Summary *2024* LPC Commercial Law & Intellectual Property (CLIP) – BPP Distinction Level Notes & Step-by-Step Exam Solutions

Summary *2024* LPC Commercial Law & Intellectual Property (CLIP) – BPP Distinction Level Notes & Step-by-Step Exam Solutions What is the difference between unilateral and a bilateral contract? Bilateral - parties assume obligation to each other. Unilateral - 1 party makes an offer for an act to be performed by other party/parties. Relevant statute to put in answer Sale of goods in a B2B context (governed by SGA 1979 and UCTA 1977) -SGSA 1982 For contract terms and exemptions questions There has to be a breakdown in relation to: Contract Terms Breach Condition/warranty/innominate term Exemption clause Incorporation Construction Statute __ I should note in order for the exemption term to apply, it has to make it through the above 3 stages test __ Is there a contract? B2B ( business to business ) /B2C( business to consumer ) ; Sale of Goods/Services? What are the (relevant) terms of the contract? Implied: type of contract? (SGA/SGSA relevant?) Express Terms? Have any terms been breached? Categorise the terms breached (condition/warranty/innominate) and advise on available remedy Analyse Exemption Clause(s) - ICU (Incorporation, Construction, UCTA) Has it been incorporated within the contract? Is it properly constructed so as to cover/defend against liability for the breach? Statutory Protection? Express term: Is the assistant's assurance that the pram is 'perfect for off-road territory' an express term of the contract? Relevant factors to consider: Importance (Bannerman v White) Timing (Routledge v Mckay) Expertise (Oscar Chess v Williams, Dick Bentley v Harold Smith the implied ones are in that statute Express term: note when it comes to the expressed terms point at the fact a shop should have the expert and know the matter.mAYVE Schawel v Reade, and same case for not letting him test in the shop going through sales of act you go through 13 and 12 for what kindof breach and then to terminate for 14, but if it already supplied as a service or product then you cannot terminate reasonable person s14(2A) - notesss If white v John Warwick applies no need to through UCTA section 2 or is it Alderslade v Hendon matter ? -- did harm occurred like injury if such then the opposite as above applies ( S 2 applies ) NOTES About sales of supplies of goods . In terms of Sales of good s12 - 15, section 13 then it is a condition or warranty of innominate term? Section 13(1) A is a condition breach for example. s15A: Slight and ONLY warranty = ONLY damages s14(3) along with s14(6) = condition -- In term of supplies of good, I would he fallen below the reasonable standard and explain and demonstrate how and what category is it all the time innominate go to hong kong condition or warranty Sales of goods legislation 1979 notes curtis overriding oral assuring that this misrep the clause ( if it's the just the usual is it typical or not ) ( this is highly unusual then it's a misrep ) sometime it is common and sometime not really but either you can argue your way also consider warranty and all onerous clause the greather the risk then thee should notify.( For instance when mentioning negligence it should be honorus clause therefore this require greater alert and notification Aldserslade v Hendon laundry in term of effective enough to exempt negligence Supply of sales good act S 13 is the only relevant one consider section 14 of the sales good means your only entitled to damages Implied Terms: SGA (1979) s14(2): goods must be of satisfactory quality and Implied Terms: SGA s14(2) and 14(3) are both conditions under SGA s14(6) giving MDDC the right of election But note: SGA s15A, if this is a trivial breach it will be unreasonable to terminate the contract and MDDC will be entitled to damages only Exemption clause Incorporation Construction Statute __ I should note in order for the exemption term to apply, it has to make it through the above 3 stages test go into by one by one Terms exam notes Terms : 14.2 AND 3 those are the terms in sales of good ( the satifsoty quality ) Breach: 14.2a ,2b, d , 14(3) -- Condition, warranty , innominate terms For express terms use Schuler v wickman and then Possuard v Spiers , Betteni v Gye and hong kong fir Vkawaski test . ( The breach deprived the party of the benefit of the entire contract, therefore this is a breach and this allow the C right to the election , so they terminate the contract and claim damages as a result. Hochester v De la tour : An anticipatory breach of contract This type of breach is one where a party expressly communicates that they will not be carrying out a term or condition of the contract. ( Bunge v Tradex it was held performing a contract in a date agreed upon was a condition and therefore this a breach he term ought to be constructed as a condition _ Section 14 (2) (3), also but consider 15 (a) which is warranty and damages only. - short time applies and rush and pressure then onerous clause applies. -- -- S13 IS INNOMINATE TERM HONG KOMG suuplY OF SALES OF GOOD 1982 Incorporation cases L'Estrange v Graucob (1934) Note to self: separate each notice or sig and decide . -- Curtis v Chemical Cleaning ( fraud or misrepresentation then it is not binding) Parker v South Eastern Railway ( Reasonable notice) Thornton v Shoe Lane Parking ( reasonable notice timing factor) (onerous clause as well greater notice are required) Olley v Marlborough Court ( reasonable notice timing factor) ( before or after the time of contracting ) Sugar v LMS Railway ( here it was hidden, thus Henderson v Stevenson( here it was behind) Grogan v Meredith ( the document here had no contractual effect or impact in this case, thus the document should have a sufficient contractual effect and impact) Chapelton v Berry as above reasonable notice then the contractual document should be applied, a written document should be included in order to have a sufficient contractual effect and impact -- reasonable notice should regular and consistent ( Harry Kendall v William) About contract terms and exemption separate