Presumably, the driver and the people loading the pictures were employees of Masterpiece.
The wrongful act of abandoning the vehicle and taking away the pictures has been committed in the course of their employment.If the wrongful act occurred while the employees were going about their normal work and if it was a careless or wrongful means of performing that work, the employer will be liable. But there is a problem to hold the employer liable where the accident arises not so much out of a careless manner of performing the job, but out of careless behaviour committed at the same time as doing the job. The question is to know whether the behaviour of the employees falls outside the scope of employment. Where a bus conductor assaulted a passenger on his bus, it was held that this was outside the course of his employment. (Keppel Bus Co. Ltd. V. Ahmad). Since a criminal act commited by an employee in course of his work always has to be regarded as outside the scope of employment, Masterpiece is not responsible for the disappearance of the works through the doctrine of vicarious liability.
But one could argue that –apart from the doctrine of vicarious liability- the fact that Masterpiece employed unreliable people violates the term implied by statute that the supplier would carry out the service with reasonable care and skill (Section 13 in Part II of the Supply of Goods and Services Act 1982).
If the works have disappeared by an action of the employees, Masterpiece can be held responsible for it and there is breach of the implied term to carry out the service with reasonable care and skill.
C.) The exclusion clause as substantial limitation to the validity of the contract
Another legal question as to the contractual liabilities of the parties to the contract is to know whether the clause « we accept no responsibility whatsoever beyond a maximum liability of half the carriage fees » is valid.
This clause seeks to reduce the responsibility of Masterpiece Ltd towards Alana for the breach of the obligations arising from their relationship. If this clause is a valid part of the contract, the liability of Masterpice is limited. A clause with that purpose has to be named exclusion clause and follows a special regime of control according to both common law and statute law.
1.) Incorporation of the clause
First, it has to be examined if the exclusion clause written on the receipt has become part of the contract.
Initially the contract between Alana and Masterpiece Ltd has been concluded orally. The written term containing the exclusion clause arrived later with the “contract receipt” handed out to Alana at the moment of the loading of the pictures to transport.
Therefore, the question as to whether or not that clause has ideed been incorporated into the contract arises.
a.) Notice
As to the incorporation of the exclusion clause, first of all notice of the terms must be given either before the contract is made or at the time of contacting.
In our case , as examined above, the contract was concluded at the moment of the telephone call, when Alana did not make further inquiries an therewith accepted the normal fees and the general conditions of Masterpiece Ltd. At the time when the contract was concluded via telephone, the existence of the exclusion term had not directly been brought to the attention of Alana. According to the case Olley v Marlborough Court Hotel Ltd., notice must be given at the time when the contract is concluded.
It has to be examined whether the reference of Masterpiece Ltd to the usual conditions at the moment of the conclusion of a contract is enough to satisfy the requirement of the notice of the term in question. This very special case must be distinguished from the rule that notice of the exlcusion clause must be given before or at the moment of the formation of the contract: It is nowadays very common to conclude contracts over the telephone. To make the conclusion of such contracts faster and more convenient, it is common and even necessary to refer to the normal conditions. It is not against good faith not to expressedly refer to the exclusion clause since exclusion clauses are a very common habit for transportation enterprises.
Alana could have made inquiries on the usual conditions in question.
Therefore, the reference to the usual conditions over the telephone has to be regarded as satisfactory notice of the exclusion.
b.) Contractual document
Masterpiece Ltd must show that the clause in question was contained in or referred to on a document which was plainly intended to have contractual effect. A document containing exclusion clauses is not binding if the reasonable person would have assumend that that document was not contractual in nature.
The question is to know as to whether Alana could assume that the “contract receipt” was not contractual in nature.
In favor of the contractual nature of the document one can find the argument that the document is entitled contract receipt. On the other hand the word “receipt” implies, that the paper contains only the confirmation of a transaction already concluded. In the case Chapelton v. Barry U.D.C., the exclusion clause printed on the back of the receipt which had been given to the claiment when he paid the fee to hire a deckchair was not held incorporated into the contract because the receipt was not a contractual document.
