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Contract Formation

Discuss about the Business Law for Pharmaceutical Society.

The formation of a valid contract requires in the first place an offer that is valid, the willingness of the parties contracting in line with the specific terms are defined by it. Further, the main intent behind these terms is to ensure that the offer becomes binding on the persons as soon the same are accepted. In the case of Pharmaceutical Society of Great Britain v Boots Cash Chemicals, it was opined that the products which the shops display are for customers to choose from however offer would only be there when an offer is made by the customer for buying. In the given case, Alan is the intent of buying liquor and goes to a shop with liquor on display. Thus since he had gone to the shop and was looking at the different types of liquor available, it indicated that there was the invitation to treat. Though normally such a case would lead to there being an intention for creating a relationship that is legal (legal intention) however that is not the case in the given situation. The offeror, in this case, is Ben has made to Alan, who insisted on buying Russian Vodka a counter offer. Thus, affirming the fact that there has been a nullification of the invitation to treat factor.

However since Alan was insisting on buying only Russian distilled vodka it was assured by Ben, as an offeror, that the product that was being supplied by him was the product that Alan required. As had been held in the case of Bannerman vs. White (Bannerman vs. White, 1861) that when there is the specific term that has been communicated to the offeror by the offeree the same shall be held to be binding on the offeror. Thus in the given scenario there is an offer that has been made which is in furtherance of the intention. There has been acceptance by Alan of the offer that Ben has been, and he has paid the consideration for buying of the three bottles of items that he preferred. This payment was acknowledged by Ben by way of a receipt which stated that "Product sold are not refundable nor the seller responsible for the safety of the Products” thus being a proof of a valid transaction.

Legal capacity is an essential element of a valid contract meaning thereby a person who is a minor (in Singapore from March 3009 the age of the minor is 18 years) or a person who is incapacitated mentally cannot form a valid contract. Isn the given case of Ben and Alan, it has been mentioned that Alan is an avid drinker, therefore, it is not possible for Alan to be minor and it is assumed that he has attained the legal age. Therefore Alan being the offeree is an adult. On the other hand, Ben who is the offeror is an employee though the legal working age in Singapore is 14 years however it has not been stated in the case study that Ben is a minor. Therefore an assumption is made that he has attained the legal age. Further it can also be noted from the situation that both Ben and Alan are not mentally incapacitated since Ben was able to explain to Alan the drinks that were available with him and Alan was able to put forth the specific preference that was required by him with respect to the drinks and was able to carry the whole transaction out without any issues. Thus since they have both attained legal age and both are not incapacitated legally they would hence be bound by the contract formed between them.

Legal Capacity

Thus taking into account that there has been a valid offer and acceptance, there was an intention to form a legal relationship, payment of consideration, as well as the fact that there existed the legal capacity to enter into the contract. There has been a valid contract between Ben and Alan. However, it can be further observed that though Ben had reassured on the quality of the product, there was misrepresentation on his part which led to consequences that proved dangerous. Thus this representation on his part amounts to cheating. Thus since this is the contract which has been induced by way of misrepresentation the same maybe set aside.

In this case, Ben who is the seller is a liquor shop's salesperson, and he has sold either on purpose of unknowingly liquor that that is illicit to Alan, who is the buyer. In the case of Rowland v. Divall (Rowland v. Divall, 1923) it was opined by the court if any items possession is by way of unethical method or means that are illegal the it would not be deemed to be justifiable. It is thus necessary to provide what has been insisted thus since Alan had already described that he needed Russian Vodka and Ben had reassured that the same was being provided thereby attracting section 13(1) of the Sale of Goods Act (“Act”).

However, in the given situation Ben is only a salesperson of the store it is probable that he sold the illicit liquor unintentionally. It is not possible for Ben to make out with naked eyes it is an illicit alcohol. It was not until the alcohol had been consumed by Alan and his friends drank the drink there was no suspicion that was raised regarding the quality of the product. Thus unless there was scientific testing of the drink it could not have been proved that it was not safe to drink.   Thus as per section 14(2A) the product meets the satisfactory quality under Section 14(2B) since any reasonable man would have concluded the same  (Compact Metal Industries Ltd v PPG Industries (Singapore) Ltd ([2006] SGHC 242, National Foods Ltd v Pars Ram Brothers (Pte) Ltd [2007] 2 SLR(R) 1048).

However notwithstanding anything under section 14(2B) of the Act, there can be a case which is brought under the section 14(3) of the Act since it is necessary for the product that was purchased to serve the purpose that it had been purchased for. In the case of Frost v. Aylsbury (Frost v. Aylsbury Dairy Co. Ltd., 1905), it had been held that where the drinks were bootleg they were not considered fit for purpose and hence the purpose was defeated. Further in the situation wherein it is required by the buyer that there are certain qualities which are required by the good to possess that are special and it is made known to the seller regarding the same then under section 14(3) the standards would apply which are much higher than those who have been placed under section 14(2). In such a case there would be liability upon the seller even if there is the general satisfaction with the quality of the product (National Foods Ltd v Pars Ram Brothers (Pte) Ltd, 2007). Thus it may be held ultimately that charges are faced by Ben.

