All of the forms of law previously mentioned are intrinsically linked in various ways. When a judge is presiding over a case in a UK court he must absolutely abide by primary legislation as this the highest form of law in the land. Coupled with this he must consider delegated legislation but the ability to challenge is available if the legislation is considered to be outside the jurisdiction of the body or institution that created the legislation in the first place. This is known as ultra vires. Depending on the level of the courts hierarchy at which the case is being heard, judicial precedent can come into effect if the material facts of the case being heard are close enough to that of a previous case in which a judgement has been set. An inferior court in the hierarchy must abide by the decision made previously if it was made in a superior court. Alternatively, if the precedent was set in an inferior court to the current one, the judge may make a new decision and this becomes the new precedent for future use. The European Communities Act 1972 gives the UK government the ability to change existing legislation to reflect new European legislation or to ensure that any areas of incompatibility are aligned. This effectively means that all European regulations and directives can be considered in a UK court of law and so sit alongside all UK legislation.
QUESTION 2
Distinguish between an offer and an invitation to treat.
An offer can be described as a statement by which the offeror (person making the offer) promises to be bound so long as the terms of the offer are accepted by the offeree (person accepting the offer). When an individual or a company makes an offer it can be made to another individual, a group of persons or to absolutely anyone in the world (Carlill v Carbolic Smoke Ball Co Ltd (1893)). In simple terms, an offer is predominantly in the form of a question – “Will you buy this item for £xx?” A positive decision made by an individual to pay the stated price for the item results in an acceptance of the offer and therefore a contract is formed.
However, this is not always the case. In some cases an offer is preceded by “an invitation to treat”. An invitation to treat is the initial stage at which an individual or a company (invitor) indicate that they are willing to enter into a contract or agreement but that the terms of that contract or are yet to be determined. Some of the ways in which the invitor can invite offers include:-
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Displays of goods in stores - this merely shows what items are available and on which offers can be made (Pharmaceutical Society of GB v Boots Cash Chemists Ltd (1952)).
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Advertising – the advert is acting as a shop window to all intents and purposes. As the advertiser may only have a finite amount of stock they could only possibly have intended the advert to be an invitation to treat (Partridge v Crittenden (1968)). Where the advertiser is making a promise, such as a reward, this could be classed as a unilateral agreement and therefore distinguished as an offer as no further negotiation is intended (Carlill v Carbolic Smoke Ball Co Ltd (1893)).
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Tenders – a tender is an invitation to provide goods or services for a price. The person or persons inviting the tenders will then choose a bid that suits their requirements. Until the person inviting the tender has made a decision to accept a tender there is no contract formed (Spencer v Harding (1870)).
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Auctions – the lots or items displayed are the invitation to treat. Any bids made by individuals or companies are offers and the auctioneer may decide to accept or reject such offers (Payne v Cave (1789)).
In summary, an offer is a promise by an offeree to enter into a binding agreement, assuming all terms specified by the offeror are accepted. An invitation to treat is the stage prior to an offer in most cases and simply shows willingness by the invitor that they are prepared to enter into negotiations, which may or may not lead to an offer and subsequent acceptance.
QUESTION 3
‘When two parties have come to a contract – or rather what appears, on the face of it, to be a contract – the fact that one party is mistaken as to the identity of another does not mean that there is no contract, or that the contract is a nullity and void from the beginning’, per Lord Denning MR in Lewis v Averay (1972).
How far is the above statement a true reflection of the law?
In order to claim a case of mistaken identity there must be at least one of two principles proven. Firstly, the party alleging the mistake must show that he has confused the other party with someone else. In addition, he must be able to show that he had a reason to wish to deal with the intended person. Secondly, the party alleging the mistake must be able to show that he had made reasonable attempts to establish the identity of the party with whom they were intending to form a contract.
For a contract to be voided void ab initio, from the beginning, it must be rescinded before the rogue passes the property on to a third party. If this is not the case then the rogue has good title to the property and can pass on the property with good title. In the case of Lewis v Averay (1972) the identity of the rogue was not apparent until after the attempted cashing of the cheque so the rogue had good title throughout the transaction (Phillips v Brooks (1919). The only way Lewis could have voided the transaction would have been to inform the police that the fraud had taken place prior to the goods being passed on and that would have rendered the contract voided. Had Lewis taken further steps at the outset to establish the identity of the rogue he may have been successful in his claim (Ingram v Little (1960)).
According to Lord Denning MR in Lewis v Averay (1972), Mr Lewis was only questioning the creditworthiness of the rogue when asking him for identification and therefore the contract was already formed and valid. Receipts had been written and exchanged, along with the cheque. The issue of the identity of the rogue only came to light when Lewis tried to cash the cheque. Because the contract was not voided prior to the property changing hands, the third party (in this case Averay) has acquired good title to the property (Phillips v Brooks (1919)). Had the rogue not sold the property on to a third party the contract would have been between the rogue and Lewis so therefore the contract would have been voidable for fraudulent misrepresentation (Lake v Simmons (1927)).
This area of the law is subject to debate among many judges but they all do seem to agree that the case of mistaken identity is classed as a unilateral mistake and the effect on the contract is to void it. However, this only true when the person who makes the mistake was actually intending to form a contract with a specific person and for a specific reason (Cundy v Lindsay (1878)). When the person makes a mistake about the identity of the person in his presence (whether misrepresented or not) but was willing to form a contract with the person in his presence, then the law states that the contract is valid (Phillips v Brookes (1919) & Lewis v Averay (1972)).
QUESTION 4
Hagrid plc, an English firm, contracts to sell farm machinery to the value of £1,000,000 to Snape Ltd, a Ruritanian firm. Snape Ltd pays £50,000 in advance and Hagrid plc manufactures and dispatches 25% of the required machinery. The Ruritanian Government then passes a law forbidding the importing of foreign farm machinery.