But in our case things are different:A reasonable person in the place of Alana could not assume that the document was not contractual in nature because Masterpiece had referred to its usual conditions on the phone. Since these conditions had not been specified yet, Alana could attend to get a specification of these conditions at the moment of the loading of the pictures.
c.) Overriding of exclusion clause by the driver ?
Alana might argue against the exclusion clause in objecting that the content of the clause had been overridden by an inconsistent oral undertaking or other representation. The driver, an agent of Masterpiece Ltd, told Alana when she asked him about the content of the document, , that he was only the driver and that the document was probably just a warning about the effects of dampness on documents.
Here, a reasonable person could not trust the words of the driver who admits not to know what exactly the document contains. Alana would have had to read the document herself. It is not reasonable to trust someone who admits not knowing the content. What the driver said on the content of the document was a mere speculation and Alana could have noticed that.
The exclusion clause has indeed been incorporated into the contract.
2.) Control of the clause as to its content
According to the wording of the exclusion clause, the liability of Masterpiece Ltd for breach of contract is limited on half of the carriage fee.
This may seem very unfair, especially considering the fact that Masterpiece is specialized in the transportation of Art works, often small objects with a very high value.
Therefore the exclusion clause has to undergo a control as to its content. The validity of such clauses is now controlled by the Unfair Contract Terms Act 1977 and the Unfair Termis in Consumer Contracts Regulations 1994, that have superseded the Common Law Tests applicable before the enactment of these legislative rules.
Both legislations render certain terms without legal effect.
a.) Applicability of the UCTA 1977 rules ?
The UCTA rules mainly deal with negligence liability. In the present case the question is not about negligence but about contractual liability.
By virtue of section 3 (1), the UCTA rules apply only to contracts where one party deals as a consumer (defined in section 12) and where one party deals on the other’s written standard term of business. In our case Alana is a consumer and Masterpiece deals with written standard terms. The UCTA 1977 rules are applicable.
b.) Effect of the application of the UCTA 1977 rules
Masterpiece can exclude liability for his breach only if the contractual term is reasonable, Section 3.
Masterpiece has to prove that it was reasonable at the time at which the contract was made, Section 11 (1) and (5).
The factors by which the reasonableness is judged include the respective bargaining position of the parties: Criteria might be the conduct of the party seeking to rely on the term; the availability of an alternative source of supply to the innocent party and the clarity, candid and specificity of the term; the availability of insurance;.
The conduct of Masterpiece as the party who wants to rely on the exclusion clause, as mentioned above, was fair concerning the incorporation of the exclusion clause. It is only noral and natural that a transportation enterprise refers to its normal terms and conditions on the phone and in is very common that those terms contain exclusion clauses.
Then again, the term is very clear. Masterpiece cannot be accused of using an unclear term.
However, according to Section 24 3) b) of the UCTA 1977, it has to be taken into accout, how far it was open to the party seeking to rely on the exclusion clause to cover himself by insurance.
Regarding the positions of both parties, it can be said that a transportation enterprise that is specializing in the transportation of Art works has to be insured against loss and damage of those goods: The transportation enterprise knows very well that many of the goods transported are extremely valuable, much more valuable than a certain percentage of the transportation fee. The damage and loss of the works of Art lies within the sphere for which the transportation enterprise is responsible.
It would have been open to Masterpiece to cover itself by insurance.
Therefore, it cannot been seen as fair and reasonable to incorporate the term in question into the contract.
According to the reasonableness test prescribed in Section 24 of the UCTA, the exclusion clause has not become a valid part of the contract.
Thr liability for the breach is not limited to half of the carriage fee.
c.) Application of the Unfair Terms in Consumer Contracts Regulations 1999 (“Regulations”)
These Regulations introduced into UK law by a european directive render ineffective unfair terms, which have not been individually negotiated in contracts between consumers and commercial suppliers of goods or services (Section 4 of the Regulations).
In our case the exclusion clause is part of contract between a professional privider of goods (Masterpiece) and a consumer (Alana).
Since it is part of the general terms of business, since it has been simply refferred to, and since it is printed on the “contract receipt”, the exclusion clause has to be regarded as a term, that has not been individually negotiated.
According to Section 5 of the Regulations, such a contractual term has to be regarded as unfair and therefore is not applicable, if it causes, contrary to the requirements of good faith , a significant imbalance in the parties’ rihgts and obligations arising under the contract, to the detriment of the consumer.
