Introduction
In the terms of the common law of Contract in UK, there should be three operative ingredients present in order to give birth to a valid contractual agreement – a) an agreement b) an intention to contract and c) a valid consideration. An agreement under the UK common law of contract can only be formed when there is an active offer by one party and an acceptance complimenting the terms of the above referred offer made by the party. Thus, once an offer is accepted with all the terms of the offer being unaltered, it shall give shape to a valid agreement herein. If you are seeking guidance in understanding all these legal concepts, you may think of considering seeking UK dissertation help so that you can navigate through the complexities of contract law.
The common law of contract herein defines offer as an intention to contract, willingly expressed by one party or the offerer, to other and which shall give rise to a binding effect, if accepted by the party to whom it has been expressed. In respond to the abovementioned offer, if the party to whom such offer has been made or the offeree, assents to the terms and conditions of the offer without altering anything, that shall be considered as a valid acceptance on the part of the offeree herein. However, as per the common law, only a promise shall not be an enforceable contract unless to the abovementioned agreement is entertained by some valuable or consideration. Also, in order to make the contract legally binding, both the parties shall need to express such terms and such intention should be clear
In the above referred case herein, where Derek and Junior exchanged terms regarding buy a product in concern, we shall be dealing with several issues.
Firstly, whether had there been a valid offer and a valid acceptance, expressed by both the parties clearly.
Secondly, whether the acceptance had been properly communicated to the offeror.
Thirdly, whether there had been any legal intention present to form a valid contract.
The Concept of Invitation to Treat
Originating from the Latin term invitatio ad offerendu, invitation to treat is a concept where the public at large has been invited to take an interest to negotiate and put an offer which is not considered to be a valid agreement unless the negotiator accepts the offer as mentioned herein. Auction system is one such great example of invitation to treat
In the present scenario, Derek has put up an advertisement in his local newspaper with an intention to invite the public at large to make offer on his car. In the case of Partridge v Crittenden, it was held that it was held by the Apex court that an advertisement is not an offer in itself but a mere invitation to treat, extended at the public at large. Based on this principle, it can be concluded that, in the above referred situation, Derek extended towards the public at large an invitation to offer, in answer to which, Junior made an offer. Derek is not bound to accept the offer of Junior herein and thus, no valid agreement exists between these parties.
The Concept of Counter Offer
An offer made in response to a previous offer is called a counter offer. When a counter offer is made, the initial offer stands rejected and a new offer takes place. Thus, the acceptance shall be made in respect of the new offer and the rejected offer shall not bind the contract anymore.
In the above referred case study, in response to Derek’s invitation to treat, Junior made an offer to buy the product in concern, namely the Range Rover Evoque at £34,000. To such offer, Derek refused to sell the product in concern at the price offered by Junior and replaced the initial offer with a new offer to sell the product in concern at £40,000. Thus, the offer made by Derek in response to Junior’s offer shall be regarded as counter offer and as it has been mentioned in the case of Hyde v. Wrench, once a counter offer is made, the previous offer stands invalid and it shall not have any effect whatsoever in forming a binding contract.
A valid acceptance
A valid acceptance under the common law of contract in UK should contain 3 essentially characteristics – a) It should be absolute and certain b) The Offerer should be communicated about the acceptance in prescribed manner c) The Offeree shall accept the offer himself unless
any other term for the purpose of acceptance has been agreed upon. Thus, a valid acceptance shall comply with the mirror image rule. Mirror image rule of a valid acceptance can be defined as the form of acceptance where the Offeree shall accept the offer at the exact terms of the Offerer.
In this above referred case, Junior was provided with a counter offer and Derek gave Junior a time period within which Junior had to make a decision and communicate to Derek. Junior complied with the ‘mirror image rule’ of a valid acceptance and accepted the offer made by Derek without altering any terms whatsoever and communicated the same to Derek within the given time frame through telephone. Junior herein left a message of acceptance on the telephone as Derek was not available and could not be communicated about the acceptance of the offer he made and subsequently the message was erased by Derek’s assistance accidentally
According to the landmark decision held in the case of Entores Ltd v Miles Far East Corporation, the postal rules for a valid acceptance shall not be applicable in case of electronic communication system such as telephone or telex. According to Denning LJ, if the postal rules of valid acceptance are to be applied in case of instant electronic communication that shall lead to unjust legal binding between parties.