The receipt is only an acknowledgement by a party that they have received from the individual who has been mentioned on the receipt the payment which has been mentioned in the receipt. Receipt forms only the prima evidence that there exists between the parties a contract. The receipt is a mere acknowledgement and not any contract's express term.  Thus what has been printed on the receipt which has been given to Alan by Ben there is presumption which is clear that it is not contractual in nature, and there is no effect that is legal which is attached to the same.

Exclusion Clauses



It is only when terms are implied either during of before the formation of the contract either by writing or orally the same can be deemed to be contractual in nature. However with respect to the receipt, it is after the contract that the term is incorporated. In the case of Olley v. Marlborough Court case (Olley v. Marlborough Court Hotel, 1949), it had been held that for a term to be considered a being incorporated in the contract, it is necessary that the notice of the same should have been given either at the same time or before the formation of the contract (Articles and conditions of building contract, 2011). In the case of Alan and Ben, the receipt was issued after the consideration had been given thus it is only after the formation of the contract that the receipt was provided thus making it post-contractual in nature, therefore, making it an invalid receipt that is not binding legally. Also in the case of Parker v. SE Railway Co. (Parker v. SE Railway Co., 1877), 1877 the jury had opined that not reading the conditions of the ticket is reasonable since it is only a receipt and receipt is not a part of a contract, and exclusion clause can only be in the contract.

Reasonableness is another factor that needs to be taken into account when ti comes to exclusion clause. Where the product sold by Ben came with a receipt that stated “Product sold are not refundable nor the seller responsible for the safety of the products.” it is a generic statement which has been mentioned thus being limitless and denies the wrongdoings and the responsibility related to it. Thus being a term that is unreasonable it would not be enforceable. As it was opined in the case law of George Mitchell v Finney Lock Seeds (1983) (George Mitchell v Finney Lock Seeds, 1983) that the breach would not be discovered by the buyer unless there was processing or consumption and thus are unreasonable clause and can be strike down under section 6(3) of the UCTA.

The drink had been bought by Alan for entertaining his friends. Thus as per the principle of neighbour the friends of Alan who are drinking the alcohol bought from Ben qualify as neighbours. There is proximity that is close between Ben and friends of Alan since there is the likelihood of Alan's friends drinking that vodka as well. Thus there is the duty of care that is owed in a situation where it can been reasonably foreseen that due to any omission or act of the defendant harm may be caused to the plaintiff (Donoghue v Stevenson, 1932). It was in the case of Donoghue v. Stevenson that the principle of product liability was established stating that even in cases where there was no proximity there existed between the parties a duty to care.



It was foreseeable that the boot leg vodka would cause on consumption harm to Alan and his friends. In the landmark case of Wyong Shire Council v Shirt (1980) (Wyong Shire Council v Shirt, 1980), the test of objectivity test determines harm's foreseeability which would be a possible result of the action of the defendant. Therefore there was a duty of care that was owed towards Alan’s friends by Ben and since he did not comply with the same Alan’s friends had to suffer health complications.

Holding the case under the Chapter 53B of the "Contracts (Rights of Third Parties) Act" would benefit the Friends of Alan where there is enforcement provision of the third party contract terms. The friends will be able to qualify under it under the aspect of neighbourhood principle and shall have the remedy under this Act (Holly, 2016).


There is also the relation between the negligence of Ben and the harm caused to the Alan's friends. It is necessary under causation that harm's necessary condition should be negligence, and it is within the scope of liability of the defendant that harm is falling. The causation and remoteness issues are tended to separately, the test which is key is the “but for” test which questions whether the loss would have been sustained but for the defendant's negligence. In the case of Barnett v. Chelsea and Kensington HMC (1969) (Barnett v Chelsea and Kensington, 1969) is a leading case in this respect wherein it was stated if not for the fact that there were doctors to attend the patient the patient would have survived. Thus in case of Alan's friends the liquor that had been supplied by Ben had it not been for this harmful alcohol they would not have fallen sick, and hence the harm is within Ben's scope of liability.s

However considering the various aspects, in my opinion, it is more probable that the case will be in favor of Alan and his friends since there is the duty on Ben to check the vodka's labels before selling them to ensure such incidents do not occur.

References

Articles and conditions of building contract.(2011). Singapore.

Bannerman vs. White, 10 CBNS 844 (1861).

Barnett v Chelsea and Kensington, HMC (1969).

Donoghue v Stevenson, AC 562, 580. (1932).

Frost v. Aylsbury Dairy Co. Ltd., 1 KB 608 (1905).

George Mitchell v Finney Lock Seeds, 2 AC 803 (1983).

Holly, L. (2016). An overview and analysis of the National Unfair Contract Terms Provisions.Epublications.bond.edu.au. Retrieved 23 June 2016, from https://epublications.bond.edu.au/cgi/viewcontent.cgi?article=1396&context=law_pubs

Neyers, J., Bronaugh, R., &Pitel, S. (2009). Exploring contract law. Oxford: Hart Pub.

Olley v. Marlborough Court Hotel, 1 KB 532 (1949).

Parker v. SE Railway Co., 2 CPD 416 (1877).

Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd., 1 Q.B. 401 (1953).

Rowland v. Divall, 2 KB 500 (1923).

Wyong Shire Council v Shirt, HCA 12 (1980).

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