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Issue

Discuss about the Contractual Liability for Olley V Marlborough Court.

The issue in this case is that whether David can claim compensation for the damages to his car.

Exclusion clause is considered to be significant term under the law of contract with the help of which one of the parties to the contract can escape liability. The essentials of exclusion clause are-

The parties to a contract can only rely upon the existence of an exclusion clause only if such exclusion clause is consolidated into the contract (Cartwright 2016). However, it is important that the exclusion clause must be clear and free from encumbrances (Besley 2015). In some cases it may occur that the exclusion clause is depicted in a document which is not duly signed, for instance, it may be a ticket or a notice (Deakin et al. 2017). In this regard, the Court is at the authority to reject the enforcement of an exclusion clause, if it comes to its knowledge that the injured party was aware of the existence of the clause and was given reasonable notice (Kraakman and Hansmann 2017). The defendant can escape liability, if the exclusion clause contained in the form of a document (Roehrich and Lewis 2014). However, the nature of the document should be such so that it can be noticed by any reasonable man (Piccoli and De Witte 2015). It is essential to remind the other party regarding the presence of exclusion clause in the contract before binding in an agreement. In Olley V Marlborough Court [1949] 1 KB 532 it was observed that the contract was formed between the parties inside the hall room of the suite before the plaintiff could view the notice. Therefore, it was held by the Court that the notice was not included in the contract which formed between the parties.

In order to escape liability, it is important that the exclusion clause should be clear from ambiguity (Kraakman and Hansmann 2017). The working of the clause should be mentioned in such a way so that the individual can rely upon it (Piccoli and De Witte 2015). In order to avoid liability the wordings of the language must be precise. It was observed in Thornton V Shoe Lane Parking [1971] 1 All ER 686 it was observed that the plaintiff drove his car into the car park which belonged to the defendant. Inside the car park, the plaintiff was handed a ticket by the automatic machine where the terms and conditions were depicted. The conditions were written in a very small print which would exclude them from the liability in case of injury to vehicles. It was held by the Court that the defendant cannot escape liability with the exclusion clause as it was not noticeable by the plaintiff. Similarly in Curtis V Chemical Cleaning Co [1951] 1 KB 805 it was observed that the plaintiff could not notice the wordings of the receipt which was given to her by the cleaners. It was held by the Court that the cleaners cannot escape liability by depending upon the exclusion clause.

Rule

In the present scenario, it can be observed that when David drove into the car park, Jenny Pty Ltd where there was a large signboard which stated that the owners should keep their vehicles at their own risk and in case of damage, the owners of the car park shall not be held liable for any damage. However, the ticket which was handed to David before entering the car park contained certain provisions which David could not see. The exception of incorporation of contract can be applied in this case, because as soon as David entered into the car park and accepted the ticket, the contract was formed. In this regard, the case study of Olley V Marlborough Court [1949] 1 KB 532 can be applied in which it was observed that the contract was formed in the hall room before the plaintiff could enter into the room. However, in this case the defendant could not escape liability as the plaintiff was not aware of the contract incorporated in the notice. Similarly, in the present scenario, it can be stated that the owners of the car park cannot escape liability as David was not aware of the contract incorporated when receiving the receipt. The case of Thornton V Shoe Lane Parking [1971] 1 All ER 686 and Curtis V Chemical Cleaning Co [1951] 1 KB 805 can be refereed in this case. It is evident that David upon receiving the receipt could not see the wordings contained in it. Therefore, the owners of the car park are at the responsibility to include the exclusion clause in such a way so that it can be noticed by any reasonable person.

Conclusion:

In the conclusion it can be stated that David is at the authority to sue the owner of the car parking station and therefore can claim compensation for the damage caused to his vehicle.

The issue in this case is that whether David has to pay the full amount.