Thus, even if the postal rules under the common law of contract states that an offer shall stand as acceptance once it has been posted by the Offeree, the same rule shall not be applicable in case of telephonic conversations. In the above referred case, where Derek could not be communicated about the acceptance as mentioned herein, no valid contract or legal obligation shall be formed between Derek and Junior regarding the Range Rover Evoque as well.
Revocation
Under the common law of contract, revocation is defined as the withdrawal act of the offerer before the offer has been accepted by the offeree herein. In the case of Payne v Cave, it was held that an offer can be revoked by the offerer anytime before it has been accepted by the offeree, only the revocation must be communicated to offeree directly or indirectly.
Again, in the case of Dickinson v Dodds, an offer can also be revoked through third party and sufficient communication does not need to be made by the offerer personally to the offeree herein. In the abovementioned case, James LJ also held that an offer which is left at the stage of negotiation and the offeree did not accept the terms of the offer instantly, it shall not form any kind of binding agreement between the parties of whatsoever nature.
Thus, applying the abovementioned decision in the instant case study, where Junior failed to establish a proper acceptance through telephone, the offer of Derek could be revoked anytime and the communication of such revocation was made through third party when Raul told Junior that the Range Rover Evoque has been sold by Derek. Again, as it has already been held in the case of Dickinson v. Dodds, an offer which has been left at the stage of negotiation and where the offeree needed time to consider the offer herein, no binding agreement exists between Derek and Junior as Junior has failed to establish a valid acceptance on his part.
Postal Rule in case of acceptance
According to the terms of the contract under common law of UK, an acceptance is valid and communicated once a letter to that effect has been posted on behalf of the offeree and whether the offerer received the letter or not shall not affect the status of such valid acceptance. However, in this above referred case study, a letter on part of Junior was posted after the offer was revoked and the same had been communicated to him through a third party. Thus, the postal rule shall not be applied in Junior’s acceptance and the revocation of offer by Derek stands valid.
Conclusion
In the light of the abovementioned discussion of the common law of contract and several case laws, it can be well established that Derek and Junior had no valid agreement to be agreed upon as Junior failed to provide Derek with a valid acceptance. In response to an invitation to treat, Junior made an offer and such offer was countered by Derek by terms and conditions which were not accepted by Junior right away. Thus, Derek reserved the absolute right to revoke the offer any time before the acceptance. Thus, it can be concluded that there has not been any valid contract between the parties and no legal breach of agreement took place as well.
Introduction
Each contract will contain a set of basic terms and be divided into categories. The contract's conditions might be agreed upon orally or in writing. Furthermore, the Terms may be implied by law, the parties' conduct, the custom in a particular business, previous interactions, or the parties' intentions. Unspecified terms, warranties, or conditions are referred to as contract terms.
Condition:
It is a phrase in a contract that, if violated, allows the aggrieved party to cancel or confirm the deal. Furthermore, the harmed person has the right to sue for damages.
In Poussard v Spiers 1876the plaintiff agreed to engage as an opera singer for the defendant for three months. He became unwell five days before the scheduled opening night and was unable to perform for the first four evenings. As a result, the defendant replaced her with another vocalist. The plaintiff had violated a clause that granted the defendant the right to terminate the contract, according to the court. The first night she was missing was crucial since it would serve as the foundation for the defendant's trial.
Guarantee:
It is a contractual term that, if broken, does not provide the offended party with the right to terminate the contract; instead, it gives the aggrieved party the right to sue for damages.
Case law: Bettini v Gye (1876)
Bettini v Gye (1876) involved a contract in which the plaintiff undertook to do the defendant's work as an opera singer for up to three months. He fell ill, though, and was unable to join in the rehearsals for six days. Someone else was substituted for him by the defendant. The defendant had no authority to cancel his contractual duties since the plaintiff had breached a guarantee
rather than a condition. The rehearsals were unimportant because they didn't get to the heart of the particular contract.
Innominate terms
According to innominate terms the handling of a breach is determined by the consequences of the violation at the time it happened. If the aggrieved party suffers a material effect, it is very always a basic term that allows that party the right to terminate the contract (and claim damages). Otherwise, this party's only recourse is to sue for damages.