and different applications to sig and notices, for instance, notice reasonable and reciept? and the sig may be a different issue altogether. the case Obrian v MGN can be used . the onerous clause should be considered . - Consider reset _ consider each thing by separate issued . Timing and whatever it was hidden or not. --Is the clause onerous? (Spurling v Bradshaw; Interfoto v Stiletto (The term was not incorporated into the contract. Where a term is particularly onerous the person seeking to rely on the term must take greater measures to bring it to the attention of the other party. unless the person went through the reasonable steps ) signature will incorporate onerous clause except in extreme circumstances (chemical transport v Exnor Cragg) it mainly operate with Canda steampunks ship negligence because there's a great burden upon that - _ we conclude whatever it was incorporated or not ? is there doubt or not Sometime in both contract terms and remedies you go through the steps of incorporation and etc construction cases NOTE from exams once you go into construction if it ambiguous applies contra proferetem rule ( Adnrew v singers ) BUT if not commercial one in Victoria street v House of fraser or Presimmons homes v Arup (do they have equal bargaining power) sometime the cause may not be constructed probably as it only effective to exclude warranty and the breach of the terms are innominate terms conclude on each issues on contract law , they may not able to relay because of the breaches? contra prof and 14.2. 3 sales of goods. construction cases 1- CONSTRUCTION = INTERPRETATION George Mitchell v Finney Lock Seeds ; Per Lord Bridge"On its natural and ordinary meaning does the clause cover the breach, whether fundamental or otherwise?" Persimmon Homes Ltd & Ors v Ove Arup & Partners "...Exemption clauses are part of the contractual apparatus for distributing risk. There is no need to approach such clauses with horror or with a mindset determined to cut them down..." 2-The Contra Proferentem Rule; General Rule: Any ambiguity in the clause will be construed against the Proferens. Andrews Brothers v Singer & Co [1934] However, courts now less likely to use contra proferentem in commercial contracts: Victoria Street v House of Frase "... "rules" of interpretation such as contra proferentem are rarely decisive as to the meaning of any provisions of a commercial contract. The words used, commercial sense, and the documentary and factual context, are, and should be, normally enough to determine the meaning of a contractual provision." 3-Construction: Exempting liability for Negligence Courts unwilling to allow wide-ranging exemption clauses which try to exclude liability for contractual breaches and breaches of a duty of care. Negligence here is: i) Breach of duty of care in tort ii) Breach of contractual duty of care i.e. B2B s.13 SGSA 1982 B2C s. 49(1) CRA 2015 'to exercise reasonable care and skill' 4-Construction: Negligence - Canada Steamship Test If clause is being used to exclude liability for negligence, apply the Canada Steamship Test - Canada Steamship Lines Ltd v The King [1952] However, approach Canada Steamship with caution - recent cases: 'broad guidelines not prescribing rigid rules' HIH Casualty & General Ins. v Chase Manhattan Bank [2003] "In recent years, and especially since the enactment of UCTA, the courts have softened their approach to both indemnity clauses and exemption clauses. ... my impression is that, at any rate in commercial contracts, the Canada Steamships guidelines (in so far as they survive) are now more relevant to indemnity clauses than to exemption clauses." Persimmon Homes v Ove Arup [2017] Jackson LJ --Construction: Negligence - Canada Steamship Test If clause attempts to exempt liability for negligence, apply 3 stage test: 1) Does clause specifically refer to negligence OR synonym of negligence? Monarch Airlines Ltd v London Luton Airport [1997] e.g. 'any act or omission, neglect or default' it was held yes it did in this case 2) If no, is clause wide enough to cover negligence? e.g. 'any liability' / 'any loss howsoever caused' 3) If yes, is clause too wide? e.g. Is clause being used by defendant to exclude other type of liability (breach of SGA/ breach of express term) as well as negligence? If more than one type of liability being excluded, clause only excludes non- negligence liability. Where negligence is only liability being excluded the clause will pass the test White v Warwick [1953] Alderslade v Hendon Laundry [1945] E.E.Caledonia Ltd v Orbit Valve Co. [1994] Persimmon Homes v Ove Arup [2017] ++Construction: Limitation Clauses Aisla Craig v Malvern Shipping A clause which limits rather than excludes liability is construed less restrictively. ++Exemption Clauses and Third Parties Caselaw: Scruttons Ltd v Midland Sillicones Ltd [1962] New Zealand Shipping Co. Ltd. V A.M Satterthwaite (The Eurymedon) [1975] Statute: Contract (Rights of Third Parties) Act 1999 s.1(6)- can exempt 3rd parties s.6(5) - can exempt 3rd parties in contracts for carriage by sea Notes to clear out construction Andrews Bros. v Singer [1934] 1 KB 17 There was a contract to purchase new Singer Cars; the contract contained a clause excluding "guarantees or warranties, statutory or otherwise". One of the cars delivered to the dealer was a used car. The plaintiff sued Singer (defendants); they tried to rely on the exemption clause. Held - The stipulation as to the suitability of the car was a condition, not a guarantee or a warranty, and as such was not covered by the exemption clause. The term "new singer cars" was an express term. An exclusion of liability in respect of implied terms could not cover liability under the express term. This is particularly so if there is any ambiguity in the term Curtis v Chemical Cleaning -a weeding dress that was subjected to an exclsuion clause , thus the isssue was Whether the exclusion of liability clause was binding upon the claimant given that the service assistant had misrepresented its consequence. Held The Court of Appeal found for the claimant, viewing that whilst a party is