Tutorial Ans-contract 2002

Transcript

LW 56-806-01 (21) “C.P.E. (POST-GRADUATE DIPLOMA IN ENGLISH & HONG KONG LAW) !EAR I" (2002#0$) C%&'()*' T+'%(,)- .+/0',%&0 1. Alan Pitchpond is a landscape gardener with his own TV series. He has recently invented a self-propelling lawnmower. It cuts grass and disposes of the cuttings automatically. At this stage, there is only one machine in existence and harlie Hammoc!, the winner of the "ardener of the #ear $%%% competition, is !een to ac&uire it in his effort to retain the title. harlie's main rival (asil )lowers is also !een to o*tain the lawnmower to help him win his first "ardener of the #ear title. +n ,onday, Alan places an advertisement in the "arden "a-ette./+riginal model, self propelling lawnmower, one only 01,%%% or nearest offer2. 3ater that day, harlie telephones Alan and says. /the lawnmower for sale, I'll ta!e it for 04,1%%2. Alan replies /I cannot accept less than 05,%%%, *ut I am an admirer of your wor!, so I will not sell it to anyone else *efore 6aturday. 3et me !now if you want it2. harlie is delighted to hear that Alan is a fan of his wor! and says /that is !ind of you, I will send you a copy of my new *oo! 7 reating Pri-e 8inning "ardens'.2 +n 8ednesday, harlie telephones Alan and leaves a message on his answering machine saying /I accept your offer2. 9nfortunately, the answering machine does not have a tape in it and the message is not recorded. 3ater that day, Alan sells the lawnmower to (asil )lowers for 05:1%. +n Thursday, harlie is at the "reendale "arden show and he meets (asil's wife, ;osemary, who tells him that (asil is very excited at having ac&uired the only selfpropelling lawnmower in existence. As soon as he gets home, he posts a letter to Alan confirming the message he had left on the answering machine. +n the same day, Alan writes to harlie withdrawing the offer. 1. OUTLINE ANSWER O11ER )&2 ACCEPTANCE +n the facts, it is li!ely that this will *e interpreted as an invitation to treat for the following reasons. <@= The courts normally regard an advertisement as an invitation to treat on the grounds that if the advertisement is an offer, and li!e here, the advertiser has only one item to sell, this would mean that if a num*er of people respond accepting the offer, the advertiser is going to *e in *reach to all *ut one of them as he has only one item for sale. Therefore, to avoid this conclusion, and also to give the owner discretion as to which party he is going to sell to the court will normally infer the intention of the advertisement is to invite people to ma!e offers to *uy B hence, the advertisement is an invitation to treat. PARTRIDGE 4 CRITTENDEN The fact that the advertisement says 01%%% or nearest offer again o*?ectively indicates ,i!e's intention that he wants mem*ers of the pu*lic to respond *y ma!ing offers to him. The facts are therefore different from CARLILL 4 CAR3LIC SMOKE 3ALL COMPAN! where on the facts of the case, the wording of the advertisement was an offer. <$= harlie telephones Alan This seems to *e an offer. An offer exists when it is clear that one party regards negotiations as at an end and intends o*?ectively to commit himself to an agreement. This is the case here. harlie does not wish to negotiate further *ut is ma!ing it clear that he wants to enter an agreement to purchase the lawnmower for 041%%. Thus it is an offer. Alan's reply Alan's reply is not an acceptance. He is introducing a new condition that the price should *e 05%%%. It is therefore li!ely to *e construed as a counter offer as ,& H!DE 4 WRENCH. This has the legal effect of destroying the original offer. If this is the case, then all that legally exists is Alan's offer to sell the lawnmower to harlie for 05%%%. It could *e argued that all Alan is doing is supplying information to harlie i.e. if he decides to sell, then he will not ta!e less than 05%%%. STE5ENSON 4 M*CLEAN. $ However, 7let me have a reply *y 6aturday' suggests that it is more li!ely to *e an offer. Alan's statement Is the promise to !eep the offer open until 6aturday legally *inding on Alan> B no this is not *inding on the offeror unless the offeree has provided consideration for it. ROUTLEDGE 4 GRANT. The fact the harlie states that he will let Alan have a copy of his *oo! is not consideration. The suggestion comes after Alan's promise and therefore, it seems to *e past consideration ROSCORLA 4 THOMAS. The exception to