A term in a commercial contract that is specifically agreed upon by the contractual parties is known as an express term. Many business owners believe that an express contract term must be in writing, however, this is not the case.
Expressed contract:
It should ideally be written into a contract between the two parties, but if the contract is agreed upon verbally, the conditions will be discussed and agreed upon between the two parties. This kind of express terms included in a contract vary depending on the type of business deal, but pricing, timeframes, warranties, and indemnities are all frequent express terms.
Implied contracts: They are terms that the courts include in business contracts because the parties did not specifically specify the term. This could be because the parties didn't think about it, didn't think it would come up, or just forgot to include the term.
While you may not assume that any disagreements you have with the contracting party would result in a business contract dispute, it is critical to be aware of the implicit terms. This is due to the fact that your business attorney's advice will be based on both the contract's written and implied provisions.
Remedies for breach of contract:
Breach of contract gives rise to a cause of action in the following:
Where the innocent party has the right to monetary recompense, or compensation for breach of contract, under contract law.
You have the right to end the contract if the situation is bad enough.
You may be able to get particular execution of the contract or a court order to prevent additional breaches of the contract in
some instances.
Despite this, the contract's provisions may severely limit or expand the innocent party's rights to damages and other remedies.
The importance of innominate term:
The innominate term is a compromise between the terms condition and guarantee. Between the two, it's often referred to as "no man's land." Unspecified terms, conditions, and warranties are examples of contractual promises. If one of the contracting parties fails to keep these obligations, the contract is considered breached, and that party may be held accountable for damages. Failure to fulfil allows the aggrieved party to terminate the contract in specific instances. This is referred to as a violation of disclaimer, and only certain sorts of terms permit it.
The indefinite term can have a wide range of repercussions if it is broken. Some non-toxic phrases have minor ramifications, while others have far more serious ramifications. In the event of non-compliance, the court or arbitrator will determine the meaning of the term and whether the contract is legitimate.
The court is likely to allow the offended party to dissolve the contract if the indefinite term is so significant that its breach undermines the entire value of the deal for the innocent party. If, on the other hand, the unlimited term is seen to be shorter and has little effect, the innocent party is likely to be limited to suing for damages rather than being able to terminate the contract.
Case Law- Hong Kong Fair Shipping Limited v Kesen Kaisha Limited (1961):
Facts
The ship's owners, the Hong Kong Fir, have agreed to let the charterers use the vessel for a period of 24 months. The owners were expected to provide a ship "in seaworthy condition" under Clause 1 of the contract, and they were also expected to maintain the ship's seaworthiness and excellent condition under Clause 3. The ship's machinery was regarded as "pretty decent condition" when it was delivered, but due to her age, it required continuing repair. The ship's chief engineer was clueless and inept, resulting in numerous malfunctions and delays. The charterer cancelled the contract, citing a breach of the charterer's duty to supply and maintain a seaworthy vessel.
Issue:
Questions were raised about whether the navigability commitment was a "condition" of the contract, allowing the party to repudiate if it was breached, and (ii) if the breach caused enough delay for the tenant to perceive the contract as objectionable.
Held:
To begin with, the Court held that determining whether a contractual clause is a prior clause, allowing repudiation in the event of non-compliance, or an indeterminate term, allowing compensation in the event of non-compliance, requires a careful examination of the circumstances surrounding the contract in order to determine the parties' intention to deal with the clause. In light of the facts, the Court determined that the navigability and maintenance provision was not so basic as to be called a contractual condition, but rather a condition that provided for damages compensation. Second, the court found that if the breach was less than abortion of the contract that rendered performance impossible, the innocent party could not treat the contract as denied owing to delays, no matter how severe. In light of the facts, the delays, while substantial and numerous, did not amount to an abortion of the contract allowing for repudiation, but rather a simple breach allowing for compensation for damages.
Certainty and flexibility- A theoretical perspective:
The first step is to define the distinction between certainty and flexibility. In fact, there is a slew of similar but incongruent distinctions in action. When looking through the literature, there are
debates about certainty versus flexibility, grammar versus curriculum, regionalism versus policy analysis grammar versus and traditional versus modern methods. When we layer these distinctions on top of each other, we get typical American cases: the first reformulation is rigid, territorial, conventional, and rules-based, whereas the second reformulation is flexible, policy-based, modern, and standards-like.
