any person out of their own negligence (Cilliers, 1992). Section 3 validates that the exclusion clause will not extend in case the performance of the contract is not done on valid terms.

As far as the Courts are concerned, the England and Wales Court of Appeal (Civil Decisions), in the matter of Phillips Products Ltd v T. Hyland (Phillips Products Ltd v T. Hyland, (1987) 1 WLR 659, [1987]), ruled that the liability in an exclusion clause should be limited till the time it is reasonable. If the performance is not adhered to b y the contracting parties, then the protection will not be given to them in this regard (Boros and Duns, 2010).

Further, in the case of Smith v Eric Bush (Smith v Eric Bush (1990) 1 AC 831, [1990]), the House of Lords ruled that when there is negligence on the part of the seller, he cannot take the plea of the exclusion clause in a later stage in order to exclude liability (Elliott and Quinn, 2009).

Liability of Sea Restaurant:

In the given matter, Sea Restaurant will not be competent to rely on the exclusion clause as they have been particularly negligent on their part. The advertisement put forth by them stated that buffet dinners at a reasonable price would be served against the coupons bought. In such circumstance, it was imperative on their part to take due care and ensure that the quality of food served was of a high standard and none of the consumers of the food should suffer from any ill health because of such consumption. Alvin bought the coupon based on the advertisement. Of course there was an exclusion clause associated with it but it should be noted that the exclusion clause cannot be used in this regard to limit liability because had Alvin known that the quality of food is so bad that it would make a person suffer from diarrhea and vomiting, no one would have bought the coupons. As such, Sea restaurant has been particularly negligent on their part and have not acted in good faith. Moreover the performance on their part is also misappropriated and hence, they are not liable to take the plea of the exclusion clause.

Thus, it can be conclusively said that Sea Restaurant will not be competent to rely on the exclusion clause.

Task 3

The tort of negligence:

For a successful claim of negligence, three elements needed to be proved are:

  • There is a duty of care that exists;
  • The duty of care has been breached; and
  • The damage that took place is not only direct but also foreseeable.

The leading case in matter of negligence is that of Donoghue v Stevenson (Donoghue v Stevenson [1932] UKHL 100, [1932]). We shall look into this particular case to understand the basic elements of the tort of negligence. Let us analyze the facts in brief initially.

The case took place in Paisley in Scotland in the year 1928. Ms May Donoghue had purchased a bottle of ginger beer for her friend while she was attending a store. While most of the contents of the bottle had been consumed, they discovered a decomposed snail in the contents of the bottle. What is to be noted here is that the bottle was not made of clear glass but was made of black glass that had made it look opaque and hence, it could not be seen from outside that what is in the beer and what is not (Cooke, 2009). Upon consuming the beer, she later on fell sick and the physician analyzed her with gastroenteritis. Donoghue thus initiated a lawful action against Mr Stevenson who was the producer of all the Ginger Beer. She filed a writ in the Sessions Court and sought for damages worth £500.

The matter upon appeal was heard by Lord Atkin who pronounced a historical judgment regarding this. He held that Stevenson should be responsible for the products that are manufactured under him (Cooke, 2005). The outcomes of the case along with the legal principles for establishing a valid claim of negligence are being summarized as under:

Duty of care:

According to Lord Atkin, a duty of care is something which is bestowed on a person who required faithfulness to ensure that a basic care has been taken by him while he performs his acts that he could reasonably foresee are likely to cause a certain amount of harm to others (Cooke, 2007). In every case of negligence, the claimant is supposed to show that a necessary amount of duty of care has been imposed on the defendant either by law or by subject and the defendant was supposed to adhere to that duty. It is those circumstances and relationships which are recognized by law as which owe a duty of care towards others. A failure to adhere to such duty results in the defendant being liable to pay damages to the other party (Geistfeld, 2008). There are two requirements of this test. Firstly, there should be a realistic prudence of the harm and secondly, there should be a connection of nearness.

In the case of Donoghue v Stevenson (Donoghue v Stevenson [1932] UKHL 100, [1932]), it was not at all surprising for Stevenson to understand that whatever he is manufacturing, will be consumed by the buyers and is not merely for show purpose. Thus, he had a reasonable duty of care towards the consumers and he failed in taking that care in the dissipation of his duties.

Breach of duty of care:

This implies that the duty that existed has been breached in some form or other. This may be found to exist where there is absolute failure on the part of the defendant to show that he has failed to take the necessary care that he was supposed to take. This arises after it is proved that the defendant had a duty of care (McBride and Bagshaw, 2008).