typically bound by all the contents of a signed written contract, even where they had not properly read the contract, a clause ought not be deemed legally enforceable where the drafting party misrepresents the effect of a clause to the other party. Thus, the exemption of liability clause was not deemed properly incorporated into the contract and the claimant was awarded damages. Exception when it is not reasonable that the signature shows an intention to be bound - Clause said no liability for any damage; but employee had described it as no liability for any damage to beads - Misrepresentation overrode exclusion clause -- Signature is not binding where one party misrepresents the meaning of the exemption clause persimmon case Incorporation L'Estrange v Graucob (1934) Exemption Clauses I - Incorporation - Incorporation through signature - When a contract is signed without there being any misrepresentation then the signing party is bound. ---- Those are the exception to the rule : if they apply and if they do not conisder that Curtis v Chemical Cleaning (1951) Exemption Clauses I - Incorporation - Incorporation through signature - Exception: May not be binding if there was an overriding oral misrepresentation regarding the meaning of the clause. --- Parker v South Eastern Railway (1876) Exemption Clauses I - Incorporation - Incorporation through notice - Party relying on clause only needs to show taking reasonable steps to bring to other party's attention. --- Thornton v Shoe Lane Parking (1971) Exemption Clauses I - Incorporation - Timing: Reasonable notice mist be given before or at the time of contracting. --- Chapelton (1940) Exemption Clauses I - Incorporation - Contractual document or mere receipt?: If clause is not incorporated properly, will not be binding. --- Timing? (Olley v Marlborough Court). prior or after contracting the notice __ Notice of the term given at or before the time of contracting Olley v Marlborough Court / Thornton v Shoe Lane Parking / Grogan v Meredith Document in which the clause is contained has contractual effect Chapelton v Barry / Grogan v Meredith Also, consider Sugar v LMS Railway Alisa case regarding limitation Ailsa Craig Fishing Co Ltd v Malvern Fishing Co Ltd & Securicor Scotland [1983] 1 All ER 101 Securicor agreed to provide a security service for Ailsa Craig's boats in Aberdeen harbour. Because of their negligence one of the boats sank and took with it another boat belonging to R. The main issue at the trial was the third party liability of Securicor, whose contract with Ailsa Craig included a clause limiting © NWTF 2012 their liability "for any loss or damage of whatever nature arising out of ... failure in the provision of the services contracted for" to £1000. Held - The House of Lords unanimously upheld the validity of this limitation; Lord Fraser said the strict principles applied when construing exclusion clauses are not applicable in their full rigour when considering clauses merely limiting liability. The contra proferentem rule still applies, but so long as the clause is clear and unambiguous there is no reason to doubt that the other party assented to it. No matter how extreme the breach was in the particular case as in Photo Productions Ltd v Securicor Ltd. This case finally disposed of the notion that a fundamental breach not only destroyed the contract but also destroyed any exemption clause within it. incorporation BPP Notes: Once the general rule of lestrange of sig being binding expects for : 1_Overriding oral assurance A party may be prevented from relying on incorporation of an exemption clause through signature of a document if he has orally misrepresented the meaning of the clause to the other party (Curtis v Chemical Cleaning and Dyeing Co. [1951] 1 KB 805; and for discussion of precisely how this exception is to be understood, see Axa Sun Life Services plc v Campbell Martin Ltd and others [2011] EWCA Civ 133). 2_ Nature of document A signature will not incorporate an exemption clause if the document signed does not have contractual effect (see Grogan v Robin Meredith Plant Hire 3_Incorporation through notice assessing the degree of notice which is acceptable, it is clear that the party relying on the exemption clause need not show that he brought it to the actual notice of the other party, but only that he took reasonable steps to do so. The concept of reasonable notice draws its guiding principles from the following case. Parker v South Eastern Railway Co. : the plaintiff deposited a bag in the defendant's cloakroom. He paid two pence and was given a ticket, on the face of which was printed: 'See Back'. On the back of the ticket was a printed notice saying that the company would not be responsible for loss of any item whose value was more than £10. The plaintiff's bag, which was worth more than £10, was lost and he brought an action for damages against the company. The plaintiff had not read the notice on the back of the ticket. The company pleaded the exemption clause. The jury were directed to consider whether the plaintiff had read or was aware of the exemption clause. The jury answered both these in the negative and accordingly judgment was entered for the plaintiff. On appeal by the defendant, the Court of Appeal held that the jury had been misdirected. The notice was clear and the ticket was a common form of contractual document. The relevant question for the jury was whether the company had taken reasonable steps to bring it to the plaintiff's attention. Harvey v Ventilatorenfabrik Oelde GmbH (1988) 8 Tr L 138 where the contract was written in German, and an exclusion clause was inserted without the knowledge of the other party. The party relying on the clause knew that the other could not read the language in which the clause was expressed. The Court of Appeal held that the clause in question had not been incorporated Where a document does not have clear words on the face of it, directing attention to an exemption clause on the reverse, it is unlikely that such a clause will be incorporated: Henderson v Stevenson (1875) LR 2 Sc & Div 470. Similarly, if there are