Part one: Intention to create legal relations
Issue:
Did The Andersons and Humphrey Plank
to create an enforceable contact?
Relevant law:
The law required every contract need an express or implied
intention to ensure they are into a relationship with legal consequence. If
there have not an intention, there is no contract.
In general presumption of intention,
first, if the agreement is made between family or friends or of a social nature,
it can be considered the parties are not intend to create a binding legal
relationship; second, the presumption should be appropriate; third, there are
enough evidence to prove the parties are doing business.
The situation of this case
is similar to the case Carlill v Carbolic
Smokeball Co [1893], the company promised if customers used their product
still having influenza, they will pay £100. Then Carlill
purchased the smokeball, but she still got influenza. Then she sued the
company. The Court decided plaintiff won the case.
Apply to fact
In this case, The Andersons wants to
find a company to repair their property, and after looked the building,
Humphrey Plank gives their quote (offer). Then The Andersons received the quote
and accepted (acceptance), this is an agreement. Humphrey Plank as a builder
are doing business with The Andersons, it can be said they are commercial in
Nature. Also, this is an appropriate presumption that the parties are both
intended the agreement becomes a contract, and they are doing business. In the
mail document, it is said “while care is taken to ensure costs are kept under
the figures quoted above” (Phillippa &
Martin, 2006), and because of this quote, The Andersons purchased the
property. This circumstance is similar to Carlill
v Carbolic Smokeball Co [1893].
Conclusion
In this case, I think The Andersons
and Humphrey intend to create an enforceable contract, Humphrey has obligation
to do the renovation work and The Andersons only need to pay $165,000 to
Humphrey.
Part two: offer and acceptance
Issue:
Has a contract been formed between The
Andersons and Premier Renovation?
Relevant law:
Offer can be a
sign, statement or action that someone wants to join a legal contractual
relationship if the promise of the person (he/ she) is accepted.
Acceptance can be a sign, statement,
or action that can show the person’s intention to be legally bound by the terms
of offer.
Offer + acceptance = contract
The statements and actions which give
information in response to a query are not offers. The relevant case authority
is Harvey v Facey [1893], Harvey
wants to by pens from Facey and telegrams to ask, then Facey gives the price of
the pen. After Harcy accepts the seller refuses. The result of this case is no
contract between these two parties.
Statement of intention, this
statement is the parties broadcast that they decided to buy, sell or deal. This
kind of statement is not offers, because there is no intention. It has not any
binding or legal significance. Case authority: Harris v Nickerson[1873].
Invitation to treat, this kind of
statement is to encourage or entice offers; it only shows the willing of the
party to start the offer and acceptance. However, advertisement as an
invitation to treat is not offer to sell. Case authority: Pharmaceutical Society of Great Britain v Boots Cash Chemists Led
[1953].
A counter-offer has two requirements,
1) it need an express or implied rejection to the existing offer, and 2)a
introduction of the replacement offer, because the original offer is ended when
it is rejected. The relevant case is Hyde
v Wrench [1840], Wrench offered to sell something to Hyde for £1000. After two days Hyde
made a new offer to buy for £950.
Wrench refused. Then Hyde said he will pay £1000. Wrench considered there is no
contract between two parties, and then Hyde sued. The result of Court was Wrench
won.
Communication of the offer, the offer
has to be communicated between offeror and offeree. Terms of offer, it is also
need be communicated between parties that all terms that make up the offer.
Case authority: the Moorcock[1889]
Apply to the fact:
1 Sept, Simon phoned to Premier
Renovation when he saw the advertisement on the yellow pages, and the assistant
posted a brochure about the company’s information. Then Simon phoned back for
more details. In this circumstance, I think there is no offer and acceptance, because
giving information in response to a query cannot be an offer, and also advertisement
is also not an offer.
3 Sept, the Andersons arrange to meet
the director of the company Frank Fabel to ask more details. There is no offer
and acceptance, only supply information.
14 Sept, after looking the property,
Frank told The Andersons the cost will be $205,000, and
the cost includes labor, materials taxes etc. and he said he can start the work
on 1st October. But Simon told Frank they only can cost $200,000 for
the renovation, and then Frank disagreed. In this day in my opinion there is a
counter offer, Frank gave an offer for renovation $205,000, and Simon gave an
other offer $200,000, that means he express or implied rejected the offer which
Frank gave. Then he gave a replacement offer, if Frank accepted the replacement
offer, the contract will be made, in fact, Frank rejected. A counter-offer
cannot be an acceptance, so there is no acceptance.
