Importance Of Essential Elements In Contract Formation

1) Bob goes into Sam’s bookshop and sees a book which he wants to buy on display. He takes the book to the counter to pay for it, but Sam tells him that the copy of the book is his only copy and that he has already sold it to Carl, but forgot to remove it from the display. Is Sam entitled to refuse to sell Bob the book? Taking this scenario into consideration explain the importance of the essential elements required for the formation of a valid contract?

2) Discuss the impact of different types of contract and analyse terms in contracts with reference to their meaning and effect?

3) Adam advertises a reward of £1000 for the first person to paddle across the English Channel in a bath from Dover to Calais. Brian sees the advertisement in the newspaper, purchases a bath, and sets out from Dover. On the same day, whilst Brian is in mid-channel, Adam places another advertisement in the same newspaper announcing that the reward is being withdrawn with immediate effect. Unaware of this, Brian continues his voyage and duly arrives in Calais. Brian then claims the reward. Adam refuses to pay. Is Brian entitled to claim the reward? 

4) Barry goes into a park which is managed by his local council. He sees a notice which states that chairs are for hire for 50p per hour. Barry pays the 50p and is given a ticket and a chair. Later, the chair collapses under him, damaging his clothes. When Barry complains, the attendant points to a clause on the ticket which states, “No liability is accepted for any damage or injury caused by the failure of any hired equipment.” Are the council entitled to rely on the clause? Taking this scenario into consideration, apply the elements of contract in given business scenarios, apply the law on terms in different contracts and evaluate the effect of different terms in given contracts

Answer 1: In the present case, the issue that needs to be decided if there is a contract between Bob and Sam and if the essential requirements for the creation of a contract have been fulfilled in this case or not. The law provides in this regard that there is a difference between an offer and an invitation to treat. While an offer is a definite promise in case certain terms are accepted by the other party. On the other hand, a statement is considered as an invitation to treat if it is not intended to be legally binding. Such a statement only invites the other parties to make offers. Generally, an invitation to treat can be found in case of advertisements, auctions and the display of goods in the shops. In Fisher v Bell (1961), the difference between an offer and an invitation to treat was elaborated by the court. Therefore generally the goods displayed for sale by a shop owner is considered as an invitation to treat and not an offer. Therefore the shopkeeper cannot be forced to sell the goods when a person who wants to pay for the goods. As a result of this distinction between an offer and an invitation to treat, it means that if the goods have been mistakenly displayed for sale by a shopkeeper, it is not obligatory to sell the goods to the consumer who wants to purchase them. Another significant case related with the nature of offer made by a party is that of Pharmaceutical Society of Great Britain v Boots Cash Chemists Ltd (1953). In this case, it was held by the court that merely the display of the goods in a store along with its price cannot be considered as an offer but it is only an invitation to treat. On the other hand, the customer made an offer to buy the goods when the goods were placed in the basket. It was for the pharmacist present at the cash desk to accept or reject the offer. In this way, the court stated that the contract was created at the cash desk, in the presence of the pharmacist.

Types of contracts and analysis of contract terms

As a result of this discussion, it can be said in the present case that Bob had made an offer to buy the copy of the book. On the other hand, Sam had already sold the last copy of the book to Carl. However by displaying the book in the shelf, Sam had only made an invitation to treat and it was for Sam to decide to accept or reject the offer made by Bob.

Answer 2: There are different types of contracts like express contracts, implied contracts, contracts under seal, bisexual and unilateral contracts and executed and executory contracts. In the same way, the contents of the contract are called the clauses all the terms of the contract. Generally, several terms are present in an agreement. Even in case of the simplest contracts, there are many terms. Generally the main terms are related with the subject matter of the contract and the price paid by the party under the contract. While generally the business contracts are in written form, and it is also necessary to have written contracts in certain cases like the contract for sale of land or mortgage but the parties also entered into oral contracts.

On the other hand, the terms of a contract can be expressed terms or implied terms (Esso Petroleum v Mardon, 1976). The express terms are the terms that have been agreed upon by the parties. Implied terms are the terms that have been placed in the contract by the statute or by the courts. In this way, the statements that are made by the parties during negotiations before entering into the contract can be classified as an express term, a representation or a collateral contract. Similarly, such statement can also be a mere sales puff.

