Legal Case Study: O'Brien V MGN Ltd, Bill To Become An Act Of Parliament, And Test In Employment Law

Part A

1. Which Act of Parliament governs the exclusion clauses in business to business transactions

2. Explain the difference between a condition and a warranty

3. Explain what a meant when a contract is frustrated

4. Explain what constitutes a misrepresentation.

5. What factors are taken into account when deciding satisfactory quality under the Sale of Goods Act 1979 s. 14

Part B

Look at Workshop 2 in your materials pack. Read the case study of O'Brien v MGN Ltd [2001] EWCA Civ 1279, and answer these questions:

• Is this a civil or criminal case?
• What did the claimant seek?
• Did the defended win or lose?
• How many Court of Appeal judges normally hear a case?
• Provide an example of a precedent used in this case

Part C

Draw a diagram of the process that a Bill takes to become an Act of Parliament.

Part D

Briefly explain the following tests in employment law. Include cases as examples:

• Control Test

• The Integration Test

• Multiple/Reality Test

Part E

Ben and Perry are business partners in a firm called Huddersford Vintage Jewellery, buying and selling old and unusual jewellery on-line and in their Main Street store.

On 5^th April Zak, an antiques dealer, decided to make an offer on a gold necklace watch which he had seen on the firm’s website, priced by Ben and Perry at £7,000.  He wanted to give this to his fiancé, being aware that the watch was very rare.

At 9.00 a.m. on 5^th April Zak left a message on the firm’s answer machine offering to pay £6,000 by cheque. He sent an e-mail confirming this before midday that same day, giving all his contact details.

Ben and Perry discussed the offer and decided they would sell for £6,000.  Perry drafted an e-mail to Zak accordingly. However, as his internet was not working, Perry’s email was not sent. 

Over morning coffee Ben asked Perry to stick out for £6,500 for the watch.  Perry agreed and left a voice-mail for Zak accordingly, stating that this offer would be left open until 5.00pm that day. 

On 5^th April, at 1.00 pm during her lunch hour, Ayesha saw the necklace watch in the window of Huddersford Vintage Jewellery.  She went into the shop to examine it.  Recognising it as a family heirloom her mother had sold years earlier, she was determined to buy it immediately. 

Ayesha offered £6,500 cash and this offer was accepted by Ben and Perry. Ayesha withdrew the cash from her bank next door and was given the watch. She then rushed back to work.

Zak checked his voice-mails at 10.00 pm on 5^th April, when he heard the message from Ben and Perry. He replied by text at 9.00 a.m. on 6^th April that he would have the necklace watch for £6,500.

Advise Zak whether he has a binding contract with Huddersford Vintage Jewellery and whether it would have made any difference if Zak had sent his acceptance by post at 5.30pm on 5th April.

Overview of the legal case study

1.

Exclusion clauses are governed in UK by the Unfair Contract Terms Act 1997

2.

The term of a contract which is the primary reason for which the parties got into the contract is known as a condition. Therefore, evidently it can be stated that conditions are the most important terms in a contract. When a party fails to comply with a condition in a contract the other party may not only claim damages for any loss incurred by them but also have the option of rescinding the contract as per Poussard v Spiers (1876) 1 QBD 410

A term which is not as important as a condition in a contract but nevertheless is a term which has been agreed by the parties to the contract is called warrant. When a party fails to comply with a warranty it can only claim damages but not have the option to rescind the contract as per Bettini v Gye 1876 QBD 183

3.

Frustration is one of the doctrines through which a contract may be discharged by any of the parties. Frustration of the contract takes place when the circumstances has becomes such that the terms of the contract cannot be carried out and the circumstances were not within the control of the party as per Pioneer Shipping Ltd v BTP Tioxide Ltd [1982] AC 724

4.

As provided by the case of Bisset v Wilkinson [1927] AC 177 when a party to the contract is induced by the other party to get into the contract based on false and incorrect statement of facts provided by the other party be it innocently or intentionally accounts to misrepresentation under contract law.

5.

Under section 14 of the Sale of Goods Act 1979 goods are considered as of a satisfactory quality if standard of a reasonable person as being satisfactory is met by them by taking into consideration description of goods, price and other important circumstances. Thus of the goods have good quality in terms of finish and appearance, free of minor defects, durability, safety and being fit for the purpose it has been supplied for the goods are considered to be of a satisfactory quality.

1.