clauses on the document that have been rendered illegible, for example by a date stamp, it is unlikely that they will be deemed incorporated: Sugar v London, Midland & Scottish Railway 3_ The nature of the clause The nature of the clause may also be taken into account in assessing the degree of notice required. Where the clause is unusual or unexpected or is particularly onerous, a higher degree of notice will be required to incorporate it. For example in Thornton v Shoe Lane Parking [1971] 2 QB 163, Lord Denning MR, commenting on a clause that attempted to exclude the defendant's liability for personal injury, stated: '[A]ll l say is that it is so wide and so destructive of rights that the court should not rule any man bound by it unless it is drawn to his attention in the most explicit way. It is an instance for what I had in mind in Spurling v Bradshaw [1956] 1 WLR 461 when I stated that in order to give sufficient notice, it would need to be printed in red ink with a red hand pointing to it, or something equally startlin 4_ Incorporation by a course of dealing Harry Kendall & Sons v William Lillico & Sons Ltd [1969] 2 AC 31 where the House of Lords held (albeit obiter) that a clause had been incorporated by a course of dealing. The same sale note (containing the relevant term) had been used three or four times per month over a period of three year 5- Timing ; Olley v Marlborough Court Hotel, Thornton v Shoe Lane Parking the plaintiff was not bound by the exemption clause because reasonable notice of it was not given either before or at the time of contracting. In the Thornton case, Lord Denning MR distinguished between situations where a ticket is purchased in a face-to-face transaction, (for example, at a ticket office), and situations where a ticket is purchased from a machine: 'The offer is made when the proprietor of the machine holds it out as being ready to receive the money. The acceptance takes place when the customer puts his money into the slot. The terms of the offer are contained in the notice placed on or near the machine stating what is offered for the money. The customer is bound by those terms as long as they are sufficiently brought to his notice beforehand, but not otherwise. He is not bound by the terms printed on the ticket if they differ from the notice, because the ticket comes too late. The contract has already been made...' 6-Contractual document or mere receipt? An exemption clause is not incorporated into the contract if the document, in which it is contained, is not one that could reasonably be expected to have contractual force: Chapelton v Barry Urban District Council [1940] 1 KB 532. The question is whether the person, to whom it was handed, could reasonably know that it was intended to have contractual effect. This will be the case where the document is delivered in such circumstances as to give the individual reasonable notice of the fact that it contains terms. A document is also a contractual one if it would be obvious to a reasonable person that it is intended to have this effect, or if the document is of a kind that generally contains contractual terms. See also Grogan v Robin Meredith Plant Hire [1996] CLC 1127, where the Court of Appeal sought to distinguish between a document having contractual force and one that merely evidences contractual performance. Construction The general rule is that exemption clauses will be construed contra proferentem. This means that if there is any doubt as to the meaning and scope of the exemption clause, the ambiguity will be resolved against the party (known as the 'proferens') seeking to rely upon it. The courts have held that clear words must be used if they are to excuse one party from its liability. It should be noted that the courts apply the contra proferentem rule with less rigour where the clause in question merely limits (rather than excludes) liability: Ailsa Craig Fishing Co Ltd v Malvern Fishing Co. _Andrews Brothers v Singer the plaintiffs entered into an agreement with the defendants whereby they would be the sole dealer within a specified area for the sale of 'new Singer cars'. By virtue of this agreement, the plaintiffs contracted to purchase a certain number of cars. The written agreement contained a clause stipulating the following: 'all conditions, warranties and liabilities, implied by statute, common law or otherwise are excluded.' The plaintiffs ordered a car from the defendants. At the time of delivery, the car had already travelled some 550 miles and could therefore not be described as new. The court held that the clause only exempted liability for implied terms, whereas this was a breach of an express term. ++Exemption clauses and negligence 1. Does the clause expressly mention 'negligence'? (Or a close synonym: Monarch Airlines v London Luton Airport [1997] CLC 698). If so, the court must give effect to the clause (subject to any statutory controls). 2. Are the words used 'wide enough'? If there is no express reference to negligence in the clause, the court must consider whether the words used are wide enough, in their ordinary meaning, to cover negligence by the party seeking to rely on the clause (the "proferens"). 3. Are they too wide? If the words used are 'wide enough', the court must then consider whether, in the particular context, liability may be based on some ground other than the negligence of the proferens. However, that other ground must not be so fanciful or remote that the proferens cannot be supposed to have desired protection against it. If, on the facts of the case, the clause could cover a ground other than negligence then the clause will be ineffective in excluding liability for negligence and will only be effective as against that alternative head of liability. See for example: White v John Warwick [1953] 1 WLR 1285, where there was an alternative ground (breach of a strict contractual duty) and E. E. Caledonia Ltd v Orbit Valve Co plc [1994] 1 WLR 1515 (breach of a statutory duty). And compare these cases with Alderslade v Hendon Laundry [1945] 1 KB 198, where there was no such alternative ground; the wide