1. Explain the elements to the formation of the contract between the parties.
2. What statutory provisions are Ben contravening under the Sale of Goods Act (SGA)?
3. Discuss the validity and enforceability of the statement printed on the receipt.
4. Can Alan’s friends pursue liability with Ben under contract? If yes, what are the provisions for recourse? Otherwise, suggest an appropriate cause of action.
The formation of a contract requires valid offer and acceptance. On the initial stage of the contract formation, the interested party is liable to forward an invitation to the [arty with whom the contract is intended to structure. The contract is enforced after the acceptance made from the part of the party to the contract without the presence of manipulation (McKendrick, 2014). The language of the contract is expected to be in clear version so that it is easy for the party to understand without the chance of getting interpreted.
An agreement is legally enforceable which requires some terms fulfilling such criteria. The rights and respective obligations bound by certain terms enforceable by law (Wright, 2015). The facts are ascertained by the party whether they have reached the conditions of a contract or not or in other words whether any form of agreement is enforceable between them or not.
The essential principles of the contract formation include:
- Capacity to contract resulting to invitation to treat to a party, which is summed up as making an offer.
- Intention to create legal relations. For creating intension for legal relation certain terms are followed.
- Capacity that includes (invitation to treat), offer - An offer is defined as a mere invitation from the part of the interested party to the invited party, in other words, the concerned party mentioned as offeror and invited party known as offeree. The offeror expresses the interest towards offeree so as to have an expression of willingness to bind them to specify terms defined under the law Baird Textile Holdings Ltd v Marks & Spencer plc. The contract comes into existence with the rule of termination so that the either party may end the terms on the ground of fulfillment of the terms Partridge v Crittenden. Ben made an offer of invitation to Alan to serve the requirements.
- Acceptance- Once the offer made by the offeror the offeree is expected to accept the offer on the absolute terms and assent. The general rules define that the acceptance requires a general communication and the inference must not come from mere silence. The communication shall be supported by the implied terms of the contract. In some of the cases in an agreement where there not possible to have a straight communication, then the postal acceptance rules are applied, and the party accepts the same out of posted communication. Alan accepted the offer of invitation to serve by Ben.
- Completeness and certainty: The terms of the contract is expected to have a certainty and completed when the offeree accepts the same before the enforcement of the agreement. The certainty comes out of good faith by the party and is likely to get hampered if the contractual terms are not correctly specified Carter v Boehm. The subject of the contract is likely to term as incomplete if the terms in agreement lack legal enforceability. Ben assured that the products are distilled in Russia and made a certainty of statement by explaining the background to Alan.
- Promissory estoppels- The promissory estoppels are the promise merely unsupported under the conditions of consideration. The principle applies to those elements where the party in concern makes an unequivocal commitment to the terms of the agreement. Ben assured promised Alan that the products are genuine
- Expressed terms: The expressed terms are one of the essential elements of the contract as mentioned under Sec-5 of the contract law. The expressed terms ascertain the fact of the contract that there are no hidden facts, or no terms are distinguished from the actual and expressed terms. The examining of the same applies to the enforcement of a contract. Ben made an expression of the terms that the product served are genuine and fulfilling of the specified requirements expressed by Alan. Hence, it is proved that there is a presence of contract between Ben and Alan.
The presence of contract can be supported with the reference of the matter, Eastern Resource Management Services Ltd v Chiu Teng Construction Co Pte Lt.
The sale of good act is governed under the law of contract act. The sale of goods comes with some enforceability of the contractual terms with the presence of good faith. The explanation of the statement is that when the person makes a purchase of a commodity he does so under the impression as expressed by the seller. The seller is even expected to act by following the fair trading policies. The ultimate responsibility of the seller is to sell the product with an absence of hidden fact about a certain commodity. The seller is likely to commit a breach if the buyer finds that the product is not identical with the explanation (statutes.agc.gov.sg, 2016).
The following matter explains that made the purchase after making specified requirements. The requirements included product description that explains the intention of Alan to make a purchase of beverages manufactured and distilled in Russia and nowhere else. When Alan arrived at the liquor store, he was served by a salesperson named Ben whom he expressed his particular requirement. Upon clearing the requirement, Ben went to bring some of the products and shown to Alan creating assurance that the product meets the demand of the requirement made by Alan. Ben went further with the discussion and explanation regarding the background of the vodkas and made the specified suggestion to make Alan purchase the same.