15-20 Sept, The Andersons went to see
other companies and no quote is suitable. In these days there is no offer and
acceptance, only inquiries that cannot be acceptance or offer.
21 Sept, The Andersons went back and
told Frank they will pay $205,000 and they wanted the work can be done by 1st
December 2011. In this situation, there is an offer made by The Andersons.
However Frank refused. So there is no acceptance and no contract.
29 Sept, Frank told The Andersons he
decided to do the work. This is a new offer made by Frank, not an acceptance
for the offer that Andersons gave in 21 Sept, because the offer by The
Andersons in 21 Sept was refused, the offer was ended. And The Andersons did not
give reversion. So there is no acceptance.
Conclusion:
There is no contract between the Andersons
and Premier Renovation, because making a contract should have both offer and
acceptance, but in this case, there is no offer and acceptance occurs at the
same time.
Part three: consent
A) Issue:
Whether Regency
Revitalisation Ltd’s action is misrepresentation?
Relevant law:
There are five
characters to prove whether the issue is misrepresentation,
Ø A false statement of fact
Ø The fact made before or at
the time that the contract is made
Ø The fact made by one party
to another
Ø It does not become a term
of contract
Ø Persuading party enters
into contract and the party need to rely it.
Puff, terms and representations are
three kinds of statement. Puff is an enticement, flattery and exaggeration
statement which has no legal significance. Representation is an effective
statement which can persuade a party enters into a contract.
A puff is not regarded as a fact- Advertisement,
statement of praise and recommendation are not actionable at common law,
because any sensible person would not believe that. However, today, the Fair
Trading Act 1986 misleading conduct is outlaw, it include advertisements.
A false statement of fact, this fact
relate to something which is existing or already occurred. About future (promise)
is not a fact. Relevant case is Ware v
Johnson (1984), the plaintiffs purchased a kiwifruit orchard in 1980, and
the seller said the first crop of the kiwifruit vines will in May 1982 which
the seller had planted in 1605. However, the vines failed in 1980/81, the buyer
was loss of the plants, and the reason is seller used wrong herbicide. So
plaintiffs sued for damages. It was considered misrepresentation.
Apply to fact:
In this case, at
the begin Maurice told the Andersons he had been in the industry for 45 years
and the company had not had a single dissatisfied customer, also, he showed a
number of testimonials. In fact, after Simon’s investigation, The Andersons is the
first customer and the testimonials are spurious which from the Maurice’s pub
friends. For the advertisement, Simon found this company has two qualities that
he felt important, competitive and professional. So the Simon and Rebecca signed
the contract. The above information from Maurice is a false statement of fact;
the fact is about passed and existing.
According to the five characters of
misrepresentation, that circumstance is a false statement of fact is made
before the contract is made, the contract is made by The Andersons and Regency
Revitalisation Ltd, and the above things are not become a terms of contract.
Also those things are Regency Revitalisation Ltd induces The Andersons to enter
into a contract.
Conclusion:
Regency
Revitalisation Ltd’s act
is a fraudulent action. It is a misrepresentation because we can prove all
information from Regency Revitalisation Ltd is untrue. Simon and Rebecca can
sue Regency Revitalisation Ltd.
B) Issue:
Are there any remedies for The
Andersons?
Relevant law:
The Contractual Remedies
Act 1979 refers to two kinds of misrepresentation- Fraudulent and innocent
in section 6 damages for misrepresentation and section 7 cancellation of
contract. Fraudulent means the statement is made untrue or dishonest; normally
Fraud is hard to be proved. Innocent means the party who real believes that the
other party said was true, but the statement is incorrect.
In the text book, for remedies, if the
following are satisfied Section7 (4), Section7 (5) and Section9 that will be
considered cancellation; and if cannot cancel under Section7 (4) and Section7
(5), that will not elect to cancel.
Apply to fact:
In the above conclusion, the action
of the Regency Revitalisation Ltd is misrepresentation.
According to the Contractual Remedies Act 1979, Simon and Rebecca are innocent. They
honestly believe that what the Regency Revitalisation Ltd said, and it
led Simon and
Rebecca signed the contract. The circumstance is like Section 7(3) (a), “has
been induced to enter into it by a misrepresentation, whether innocent or
fraudulent, made by or on behalf of another party to that contract”.
If want to cancellation, it should be
satisfied Section7 (4), Section7 (5) and Section9. If cannot cancel under
Section7 (4) and Section7 (5) that the Andersons can sue for damage.
