Discuss about the Business Law and Ethics for Case of Poussard v Spiers.
A term of the contract is a provision that forms part of a contract. Every term in a contract creates a contractual obligation which when breached by either of the parties leads to litigation for the breach. All the terms of a contract are not expressly stated in the contract. The ones not stated in the contract are implied as they are ancillary to the main objective of the contract formation (Parker, 2015).
The parties to a contract are normally bound by the terms of the contract only. Statements made in contract negotiations with the intent to persuade either party to enter into a contract do not form part of the contract except where they are incorporated through writing as terms of the contract.
Whether it was a Term of Contract
Terms of a contract are classified as either conditions or warranties. A condition is the major term of any contract. It is said that it goes to the root of the contract, a breach of which entitles the innocent party to repudiate it and claim for payment of damages as well. In the case of Poussard v Spiers (1876) 1 QBD 410, the plaintiff entered into a contract with the defendant as an opera singer and to act for a period of three months. But five days before the agreed night of opening, she fell ill and could not perform for the initial four consecutive nights. The defendant therefore replaced her with a different singer. The court found the plaintiff to have breached a condition giving the defendant the right to end the contract. The first night she missed was the most important as it would be the basis to judge the defendant.
A warranty on the other hand is a minor and insignificant term of a contract which does not go to the root of the contract; breach of which only entitles the innocent party to claim damages but not to end the contractual obligations. In the case of Bettini v Gye (1876) QBD 183, the plaintiff had agreed through a contract to perform in the defendants’ play as an opera singer for a period of up to three months. He however fell ill and could not participate in the six days of rehearsals. The defendant replaced him with another person. It was held that the plaintiff was in breach of a warranty and not a condition and therefore the defendant had no right to end their contractual obligations. The rehearsals did not form a major part as it did not go to the root of the specific contract.
From the above illustrations, it is clear that it was not a term of the contract between Mikaela and Tower Flours that the almond flour would be free from gluten
Whether There was an Implied Term
Terms of a contract can be express or implied. Express terms are those contained in the written contract which can be pointed out by any party. Implied terms are not contained in the contract document and may be implied by common law though reluctantly to protect the weaker party. Courts occasionally endeavour to uphold the principle of privity of contract; that parties are free to contract without interference from the court. The courts do not want to write contracts for parties. But in certain circumstances, terms are implied under common law through custom, by fact and at law.
A term is implied through custom where the term is common in a particular trade. Courts would therefore imply it in the same type of trade. In the case of Hutton v Warren (1836) EWHC Exch J61, the plaintiff, a farmer had a tenancy agreement on the fields of the defendant. The plaintiff cultivated corn and barley on the fields. Before harvesting, the defendant terminated the tenancy. The plaintiff subsequently submitted to the defendant a bill for the works and costs of seeds as was the common practice in tenancies for farming. The defendant then refused to effect the payments claiming that the agreement did not state that such sums were payable. The court implied a term into the tenancy agreement providing for the compensation for the works and expenses incurred in growing the crops because it was common practice for tenancies in farming to contain such terms.
It was therefore an implied term in the contract between Dan and Jacob’s and Mikaela, that their wedding cake would be free from gluten. It was a term implied by fact that the Almond flour would be free from gluten. The term was necessary in the circumstances to give the business efficacy as the business would have lost its sense without it.
In the case of the Moorcock (1889) 14 PD 64, the claimant had moored his ship at the wharf of the defendant in river Thames. The river is associated with tides and when the tide went out, the ship normally touches the river bed. The ship got damaged by the rocks contained in the river bed. The claimant sought damages and the defendant argued that there was no warranty in the contract on the condition of the river bed. The court implied a term in fact; that the river bed would be safe for the ship to moor. The court applied the business efficacy test that the term was necessary to give effect to the business. But in circumstances where a business makes sense without the term, courts would not imply it.
Whether the Icing Colour was a Condition or a Warranty
The icing colour on the cake was a warranty and not a condition. It does not form part of the contract. It is just a mere statement during the contract negotiation stage and an expectation that Mikaela needed to comply with but it does not go to the root of the contract. A cake of a different colour specified in the contract would not be suitable for a sports celebration anyway but the celebration would not be cancelled just on the variation on the icing colour. Since the icing colour does not repudiate the contract, it is a warranty.
In the case of Bettini v Gye (1876) QBD 183, the plaintiff had agreed through a contract to perform in the defendants’ play as an opera singer for a period of up to three months. He however fell ill and could not participate in the six days of rehearsals. The defendant replaced him with another person. It was held that the plaintiff was in breach of a warranty and not a condition and therefore the defendant had no right to end their contractual obligations. The rehearsals did not form a major part as it did not go to the root of the specific contract.
Whether Mikaela is Responsible for the Icing
Mikaela is still responsible for the defects on the icing colour in Kimala’s cake. Though not all statements made during contract negotiations form part or terms of the contract, some have the inducing effect that encourages a person to enter into that contract. In this case therefore, owing to the form of celebrations Kimala was anticipating, the affirmation by Mikaela that the icing colour he was ordering for could actually be baked induced Kimala to contract with Mikaela. Any slight variation would therefore defeat the intention of the innocent party as the cake would not be fit for the purposes for which it was intended.
Exclusion clauses however operate to prevent the innocent party from claiming damages for breach of a warranty in certain cases. For the exclusion clause to shield the guilty from incurring any liability, it must be brought to the attention of the other party within reasonable time, mostly before the contract is negotiated and concluded. It should be displayed in a place that it can be easily seen by any person entering the premises (Sampford, 2003).
In the case of Thornton v Shoe Lane Parking  2 WLR 585 CA, a claimant injured in a car park due to the negligence of the defendant when he accessed the car park through a ticket obtained by putting money in a machine. The ticket stated that the contract of parking was subject to the terms on display inside the park; one of them being exclusion from liabilities on personal injuries out of negligence. It was held that the clause was not brought to the attention of the plaintiff at the time of entering into the contract.
The warranty displayed by Mikaela to exclude him from liability arising from the defects in a cake is however not binding on Kimala as he saw it on his way out after the contract was negotiated. It was not brought to his attention at the time of contract for him to accept it and be incorporated in the contract. Mikaela oh his part did not reasonable steps to bring to the attention of Kimala the warranty that excluded him from being liable for any variation in the contract. The warranty is therefore unfair and not binding on Kimala.
Kimala can therefore claim damages for the breach of a warranty that the icing on the cake would correspond to the specifications given by him.
Parker, S. (2015). Business and Law in Australia. Pyrmont, N.S.W: Thompson Reuters Australia Limited.
Sampford, J. (2003). Business Ethics and the Law. Leichhardt NSW: Federation Press.