In the law of contract, consideration is an important term. The term consideration is used in a contract when there is a promise to pay an amount in return of supply of goods and services (Masten and Prüfer 2014). In this regard, it is worth stating that without the existence of a valid consideration, the promise made by the either party has no existence (Hoeppner Freund and Depoorter 2017). In Hartley v Ponsonby (1857 ) 119 ER 1471, QB it was observed that he captain has promised to pay an extra amount to his crew however; half of them did not receive the extra amount. Therefore, it was held by the Court that the captain shall be liable for the breach of promise. In Dunlop v Selfridge (1915) AC 847 the term consideration was defined in a different manner. Here, it was held by the Court that, the existence of consideration in a contract creates benefit for one party and the detriment or loss is suffered by the other party. It is noteworthy to mention here that every consideration requires the existence of a present or future exchange (Decarolis 2014). The presence of a mere wish does not bind the parties to a contract; in order to bind the parties there must be a presence of reasonable consideration which was held in Thomas v Thomas (1842) 2 QB 851; 114 ER 330. However, it is important that the nature of the promise must be more than a reasonable duty which was observed in Williams v Roffey Bros & Nicholls (Contractors) Ltd [1989] EWCA Civ 5. Consideration can be divided into two types-

  • Executory consideration: A consideration can be regarded as executory when there is a transfer of promises between the parties regarding the performance of a specific act (Alschner 2014). For instance, if there is a promise on the part of A to deliver certain goods to B, where as B promises that he shall pay on delivery. If A delivers the goods on time however; B denies to pay the amount, therefore the consideration on the part of A is executed however; A is at the authority to sue B for breach of contract.
  • Executed consideration: When a promise is made by one of the parties in exchange for an act by the other party. Upon completion of the act, the consideration is termed to be executed. The consideration must not be based upon a past promise. In this regard, it can be mentioned that consideration made in the past is not a good consideration. Past consideration in a contract is declared to be void and therefore parties cannot rely upon it to sue for breach of contract (Masten and Prüfer 2014). However, in case of business transactions, it is evident that both the parties has agreed to a reasonable consideration and has paid for the same in the past. Therefore such past considerations in business situations will be valid which was observed in Re Casey’s Patents [1892] 1 Ch 104.

Application

In the present scenario, it is evident that Emily has already promised David that she would reduce the price of the chairs to an amount of $200/month. However, the amount depicted in the invoice was $300/month. In this regard, it can be noted that there was a promise on the part of Emily and such promise was governed by a consideration. The case study of Hartley v Ponsonby (1857 ) 119 ER 1471, QB can be applied because it can be observed that Emily has breached her promise and therefore David is at the authority to sue her for breach of promise. The case Dunlop v Selfridge (1915) AC 847 can be referred here because due to the presence of consideration in the said promise, David would have been benefitted while Emily would suffer detriment or loss. The case of Thomas v Thomas (1842) 2 QB 851; 114 ER 330 can be referred in this case because the promise which existed between David and Emily was not a mere wish, the promise was supported by a consideration. The case of Williams v Roffey Bros & Nicholls (Contractors) Ltd [1989] EWCA Civ 5 can be referred because, the nature of the promise which existed between David and Emily can be considered to be more than a reasonable duty. The exception of executory consideration can be applied in this case. It can be observed that there was a promise from the end of Emily to reduce the price of chairs to $200/month. Therefore, based on her promise David was expecting to pay the reduced amount. Therefore, the consideration on the part of Emily was not executed and therefore David can sue her for breach of promise. The exception of executed consideration can be applied here which states that parties should not rely upon a past consideration. However, in case of business situations which existed between David and Emily, past consideration can be said to be valid.

Conclusion:

It can be finally concluded that David is not liable to pay the full amount.

The issue in this case is whether Master Arts can terminate the contract and Laura can take any action against them.

Termination of contract is a significant essence of contract which takes place when the parties to the contract and not anymore bounded by the contractual obligations. Therefore, termination of contract can take place by-

  • By an agreement between the parties.
  • By breach of contract.
  • The inability to perform by the parties.
  • By performance.

Termination can be caused by breach of contract when one of the parties to the contract fails to deliver the contractual liabilities promised during the course of contract. An anticipatory breach of contract may occur when there is an intention on the part of the part of the party either express or implied to terminate the contract (Deakin et al. 2017). In this regard, the parties consider themselves that they are no longer bound by the conditions of the contract. Therefore, the innocent party is at the authority to sue for damages for the termination of contract as a result of breach on the part of other party. The injured party may also accept such repudiation and terminate the contract which was observed in Confetti Records V Warner Music Uk (2003).

Conclusion

Contract can also be terminated when the performance on the part of the parties are partial (Besley 2015). A contract is discharged when the performance is complete however; it can be terminated where the performance is not completed on the part of the parties. A contract can also be terminated when the parties are prevented from performing their duties which was held in  Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd [1953] EWCA Civ 6.  However, there must be a presence of an unforeseeable force which prevents the parties from performing the obligations of the contract.