Answer 3: In the present case, a reward of £1000 has been advertised by Adam for the first person who is successful in finding across the English Channel in a bath. The advertisement is seen by Brian and he sets out from Dover in a bath. However when he was in mid-channel, another advertisement was placed by Adam in the same newspaper in which it was announced that the reward has been withdrawn. However, Brian was not aware of the second advertisement and the continued with his voyage and ultimately arrived in Calais. Now Brian claims the reward but Adam says that the reward has been withdrawn and therefore he is not liable to pay. The present case is that of a unilateral contract. In case of a unilateral contract which is also known as a one-sided contract, the party making the offer promises in exchange of an act by the other party, who is known as the offeree. Therefore in such a case if anybody acts on the promise made by the offeror, the party making the offer is legally bound to fulfill the contract. As a result, after the offeree has performed the act passed by the party making the offer, there is a legally enforceable promise present between the parties. As against a bilateral contract where mutual promises are exchanged by the parties, a unilateral contract is different. While generally the bilateral contracts are used in case of business transactions like the sale of goods, on the other hand, an example of unilateral contract can be given in the form of reward offers. In such a case, the party that has offered the reward cannot force anyone to fulfill the conditions required for the award. However, if the action has been performed by the offeree, in such a case, the party making the offer can be sued for breach of contract if such party fails to provide the reward after the offeree has fulfilled the requirements of the contract. Therefore it can be said that in case of a unilateral contract, if the potential performers decides to act, there is an agreement between the parties (R v Clarke 1927).

In the present case, an offer was made by Adam when he advertised a reward of £1000 for any person who is successful in padding across the English Channel in a bath. The offer is accepted by Brian when he sees the advertisement and purchases a bath and started from Dover. Therefore, although Adam had withdrawn the reward but by that time, Brian was already in the channel and had not seen the advertisement in which Adam had withdrawn the offer. Therefore, Brian had accepted the offer made by Adam when he started from Dover. After arriving in Calais and becoming the first person to paddle from Dover to Calais, there is a legally enforceable contract between Adam and Brian. As a result, in the present case Brian is entitled to claim the reward announced by Adam.

Answer 4: The issue that needs to be decided in this case is if the local council can be held liable for the damage suffered by Barry after the chair taken from the Council on rent collapsed damaging the clothes of Barry, particularly when there is a clause present on the ticket according to which, the Council is not liable for any injury or damage that may be caused by the failure of hired equipment. The facts of this case are somewhat similar to that of Chapelton v Barry Urban District Council (1940). This case is related with offer and acceptance and also the exclusion clauses that may be present in a contract. It was stated by the court in this case that the exclusion clause has not been incorporated by the Council in the contract. In the opinion of any reasonable person, a ticket cannot be considered as something more than a receipt. Therefore it cannot be expected by any reasonable person that the ticket may contain the terms of the contract. Moreover in this regard, the court also stated that it was suggested by the words used in the notice that in this case a deck chair can be obtained by a person and later on a ticket for the same can be obtained. In this way, and often was constituted by the notice and by collecting the chair, the offer was accepted. As a result, the council cannot be allowed to introduce new terms of the contract after the initial contract between the parties has been created. At the same time, the court also stated that the ticket is merely a receipt and it cannot be equated with the railway ticket in which the terms on which the railway company has agreed to carry the passengers are mentioned.

Applying the elements of contract to business scenarios

In the present case also, the local council has mentioned at the back of the ticket that it cannot be considered as liable for any damage or injury suffered by a person as a result of the failure of hired equipment. In view of the above discussion, it can be said that the exclusion clause has not been incorporated into the contract that has been created between the local council and Barry. As a result, in the present case the local Council cannot rely on the exclusion clause that is present on the ticket in order to exclude the liability of the Council regarding any injury or damage suffered by the other party.

Therefore it is clear that the local council cannot rely on the exclusion clause present on the ticket.

1) Contrast liability between contract and tort liability with cases.