In Section7 (4) (a) and Section7 (4)
(b) - the parties agreed the truth of the representation no matter expressly or
impliedly, and the effect of the misrepresentation is substantially reducing
the benefit, or increasing the burden, or change the benefit or burden to the
cancelling party; and in Section 5- the parties cannot cancel the contract when
the parties has affirmed the contract.
In this case, if the contract is
cancelled that will bring loss to the Andersons, so the contract cannot be
cancelled.
Conclusion:
Through analyzing the fact, I think Regency
Revitalisation Ltd can be sued by Simon and Rebecca for damage
for misrepresentation, and Regency Revitalisation Ltd requires cancelling
the contract, he need pay remedy to Simon and Rebecca.
Part four: capacity
Issue:
Do Todd and Amy make an enforceable
contract with Simon and Rebecca? Can they avoid the contract?
Relevant law:
Capacity is
the ability to do some legal effect actions, in law of contract; it means the
ability to make a valid contract.
Section2 of Minors
Contracts’ Act 1969 defined minor is a person who has not attained the age of
18 years. Section15 (2), the Act applies only to contract made by minors; the
Act also applies to all contracts made by minors including those made for cash
or credit consideration.
In general
rules, there are 3 kinds of people who do not have the legal capacity to enter
into valid contracts:
Ø People who do not have the
mental capacity to understand what a contract is.
Ø People who do not
understand what they are agreeing to be because they are under the influence of
alcohol or drunks.
Ø People who are under 18
years of age.
The time for
making contract is the important time for classifying minors under the Minors
Contracts’ Act.
Contract enforceable unless harsh or
unconscionable, in Section5 (1), the example is life insurance and contracts of
service (employment); and contracts unenforceable unless fair
and reasonable, Section6 (3) - determined whether the contract is fair and
reasonable the Count can take into account.
In Section9, Contracts enforceable as
if of full age.
Remedies in Section6 (2), if the
contract is fair and reasonable that Court can discretion to: enforce the
contract and declare the contract binding on the minor, other party entitle
cancel the contract and can order compensation or restitution; if the contract
is unfair and unreasonable that Court can discretion to: cancel the contract,
minor entitle to cancel the contract and can order compensation or restitution.
Case authority: Morrow & Benjamin Ltd v Whittington [1989], in this case, it
said ‘fair and reasonable’ means the contract have to meet two conditions, it
must be both fair and reason.
Apply to
fact:
This is an enforceable contract
between the Andersons and Todd, but not with Amy. The Andersons make an offer,
Todd and Amy accepted. The reason why Amy is not entering into a valid contract
is according to Minors contracts’ Act 1969, minor is a person who has not
attained the age of 18 years, and in this circumstance, the payment that the
Andersons pay is unfair and unreasonable, and then they want to get out of the
contract.
The contract, the Rebecca’s quote is
$2200, but the materials need to cost $1700, only $500 will be paid to Todd and
Amy of their work over six weeks, obviously, it was unreasonable and unfair. In
Section5 (1), the example is life insurance and contracts of service
(employment), Todd and Amy are not employees with Simon and Rebecca.
However, with Minors contracts’ Act
1969, even though Todd and Amy in the same environment, Todd is 18 years, he is
not minor, so he cannot get out the contract when he thinks the contract is
unfair and unreasonable after he signs the contract. Contract enforceable as if
of full age- Section9. Amy can get out the contract if the Count considers the
contract is unfair and unreasonable, Count has the right to cancel the contract.
Conclusion:
In this case, because of the minor
problem, although Todd and Amy sign a valid contract with Rebecca, Amy is only
16 years as a minor, according to remedies Section6 (2), so she can avoid the
contract, Todd is 18 years, he is not a minor, so he cannot avoid and he need
to enforce the contract with Rebecca.
Part five: consideration
Issue:
Is there a valid consideration between Simon and Fantabulous Foliage, does
Simon need to pay $450 to Fantabulous Foliage? Is there a consideration between
Simon and Landscape Architects Ltd, should Simon need to pay the additional
payment?
Relevant law:
As
simple agreement, if no consideration, it has no contact. If it has
consideration and other elements, a contract will be made.
Consideration, one party provides a promise or action or property, and
the recipient has also to do something or provide something in return, that
will be a consideration.
Executory
consideration consist of a promise to pay, supply, perform or forgo, these
things are future action. Executed consideration consists of completed action. Both
act and promise in terms of consideration can support a contract, these two has
no differentiate.
