Issue
The key legal issue in this case revolves around the contract formation between Eddo Products Co and Vestley Co.
To best manner of defining a contract lies in such an exchange of promise whereby one side promises to undertake a particular thing and the other side promises to fulfill the payment of consideration, and this promise is mutually decided between the parties. There are broadly two forms of contract formation. The first one is where the contractual terms are exchanged verbally, giving rise to an oral contract[1]. And the second one is where the contractual terms are put down in writing and signed by the contracting parties. For the formation of a contract, there have to be presence of certain crucial elements, which includes an offer, an acceptance, consideration, consent, intent and clarity. Without the presence of such elements, the contract cannot be legally valid[2].
The initial requirement for contract formation lies in the first party making an offer to the second party. For the contract formation, there is a need for a party to offer certain terms to another party. There is a need differentiate between offer and an invitation to treat[3]. The offer shows that parties’ intent to create legal relationships and the invitation to treat shows the intent to initiate negotiations and not a contract. An invitation to treat does not necessarily result in a binding contract; but when an offer is accepted, the result if a binding contract, provided the other elements are present[4].
So, the invitation to treat denotes the pre offer communication. The difference between the two can be better understood through different case laws. In the case of Carlill v Carbolic Smoke Ball Company[5], the newspaper advert was considered as a unilateral offer since it could be accepted merely by performing the conditions stated in it. However, when the advert in Partridge v Crittenden[6] was considered, it was deemed as an invitation to treat. The result of this was the lack of obligation on part of the party to sell his product. There is another aspect where the request of information is considered and the telegram sent later on was deemed as a request of information and not an offer in Harvey v Facey[7].
The second step in contract formation is the acceptance which shows that the offer which had been made is acceptable to the second party. The offer has to be accepted exactly as it was made. In case of any changes or amendments in the offer which had been made, the communication is not taken to be an acceptance and is considered instead as a counter offer[8]. A leading example of this is Hyde v Wrench[9]. In this case, the original offer expired once the counter offer was made. Gibson v Manchester City Council[10] was a case where the statement “may be prepared to sell” was considered as a notification for price and not a distinctive offer.
Rule
The date of acceptance is taken to that date when the communication through which the acceptance had been sent, reaches the offering party. Though, there is one general exception to this rule, and it lies in the postal rules of acceptance. When the acceptance is sent through a letter, the date of acceptance is deemed as the date on which such letter had been posted by the accepting party and not the date on which the letter reaches the offering party. This is due to the concept of the postal office being the agent of the offering party and the acceptance by the postal office is the acceptance by the offering party[11].
The date of actual receipt of the acceptance remains irrelevant in such cases. The enforceability of contract, on the basis of this rule was seen in the matter of Adams v. Lindsell[12]. The applicability of these rules is not just over the physical letter but on the digital communication as well. The Electronic Transactions Act, 1999 (Cth)[13] provides clarity to this through section 14 where the date and time on which the email is sent and it leaves the device of the sender is considered as the date of the acceptance[14]. The same rule applies to the offers made through such channels.
Next requirement is the consideration. The value of consideration cannot be past and has to be present. The consideration value is decided between the parties and is given validity if it has economic value. There is also a need for the consideration being sufficient and not just adequate[15]. The case of Chappell & Co Ltd v Nestle Co Ltd[16] saw the acceptance of three wrappers due to the condition precedent as acceptable consideration.
The next step is the parties having contractual capacity to create a contract. Based on this, the parties need to be of sound mind and of legal age[17]. The next step is to have clarity in the contractual terms. Such clarity avoids any kind of disputes which may be raised in the future. Lastly, the parties must have the intention of entering into legally binding relations. If even a single element stated here is not present in the contract, a contract would not be formed[18].
The facts given in the hypothetical scenario shows that a communication was send on 01st November. This communication shows negotiations and hence, it would be a deemed as an invitation to treat. This communication did not contain a unilateral offer like Carlill v Carbolic Smoke Ball Company. So, there is no obligation on part of Vestley to sell the product on the basis of Partridge v Crittenden. The 06th November dated communication would also not be an offer, as it would be considered as a supply on information based on Harvey v Facey as this communication was regarding details of the order.
Application
The 13th November dated communication, which was sent through email, would be considered as the offer in this case. Applying section 14 of the Electronic Transactions Act, this would be date of offer. The 19th November communication cannot be taken as a distinctive offer based on Gibson v Manchester City Council as this did not contain a new offer and merely questioned about the sizes. This is not considered as a counter offer as the offer terms have not been changed and the reason for sending this communication is to make the offer clearer. The 16th November offer would be considered as the acceptance. There is a clear intention on part of the parties. There is also consideration involved here at the value of $900 per ton. There is nothing to suggest that there was a lack of contractual capacity on part of any of the parties. Since, all the requisite elements of the contract are present here, a contract would be deemed as having been formed between the two parties.
Conclusion
Hence, on the basis of discussion carried above, it can be conceded that a valid contract was formed between Vestley and Eddo.