The case is a civil case because it is in relation to incorporation of terms in a contract

2.

The claimant had made a claim to not include rule 5 as the terms of the contract as it was not present in the newspaper on the day when the cash price was found.

Process of a Bill to become an Act of Parliament

3.

The defendant won the case as the court held that Rule 5 was a terms of the contract

4.

Normally 3 Court of Appeal judges hear a case

5.

The precedent used in this case was Parker v South Eastern Railway Co (1877) 2 CPD 416 where the court had also dealt with an issue of reasonable notice.

Source: Created By Author

1. The control test is a test under common law which is in relation to determine whether a person is a contractor or an employee. The control test had been provided through the landmark case of Yewen v Noakes [1880] 6 QBD 530 where it had been stated by Bramwell LJ that ‘a servant is a person subject to the command of his master as to the manner in which he shall do his work’. Thus in situation where it is identified that the way in which the person in working is controlled by the employer then the person is regarded as an employee. On the other hand where the way in which the person is working is not controlled by the employer and he has freedom of making a decision in relation to how the work in context is carried out the person is regarded as an independent contractor. Thus where the employer provides the employee not only the work which should be done by him but also the way in which the work is to be carried out and when it is to be done then a contract of employment is deemed to exists under the test and where the degree of control is smaller it would signify self-employment.
2. The integration test had been introduced by the court in order to address the shortcomings of the control test. This is because the control test being the sole criteria although is important but cannot be regarded as conclusive for the purpose of determining a contract of employment. The approach of integration test came to light in the 1940s and 1950s. The integration test had been identified in the case of Cassidy v Ministry of Health [1951] 2 KB 343 by Somervell and Denning LJJ where the test was put to use in order to establish that the doctors working for the hospital are its employees. The test had also been applied in the case of Jordan & Harrison Ltd v MacDonald & Evans [1952] 1 TLR 101where the court tested the question  that whether the work of a person is a integral part or an accessory to the business. If it is fond by the court that the person’s work is an integral part of the business then he is regarded as an employee. On the other hand of the person’s work is accessory to the business then he is regarded as an independent contractor. However the meaning of integration is not easy to determine and the test was held not to be conclusive.
3. It had been identified by the court that both the control and the integration tests were not adequate to address the question in relation to employment. Thus a new test had been identified by the court in order to address the issue which is known as the multifactor test. The test had been clearly illustrated through the case of Ready Mixed Concrete Ltd v Minister of Pensions [1968] 2 QB 497. The multifactor test is a threefold test through which it has been provided that in order to establish that a person is a employee there must be a duty of providing personal service, there must be a sufficient degree of control exercised by the employer on the person and other terms of the contract are in relation to that of a service and not services. In this case the court had stated that existence of a contract of service is determined by the where the three conditions are satisfied. Firstly the person agree that he will work on his own for the employer in return of wages, he agrees to abide by a sufficient degree of control by the other person and terms of a contract are consistent with that of a service and not services.

1. The issue in this case is to find out whether Zak has a valid contract with Huddersford Vintage Jewellery as per the facts of the case.
2. Another issue in the question is that whether there would have any difference to contract formation of the acceptance was done by 5:30 pm by Zak

A legally binding agreement is only established when the elements which are required to form the agreement are satisfied as per their respective legal provisions. The primary elements which have been identified to be at dispute in this case is that of an offer and acceptance.

The statement which has been made by a person through which he attempts to create a legal relationship with the other party (The potential acceptor or the offeree) once the terms contained in the statement have been accepted is terms as an offer. An statement cannot be described as an offer unless the legal elements of an offer have been satisfied. These requirements have been provided through various cases at common law.

Firstly it had been ruled in the case of Gibson v Manchester City Council [1979] 1 WLR 294 that an offer can only be valid at law if it is “sufficient and unambiguous”. This means that the nature of statement in relation to the transaction has to be complete. For instance an offer for sale of goods must comprise of terms relating to price, delivery, payment, quality and quantity.

Secondly, an offer is to be distinguished from an invitation to offer and as per the case of Partridge v Crittenden [1968] 2 All ER 421 an advertisement which is not complete and not reasonable sound as an offer is a invitation to treat. There is no legal significance of invitation to treat and only an offer can be made in relation to it and not acceptance.

In the case of Barrick v. Clark, [1951] SCR 177 it had been ruled by the court that an offer is time barred if terms in relation to time limitations are provided through the offer. It is rejected  if the time period of acceptance has elapsed.