Alan upon the good faith imposed over Ben bought the products as described by Ben. Alan had thrown a get-together with his friends where he gave his friend to drink the same vodkas and everyone who consumed the same suffered from diarrhea. After the test conducted regarding the product, it was found out that the product contained some toxic substance and that it was a bootleg which means a good illegal to consume. The matter explains the presence of deliberate mistake and misrepresentation from the part of Ben.
The factual incident explains the violation of sections 13, 14 (2) with correspondence to 14 (b) and 14 (3) of the sales of goods act. Ben even committed the violation of section 6 (2) (a) by delivering an alternative product as described in samples. Ben committed a violation by transferring the prohibited good to Alan.
Section 13 of the act explains that the goods must correspond with the description as made by salesperson which processing a purchase. The seller must deliver the commodity with an absence of manipulation and presence of willful acceptance from the buyer, along with similar description upon the product (Butler, 2016). Unlike what is described in the matter (Harlingdon & Lienster Enterprises Ltd v Christopher Hull Fine Art Ltd, where the buyer did not rely on the words of the seller, here Alan relied on Ben’s words, and got him delivered with a bootleg explaining Ben’s contradiction to the mentioned section.
Section 14 (2) of the act described that the goods’ condition must be satisfactory quality and there must be a safety ensured since the good is meant for consumption. The factor of section 14 (2) goes with reference of section 14(2B). Ben made a wrong delivery of the product to Alan causing a violence of the section. The section explains that the quality of the goods must be hypothetical with the description and with reasonable person. The matter can be explained best by referencing the cases of Compact Metal Industries Ltd v PPG Industries (Singapore) Ltd (, National Foods Ltd v Pars Ram Brothers (Pte) Ltd .
Section 14 (3) of the Act describes the delivery of the product should be capable of providing safety assurance and reasonably fit for the person consuming the product. Alan and his friend had to be hospitalized with severe diarrhea and the corresponding test found that the product were bootlegs which means they are illegal as well as unhealthy for the consumption. National Foods Ltd v Pars Ram Brothers (Pte) Ltd  explains similar issues that the products were not fit for using purpose.
Apart from the violation of the sections from sale of good act, Ben committed an act as described in section 6 (2) (a) of the Unfair Contract Terms Act 1977. Section 6 (2) (a) explains that provisions gets related to the liability of implied terms of Sales of Goods Act 1979 with respect to the supply of goods. The sales party to the contract can never exclude the liability when the commodity comes with the liability regarding the safety and violation of the product. Ben did not follow any of the instruction and committed a clause by carrying of an unfair means terms of contract by delivering a bootleg product to Alan. The product caused severe damage to Alan and his friends resulting to get them admitted in the hospital.
The implied contractual validity depends on upon the non-performance of the deliberate violation of the expressed terms. It is important for the concerned party to follow the terms as expressed clause in the contract since those terms come with legal enforceability, and the misrepresentation causes the breach to the terms. The similar fact is observed in the matter of Alan and Ben, where Ben served him a bootleg product assuring that to be Russian distilled vodka.
The expressed terms of the contract as mentioned under section 5.1 ascertain the fact and explain that there shall be no distinguishing of the fact with the actual representation made for a particular commodity (Fried, 2015). The contractual terms may be orally described or in the written form which has a similar effect of implication over the application of terms. The implication of contractual terms should not have the contradiction of the terms and similar to the presentation made. Ben made an alteration of the product with the description delivered to Alan.
The nature of the statements or the terms explains the liability of the business holders during any uncertain risks arising from the consumption of product. The section 5.2 explains that the business cannot interpret the terms or the nature of statement in the receipt as per convenience, Chapelton v Barry UDC. The factual matter explains about the deliberate mistake of the salesperson, Ben as he delivered the wrongful product and is now explaining the terms in the receipt. The terms of the receipt cannot be interpreted as per convenience even when there is uncertain risk, Petroships Investment Pte Ltd v Wealthplus Pte Ltd.
The receipt explained about the non-liability of the organization regarding the risk that may arise due to the consumption of the beverages. The implied terms were well interpreted since the risk included some expected risk that may arise and there was no mention of the illness that may cause to the person consuming the product. The organization does not hold the right of interpretation of the terms with favor to their interest. The situation may arise where there can be advantage taken by the concerned party for altering contractual terms (Alexandrov & Mendenhall, 2015). The terms of the receipt will have no value since the risk arose was not any expected issue but due to the consumption of prohibited drinks which was tested and found as a bootleg.