What were the terms of the contract, if a contract was formed in this case?
Same as above Rule 1.
The terms of this contract are the supply of a single ton of canned mango for Grade B fruit at the $ 900 per ton. This is in addition to equal monthly shipment delivery beginning from 02nd February and can sizes having fair distribution size, along with the contract being subjected to International Fruit Trading Association’s terms.
Conclusion
The contractual terms, hence, have been summarized here.
The legal issue here is the chances of success of Con in suing Becky for the lost car.
The contracts often contain clauses which are known as exclusion clause, which have the power of limiting the liability of the party which inserts such clause. The exclusion clause is only when it is properly and lawfully inserted in the contract and is not opposed to any law. In case of the addition of exclusion clause in a contract, pursuant to signing of contract, it would not have any validity[19]. Though, if the parties sign a contract, even without reading the exclusion clause, it would remain valid as was seen in L’Estrange v Graucob[20].
In case of the exclusion contract being referred to a place which is not the contract, it needs to be brought to the attention of the party against which this clause would be used for it to have legality. Thornton v Shoe Lane Parking Ltd[21] was a case where the exclusion clause was not held valid as it was stated on the back of the ticket and not brought to the reasonable notice of the parties. The case of Olley v Marlborough Court Ltd[22] also saw similar ruling being given owing to the backside of ticket containing the exclusion clause. The reason of not upholding the validity of exclusion clause in both these cases is due to the absence of reasonable notice[23].
Conclusion
The facts given in the hypothetical scenario shows that Becky had provided an exclusion clause and the liability was limited for damages, losses or harm. The exclusion clause was mentioned at another place and could be accessed only after the car was being removed from the parking station. Having the exclusion clause at a different place imposed a duty upon Becky to inform Con about it. Since, this was not carried on the exclusion clause would not be valid.
The ticket also contained the exclusion clause but even that would fail to have any validity. The reason for this is the lack of exclusion clause being brought to the reasonable notice of the party. And so, applying the cases of Thornton v Shoe Lane Parking Ltd and Olley v Marlborough Court Ltd, there would not be any validity in the exclusion clause. And this would stop Becky from evading her liabilities owing to the theft of car of Con being parked at Becky’s parking station.
Though, the ticket which had been given to the parties entering the parking station would assist in evading the liabilities of Becky. This is because the exclusion clause was contained on front of these tickets which was different from the cases of Thornton v Shoe Lane Parking Ltd and Olley v Marlborough Court Ltd. So, Becky would be able to evade her liabilities, owing to the validity of exclusion clause contained in front of the parking ticket.
Conclusion
To conclude the discussion, the exclusion clause contained on a notice attached to the wall of the office would not be valid. However, the one contained at the front of the ticket would help Becky in evading from the liabilities arising from the theft of Con’s car. This would result in the actions of Con failing.
The legal issue here is the chances of success of Debbie claims owing from negligence.
Negligence denotes the contravention of the obligation of care which a person owed to another for the reasons of the work being undertaken by the, where there are chances of the actions resulting in loss or harm[24]. The requirements of establishing negligence are duty of care, its contravention, loss, proximity, foreseeability, direct causation and loss not being too remote. Donoghue v Stevenson[25] is a leading case where the manufacturer was held to have owed a duty of care to the consumer for the reasons of manufacturing the product.
The employer is held liable for the negligent acts undertaken by their employees, owing to the agency law. However, this liability is only present when the negligent act was undertaken in the course of employment as was held in the case of Storey v Ashton[26].
The facts given in the hypothetical scenario shows that the exclusion clause which was supposed to limit the liabilities for such harm, loss or damage which had been caused to the vehicle inside the parking station. This exclusion clause never limited the liability arising from the injury caused to an individual whilst inside the parking station.
Tom, in this case, had been negligent in his actions and backed the car which resulted in the foot of Debbie being injured. He had to take care while he was backing the car and there was a high possibility of a person being injured if care was not undertaken. And this carelessness resulted in Debbie being injured. Based on Donoghue v Stevenson, Tom would be liable to compensate Debbie for the undertaken negligence. Further, the applicability of the agency law would hold Becky liable to pay the damages to Debbie as the negligent act was committed by Tom during his course of employment based on the case of Storey v Ashton
Conclusion
So, it can be concluded that Tom had undertaken the tort of negligence and owing to the agency law Becky would be liable to compensate Debbie for her loss.
The key issue here is the liability of Friedrich for paying the additional parking amount.
When one of the contracting party, fails to fulfill the obligation contained in the contract, it results in a breach of contract. And in such cases, the breaching party is required to compensate the aggrieved party for their losses[27]. The damages can be in equitable form or monetary form. In Addis v Gramophone[28], the court stated that the purpose of awarding damages was not to punish, but to put the aggrieved party back in that place, where they would have been originally, had the contract been performed properly.
