Legal Case: Vegan Leather Shoes | Contractual Terms And Implied Terms Essay.

Peter owns and runs a shoe shop, Ethical Footwear, in Sydney. He sells custom-­made, artisan shoes. He prides himself in producing footwear in a much more sustainable, less toxic and more compassionate way than using animal hides. Peter’s clients are vegans looking for high quality alternatives to animal leather. Peter has sourced the material for his vegan line of footwear from No Animal Harmed (NAH) since 2010. Sadly, the owner of NAH passed away recently and Peter had to find another supplier. Peter identified Animal-friendly Cobbler Supplies (ACS) as a potential new supplier of vegan leather. He rings the business to discuss the nature of the materials they sell and speaks to Martha:

Peter: ‘Many of my vegan clients are environmentally conscious. They are looking to buy shoes that are manufactured from an eco?friendly, natural alternative to animal hide. Is the vegan leather you supply all-­natural?’

Martha: ‘Yes, of course!’

Peter informs Martha of his intention to order 5m2 black vegan leather. Later that afternoon, Martha emails Peter an online order form with the type and amount of leather already entered. Peter adds his details to complete the online order form and e-mails it back to Animal-friendly Cobbler Supplies. The order form did not include specific instructions/details about the vegan leather.

Peter uses the vegan leather to craft a pair of bespoke black boat shoes for Samantha. Samantha calls Peter a couple of days later, threatening to sue him. Within minutes of putting on the shoes, the skin on her feet broke out in painful red patches and blisters. Samantha is allergic to synthetic colouring. It turns out that the synthetic tint ACS uses to colour the vegan leather they supply, caused the reaction.

Although Samantha made it clear that she wanted vegan leather, she did not specify that the production process should not involveany synthetic materials. She now wants to sue Peter for breach of contract.

1. Wasit a term of the contract between Peter and Animal-­?friendly Cobbler Supplies that the vegan leather would be all-­?natural?

2. Was there an implied term in Samantha’s contract with Peter, that the shoes will be made with all natural vegan leather with no synthetic material/ingredients involved?  

After the complaint about Samantha’s shoes, Peter makes a sign to display in his shop. He puts the sign up on the wall next to the counter where customers are served.

Geoffrey comes to Peter’s shop to place an order for a pair of men’s sneakers. They discuss all the details: Geoffrey orders a pair of white men’s sneakers in a size 13, with white rubber soles. While finalising the order Geoffrey sees the sign, which says: We accept no responsibility for breach of any warranty. Geoffrey returns a week later to pay for and collect the sneakers. After leaving with the pair, Geoffrey discovers that the sneakers have caramel coloured rubber soles. Geoffrey had the pair made to wear when he participates in bowling league competitions, as participants must wear all-­white shoes on the lawns.

Geoffrey wants to complain to Peter but isn’t sure whether the sign prevents him from doing so.

3. Was the colour of the sneakers’ soles a condition or a warranty of the contract?

4. IsPeter still responsible for the sneaker soles being the wrong colour?

The main issue is whether the statement on the nature of the leather makes a term of the contract or not.

A contract is an agreement enforceable by law. The agreement is being made of certain terms or promises. The rule is that all these terms should be clear and forms part of the contract (Moore, McKay and Veale 2013). The contracting parties should give their consent over the same and submit their view in respect of the same. However, for the betterment of understanding, the terms can be divided into two main parts such as the primary terms and secondary terms. Primary terms include price and description of the contracting object.

Contractual terms are verified the rights and liabilities of the contractual person (Ayres and Schwartz 2014). However, there might be certain pre-contractual statements present in case of the contract such as term of contract, collateral contract, mere representation and sales puff. The rules of Australia provide certain remedies if any party to the contract would infringe the terms of the collateral contract or performed any contractual damages. Apart from this, if any of the party does represent him wrongfully, the aggrieved party may bring action for misrepresentation (Appleman, Appleman and Holmes 2016). However, there is a dilemma regarding the fact in case of deciding whether a clause is a term of the contract or a representation. The court is considered four steps to come to a conclusion, such as:

• Parole evidence rule
• Relative expertise
• Importance of statement

In case of contract, the written parts are the terms and the verbal parts are considered as representation according to the parole evidence rule.

The case of Oscar Chess Ltd v Williams [1957] EWCA Civ 5 is an example of relative expertise. It was held that if the party to a contract misrepresent a fact with good faith, that clause will be called representation and not a term. The reason has been laid in the case of Heilbut Symons & Co. v Buckleton [1913] AC 30 where warranty has been distinguished from condition and separated from the terms of the contract.

It has been held in Schawel v Reade [1913] 2 IR 81 that if the representee will make a reliable statement about the contracting subject, it will be amounted as contractual terms.

In Routledge v Mckay [1954] 1 WLR 615, it had been held that if the time between statement construction and entering in contract has been lapsed, the clauses will be considered as representation and not contractual terms.

It has been observed in the first part of the case that the contract made in between the shoe company and Peter was based on online and there were certain written clauses. It has been revealed by Peter that many of his clients are environment conscious. However, there was no written provision regarding the use of synthetic material. According to the parole evidence rule, all the verbal agreements or clauses should be regarded as representation.

Conclusion:

The statement is representation and not contractual terms.