2) One night, Mark decides to check in at the Poshplace Hotel, which is owned by Ben. Later that night, Mark is in his room when a masked man enters and threatens to hurt him unless he hands over his valuable antique jewellery. Mark hands it over. The thief later turns out to be Neil, the hotel gardener, who had stolen a master key to the hotel room. Can Mark use ordinary negligence principles in his claim against Poshplace Hotel. Alternatively, can Mark bring a claim in vicarious liability against Poshplace Hotel for the loss of his jewellery

3) In the meantime, downstairs in the kitchen, Roger, the dishwasher, is complaining about the skin rash he has developed as a result of long periods of washing up. Although rubber gloves are available, most employees do not use them. Colin, the head chef, is getting fed up with Roger and in his anger, knocks Roger unconscious with a frying pan. Does Ben, the Hotel Owner, owe Roger a non-delegable duty of care as an employer to provide a safe working environment? Can Roger bring a claim in vicarious liability against Ben for Colin’s actions.

4) Meanwhile, Mark decides to go to the Hotel pool for a swim. A sign on the pool door reads: ‘Pool closed between 7.00pm and 7.00 am. No entry to visitors during these hours; ‘Dangerous when unattended’. Mark reads but ignores the sign and enters. He cannot find the light so just jumps in. In fact, the pool has been emptied and Mark is badly injured and tears his expensive designer swimming trunks. Under the Occupiers’ Liability Act, will Mark be able to claim for the cost of his designer swimming trunks.   Is the Poshplace Hotel liable to Mark under the Occupiers’ Liability Act 1957. Can the Poshplace Hotel exclude liability to Mark under the Occupiers’ Liability Act 1984 because of its warning notice.

Answer 1: There are certain similarities in case of the law of contract and tort. For example, both of them fall under the civil law. In both cases, an action is initiated by the claimant against the defendant and in both cases, the claimant is required to establish its case on balance of probabilities. In case of tort as well as the law of contract, the remedies can be avoided if the loss suffered by the claimant is not too remote from the beach of the defendant. Similarly in both cases, generally the remedies are intended to compensate the claimant instead of punishing the defendant (Currie and Cameron, 2000). However at the same time, there are certain significant differences between the law of contract and tort. In case of a claim under tort, it is possible that the defendant did not have any previous relationship or transaction with the claimant. On the other hand, in case of a claim under the law of contract, it is necessary that the claimant and the defendant should be the parties to the contract.

Impact of exclusion clauses in contracts

Answer 2: In the present case, due to the reason that the gardener of Poshplace Hotel, Neil has entered the room of Mark during the night with the help of a stolen master key, and took away the valuable indeed jewelry of Mark, it needs to be decided if Mark has a claim against Poshplace Hotel in accordance with the ordinary principles of negligence. On the other hand, it also been decided if Mark has a claim against the Hotel in vicarious liability. An employer can be considered as vicariously liable for the acts of its employees done during the course of employment (Payne, 1958). However in the present case, the theft has been committed by the gardener of the hotel and that too with the help of the master key to the room that was stolen from the hotel. As a result, according to the ordinary negligence principles, Mark has a claim against Poshplace Hotel. The reason is that it was the responsibility of Poshplace Hotel to provide safe accommodation to its guests including Mark. But in the present case, the gardener of the hotel has committed the theft. At the same time, the hotel has also been negligent when Neil succeeded in stealing the master key to Mark's room due to which he was able to enter the room during the night and threatened Mark to hand over the antique jewelry. But in this case, it cannot be said that Poshplace Hotel can be held vicariously liable for the acts of hotel gardener, Neil. The reason is that an employer is vicariously liable for the acts of the employers that have been committed during the course of employment. In the present case, in order to establish vicarious liability of Poshplace Hotel, it is necessary to establish that the act of Neil falls within the course of employment.