Certainty and flexibility:
What exactly does it imply to state that a system of law selection gives certainty? To put it another way, certainty, as opposed to flexibility, indicates that there is no room for judicial discretion. The system generates a response from which the judge is unable to differ. A flexible system, on the other hand, provides judicial discretion: if problems develop where the system's response appears to be inappropriate, a flexible system permits them to be avoided. This formula is correct to the best of our knowledge and may be useful in some cases, but it's important to note how limited it is. Certainty is frequently offered as one of a group of related characteristics, such as uniformity, predictability, and simplicity. However, a system that forbids any form of discretion might be extremely complicated (it was the first reformulation). Even if the judges could follow it correctly, it would lose predictability if it was complicated enough. Otherwise, consistency and, in some situations, certainty will be compromised .Of course, a basic and true approach (such as always applying the law of the forum) may not guarantee uniformity or predictability, or at the very least be unpredictable from the outset. This formula's flexibility is likewise limited. This implies that the judges have some discretion in their decisions. There is no one-size-fits-all solution provided by the system. It can offer up a variety of options on which various decision-makers can dispute without being plainly correct or incorrect. You can also give a clear response, but only if you grant the judges the ability to vary from it inappropriate exceptional cases.
Conclusion:
Given the historic emphasis on the need for legal certainty to promote commercial transactions, this article asks why uncertainty remains in commercial law through time. The major response is the availability of solutions that eliminate or reduce ambiguity without requiring the law to change or evolve in order to do so. These solutions are primarily contractual, but there are also essential strategies, including Creative Compliance and Regulatory Guidance, that do not require contracting and thus give a framework for resolving regulatory rule uncertainty. The extent of these solutions might be viewed as removing legal uncertainty to the level that business practises can bear without changing the law. It may be claimed that in any legal system, the conditions under which the complete range of answers is available are when contract law prioritises freedom of contract (thus enabling contractual solutions) and contracting parties have access to guidance (therefore, facilitating both the fulfilment of creative and contractual solutions). The degree to which these two conditions are met, as well as the costs and advantages of dealing with ambiguity in a given situation, will differ.
As a result, it is reasonable to conclude that legal uncertainty in commercial law is of minor concern as long as a suitable remedy is available. This is not to suggest that lawmakers and courts should not strive for legal certainty; they clearly should; nevertheless, when they fail, the consequences may not be as disastrous as some believe.
Question 3.
Introduction
Misrepresentation Act, 1967 s.2 enumerates the term ‘misrepresentation’ as a “statement of fact” or a claim which has been affirmed by one party (the seller herein) to the other party (the buyer) in order to facilitate a contract that shall give rise to legal obligations and such affirmation stated by the seller herein has been made “without due care or without having proper grounds for believing it to be the truth”, such act shall be construed as misrepresentation. Thus, the act of misrepresentation as has been enshrined under Misrepresentation Act, 1967, must contain three ingredients to be fulfilled as an act of such namely – a) A factual statement b) The factual
statement should be one of the necessary elements on part of the buyer to facilitate the agreement c) While making the factual statement, the seller must have enough reasons for believing it to be false.
Misrepresentation Act, 1967 herein defines three kinds of misrepresentation that has effect in the United Kingdom under section 2(1) of the Act, namely – Fraudulent, negligent and innocent.
The establishment of a case of misrepresentation
Now, if we take account of the case study regarding an existence of contract between Hannah and Ellen herein, the main concern shall reside with the discussion – whether Ellen had misrepresented the factual statements in order to facilitate a contract with Hannah or not. Keeping the facts of the above referred case study in mind, the case of JEB Fasteners Ltd v Marks Bloom & Co, poses a striking similarity to the facts of the instant case study. In the case of JEB Fasteners, it was held that the defendant asked and invited to cross check the facts represented by them but the claimant did not and as such the claimant shall not be entitled of any damages afterwards. However, in the case of the defendant had the knowledge that the claimant cross checked the facts represented by them and this point differentiate the instant case study from the case of JEB Fasteners.