The main issue of this part is whether the non-use of synthetic material in the shoes is an implied terms of the contract or not.

Implied Terms

There are two types of terms exists in contract such as express terms and implied terms (Manesh 2013). It has been held in Thornton v Shoe lane parking [1971] 2 QB 163 that express terms of the contract should be clearly displayed in the agreement. According to Toll v Alpha Pharm (2004) 219 CLR 165, the parties are bound by the terms of the express contract.

The implied terms of the contract should be reasonable and the inner meaning of the terms must be clearly expressed. It has been held in Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 that the terms of the implied terms should not contradict the expressed terms (McKendrick 2014).  

It has been observed in Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur (Australia) Ltd (1986) 160 CLR 226 that in case of any custom, the implied terms of the contract could be accepted and not otherwise (Cartwright 2016).

In this case, it has been observed in this case that it was not mentioned by Martha that she is allergenic of synthetic colourings and did not mentioned the thing expressly. The substances of the shoes should be environment friendly and that was mentioned by Peter at the time of contract and negotiation process as well. The non-appliance of synthetic substances could not be an implied term as it will contradict the express terms as there was no mention about it. This condition could also be not regarded as reasonable and justified for Peter.

Conclusion:

The term regarding the non-use of synthetic substances could not be regarded as implied term in this case.

The main issue is whether the colour of the shoe’s sole be regarded as warranty or condition to the contract.

The main issue of this part is based on nature of the contractual terms. There can be three types of terms such as conditions, warranties and in nominate terms. Conditions play an important role and based on the urgent requirements. It has been held in Poussard v Spiers (1876) 1 QBD 410 that if there is a breach made regarding the condition, the aggrieved party will get compensation. The terms of the contract could be put an end by the affected party. On the other hand, warranties are not that serious comparing to the conditions. In Bettini v Gye 1876 QBD 183, it has been observed that the party can claim for damage but is not allowed to put the terms of the contract an end. Therefore, it can be held that if a party to a contract will violate a warranty, the aggrieved party will get an opportunity to claim damage against him (Knapp, Crystal and Prince 2016). However, there is no scope for the termination of the contractual relationship.

Before placing the border for the shoes, Geophrrey told Peter that white sole of the shoe is mandatory as he will not be allowed to enter into the lawn without white sole shoes. Therefore, the requirement is urgent and considered as condition to the contract.

Application of Principles

Conclusion:

The terms on colour of the sole are a condition to the contract.

The main issue of the case is whether Peter is responsible for his conduct regarding the wrong colour of the sole or not.

The colour of the sole was a condition to the contract and compensation can be claimed in case of breach of the condition. However, there are certain exclusion clauses that can enable the offender to escape from their liabilities. It has been pointed out in Curtis v Chemical Cleaning Co. [1951] 1 KB 805 that the exclusion clause should be brought to the notice of the parties to the contract and in case of any failure regarding the same, the provisions of the clauses could not be applied and the offender party could not get the opportunity to get benefit of it (Poole 2016). It has also been the part of the rules that an offender could not evade his liability in case of legal matters. In Olley v Marlborough Court [1949] 1 KB 532, it has been held that if in the contract, there is no mention of any exclusion clause and the parties have entered into the contract without knowing the terms of exclusion clauses, the benefit of exclusion clause could not be available or applied (Adriaanse 2016). It has been held in Baldry v Marshall [1925] 1 KB 260 that the terms of the contract should be clear and must be interpretable. The exclusion clause could not restrict the liability of the party in case of breach of a condition.

It has been observed in this case that the terms stated by Geoffrey were conditions to the contract and the white colour of the sole was primary term. It has been mentioned by Geoffrey that the sole of the shoes must be white. However, at the time of the delivery it has been observed that the original colour of the sole is caramel. Therefore, there is a breach regarding the colour of the sole happened and according to Baldry’s case, exclusion clause could not be applied in case of violation of conditional terms. Moreover, no exclusion clause has been brought to the notice of both the parties and therefore, there is no possibility of the restriction of exclusion clause here.  

Conclusion:

Peter is liable for the different colour of the sole and his actions could not be restricted by the exclusion clause.   

Reference:

Adriaanse, M.J., 2016. Construction contract law. Palgrave Macmillan.

Andrews, N., 2015. Contract law. Cambridge University Press.

Appleman, J.A., Appleman, J. and Holmes, E.M., 2016. Contract Concerns: Reinsurance Contract Formation, Validity, And Judicial Construction (Vol. 14). Appleman on Insurance Law and Practice.

Ayres, I. and Schwartz, A., 2014. The no-reading problem in consumer contract law. Stan. L. Rev., 66, p.545.

Cartwright, J., 2016. Contract law: An introduction to the English law of contract for the civil lawyer. Bloomsbury Publishing.

Knapp, C.L., Crystal, N.M. and Prince, H.G., 2016. Problems in Contract Law: cases and materials. Wolters Kluwer Law & Business.

Manesh, M., 2013. Express Contract Terms and the Implied Contractual Covenant of Delaware Law. Del. J. Corp. L., 38, p.1.

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Moore, S., McKay, S. and Veale, S., 2013. The Fragmentation of Representation—‘Contract-based Recognition’. In Statutory Regulation and Employment Relations (pp. 208-238). Palgrave Macmillan, London.

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