words in the clause could only conceivably have been intended to cover liability for negligence, and so the court had to give effect to the clause. The decision in Persimmon Homes Ltd v Ove Arup & Partners Ltd [2017] EWCA Civ 373 has cast doubt of the extent to which the decision in Canada Steamship Lines v R applies to commercial contracts. When parties to a commercial contract include an exemption clause which seeks to exclude liability for negligence, the contra proferentum rules apply such that any ambiguity should be resolved against the party who put the clause forward and relies upon it. This rule has been extensively debated; in recent years the courts have favoured a more commercial, and less mechanistic, approach to the application of the Canada Steamship guidelines when interpreting indemnity clauses and exemption clauses falling outside the scope of the Unfair Contract Terms Act 1977. In Persimmon Homes Ltd v Ove Arup & Partners Ltd [2017] EWCA Civ 373 Lord Justice Jackson commented that the contra proferentum rule now has a very limited role in relation to commercial contracts negotiated between parties of equal bargaining power. The Court of Appeal considered that, in so far as the Canada Steamship guidelines survived, they are now more relevant to indemnity clauses than to exemption clauses. ++The doctrine of fundamental breach From the 1950s, the courts developed a doctrine which suggested that, as a matter of law, one party would not be able to rely on an exemption clause (no matter how clearly it was worded) to exclude or limit liability for a breach which effectively deprived the innocent party of the main benefit of the contact. These types of breach were deemed to be 'fundamental' and therefore not excludable. This approach sprang from the determination of certain judges to regulate the harmful effects of exemption clauses, particularly for individual consumers.Photo Productions Ltd v Securicor Transport Ltd ++ Third parties and exemption clauses Even if the excluding or limiting term is incorporated into the contract and sufficiently clear and unambiguous, the question may still arise as to whether the clause can operate to protect a person who is not a party to the contract. The doctrine of privity establishes that, at common law, a party outside the contract cannot benefit from its terms. Nor can that party have an obligation imposed upon it by the contract. The doctrine applies to an exemption clause in just the same way it would to any other kind of clause. Note: this area of law must be read in conjunction with the Contracts (Rights of Third Parties) Act 1999 (see Manual Chapter 8 on Privity of Contract). The leading authorities on the application of the doctrine of privity in the context of exemption clauses are Scruttons Ltd v Midland Silicones Ltd [1962] AC 446 and New Zealand Shipping Co. Ltd v A.M. Satterthwaite Ailsa Craig Fishing Ltd v Malvern Shipping Where the clause is a limitation clause as oppose to an exclusion clause the courts will apply the natural meaning and not seek to find ambiguity where none exists. -- Limitation clauses - courts should not eager to find ambiguity - less strict Notes to read a bit Statute unfair term act Consider the course of business section 1 (3) - conisder s(2) (1) (2) in relation to the negligence of death or injury is void and damages __ section (3) for implied and expressed term __ section 11 (1) sales of good. time of contracting 11(5) George Mitchell Lord Bridge said that we are reluctant to depart fro the Trial Judges decision(section 6 , Section 11 of reasonableness test and sch 2 applies and here in order to establish if it was reasonable it should be decided if there was an equal bargaining power between the parties section 6(1)A also section 13 does amount to a breach of negligence? Steward Gill v Horatio Myer- courts said reasonableness test must consider Sch 2 -- waterford electrics v sanderson as well S(11)(5_ Sch2 (a) (c) possibly . George Mitchell v Finney Lock Seeds Construction - clause must cover breach on its natural and ordinary meaning UCTA What does George Mitchell v Finney Lock Seeds tell us about how reasonableness is to be judged (section 6 , Section 11 of reasonableness test and sch 2 applies and here in order to establish if it was reasonable it should be decided if there was an equal bargaining power between the parties General notes about UCTA ( unfair term act) ( lecutres notes) Definition section 1(1) it is there to limit liability or make it voids as per sections voids section (2) (1) in relations to negligence and death and personal injury = no impact and void. selling at goods without titles section (6) (1) sales good act __ Other that are NOT void S2(2) reasonableness test S6(aA) Section 3 cases ) UCTA Written terms Section 3(1) (2) UNLESS it is reasonable Case law: St alban city council v international computers ( s11. 4 (a) (b) commercial management v Mitchell designs Smith v Eric Bush Unfair term act cases 1990 HL Issue was whether valuer owed duty to C for negligently surveying house; he had been instructed to do so not by purchase (C ) but by purchaser's mortgagee- the report contained an exclusion clause. There was liability- no reliance on exclusion clause allowed (fell foul of UCTA). Court seems quite clearly to implicitly draw the conclusion that an assumption of responsibility need not be voluntary. Lord Templeton emphasises relatonship is one "akin to contract". Lords Griffiths and Jauncey emphasise the duty established through a sufficiently proximate relationship. Lord Griffiths comments that the reason that there are references to voluntarines, which he deems a por test, in Hedley is due to the context of the express disclaimer. so assumption of responsibility can be attributed regardless of expressed intentions of the adviser. Seems court undermined Hedley Byrne because they thought it was an ineffective test- indeed several members of the court preferred a test looking much like Caparo. -- Some factors to decide whether reasonable: - were the parties of equal bargaining power - in case of advice, would it have been