Advise Hagrid plc and Snape Ltd of their legal positions, assuming that any legal action would take place in the English courts.
Under common law, any monies paid prior to the frustrating event would remain as so and no amount can be recoverable (Chandler v Webster (1904)). In the situation of Hagrid plc and Snape Ltd, the deposit of £50,000 paid in advance by Snape Ltd is irrecoverable, as Hagrid plc had fulfilled part of its contract consideration by dispatching 25% of the machinery prior to the point of frustration. Likewise, the machinery dispatched by Hagrid plc does not need to be returned by Snape Ltd as they had fulfilled their part of the contract by paying a deposit of £50,000. If Hagrid plc had not yet dispatched any machinery, to say that there was a total failure of consideration on their part, Snape Ltd would be permitted to claim back the monies paid to that point, in this case £50,000 (Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd (1942)).
Under The Law Reform (Frustrated Contracts) Act 1943 Section 1(2), any monies paid under contract prior to the event that deemed the contract frustrated were recoverable, regardless of whether there had been a total failure of consideration (Gamerco SA v ICM/Fair Warning (Agency) Ltd (1995)). Using their discretion under Section 1(3), the courts can order that any expenses incurred by the payee in undertaking his part of the contract up to the point of frustration can be off set against the amount paid. In this case, Snape Ltd would be able to recover the £50,000 he paid in advance for the machinery and Hagrid plc would be able to claim for overheads and expenses relating to the 25% of the machinery he has already dispatched, along with any additional expenses for the remaining machinery (BP Exploration v Hunt (1982)). However, Hagrid plc would not be able to recover any further monies over and above the £50,000 already paid by Snape Ltd, as this money would have been transacted after the point of frustration and The Law Reform (Frustrated Contracts) Act 1943 does not apply in situations such as this (Krell v Henry, (1903)). There was clearly an agreement between the parties that a deposit of £50,000 would be paid in return for machinery that equated to 25%, otherwise they could not have arrived at such figures.
As the most recent case law in effect is The Law Reform (Frustrated Contracts) Act 1943 and both parties to the contract appear on the face of it to have obliged in at least part of there duties under the contract, there is now the issue of recovering costs and claiming expenses to be considered. Quantum Meruit is an award that compensates for costs incurred in the process of carrying out elements of a contract, in this case the supply and dispatch of machinery. The contract value was for £1,000,000 and given that Hagrid plc dispatched 25% of the machinery is could be suggested that the value of the machinery dispatched was £250,000. However, the courts must identify the benefit and apply a value to the benefit obtained by Snape Ltd in receiving the machinery. Although 25% of the machinery has been dispatched, it may not form complete machinery, that is to say the 25% may be components of machinery that would be completed by a subsequent delivery of additional parts. In this scenario, the machinery could be deemed as worthless to Snape Ltd as it would have been useless. This would be for Hagrid plc to argue and prove to the courts so that they could include it in their consideration.
Snape Ltd have an extremely strong case for claiming the £50,000 paid in advance to Hagrid plc for the farming machinery. It was a completely unforeseen circumstance in which the contract became frustrated and one that neither party in the contract could have avoided. The laws of the country in which Snape Ltd operate have changed and therefore the agreement to trade machinery is now illegal. It is the trading of machinery that forms the basis of the contract and so the contract became frustrated the moment the law changed (Denny Mott & Dickson Ltd v James B Fraser & Co Ltd (1944)). Under the terms of The Law Reform (Frustrated Contracts) Act 1943, Section 1(2), any monies paid under the terms of the contract are recoverable and Snape Ltd should pursue such a claim.
Hagrid Ltd has carried out their part of the contract as per the terms up until the contract became frustrated. There is a high degree of probability that the value of the machinery dispatched to Snape Ltd exceeds the £50,000 paid in advance as a deposit. Taking into account manufacture, handling, shipping and other costs the courts will place a value on the benefits received by Snape Ltd and must consider the all circumstances relating to the case in order to reach a fair and just sum. This sum will form the upper limit of any award and the courts will decide upon a fair and just amount to award. Under the terms of The Law Reform (Frustrated Contracts) Act 1943, Section 1(3), any party that has received a valuable benefit through the performance of a valid contract that has become frustrated, the other party may seek to recover the sum that the courts deem fair and just, with all circumstances considered and Hagrid plc should pursue such a claim.
Bibliography
Unless otherwise stated, answers and responses to all questions have been considered using my own knowledge and information adapted from standard text, research papers, documents and websites as detailed below. I have also used and read the discussions on Blackboard to help interpret my thinking.
Standard Text
Contract Law (2nd Edition), Chris Turner, 2008
Contract Law (5th Edition), Routledge Cavendish, 2006
Estate Management Law, 6th Edition), Card Murdoch & Murdoch, 2005
Oxford Dictionary of Law (6th Edition), Oxford University Press, 2006
The Good Study Guide, Andrew Northedge, 2005
All Write!, Alan Bailey, 2002
Further Information Sources
Course Material
Introductory Teaching Handouts
The Law Study Guide
The Law Assignment Guide
Web Sites
www.a-level-law.com
www.college-of-law.co.uk
www.consilium.europa.eu
www.defra.gov.uk
www.direct.gov.uk
www.eur-lex.europa.eu
www.europa.eu/index_en.htm
www.europarl.europa.eu
www.google.co.uk
www.lawontheweb.co.uk
www.lawteacher.net
www.parliament.uk
www.professionalstandardscouncil.gov.au
www.stbrn.ac.uk
www.studentatlaw.com
www.venables.co.uk
www.vivisimo.com
Word Count
2817 excluding front page, question headings, bibliography and sources.