In case of termination of contract, there injured party is at the authority to take legal actions against the party who has breached the contract. In some cases, the parties not perform according to the terms and conditions of the contract which results into termination of contract. In this context, the injured party is at the authority to bring claim for damages which was observed in Pickfords Ltd v Celestica Ltd [2003] All ER (D) 265 (Nov).

In the present scenario, it can be observed that there was a contract between Laura and the Master Art to create three sculptures for Master Art every year. However, it was observed that at the end of the year only two sculptures was created by Laura. In this regard, the principle of termination of contract can be applied. In this context, the essentials of termination can be applied which is termination by breach of contract. It can be observed that the Laura did not perform the obligations of the contract. Laura was required as a part of the contract to create three sculptures at the end of every year which she failed to do. Therefore, Master Arts is at the authority to sue Laura for breach of contract and can terminate the contract. Therefore the ground of inability to perform can be applied as Laura failed to perform the requirements of the contract. Therefore, in this scenario, the cases study of Confetti Records V Warner Music Uk (2003) can be referred and hence Masters Act can repudiate the contract and thereby terminate the contract. The case law of Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd [1953] EWCA Civ 6 can be referred because in the present scenario, Laura has not discharged her duties in relation to the contract. Therefore Master Arts can terminate the contract any time on the ground of non-performance. The case references of Pickfords Ltd v Celestica Ltd [2003] All ER (D) 265 (Nov) can be applied to the present scenario because the injured party Master Arts has the authority to take legal actions for the loss incurred. Therefore, it can either terminate the contract or sue Laura for breach of contract.

Conclusion:

It can be finally concluded that Master Arts is at the authority to terminate the contract however; Laura does not have the authority to proceed with any legal actions against them.

References:

Cases:

Confetti Records V Warner Music Uk (2003).

Curtis V Chemical Cleaning Co [1951] 1 KB 805.

Dunlop v Selfridge (1915) AC 847.

Hartley v Ponsonby (1857 ) 119 ER 1471, QB.

Olley V Marlborough Court [1949] 1 KB 532.

Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd [1953] EWCA Civ 6. 

Pickfords Ltd v Celestica Ltd [2003] All ER (D) 265 (Nov).

Thomas v Thomas (1842) 2 QB 851; 114 ER 330.

Thornton V Shoe Lane Parking [1971] 1 All ER 686.

Williams v Roffey Bros & Nicholls (Contractors) Ltd [1989] EWCA Civ 5.

Journals:

Alschner, W., 2014. Regionalism and overlap in investment treaty law: Towards consolidation or contradiction?. Journal of International Economic Law, 17(2), pp.271-298.

Besley, T., 2015. Law, regulation, and the business climate: The nature and influence of the World Bank Doing Business project. Journal of Economic Perspectives, 29(3), pp.99-120.

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

Deakin, S., Gindis, D., Hodgson, G.M., Huang, K. and Pistor, K., 2017. Legal institutionalism: capitalism and the constitutive role of law. Journal of Comparative Economics, 45(1), pp.188-200.

Decarolis, F., 2014. Awarding price, contract performance, and bids screening: Evidence from procurement auctions. American Economic Journal: Applied Economics, 6(1), pp.108-32.

Hoeppner, S., Freund, L. and Depoorter, B., 2017. The Moral-Hazard Effect of Liquidated Damages: An Experiment on Contract Remedies. Journal of Institutional and Theoretical Economics JITE, 173(1), pp.84-105.

Kraakman, R. and Hansmann, H., 2017. The end of history for corporate law. In Corporate Governance (pp. 49-78). Gower.

Masten, S.E. and Prüfer, J., 2014. On the evolution of collective enforcement institutions: communities and courts. The Journal of Legal Studies, 43(2), pp.359-400.

Piccoli, B. and De Witte, H., 2015. Job insecurity and emotional exhaustion: Testing psychological contract breach versus distributive injustice as indicators of lack of reciprocity. Work & Stress, 29(3), pp.246-263.

Roehrich, J. and Lewis, M., 2014. Procuring complex performance: Implications for exchange governance complexity. International Journal of Operations & Production Management, 34(2), pp.221-241. 

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