The facts given in the hypothetical scenario and the analysis carried till now clearly show that exclusion clause contained on the front of the ticket had been valid. As per this clause, additional charges had to be paid in case the car was left in the parking station overnight. Friedrich’s car had been parked in Becky’s parking station overnight and this would make him liable to pay the additional amount. In case Friedrich denies making this payment, the contract would be breached and he would be liable to compensate Becky for the breach of contract.
Conclusion
On the basis of the concept of breach of contract and the terms contained in the exclusion clause, Friedrich is liable to pay the additional parking amount. In case of denial to pay this sum of amount, he would be held liable for breach of contract which would require the payment of monetary compensation to Becky, or any other compensation sought by her.
References
Abbott K, Pendlebury N, and Wardman K, Business law (Thompson Learning, 8th ed, 2007)
Andrews N, Contract Law (Cambridge University Press, 2nd ed, 2015)
Carter JW, Peden E, and Tolhurst G, Contract Law in Australia (LexisNexis Butterworths, 5th ed, 2007)
Davies PS, JC Smith’s the Law of Contract (Oxford University Press, 2016)
Elliott C, and Quinn F, Contract Law (Pearson Education Limited, 9th ed, 2013)
Furmston M, and Tolhurst GJ, Contract Formation: Law and Practice (Oxford University Press, 2010)
Latimer P, Australian Business Law 2012 (CCH Australia Limited, 31st ed, 2012)
Lawson RG, Exclusion Clauses and Unfair Contract Terms (Sweet & Maxwell, 10th ed, 2011)
Lunney M, and Oliphant K, Tort Law: Text and Materials (Oxford University Press, 5th ed, 2013)
Macdonald E, and Atkins R, Koffman & Macdonald’s Law of Contract (Oxford University Press, 8th ed, 2014)
McKendrick E, Contract Law (Pearson Education Limited, 11th ed, 2015)
Mulcahy L, Contract Law in Perspective (Routledge, 5th ed, 2008)
Poole J, Casebook on Contract Law (Oxford University Press, 2016)
Adams v. Lindsell (1818) 106 ER 250
Addis v Gramophone [1909] AC 488
Carlill v Carbolic Smoke Ball Company [1892] EWCA Civ 1
Chappell & Co Ltd v Nestle Co Ltd [1960] AC 87
Donoghue v Stevenson [1932] AC 562
Gibson v Manchester City Council [1979] UKHL 6
Harvey v Facey [1893] UKPC 1, AC 552
Hyde v Wrench [1840] 49 ER 132
L’Estrange v Graucob [1934] 2 KB 394
Olley v Marlborough Court Ltd (1949) 1 KB 532
Partridge v Crittenden [1968] 1 WLR 1204
Storey v Ashton (1869) L. R. 4 Q B 476
Thornton v Shoe Lane Parking Ltd (1971) 2 WLR 585
Contract Law- Common Law
Electronic Transactions Act, 1999 (Cth)
Tort of Negligence- Common Law
[1] Elizabeth Macdonald and Ruth Atkins, Koffman & Macdonald’s Law of Contract (Oxford University Press, 8th ed, 2014)
[2] Keith Abbott, Norman Pendlebury and Kevin Wardman, Business law (Thompson Learning, 8th ed, 2007)
[3] John W. Carter, Elisabeth Peden and Greg Tolhurst, Contract Law in Australia (LexisNexis Butterworths, 5th ed, 2007)
[4] Neil Andrews, Contract Law (Cambridge University Press, 2nd ed, 2015)
[5] [1892] EWCA Civ 1
[6] [1968] 1 WLR 1204
[7] [1893] UKPC 1, AC 552
[8] Ewan McKendrick, Contract Law (Pearson Education Limited, 11th ed, 2015)
[9] [1840] 49 ER 132
[10] [1979] UKHL 6
[11] Paul Latimer, Australian Business Law 2012 (CCH Australia Limited, 31st ed, 2012)
[12] (1818) 106 ER 250
[13] Electronic Transactions Act, 1999 (Cth)
[14] Electronic Transactions Act 1999, s14
[15] Michael Furmston and G.J. Tolhurst, Contract Formation: Law and Practice (Oxford University Press, 2010)
[16] [1960] AC 87
[17] Paul S Davies, JC Smith’s the Law of Contract (Oxford University Press, 2016)
[18] Catherine Elliott and Frances Quinn, Contract Law (Pearson Education Limited, 9th ed, 2013)
[19] Richard G. Lawson, Exclusion Clauses and Unfair Contract Terms (Sweet & Maxwell, 10th ed, 2011)
[20] [1934] 2 KB 394
[21] (1971) 2 WLR 585
[22] (1949) 1 KB 532
[23] Jill Poole, Casebook on Contract Law (Oxford University Press, 2016)
[24] Mark Lunney and Ken Oliphant, Tort Law: Text and Materials (Oxford University Press, 5th ed, 2013)
[25] [1932] AC 562
[26] (1869) L. R. 4 Q B 476
[27] Linda Mulcahy, Contract Law in Perspective (Routledge, 5th ed, 2008)
[28] [1909] AC 488
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