reasonably practicable to obtain the advice from an alternative source taking into account considerations of costs and time? - how difficult is the task being undertaken for which liability is being excluded? - what are the practical consequences for the decision on the question of reasonableness? Schuler v Wickman Express Term: Nothing to suggest the parties have labelled the term as a condition, but in any event the court has the final say Cases for unfair terms Section 2 Canada Steamship and White v John Warwick. -- Section 6 George Mitchell v Finney Lock Seeds tell us about how reasonableness is to be judged? How does Watford Electronics v Sanderson affect your conclusion? --- Section 3 How does Stewart Gill v Horatio Myer alter this? Watford Electronics v Sanderson An exemption forced upon a weaker party by a stronger party is more likely to be regarded as unreasonable. In Watford Electronics v Sanderson (2001) exclusions in the defendant's standard contract were found to be reasonable as the negotiations had been handled by experienced businessmen representing substantial companies of equal bargaining power. The Court of Appeal made the point that contracting businesses are usually in the best position to assess the commercial fairness of their agreements. A clause will only be found to be void as unreasonable if there is evidence that one party took unfair advantage of the other, or the term was so unreasonable that it could not have been properly understood/considered by the innocent party. Persimmon Homes v Arup Limited application of contra proferentem rule now in commercial contracts negotiated between parties of equal bargaining power (Jackson LJ) Less mechanistic approach now favoured if clause if clear and unambiguous, no need to construe narrowly Unfair term act Consider it plan Read the question as a whole and then decide. Do not make the mistake of not reading it as a whole. _ No damages issues here. __Its ok to read things or not?like the certain and clear one is Gibdon v MCC) ?? _ is it ok for in another contract to cite the same law case? ( if it relevant to the facts ) - Contract by contract _ State the legal issue _ Relevant law or authority _ Apply law to the fact and conclude. -_No right or wrong answer _ repeat the same process _ Define offer Treitel and ITT ( Partridge v Crittendn) First step for negotiation ( preliminary) Moreover ( Gibson v MCC ) Storer ( V MCC )an offer must Clear and certain with evidence that it binding ) Define why it is ITT ? Mirror image acception _ ousting the postal rule CONSIDER THE LANGUAGE I RECIEVE OR once posted because if it was stated it is valid once it received, then you can apply this ( was the postal reasonable here ?) _prescribed mode of acceptance ( one that is stated and clear ) by email for example ( Manchester Diocesan mandatory sating ruling out all other modes of acceptance to be effective the offeror must rule out all other method fo acceptance) If not a failure to _prescribe a mode then another mode is valid if it's equally advtangeeous of the offoror ( HE SHOULD STATE AND RULE OUT if he not ( Tinn v Hoffan ) _prescribe a mode then another mode is valid if it's equally advtangeeous of the offoror then here other modes are accepted ( Entores v Mile East Corp) ( instantaneous mode) LOOK AT THE STEPS TO APPLY entores Gibson v Manchester City Council Council wrote letter to tenant saying that it may be prepared to sell house at certain price - tenant filled in app and returned - Council changed policy. HELD by HL - there was no binding contract, offer was never made by Council. Council's letter was merely invitation to treat. What constitutes a valid offer? Treitel "expression of willingness to contract on specified terms with the intention that it is to become legally binding as soon as it is accepted by the person to whom it is addressed (the offeree)." Clear, certain, unequivocal. Steps of an Offer to outline during doing offer ITT acceptance Storer v Manchester City Council Similar facts to Gibson, but clerk wrote letter to S, asking to sign agreement in completion for change. Lord Denning - offer was certain and Storer had bound himself by accepting.Offer must be clear and certain, "I will send you the agreement" What is the difference between an offer and an invitation to treat? Invitation to treat is first step in negotiations. Not legally binding. E.g. adverts (Partridge v Crittenden), displays in shop windows (Fisher v Bell), tenders (Spencer v Harding), circulars (Grainger v Gough). Offer - offeror is prepared to become legally bound by acceptance by offeree. offer made be in respond R v Clark = no acceptance because it was in responding boluton v Jones = he was not liable as he had no knowledge of the contract being formed and did not accept -- must be communicated felt house v bindle Authorizing another party to accept the offer Powell v Lee =no contract because he was not authorized but Carlill v carbolic Smoke ball is an exception here consider those points Pharmaceutical Society of GB v Boots Boots supermarket style meant customers selected goods from shelves and took them to the counter to pay. They were accused of offering for sale goods that required the supervision of a pharmacist. Held: that the display was an invitation to treat, not an offer for sale; this took place at the till point where the pharmacists was situated. As a result Boots was found not guilty. Boots - self-service shop, P contented that selling poisons when customers put item in baskets. HELD by CA - customer makes offer at till which is accepted or rejected. Policy reason that shopkeeper can ensure that appropriate customer is purchasing the item. Carlill v Carbolic Smoke Ball Co Summary: Carbolic Smoke Ball had issued a public offer to pay reward if anyone who contracted the increasing epidemic of influenza, cold, or any disease caused by taking cold, after having used the Carbolic Smoke ball three times daily for two weeks according to the printed directions supplied with each ball. Mrs. Carlill used the Smoke Ball and did get sick. The court ruled that it was a valid offer. Unilateral offers - if the intention to bound is sufficiently clear (as it was in the case), any advert may take on guise of offer. Here, offer to the world at large which is acceptance by performance. Hartog v Colin & Shields Cannot snatch at a bargain. Colin Shields accidentally wrote down the wrong price. Hartog quickly accepted. Not binding as no objective intention. [Hare skins]It only becomes relevant if you snap up on an offer such on site for instance. Blackpool & Fylde Aero Club v Blackpool BC D said "will consider all tenders" but didn't notice one tender in postbox. Got sued for damages. HELD - Invitation to tender can give rise to obligation to consider tenders (exception of gen. rule) if plain within invitation & terms. On the facts it was. Payne v Cave (revocation) Bidder makes offer which is accepted by the auctioneer's hammer falling. Auctioneer can reject any bids made.