Answer 3: The employers have a duty towards their employees to provide safe working environment to the employees. In the present case, there are two issues that need to be decided. First of all, it needs to be decided is the owner of the hotel, Ben can be considered as vicarious reliable to Roger for the injuries caused to him by Colin. At the same time, it also needs to be decided if Roger has a claim against Ben for the skin rashes that have been suffered by him due to the long periods of washing. In this regard, the law provides that the employers have a duty of care towards the employees. This means that the employers are required to take all the steps that are reasonably possible in order to ensure the well-being, health and safety of the employees. At the same time, showing concern for the physical as well as the mental health of the employees is not only a legal duty but it also has a clear business case. The reason is that by showing concern for the health of the employees, a trust can be created among the employees and that the same time, the commitment of the employees can also be reinforced. Such a duty can also help the employers in improving boosting productivity, improving staff retention and at the same time, paving the way for more engagement on part of the employees. In this regard, the law provides that the employers should follow the relevant health and safety laws as well as employment laws. At the same time, the employers also have a common law duty of care towards the employees. Apart from it, it was also have a moral and ethical duty which provides that the employers should not cause or failed to prevent injury to the employees. At the same time, the employers should also fulfill their duties in case of the claims that are related with personal injury and negligence (Vera and Brennan, 2008).

In the present case, the dishwasher of the hotel, Roger was hit by Colin, who was the head chef of the hotel. As a result, it can be said that the employer of Roger, Ben who is the owner of the hotel is vicariously liable for the injury suffered by Roger. At the same time, as an employer of Roger, Ben also has a non-delegable duty of care which requires that a safe working environment should be provided to all the employees. In this case, Roger has suffered skin rashes due to the long periods of washing. But at the same time, it also needs to be noted that rubber gloves have been provided in this regard but they are not used by most of the employees.

Answer 4: In this case, Mark has suffered an injury and also tore his expenses designer swimming trunks after he ignored the signs and jumps into the pool of the hotel. In this regard, the Occupiers' Liability Act, 1957 is related with the duty of care that the persons occupying real property owe towards the persons who visit or trespass the premises. In this way, this legislation deals with the liability of the occupiers that may arise from accidents that have been caused as a result of dangerous or defective conditions present on the premises. In this way, the Occupiers' Liability Act, 1957 covers the liability of the occupiers towards the visitors to the premises (Phipps v. Rochester Corporation, 1955). On the other hand, the Occupiers' Liability Act, 1984 extends the liability of occupiers towards the trespassers also. In this regard, the Act provides that there is a duty of care on part of the occupiers if they have actual or constructive knowledge regarding certain danger present on the premises and also that a trespasser may be near it. It also needs to be noted in this regard that unlike the provisions of Occupiers' Liability Act, 1957, the provisions of 1984 Act only provide for claim in case of death or personal injury of the trespassers and do not allow damages for personal property (Roles v. Nathan, 1963).

As a result of the above-mentioned discussion, it can be said that in the present case, although Mark has ignored the warning sign, still Poshplace Hotel can be said to be liable for the injuries suffered by Mark. At the same time, according to the provisions of Occupies Liability Act, 1957, Mark can also blame the cost of his extensive swimming trunks. Regarding the warnings of danger, section 2(4) of the Occupies Liability Act, 1957 provides that a warning cannot be considered as absolving the liability of the occupier unless under the circumstances, such warning can be considered as sufficient for enabling the visitor to remain reasonably safe. Therefore, despite the fact that a warning has been placed by the hotel, Mark still has a claim against the hotel. At the same time, according to section 1(5) of the Occupies Liability Act, 1984, the occupier can discharge the duty of care by taking reasonable steps under the circumstances to give warning regarding the danger. However by only providing a warning sign, the duty cannot be discharged. It is necessary that the warning sign should be clear so that the risk becomes obvious to the trespassers.

Therefore, Poshplace Hotel can use the warning sign for excluding its liability under the provisions of Occupies Liability Act, 1984.

References

Bermingham, Vera; Carol Brennan (2008). Tort Law. Oxford University Press

Payne, Douglas (1958). "The Occupiers' Liability Act". Modern Law Review (Blackwell Publishing) 21 (4).

Currie, S and Cameron, D. (2000) "Your Law" Nelson Thomas Learning, Melbourne, p225

Fisher v Bell 1961 1 QB 394

Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd [1953] EWCA Civ 6

Esso Petroleum v Mardon [1976] QB 801

R v Clarke - rewards (1927) 40 CLR 227

Chapelton v Barry Urban District Council [1940] 1 KB 532

Phipps v. Rochester Corporation [1955] 1 QB 450

Roles v. Nathan [1963] 2 All ER 908