According to Section 6 of the Regulations, the unfairness of a contractual term shall be assessed, taking into account the nature of the goods or services for which the contract was concluded.
According to Schedule 2 (1) b) to Regulations 5 (5), a term which inappropriately ecxcludes or limits the legal rights of the cosumer vis-à-vis the seller or supplier or another party in the event of total or partial non-performance or inadequate performance by the sellor or supplier or any of the contractual oblications, has to be regarded as unfair.
Bearing in mind the regulations of section 5 and 6 and the schedule of the regulations, the exclusion clause is also not applicable ander the Regulations of 1999.
Conclusion:
The action for damages of Alana against Masterpiece will be fully successful. The damages will not be limited on half of the carriage fees.
Part II: Advice in relation to the liabilities concerning the contractual relation with Faith
The question is to know whether a binding contract has been concluded between Faith and Alana. If this is the case, Alana has to deliver the desk to Faith and Faith has to pay 20.000 to Alana.
I.) Offer
As defined above, an offer is the expression of willingness to contract on certain terms, made with the intention that it shall become binding as soon as it is accepted by the person to whom it is addressed.
The letter adressed to Faith on the first of April, that arrived on the 20th of April is to be regarded as an offer, since Alana expresses her willingness to sell the desk for a price of 20.000.
Maybe the offer has been brought to an end by Alana withdrawing it. Termination of the offer may have occurred by Alana sending a letter containing withdrawal of the offer on the 15th of April. The general rule is that the offeror is free to revoke his offer by informing the offeree at any time before the acceptance. (Byrne v. Van Tienhoven).
The problem that occurs in our case is that the letter containing the revocation of the offer was never received by Faith.
II.) Acceptance
An acceptance by Faith could be seen in the telephone to Alana on the 20th of April.
Acceptance must be brought to notice of the offeror in the method of acceptance prescribed by the offer. (Financing v. Stimson). An exception to this principle has to be made, where the prescription of a certain mode of acceptance is to be interpreted as a mere indication of speed. In that case, any equally fast or faster method would be enough.
In our case the precription Alana made in her offer as to the mode of acceptance cannot be intepreted as a mere indication of speed. Alana presumably prescribed the mode “by letter” to increase legal certainty and enforceability of the contract concluded.
Therefore, Faith could not accept the offer by communicating his acceptance by telephone.
No contract has been concluded between Faith and Alana. Therefore, there are no contractual liabilities between the parties.
Part III: Advice in relation to the liabilities concerning the contract with Hope
If a valid contract has been concluded between Alana and Hope, Alana can sue hope for payment of the price.
I. Offer
The letter adressed to Hope on the first of April, that arrived on the 3rd of April is to be regarded as an offer, since Alana expresses her willingness to sell the bookcase for a price of 10.000.
The reply of Hope posted to Alana on the 3rd of April may be seen as a rejection of the original offer. According to the strict mirror image doctrine the acceptance and the offer must exactly match.
If the offeree, instead of accepting the offer according to its terms, makes a counter-offer, this destroys the original offer and has to be seen a a new offer.
Although the reply of Hope ocntains only minor changes to the original offer of Alana concerning the mode and time of payment, it has to be seen as a new offer.
II. Acceptance
The question is to know whether the Fax sent by Alana upside down is to be seen as a sufficient acceptance. Since the new offer of Hope does not contain any prescription as to the mode of acceptance, in general a reply by fax is possible.
It remains to clarify if the declaration of acceptance has to be received by the offeror to produce any legal effect.
If the future parties of a contract communicate by post, according to the common law postal rule (Henthorn v. Fraser) the contract is effective even if the letter of acceptance is lost in the post and never delivered. The contract is concluded upon posting of the letter of acceptance, no matter if and when it gets to the knowledge of the offeror.
The question is to know whether the postal rule can respectively applied to communication by fax.
In the case Entores Ltd. V. Miles Far East Corporation, Lord Denning generally denies the respective applicability of the postal rule to instaneous methods of communication if the acceptor knows that his acceptance did not get through to the offeror for technical reasons. But in the same case he distinguished this situation from the situation where the acceptance is not received by the offeror but the acceptor reasonably believes that it has been received.