(reserve price) Auctions: Auction hammers fall = offer acceptance in auctions Payne v Cave smith v Hughes objective = reasonable men looking overall circumstances does a scratch of nose equal an offer there is an intention to be bound by attending the auction. but by scratching her nose doesnt constitute an offer, unlikely unless this is normal at an auction applying Smith v hugh ( I believe Lord Dennign quote applies about not knowing what is going behind the mind of the contractor ) To apply we need fruther info to decide , answer it depends on whether there further facts ?? -- Aufciton general rule in Payne v Cave= for addiction and revocation you got a bilateral contract and also unelatriual contract also highest bid exception in Barry v Davis ( without reserve ) you have a claim because he refused his obligation when he said he would get damages - Barry v Davies Auctions . (without reserve) Auctioneer must accept offer from highest bona fide due to second unilateral contract that auction will be without reserve What is the effect of a counter offer and a request for further information? Counter offer - the original offer is rejected and cannot be subsequently accepted (Hyde v Wrench). Request for more info - attempt to clarify extent and terms of offer, or to ascertain if offeror would consent to making certain changes in offer. Original offer remains open, not counter offer (Stevenson v McLean). Hyde v Wrench Counter offer destroys and terminates original offer. Facts: two parties disagreed on the price, thus it was held that there was no valid offer or contract due to there a disagreement about a vital and fundamental aspect of the offer and it is the price. Stevenson v McLean Request for info is NOT a counter offer mere request for further details does not constitute a Counter-offer, i.e. an enquiry whether the seller is prepared to accept credit or when requesting delivery times What are the rules in relation to the communication of offers? Can be communicated orally, in writing, or implied from conduct. Partly expressed and partly implied. Must be communicated to offeree (Taylor v Laird). Taylor v Laird the offer must be communicated to the offeree :the fact of this case was that a wage claim in a ship . The C in this case position of work was changed, yet the D had no knowledge about this and the court held that the offeree D here did not have knowledge about the the change of position of the worker nor that he had to pay an extra wage, thus there was no offer in the first place.The defendant had not received any communication or offer of work in this capacity from the claimant, and there was, therefore, no basis for a contract. The court reasoned that it would be unjust to hold a party bound by an offer which he had not been made aware of, and therefore had no opportunity to accept or reject; as such it is not possible in English contract law to accept an offer 'in ignorance'. Boulton v Jones Acceptance must be made by offeree and only the offeree must accept it What are the rules in relation to the termination of bilateral offers? Rejection, revocation or lapse. Rejection must be communicated to offeror also counter-offer. Revocation - can happen before acceptance (Routledge v Grant). Must be communicated (Byrne v Van Tienhoven). Indirect communication can be OK if clear intention to revoke reached offeree (Dickinson v Dodds). Routledge v Grant Revocation of offer. The offeror is usually entitled to withdraw the offer even if promised to keep it open for a specified time (separate contract needed inc consideration to keep offer open) Offer can be withdrawn at anytime before prior acceptance What are the rules in relation to the termination of unilateral offers? Must be 'Same notoriety' as offer - Shuey v USA Can be done prior to complete performance (GNR V Witham).Great Northern Railway v Witham However, part performance and can complete. Hardship to offeree to withdraw (Errington v Errington & Wood - promise of house in return for paying instalments.) Daulia v Four Mill Bank Nominees - must be implied obligation of part of offeror not to prevent condition becoming satisfied, arises when offeree starts to perform. What constitutes a valid acceptance? Acknowledgement by offeree of acceptance and ascent of term of offer. Silence does not count. ( felthouse v Bindley) Must mirror the terms of the offer (Hyde v Wrench). Must be in response to the offer (Gibson v Proctor, R v Clarke - rescue cases). What are the rules in relation to communication of acceptance? Bilateral - must be communicated to the offeror, Silence gen. not valid (Felthouse v Bindley) Can be communicated by 3rd party if authorized by offeree (Powell v Lee) Instantaneous - must be communicated/received (The Entores) Must be received within office hours to be valid (The Brimnes) Felthouse v Bindley Silence cannot constitute acceptance.This is because acceptance must be communicated. The case of the fact is an uncle negotiated to sell his nephew a horse, however, he sold it to someone else. The nephew assumed silence was an acceptance, but the court held it was not as acceptance should be communicated between the parties. In a problem question cite this case whenever there