the past consideration rule does not apply, as there is no suggestion that when Alan made the promise, he expected to *e paid RE CASE!60 PATENTS harlie's telephone call harlie appears to *e attempting to accept Alan's offer at 05%%%. However, to *e a valid acceptance it must *e communicated to the offeror ENTORES 4 MILES 1AR EAST CORPORATION. This is not the case here. There is a possi*le exception if the offeror has not learned of the acceptance through his own default see 3RINKI3ON and on the facts, perhaps some *lame can *e attri*uted to Alan for failing to ensure that the machine had a tape in it. Alan sells to (asil for 05:1% learly this means there is a contract *etween Alan and (asil. However, the fact that Alan has sold to (asil does not destroy the offer to harlie. The revocation must *e communicated to the offeree in order to *e effective. 3!RNE 4 5AN TIENHO5EN harlie's meeting with ;osemary Coes this destroy the offer to harlie> It is sufficient if the offeree learns of the revocation of the offer from a relia*le source DICKINSON 4 DODDS. If it should have *een clear to harlie that ;osemary was tal!ing a*out the lawnmower that harlie wanted to *uy, then he now !nows that Alan no longer wants to sell it to him and he cannot accept. This means that there is no contract *etween Alan and harlie. harlie posts the letter to Alan harlie attempts to accept *y post. As we have seen, he cannot do this if he !nows that the lawnmower has *een sold elsewhere. It appears that he does !now, *y his haste in rushing home to write the letter. However, if he does not !now, then he can invo!e the postal rule which states that acceptance ta!es place when the letter is validly posted even if not received ADAMS 4 LINDSELL. If this is the case, then Alan's letter of revocation only ta!es effect when received and this is too late to revo!e the offer 3!RNE 4 5AN TIENHO5EN The postal rule does not apply where it is made clear that the letter of acceptance must actually *e received *efore there is a contract HOLWELL SECURITIES 4 HUGHES or where it would *e unreasona*le to reply *y post B .UENERDUANE 4 COLE B do any of these restrictions apply here> It would not *e reasona*le to reply 4 *y post if the letter is posted at a time when there is no chance of it meeting the 6aturday deadline. If harlie has an email address or fax num*er for Alan, would it have *een *etter to use these methods> Also, is Alan's statement let me have a reply *y 6aturday similar to the case of HOLWELL SECURITES 4 HUGHES in that it as!s for notice in writing> In that case, the offeror was ma!ing it clear that he must actually receive the reply *efore the contract existed. If the postal rule does not apply, then there is no contract *ecause harlie learns of Alan's revocation *efore Alan learns of harlie's acceptance. +D 396I+D +n the facts, there seems to *e an offer *y Alan to sell the lawnmower for 05%%%. If harlie reads Alan's letter of revocation, there can only *e a contract if harlie has accepted *efore then. The only time this can have occurred is on Thursday when harlie posted his letter of acceptance. If the postal rule applies, acceptance would ta!e place as soon as the letter is posted. There are two points to ma!e in relation to this. <@= If harlie !new that the offer had *een withdrawn after his meeting with ;osemary, then it would *e too late for him to accept when he posted the letter. DICKINSON 4 DODDS Coes the postal rule apply> +r *y as!ing for a reply *y 6aturday, is Alan indicating that there is to *e no contract until he has received a reply, thus excluding the postal rule. HOLWELL SECURITIES 4 HUGHES <$= (7) if harlie had emailed the information instead of posting it to Alan, it is suggested that the position would *e the same as for telex. This would mean that the acceptance would *e effective when it was received *y the offeror <3RINKI3ON 4 STAHAG STAHOL=. This view was accepted in HONG KONG SUSANTO-WING SUN 4 !UNG CHI HARDWARE. 5 LW 56-806-01 (21) “C.P.E. (POST-GRADUATE DIPLOMA IN ENGLISH & HONG KONG LAW) !EAR I" (2002#0$) C%&'()*' T+'%(,)- .+/0',%&0 $. If Tony is only doing what he is contractually *ound to do, then the consideration may *e said to *e insufficient STILK 4 M!RICK. HARTLE! 