In this case there would nevertheless be a binding contract.
The question is to know whether Alana could reasonably believe that her acceptance by fax has been received by Hope.
In favor of a contract, one might argue that in the case of a Fax, a written confirmation of receit automatically comes out of the Fax, although the original may have been introduced upside down and therefore was not received by the other party.
But this cannot be enough to seriously and reasonably believe in the reception of the Fax by the other party. The person that uses the Fax, in our case Alana, is responsible for the correct technical use of it. The machine was in Alanas sphere, so she had to take care of the instructions as to the use of the Fax machine.
The case would be different if Alana had correctly introduced the acceptance, had received the written confirmation, but the Fax machine of Hope had run out of paper and the electronic mailbox, that keeps messages until paper is replaced, had been defect.
But in our case, Alana could not reasonably believe, that the acceptance has been received by hope.
Part IV: Advice in relation to the contractual liabilities involved in the transaction with Charity
I.) Valid contract
A contract has been concluded between Alana and Charity. Alanas offer has been accepted by letter. According to the Postal Rule, the contract between Alana and Charity is concluded at the very moment when Charity posts the letter of acceptance.
II.) Legal Remedies
Charity might intend an action against Alana for damages or for rescision of the contract. Charity can act on different legal grounds.
A.) Rescission/Damages on the grounds of Breach of Contract
According to the offer of Alana, the chair was supposed to be a genuine Secessionist chair and to have an impeccable provenance.
According to the Sales of Goods Act 1979, it is a condition to the contract, that goods must correspond with any description by which they were sold. Alana appraised the chair as a “genuine Secessionist” chair of “impeccable provenance”.
As a consequence, the buyer may set the contract aside and reclaim the price. So the question whether the terms are condition or warranty does not have to be answered. In any case, Charity can set aside the contract and reclaim damages.
Only if Charity had accepted the goods, his action would be reduced to an action in damages.
This has not been the case.
Charity can persue an action in damages and rescission against Alana on the grounds of Breach of Contract.
B.) Rescission/Damages on the grounds of Misrepresentation
A misrepresentation can be defined as any false statement of fact, which induces the party to whom it is made to enter into a contract with the party making it. It can include a statement as to the authenticity of antique furniture.
Where the seller of antique furniture provides false information about its authenticity or provenance, and the buyer relies on the statement in acquiring it, the buyer may be entitled to rescind the contract, return the piece and reclaim the price or retain the piece and sue for damages.
In our case, Alana stated that the furniture in question was genuine Secessionist with impeccable provenance, although, as Charity noticed only later, neither of theses informations were correct. This is a case of Misrepresentation.
To advice Charity which remedy to choose, one has to pay attention to several factors:
The choice depends on the relationship between the market value of the object supplied and the market value the object would have had, if the statement had been true. If the price Charity paid is high and the difference in values relatively slight, Charity may prefer to rescind and reclaim the price rather than claim damages. In contrary, if the value of the bookcase supplied is much lower than that of the a genuine Secessionist with an impeccable provenance, the Charity may prefer to sue Alana for damages.
Then again, the choice may depend on the state of mind of Alana.
In the case of fraudulent misrepresentation by the sellor, the buyer can choose between rescision and damages for the tort of fraud or deceit. Damages for fraud cover a wide range of detriments: all loss caused by the fraudulent statement, whether forseable or not will have to be repaid.
In the case of negligent misrepresentation the buyer can also choose between rescision and damages. The action for damages can be made on the ground of the Misrepresentation Act 1967 or on the grounds of the tort of negligent misstatement (Hedley Byrne v Heller & Partners Ltd).
In the case of a purely innocent misrepresentation, the buyer can rescind the contract, there is no legal ground to sue for damages.
Conclusion:
Charity may sue Alana for damages or rescind the contract on the grounds of Breach of Contracts as well on the grounds of Misrepresentation, if the misrepresentation was either fraudulent or negligent. The advice to be given to Charity will depend on the factors mentioned above.
If the misrepresentation was purely innocent, and Charity does not want to rescind the contract, but wants to obtain damages, he has to act on the legal grounds of Breach of Contract.