Past
consideration, something has already happened, after it happened, a subsequent
promise to pay for it is unenforceable. There are two exceptions of “past
consideration is no consideration”: (1) because of the special value of such
instrument, past consideration will support payment on a negotiable instrument,
such as cheque; (2)if services of a business nature were rendered at a person’s
request, this is a sufficient consideration to support a later promise to pay. The
case authority: McArdle, Re [1951]
Apply to fact:
At the
beginning, Simon asks Landscape
Architects
and Fantabulous Foliage
to design a garden plan and give a quote, these two firms are both give a plan
to Simon and after Simon’s thinking, and he decided to use the plan from Landscape
Architects. In this time, there is no action or promise or property, so on
consideration is made.
After Fantabulous
Foliage Ltd knew Simon’s decision, the firm required Simon to pay $450 drawing
up the plan fee. In this circumstance, as a consideration, Fantabulous Foliage
gives an action, Simon should also give an action or promise or property in
return, that the consideration will be valid. However, in fact, Simon did not
do anything. Besides, the plan is already made, a subsequent promise (the
drawing up fee) to pay for it is unenforceable. Past consideration is no
consideration.
With Landscape
Architects Ltd, the firm completed the work on time, and both
parties are satisfaction. After that Simon and Landscape Architects
Ltd have a negotiation that Simon only need to pay $8000, and Simon
promises that he will pay $4000 immediately and another $4000 will be paid in
two month time, and Landscape Architects Ltd agreed they do not require the
additional $700. There is an exception to the rule “past consideration is no
consideration”, that is past consideration will support payment on a negotiable
instrument, because the instrument has a special value. With this reason, there
is a consideration between Landscape Architects Ltd and Simon.
Conclusion:
In this
case, since there is no consideration between Simon and Fantabulous Foliage
Ltd, so Simon does not need to pay $450 for Fantabulous Foliage Ltd. Because Simon
has negotiation with Landscape Architects Ltd, and Landscape Architects Ltd
agreed the result- they will not required the additional payment. So there is a
consideration between Simon and Landscape Architects Ltd, Simon does not need
to pay the additional payment.
Part six: discharge
Issue: can Rebecca and Simon
release from these contracts?
a) Relevant
law:
Discharge by
performance, the terms of contract are complied with the parties keep their
promise and do what they have set out to do. Indivisible contract, it means it
must be fully completed and to the letter to amount to a discharge. Case
authority: Bolton v Mahadeva [1972]
If the most performance is completed,
discharge has occurred, and the payment cannot be refused. It can through the
quantity of completion to pay and deduct what did not finish. The case
authority: Hoenig v Isaacs [1952]
Apply to fact:
In this circumstance, there is a 12
month contract between Simon and the gardening firm. In the contract, the firm
was required to mow the lawn, trim the edges and remove all garden rubbish. If
fact the firm did perform the contract well, the lawns were not mowed. Since
this reason, Simon want discharge this contract to save his money. The company did
not do what they have set out to do, it can be consider the company failure to
complete obligations.
Conclusion:
In this case, since the gardening
firm did not perform their obligation well, and did not complete the work.
Simon entitles to release the contract.
b) Relevant law:
Impossibility or frustration occur (1)
an external event; (2) the parties are not finish to a contract; (3) the
contract becomes impossible to perform or performance is made very different
and difficult.
A doctrine of the Count considers
said that when a legal frustration happens, the contract is discharge.
Apply to
fact:
In this circumstance, a contract made
between catering firm and the Andersons, the firm provide premium frozen
desserts and Rebecca agree to purchases 60 on the first day of each two month
period for 24 months.
At the beginning, the Andersons have
a large storage freezer to keep their desserts. However, later the health
authorities required the Andersons need to use a commercial grade freezer, but
in fact, the Andersons have not enough money to buy a new one which achieves
the authorities’ standard.
This is a frustrated event, with
Count Doctrine, when legal frustration happens, the contract is discharged.
Conclusion:
I think in
this case, Simon and Rebecca can release the contract, because the change of
health authorities belongs to a frustration event, they are impossible to
afford a new freezer. According to the law and case authority, the contract can
be discharged.
Case authority: Rayneon NZ Ltd v Fraser [1940]
C) Relevant law:
There are
three parts to discharge by agreement:
Ø There are some terms of
contract described it own discharge.
Ø The contract is still executory
or not beginning at the time of the agreement to discharge.
Ø One of parties who have
performed or partly performed can agree to release the other party
Conditions subsequent, this is a term
or clause in the end of contract, and if the specified events occur or fail,
the condition subsequent will be occurred.
Agreement to release; accord and
satisfaction. If under the contract, one party get some or all benefits of
other party’s performance and the other agrees to release the recipient’s
require, then the agreement is released.