4 PONSON3! pro*a*ly would not apply here despite Tony's difficulties with the hard ground. If STILK 4 M!RICI applies, then Tony would not *e a*le to recover the extra payment. However, the case of WILLIAMS 4 RO11E! must *e examined. If Eli-a*eth has promised a further sum in order that the contract may *e performed on time and she o*tains a practical *enefit as a result of giving the promise, then the performance of the existing contractual duties on Tony's part may amount to sufficient consideration. This would *e su*?ect to the re&uirement that the promise was not given as a result of economic duress or fraud. In this scenario, Eli-a*eth does o*tain a practical *enefit in that she has her studio finished in time for the exhi*ition. an this *e reconciled with STILK 4 M!RICK> - The outcome of that case was ?ustified on the *asis that parties to a contract should not *e permitted to threaten *reach in order to secure an extra payment. +*taining payments in this way is now addressed *y the concept of economic duress and the courts appear more willing to uphold a genuine commercial renegotiation as long as economic duress is a*sent. G The answer should explain the nature of economic duress and in particular address whether any illegitimate pressure was applied to Eli-a*eth and if so, did she have any reasona*le practical alternative *ut to agree> ATLAS E9PRESS 4 KA1CO Here it does not appear that Tony exerted any improper pressure upon Eli-a*eth to induce her to ma!e the new promise. Thus, the promise of Eli-a*eth may *e enforcea*le *y Tony. Tony v Fohn. Fohn promised to pay 01%% to Tony. Is there consideration provided *y Tony doing what he was *ound to do in his contract with Eli-a*eth The cases suggest that this is sufficient consideration PAO ON 4 LAU !UI LONG: THE EUR!MEDON. It is not li!ely that this would *e an agreement which the law would hesitate to enforce and Fohn does *enefit. It is li!ely that the promise to pay Tony 01%% will *e enforcea*le. (7) The original contract is for the 01%,%%% to *e repaid at 0@%,%%% over 1 years plus interest. The (an! then promises to postpone the payment of the next 0@%,%%% for one year and to give up the interest on this sum. 6ix months later it now wishes to go *ac! on this promise. an the (an! do so> ,ilo should *e advised that the rules concerning offer, acceptance and consideration should *e complied with in relation to a variation of an existing contract in much the same way as for esta*lishing a contract in the first place. The first &uestion here is whether ,ilo provides consideration for the (an!'s promise to defer payment of 0@%,%%% and give up their right to interest. Applying the rule in Pinnel's case the answer is clearly 2no2. This decision which was approved of *y the House of 3ords in 1OAKES 4 3EER esta*lishes that it is not good consideration in return for the discharge of a de*t to agree to pay part of the de*t. The facts here are similar to 1OAKES 4 3EER agreeing to pay 0@%,%%% less interest is not good consideration when the greater sum of 0@%,%%% ;-+0 interest is owed. In the a*sence of ,ilo agreeing to do something different from what was contracted for such as paying a lesser sum at an earlier date there is no consideration as in doing less than he had contracted to do ,ilo is not suffering any detriment. ould WILLIAMS 4 RO11E! 3ROS *e applied to this decision> Applying the rule in that case a promise to perform an existing duty ould ,ilo argue applying the decision in the HIGH TREES case that "oggins made a promise to him it would not insist on its strict contractual rights and it is therefore estopped from going *ac! on this promise. There are two difficulties for ,ilo to overcome. <@= Is it e&uita*le for the *an! to go *ac! on its promise> ,ilo would argue no. 9nli!e D & C 3UILDERS 4 REES he put no great pressure on the (an! to accept the lesser sum. He merely told them he had a financial pro*lem and the (an!, who at the time were under no financial pressure There is a real difficulty here. 1OAKES 4 3EER a House of 3ords decision says the creditor is always entitled to his money. Promissory estoppel says that if it is ine&uita*le to go *ac! on the promise and the promise was meant to have a permanent effect the creditor is not entitled to the money owedJ The matter needs to *e resolved *y the House of 3ords *ut the current situation is that the only way to reconcile the decisions is *y saying that promissory estoppel merely has a suspensory effect and *y giving reasona*le notice the promissor can go *ac! on his promise and demand full payment. This is the view of Professor Treitel. If this view is ta!en irrespective of the outcome of @ a*ove re the e&uita*le point, "oggins (an! *y giving reasona*le notice to ,ilo could claim the *alance owed to them ie 0@%,%%% together with the interest. It would seem that the fault in the software would mean there is a *reach of 6@5 6ale of "oods Act @M:M B goods In limiting Acme's remedies to 0@%,%%% (yte is in effect excluding 6@5 6"A. Thus 6G 9 TA would apply and the clause would *e su*?ect to the reasona*leness test discussed in section @@ of the @M:: Act and 6chedule $. 