In the matter of Donoghue v Stevenson, the defendant had particularly failed in taking proper care and he manufactured bottles of beer that had contaminated and decomposed body of snail. This shows that the duty of care requirement was breached by Stevenson.

Directness and Foreseeability:

The requirement under this head is that the damage that is caused because of the breach of duty is both direct and foreseeable. This implies that the damage suffered by the claimant in an action of tort of negligence must be a direct cause of the breach of the duty and the same must have been responsible for causing harm to the claimant. This requirement shows that the damage should be directly attributable to the breach of the duty of care. In the matter of Donoghue, the friend suffered a health issue because of the contaminated ginger beer and hence it can be conclusively said that the reason behind the damages suffered is nothing else but the contaminated beer. Thus, the ruling given by Lord Atkin provided that directness of the damage is an essential element of the tort of negligence (McBride and Bagshaw, 2008).

As far as the foreseeablity is concerned, we should note that every person has a reasonable amount of foresight while he deals with products that are likely to be used in the process at a later stage. Foreseeability requires that the defendant should have been able to relate to the remote extent to which his breach would have resulted in the damage. In Donoghue’s matter, it was held that the manufacturers of beer should have understood that their negligence in dealing with the products is likely to cause damage and severe health issues to anyone who consumes it. Thus, the ruling established that Stevenson is responsible for acting negligently in the matter (McBride and Bagshaw, 2008).

Task 4

Vicarious Liability:

By vicarious liability, it is meant that form of strict and secondary liability that generally arises under the common law. It has reference to a situation where for the actions or wrongs done by one person, there is certain another person who is held responsible (Hodge, 1986). In the context of a workplace, an employer for example may be held responsible for the acts of his employees but it needs to be proved beyond any reasonable doubt that the act took place while the course of employment was still in existence.

In the law of tort, it refers to an attached responsibility that is bestowed on a person for the damages that are caused to another person in matters dealing with either negligence cases or for criminal prosecution.

Rules for shifting responsibility from employee to employer:

An employer generally remains liable for the acts of his employee only if such act has been done while in the course of the employment. There are generally three basic rules to put over the liability of an act over the employer as compared to the employee. Firstly, it needs to be proved that the tort was actually done by the employer (Leigh, 1982). Secondly, the association between the employee and the employer should be duly recognized (Leigh, 1982). Thirdly, there should be no room of doubt to prove that the tort was done when the employment was in existence (Leigh, 1982).

In the case of Honeywill & Stein Ltd v Larkin Bros Ltd (Honeywill & Stein Ltd v Larkin Bros Ltd, (1934) 1 KB 1991, [1934]), it was established that an employee will be said to have done a tort only if it can be proved beyond doubt that the act was actually committed by the employee while the control over the act was retained by the employer (Giliker, 2010).

Further, in the case of Ready Mix Concrete v Ministry of Pensions And National Insurance (Ready Mix Concrete v Ministry of Pensions And National Insurance, [1968]), it was held that the conditions for valid employment are that there should be the presence of wages, an expressed statement of control of employer and consistency of the service tenure (Giliker, 2010).

Thirdly, in the case of Crook v Derbyshire Stone Ltd (Crook v Derbyshire Stone Ltd, [1956]), it was held that the consistency in the employment is an important criterion to understand the presence of continual employment.

Responsibility in case of Ada’s injuries:

As far as the matter of Ada is concerned, we can say that the liability befalls on Milky Salon. This is because, they happen to be a reputed hair salon and it is their responsibility to see that the customers who come there get the best services available. Having a separate level of reputation, they should have taken due care while purchasing any hair styling products from any of the brands in the market. Moreover, the quality check of the same should be thoroughly done before using them for the first time on the customers. Ada came there and bestowed her trust over them. Mike, who is an employee of Milky Salon, was acting under the course of his employment and he cannot be said to have exceeded his liability. Thus, it is clear that Mike is not responsible for the damages faced by Ada. On the other hand, there has been negligence on the part of Nathan Ltd as well. They also should have taken responsibility before manufacturing such hair styling products because in case of malfunction, the loss was not too remote and was easily foreseeable as well.

Thus, analyzing the above situations, we can say that Ada can claim for damages of her loss in terms of scalp operations from Milky Salon as she had bestowed her trust over their name and in that course, she underwent severe losses. On the other hand, Milky Salon can claim for damages from Nathan Ltd for the faulty goods delivered to them as they had definitely expected the goods to be of a good quality but they turned out to be highly defective. This is a loss to the reputation as well as the brand name of Milky Salon and the same should be repaired by Nathan Limited.

 

 

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