Apply to fact:
In this circumstance, Acorn Linen
supply laundered and starched linen to the Andersons each week, and in the
contract, there is a clause said, after Simon and Rebecca use the service for
three months, if they want to discontinue the contract, they just need pay $100
discontinuation fee and in this process, both parties can be satisfied.
Conclusion:
In the case,
it has a clear clause to provide for own discharge. So if Rebecca and Simon
wish to release the contract, they only need to perform the clause in the
contract- pay $100.
Part seven: remedies
Issue:
What kinds of remedies that Simon and
Rebecca can against Heaven Scent Plumbing?
Relevant law:
These damages
appropriate remedies –Contractual Remedies Act Section6.
a) Low quality tap fittings were
supplied. If a person breach a contract, he/she is liable for: (1) those losses
which one would expect to occur; (2) those losses have been in the contemplation
for the parties. Case authority: Hadley v Baxendale[1954] & Victoria Laundry (Windsor) Ltd v Newman
Industries Ltd[1949]
b) Pipes burst that two rooms were
water damaged. Mitigate, when a party has losses by reasons of other party breach,
the party should do something to minimise the losses. Case authority: Brace v Calder [1895] many property need
to replace, the cost is not assessment. Case authority: Chaplin v Hicksp[1911]
c) Kitchen’ tile’s pattern cannot
identical. The losses which can be expect to occur. Case authority: Hadley v Baxendale[1854] The losses
assessment cannot be a bar to an award; the Court must ensure or fix the amount
it considers appropriate. Case authority: Chaplin v Hicksp[1911]
Apply to
fact:
a) In this event, the quality of tap
fitting that Heaven Scent Plumbing Ltd supply is lower than the standard in the
contract. The value of the tap fitting cost is also low than the standard one,
that is the loss Simon and Rebecca suffered.
b) Since the pipes burst and water
spilled out, it makes damage. In this process, Rebecca gets a plumber out to
stem the flow, this action minimise the loss. There are two damaged and some
expensive stuff had to replace, also, Simon and Rebecca pay the fee that the
guests’ whose rooms were effected to other local motel. All of these costs
cannot be assessed.
c) For replace the plumber in the
kitchen, some of tiles should be removing. In the removal process, there are
three imported tiles were broken and these tiles’ cannot buy because these
tiles are “end-of-line” stock, there are no
more can buy. With this reason, Simon and Rebecca need to make an entire and
new pattern tiles. This action is can be expected and the cost of make new
tiles cannot be assessed.
Conclusion:
In this circumstance, Simon and
Rebecca can sue Heaven Scent Plumbing Ltd for damage (remoteness of loss, mitigation
and assessment). Because in this case, since the workmanship problems from
Heaven Scent Plumbing Ltd, the firm need have an obligation to compensate to
Simon and Rebecca.
For more theory and case studies on: http://expertresearchers.blogspot.com/
Reference
Phillippa, G. B., & Martin, L. M. (2006). Understanding
Commercial Law. Wellington Lexis NZ Ltd.
Bolton v Mahadeva [1972] 2 ALL ER
1322 (EA)
Brace v Calder [1895] 2 QB 253;
[1895-9] ALL ER Rep 1196
Carlill v
Carbolic Smokeball Co [1893] 1 QB 256;
[1981-4] ALL ER Rep 127
3.4.7, 5.2.4, 5.2.5, 5.3.1, 5.3.2
Chaplin v Hicksp[1911] 2KB 786 (CA)
Hadley v Baxendale[1954] 9 Exch 341;
156 ER 145
Harris v Nickerson [1873] LR 8 QB 286
Harvey v Facey [1893] AC 552 (PC)
Hoenig v Isaacs [1952] 2 ALL ER 176
(CA)
Hyde v Wrench [1840] 3Beav 334; 49 ER
132
McArdle,
Re [1951] Ch 669; [1951] 1 ALL ER 905
Morrow & Benjamin Ltd v
Whittington [1989] 3 NZLR 122
Pharmaceutical Society of Great
Britain v Boots Cash Chemists Led [1953]. 1 QB 401; [1953] 1 ALL ER 482 (CA)
Rayneon NZ Ltd v Fraser [1940] NZLR
825
The Moorcock[1889] 14 PD 64
Victoria Laundry (Windsor) Ltd v
Newman Industries Ltd[1949] 2 KB 528; [1949] 1 ALL ER 997 (CA)
Ware v Johnson (1984) 2 NZLR 518
Contractual Remedies Act 1979
Fair Trading Act 1986
Minors Contracts’ Act 1969
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