Section 2(2) of the Unfair Contract Terms Act, 1977 explains that the declaration in the receipt cannot exclude the liability of any type of losses other than the general effect of consuming the product.
Section 2(3) of the act explains that the seller is aware of the exclusion clause of the receipt and the declaration. Hence, interpretation with the cause of defending will not be applicable in this case as Ben made an alteration of the description and committed breach under Unfair Contract Terms Act, 1977.
In the given matter, the validity of the terms questions the warranties of the implied and expressed terms within an agreement (Michael, et al., 2013). The business holder is not expected to sell the product which is a boot and manipulate the buyer to take the same Olley v Marlborough Court Hotel. Ben carried an unfair means of contract by convincing a buyer to consume a bootleg product and as a result of not only Ben but his friends even risked their lives as they were suffering from severe diarrhea. The terms of the receipts do not encourage application over the dealing of wrongful and illegal products. The person in a contract is liable to follow the terms of the agreement and is dutifully bound towards the party in the contract. Ben as a salesperson was bound to direct his customers to take things under food faith and safety.
The privity of the contract is explained section 2.1(b) of the contract law. The concept explains about the right of an absence of involvement of the third party and their rights to sue a person committing breach of contract. The section explains about the right of the direct party in the contract to sue against the party breaching terms of a contract. The rules compiled together for such facts are known as the privity rules of the contract. The third party right act provides the rights to the third party without any retrospective effect (Mahmood, 2013). In this Alan's friend consumed the beverage as bought by Alan and faced severe diarrhea for which they had to be hospitalized. The section explains about the statutory right of the party for enforcing a term in a contract against the party who made a breach in the contract. The rights will be valid for the third party even though there is no consideration made from the promisor upon such execution of the rights (singaporelaw.sg, 2016).
The law of tort explains that the third party holds no legal liability to sue against the party committed negligence in the duty of care, Donoghue v Stevenson. Only the party within the contract holds the right to bring a legal enforceability against the party committing the breach of terms in the agreement. The aggrieved party can even hold liability for the negligence shown in the contractual terms performance (Campbell, 2015). Wyong Shire Council v Shirt  is the matter explaining that there was negligence in the duty of care hence causing breach of duty. The breach of duty caused some harm to the concerned party as well as the members included in the party.
Rights of Third Parties Act 1999 explain that the third party gets right under Sec 1(b) with subject to subsection (2), when there is a benefit purport on them. Section 5 and 6 explains that the consent from the third party is required in certain cases during court proceedings. The general rules of the contract explain that the third party can sue when there is a breach of contract and such breach reached the third party some generous harm with long time consequences (Goh & Lee, 2014).
The matter tells about some breach of duty that occurred from the part of Ben. Upon such case it is important to cite matter of Blyth v Birmingham Waterworks Co (1856) which tells about the reasonable man test which results from any situation. The reasonable man test tells about the possibility of any ordinary or average person that would react in certain situation. The man test tells that the original party is liable to get some compensation because of the harm that reached them for the act of the party in concern.
The act explains that where there is a possibility of removing the risk and the salesperson did not do it then there will some enforceability of the rights of third party. The matter of fact is similar to the situation as observed in the case Latimer v A.E.C.
The third party also gets rights when there is an observance of the breach of duty from the person in the agreement that intended to create such legal enforceability. For the factual matter it is important to cite the case of Barnett v Chelsea & Kensington Hospital , where when the judgment passed introduced a concept of ‘but for’ test. The ‘but for’ test concept explains that the defendant may not be always held liable for the damage occurred especially in those case where there is only injury and not death. So when the consequence occurs’ but for’ the act or omission of the defendant the defendant won’t be held liable. In the factual matter Ben purposely gave a bootleg product to his customer thus resulting to the damage which will give the third party rights. The ‘but for’ test won’t be applicable here.
The qualified means and ways of the third party can enforce the statutory right against the promisor (Chen-Wishart, & Ong, 2015). Firstly, the third party statutory rights are necessary for the qualification of the defense by which the promisor can assert the same to the other party. Secondly, the sum of compensation for the damage can be recovered with the application of the act where there is a discovery of the observance made regarding the breach of the terms by the promisor toward the promisee.
The right of the party will be applied under the phrase that where the third party has received a negative consequence resulting from the usage of the commodity (Campbell, 2015). The negative benefits are such benefits that limit the terms of the party by the promisor, but the third party can apply for the enforceability of the rights.
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