As we have known from the fact of the instant case study, Ellen invited Hannah to check the accounts of the vegan restaurant, to which Hannah relied on the oral statements made by Ellen and declined to cross check the accounts as Hannah had no duty of care towards checking the accounts herein. Thus, Ellen had the complete knowledge that Hannah had not checked the accounts and completely relied on the oral statement made by Ellen and she intentionally chose not to disclose the actual amount, amounting to actionable misrepresentation. In support of this deduction, the landmark case of Redgrave v Hurd, can be used as a reference where it was decided that if the petitioner had no duty to see into the accounts and the defendant knowingly induces so into believing a false statement, that shall be considered as misrepresentation herein.
Representing the case of Edington v Fitzmaurice, a further insight into the establishment of actionable misrepresentation can be deduced wherein it was held by the court that it shall constitute a case of misrepresented even if the issue of the instant case is not the primary element of concern in the contract herein. Thus, Ellen in the instant case study misrepresented the environment of the vegan restaurant, which was not the main point of element in facilitating the contract. However, in accord to the abovementioned case reference, such statement of fact shall also be held liable under actionable misrepresentation
Category of misrepresentation
In order to explain and establish the liability in a case of a misrepresentation, the category of misrepresentation needs to be established as has been enumerated under section 2(1) of the Misrepresentation Act, 1967. From conceptual point of view and in respect to the above mentioned case study, misrepresentation can be categorised into three parts namely, misrepresentation in the nature of fraud, negligence and misrepresentation committed in the nature of innocence.
Fraudulent misrepresentation
The concept of fraudulent misrepresentation, thoroughly established in the case of Derry v. Peek, can be defined as facts stated by the defendant, having reasonable belief that such statement is false. Thus, the key point in fraudulent misrepresentation is having the dishonest intention.
Negligent misrepresentation
When a statement in the process of negotiation is made by a person turns out to be false but the person in concern had no prior information regarding that, it shall be construed as negligence misrepresentation herein. Royscot Trust Ltd v Rogerson, is the ideal case reference in the sphere of negligent misrepresentation where the defendant stated a fact which turned out to be false later.
Innocent misrepresentation
Innocent misrepresentation can only be established when the person making any statement of fact, had proper reasons and grounds to believe that such fact is true. The case of Redgrave v Hurd, accurately demonstrates the possible circumstance of innocent misrepresentation. In this case, the defendant relied on established grounds before stating the fact to the claimant and thus it was held that this is a mere case of innocent misrepresentation.
If we critically analyse the circumstance of the instant case study in reference to the abovementioned discussion, we can categorise the two instances of misrepresentation – one statement of fact, which was the key element in executing the contract between Ellen and Hannah and the second statement of fact, which was only circumstantial and the execution of the contract was not depended on it. However, both of the facts as stated by Ellen herein was false and enough reasonable grounds were present for Ellen to believe that statements made by her before Hannah are false. Thus, Ellen made false and distorted representation of the truth in respect of the account statement and the environment of the vegan restaurant herein and the same has been made with a dishonest intention to execute the contract. The act of Ellen in the instant case study shall constitute fraudulent misrepresentation.
Remedies
An act of misrepresentation immediately changes the status of a contract from valid to voidable at the discretion of the person who suffered such misrepresentation. When a contract is voidable at the discretion of one party, that person has the absolute right to announce the void or keep it valid. Thus, in reference to the abovementioned situation, Hannah reserves the ultimate right to announce the contract executed between her and Ellen as void. Also, in terms of remedy, she can also ask for the action of rescind under Misrepresentation Act, 1967, s. 2(1).
The definition of rescission or rescission ab initio in respect to a contract gives the meaning in the effect that the contract shall come back to the state of origin. Rescission is not termination of the contract but it essentially puts back the parties of the contract in the initial stage before the contract was made.
Under the prospect of s. 2(2) of the Misrepresentation Act, 1967, a fraudulent misrepresentation in a contract shall not only attract the provisions of damages but it shall also provide the claimant with the power of rescission as well. In Doyle v. Olby, it was held that in case of presence of fraudulent misrepresentation in a contract, the claimant shall have the absolute right to claim both damages and rescission of the contract herein.
Thus, in the prospect of the above referred case study, Ellen’s fraudulent misrepresentation shall attract remedy in terms of rescission and damages. Hannah can claim damages for the losses caused by her in executing of the above mentioned contract herein and also rescind the contract. If Hannah decides to announce the contract void and claim damages, Ellen shall be liable to do as it deems fit to dial back the circumstances of the contract. Also, she shall be liable to compensate Hannah in terms and conditions prescribed by the claimant herein.