6$ would apply here. Any attempt to exclude lia*ility for negligence causing personal in?ury is void, thus the clause will not protect Hot (odies in relation to Fohn's *ad *ac! P6.$<@=Q. In relation to loss of property caused *y negligence the clause will *e su*?ect to the reasona*leness test P6.$<$=Q. The lac! of *argaining power and the fact that the clause is so wide /not lia*le for any loss or damage2 . However on the *asis it will cost ( less to have the wor! finished off it will *e a *enefit unless it is impossi*le to get anyone to finish it B which seems unli!ely @ <4= actually states it applies if a V( was received *efore the event and thus the literal wording is at odds with "off's view=. However 6@<4= does state that, in assessing the /?ust sum2 to *e awarded, the court should ta!e account of the /effect2 of the frustrating event. If there is no frustration then A is in *reach of contract and ( could treat the contract as discharged if time is of the essence and claim the extra amount a*ove 01,%%% it is now going to cost him to *uild the garage <*= T would argue that on the authority of K(/-- 4 H/&(@ the agreement has *ecome fundamentally different *ecause the foundation of the contract the wedding no longer exists. Fust as in K(/-- 4 H/&(@ a contract to watch the coronation procession was fundamentally different from a contract for the hire of a room so T will argue that a contract for a wedding reception is fundamentally different from a contract for a meal for friends and there is therefore frustration of the contract. It would strengthen T's case if the contract actually specified it was a wedding reception The normal rule is that this choice is availa*le and it was applied *y the House of 3ords in WHITE AND CARTER 4 M*GREGOR where in similar @K circumstances the local authority was held entitled to refuse to end the contract when informed the garage did not want their advertisements displayed on litter *ins. They could go ahead, display the ads, and then claim their full payment. This decision has caused unease *ecause it goes against the principle of mitigation of loss under which an innocent party must do all that is reasona*le to !eep this loss to a minimum. 9nder this principle one would have expected the local authority to attempt to find another advertiser and only recover damages if they received less from the new advertiser. Therefore to date the approach adopted *y the courts has *een not to apply WHITE AND CARTER if. <@= The innocent party cannot carry out his o*ligations under the contract without the co-operation of the guilty party. HOUNSLOW LONDON 3OROUGH COUNCIL 4 TWICKENHAM GARDEN DE5ELOPMENTS. This would *e the case here B to perform the contract lean needs 6)'s co-operation in allowing it onto 6)'s premises so that the windows can *e cleaned. (y refusing access 6) can prevent lean carrying out its part of the contract and leave it no alternative other than to end the contract and sue for damages. In which case lean must attempt to mitigate its loss *y finding another contract in place of the one with 6). Camages would *e an ade&uate remedy CLEA SHIPPING 4 3ULK OIL B see also ATTICA SEA CARRIERS case. It was said *y 3ord ;eid in WHITE AND CARTER the principle in that case would not apply if the innocent party had no /legitimate interest2 in continuing with the contract. This has *een interpreted as meaning WHITE AND CARTER will not apply if ending the contract and claiming damages would *e a perfectly ade&uate remedy for the innocent party. Camages for loss of profit and the loss of the chance of further contracts would seem a perfectly good remedy here. However even if this argument were to fail on the grounds that the loss of the chance of further contracts is too speculative for any compensation to *e recovered lean would still fail on the first point regarding co-operation. <*=