Acceptance

In the case of Hyde v Wrench [1840] EWHC Ch J90 the court had ruled that an acceptance has to be unequivocal and where an addition term has been provided along with the acceptance or a term from the original offer has been altered it is a counter offer. A counter offer defeats the original offer which means that it has been revoked and no longer available to be accepted. In the case a series of transactions had taken place between the plaintiff and the defendant. However the plaintiff did not make an unequivocal acceptance at any instance and the offer or the defendant had been revoked. The plaintiff at last made an attempt to accept the price which had been provided by the defendant during the last communication and which had been ten rejected by the plaintiff. The court held that once an offer has been rejected by an counter offer it does not have the

Tests in Employment Law

An acceptance is only binding on the offeror when it has been communicated in a manner provided by the offer and if no mode is expressed than in a reasonable manner. There are specific rules which have been provided in relation to communication of acceptance through electronic or instantaneous modes of communication.

As opposed to the postal rule provided in the case of Adams v Lindsell (1818) 1 B & Ald 681 were it had been ruled that the posting of a correctly addressed letter accounts to acceptance, an acceptance through electronic or instantaneous modes of communication is made when the electronic message reaches the mailbox or the answering machine of the offeror. These provisions have been ruled in the case of Thomas & anr v BPE Solicitors [2010] EWHC 306 (Ch)  (Email) and Entores v Miles Far East Corp [1955] 2 QB 327 (Answering Machine)

It has been provided through the case study that an advertisement has been made by Ben and Perry in relation to the sale of a watch at a price of $7000. The advertisement made by them in an invitation to treat as per the Partridge case. Zak has made a valid offer for purchasing the Watch at a price of $6000. This is a valid offer because it is sufficient and unambiguous as per the case of Gibson.

Perry and Ben wanted to accept the offer which has been made by Zak and thus in pursuit of the acceptance sent a message to Zak’s email that they are willing to accept the offer of Zak of selling the watch at $6000. However the Email did not reach Zak due to no Internet and thus as per the case of Thomas & anr the acceptance had not been completed and a contract was not formed.

Perry and Ben changed their mind and wanted to sell the watch at $6500. They notified the same to Zak in is voice mail and stated that the offer was valid till 5 pm. As per the case of Hyde v Wrench the counter offer (to zak’s offer of $6000) is only entitled to be accepted by 5pm after which it would be revoked by time. However it has been provided that Zak had only checked the voice mail at 10pm on the same day and sent his acceptance the next day. Thus the offer can no longer be accepted as it has been revoked by time. thus there is no contract between Zak and Huddersford Vintage Jewellery.

There is no problem for Huddersford Vintage Jewellery to sell the watch to Ayesha and no contract had been formed between Zak and Huddersford Vintage Jewellery due to non compliance with provisions of offer and acceptance.

On the other hand if the offer had been accepted by Zak by 5:30 pm there would have been no difference in the outcome. This is because it was specifically mentioned in the offer that it is only valid till 5pm and therefore beyond the time it has been revoked.

Conclusion

1. Thus no contract has been formed between Zak and Huddersford Vintage Jewellery.
2. There would have been no difference if the offer had been accepted at 5;30 pm by Zak to the outcome.

References

Adams v Lindsell (1818) 1 B & Ald 681

Barrick v. Clark, [1951] SCR 177

Bettini v Gye 1876 QBD 183

Bisset v Wilkinson [1927] AC 1774

Cassidy v Ministry of Health [1951] 2 KB 343.

Entores v Miles Far East Corp [1955] 2 QB 327

Gibson v Manchester City Council [1979] 1 WLR 294

Hyde v Wrench [1840] EWHC Ch J90

ordan & Harrison Ltd v MacDonald & Evans [1952] 1 TLR 101

Parker v South Eastern Railway Co (1877) 2 CPD 416

Partridge v Crittenden [1968] 2 All ER 421

Pioneer Shipping Ltd v BTP Tioxide Ltd [1982] AC 724

Poussard v Spiers (1876) 1 QBD 410

Ready Mixed Concrete Ltd v Minister of Pensions [1968] 2 QB 497

Sale of Goods Act 1979

Thomas & anr v BPE Solicitors [2010] EWHC 306 (Ch) 

Yewen v Noakes [1880] 6 QBD 530