Conclusion
According to the facts of the abovementioned case study, Ellen is responsible for committing an act of misrepresentation against Hannah. The nature of such misrepresentation is fraudulent according to the discussion which has been held above. Thus, Hannah shall have the absolute right to declare the contract void and opt for rescission ab initio. In case of rescission, Ellen shall be responsible to do the needful to dial back the circumstances of the contract as it was before it was executed by the parties. Again, Hannah can opt for damages as well. As per s. 2(2) of the Misrepresentation Act, 1967 which gives broader scope to fraudulent misrepresentation, Hannah can opt for both rescission and damages.
Thus, to conclude the case study herein, Hannah can sue Ellen under the Act of Misrepresentation 1967, s. 2(1) for committing misrepresentation in nature of fraud as it would have been impossible for Ellen not to have proper reasonable knowledge about the statement of account the surrounding environment of the vegan restaurant. Ellen is rightly accused for committing an act of fraudulent misrepresentation and Hannah shall herein reserve both the rights of claiming rescission and damages.
BIBLIOGRAPHY
Book
‘O Sullivan Dominic; “The Law of Rescission” (2014); OUP Oxford, 2nd ed
James C. Fisher; “Contract Law in England and Wales”(2018); Kluwar Law International, 2nd Ed
David Chappell, Construction Contracts: Questions and Answers (2nd edn, Spon Press 2010) 81.
David H Parry, The Sanctity of Contracts in English Law (Stevens & Sons 1959).
James C. Fisher; “Contract Law in England and Wales”(2018); Kluwar Law International, 2 nd Ed
David Chappell, Construction Contracts: Questions and Answers (2nd edn, Spon Press 2010) 81.
Article
“What are the different types of misrepresentation?” (2020); Loncoln & Rowe < https://lincolnandrowe.com/2021/03/23/types-of-misrepresentation/ > accessed on 31st May, 2021
David H Parry, The Sanctity of Contracts in English Law (Stevens & Sons 1959).
Erin Ann O'Hara, 2002), and traditional versus modern methods (Robert Sedler, 1971). (John Bernard Corr, 1985
Hongkong Fir, 69r (Diplock LJ): ‘The test whether the event relied upon has this consequence is the same whether the event is the
result of the other party's breach of contract or not.’ The Moorcock (1889)
Alex Mills, The Identities of Private International Law
Looking for further insights on How do the courts decide whether to grant an order of specific performance? Click here.
Case laws
JEB Fasteners Ltd v Marks Bloom & Co, 1983] 1 All ER 583
Redgrave v Hurd, 1881] 20 Ch D 1
Edington v Fitzmaurice, 29 Ch D 459
Flanagan v Liontrust Investment Partners LLP [2015] EWHC 2171 (Ch).
Derry v. Peek, [1889] UKHL 1
Royscot Trust Ltd v Rogerson , [1991] EWCA Civ 12
Doyle v. Olby, 2 QB 158 [1969]
Stover v Manchester city council, [1979] UKHL 6
Balfour v. Balfour, [1919] 2 KB 571
Partridge v Crittenden, [1968] 2 All ER 421, HC QBD
Hyde v. Wrench, [1840] EWHC Ch J90
Entores Ltd v Miles Far East Corporation, [1955] EWCA Civ 3
Payne v Cave, [1789] 3 TR 148
Dickinson v Dodds, (1875) 2 Ch D 463
Hochster v De la Tour (1853) 2 E. & B. 678.
Hong Kong Fair Shipping Limited v Kesen Kaisha Limited (1961)
Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd [2007] HCA 61 [48].
Poussard v Spiers (1876)
Shirlaw v Southern Foundries (1926) Ltd [1939] 2 KB 206, 227 per MacKinnon LJ.
Stickney v Keeble [1915] AC 386.
Darlington Borough Council v Wiltshier Northern Ltd. [1995] 1 W.L.R. 68 (CA) 76E (Steyn LJ)
Dominion Corporate Trustees Ltd v Debenhams Properties Ltd [2010] EWHC 1193 (Ch); [2010] N.P.C. 63
Flanagan v Liontrust Investment Partners LLP [2015] EWHC 2171 (Ch).
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