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Contract law - Case study.

Extracts from this document...

Introduction

Both the parties in the question have come to a problematic situation which is complicated to resolve. Friend's of the Forest (Friends), represented by Christabel, is involved in a commercial trade with Paper Supplies Pty Ltd (Paper) which is represented by Dee. A contract needs four essential elements to exist. In the situation, it is obvious that the four elements are satisfied. As the details are not fully provided, it is arguable as to when the contract was formed which will affect the legal rights and obligations of both parties. The first main issues to be discussed regarding the contract is whether is the exemption clause binding and enforceable, is the document contractual in nature, and was the exemption clause a term of the contract. It is arguable that the contract was formed only after the goods and delivery note had been delivered, and Christabel retained the goods without making any objection to the conditions on the note. But this did not mean that all conditions contained in the note were terms of the contract. It was not possible for Christabel to negotiate the terms in the document as it was delivered by the driver and is reasonable to assume that the driver is not an agent of Paper. Thus, Christabel could not negotiate the terms with Dee.1 Nevertheless, Christabel did sign the document which will become binding as the fact that a person that has signed a document is strong evidence that the person has agreed to be bound by it. ...read more.

Middle

In the situation, Christabel was shown Paper's letterhead which looked to be the type and quality that she had specified as a sample. But the paper she received appeared to be far different from the sample as they were thick, coarsely textured and heavily impregnated with chemicals which rendered them to become unmerchantable. It is arguable that Christabel could not inspect all the boxes of papers as there were 200 large boxes and it is only normal to inspect one box. Because of this, Christabel was misled to accept the bulk of unmerchantable papers. Paper has once again breached an implied term which is the Goods Act Part I s.20 (2) which will provide Christabel the available remedies. There are also many occasions when both the implied condition and also the implied condition of merchantable quality will apply. According to David Jones Ltd v Willis, Willis asked for a pair of walking shoes that must fit comfortably over a bunion on her foot but on the third occasion which she used the shoes, one of the heels collapsed. Therefore, Willis sued for the shoes of unmerchantable quality and unfit for purpose as specified by Mrs Willis. In Christabel's case, she specifically asked for high quality recycled papers but Paper Supplies failed to deliver such goods. As Paper has breached all these explicit and implicit terms, the only defence possible is related to the exclusion clause mentioned earlier. ...read more.

Conclusion

This however is short lived as Paper sent Friends a letter, with an account enclosed, stating that is intends to rely on the document signed by Christabel at the time of delivery. The agreement offered by Dee to Christabel is not contractual by nature but it is more of a promise. Christabel can argue on promissory estoppel. Following Central London Property Trust Ltd v High Trees House Ltd, the plaintiff agreed to reduce the rent and did not try to claim back the rent. If he did, it would be rejected as the plaintiff would have been estopped from claiming back the rent. Ditto, Christabel can argue that they have an agreement that payment on this delivery will not be enforced and if Paper does do so, they will be estopped from claiming it. For Christabel to rely on the promissory estoppel rule, she will have to prove all four elements of promissory estoppel which is the assumption, the promisor was responsible for the assumption, the reliance and the detriment. In this case, Dee and Christabel have a legal relationship and Dee as the representative of Paper made assumptions of not collecting the payment of the delivery. In reliance, Christabel acted on the faith of the assumption and manage to calm down the unsatisfied clients and she will suffer detriment if Dee reneges on the promise. In conclusion, Christabel's claims for damages and breach of warranty will most likely be approved based on facts and cases given above. ...read more.

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