is silence and no respond. Powell v Lee Acceptance may be communicated by an authorized third party Headmaster; third party acceptance is legally permissible where the third party is authorized to accept In this case, someone was promised a promotion and it did not go through. held that there was no contract as there had been no authorised communication of intention to contract on the part of the body, that is, the managers, alleged to be a party to the contract. Entores v Miles Far East Corporation Instantaneous communication- acceptance is made on receipt, if not received because of offeror fault, then acceptance is made. (this is not a universal rule, as stated by Wilberforce LJ in Brinkibon) Acceptance must be communicated (Entores v Miles). . Consider Denning's comments in Entores regarding negligence. If the offeree has any indication that acceptance was not properly received; the obligation would be on him to try again (Denning in Entores). If he fails to try again, there is no contract. However, ifthe offeree reasonably believes that he has communicated his acceptance (as is the case with George) but it is not received due to the fault of the offeror, thenacceptance will be deemed to be binding when it would have been reasonably received by the offeror (Denning in Entores). Lord Denning famous saying imagine there was an airplane flying and I did not receive acceptance ( for instance, there was communicated acceptance between the offeror and offeree ,thus there is no contract ) The Brimnes Must be within office hours to be valid ( Instantaneous communication) c.f. Mondial Shipping & Chartering BV c Astarte Shipping Ltd. "no universal rule" Brinkibon Ltd v Stahag Stahl. Thomas v BPE Solicitors Email received by a solicitor at 6pm Friday evening but ignored until Monday. An email sent at 6pm was deemed by the Court to be effective when it arrived in the inbox at 6pm on the grounds that it was then available to be read by the recipient. Solicitor could reasonably be expected to have read it (office hours). Postal rule doesn't apply to email: Thomas v BPE Solicitors; It was held here similary to the Brimnes case that there is because the email was outside of office hours, there is no liability on the solicitor Mondial Shipping v Astarte where a message sent later on in the day on a Friday was held to only be communicated on the next working day (Monday morning). This seems fair as it is not practical to regard all messages sent at all times as indifferent to face to face communication. The law regarding instantaneous seems to be more concise and fairer than the postal rule, instantaneous methods have been used for many years since the cases above and has had little or no effect on commerce which could be an indicator that it is perceived as just and acceptable by society. - What are the exceptions to the general rule that acceptance must be communicated? Can be by conduct (Rust v Abbey Life Assurance). The postal rule (Adams v Lindsell - valid on posting if addressed and posted correctly) However, Holwell Securities v Hughes - if not expected and 'manifest inconvenience and absurdity', postal rule can also be excluded. Revocation of posted acceptance may be possible (Dunmore v Alexander) but this Scottish case disapproved by Thomson v James. Also, unilateral offers (Carlill). Adams v Lindsell Postal rule for acceptance established (accepted when post is properly posted not when received and this is a general rule . Adams v Lindsell (1818) Acceptance by Post. The defendant wrote to the claimant offering to sell them some wool and asking for a reply 'in the course of post'. The letter was delayed in the post. On receiving the letter the claimant posted a letter of acceptance the same day. However, due to the delay the defendant's had assumed the claimant was not interested in the wool and sold it on to a third party. The claimant sued for breach of contract. Held: There was a valid contract which came in to existence the moment the letter of acceptance was placed in the post box. This case established the postal rule. This applies where post is the agreed form of communication between the parties and the letter of acceptance is correctly addressed and carries the right postage stamp. The acceptance then becomes effective when the letter is posted. Holwell Securities v Hughes If the postal rule 'causes manifest inconvenience and absurdity' Lawton LJ, it won't apply. Postal rule cannot apply where it leads to an absurdity, can be ousted if explicitly ruled "by notice in writing" The postal rule can be ousted by saying offer is only exercisable on notice. Failure of Posting Rule: Post Never Arrived. The negotiating parties cannot have intended that there should be a binding agreement until the party accepting an offer or exercising an option had in fact communicated the acceptance or exercise to the other. This is the exception to the postal rule that ousted it . The exception to the Postal Rule. D offered P a six-month option to buy a certain property. He wrote back just under the time but the letter was lost. Court said postal rule did not apply in that case. No deal. The proscribed method of acceptance clearly stated was by post and so the postal rule did not apply. Re London & Northan ex Parte Jones exception to the posted rule if its not posted properly Henthorn v Fraser The post is an acceptable form of acceptance exception applies if its unreasonable to use it Revocation of the offer must be communicated to the offeree, prior to acceptance of the offer, to be effective. an unconditional offer remains capable of acceptance until the offeree is made aware of its withdrawal Household Fire Insurance v Grant Acceptance complete on posting, even if lost and never arrives. Lord Justice Bramwell dissented, arguing that the postal rule can hinder transactions and that acceptance should only be effective once the letter arrives. Quenerduaine v Cole Postal rule ousted. Offer which was made by telegram (instantaneous) implies equally quick acceptance required Postal acceptance is not permitted where a telegram identifies need for prompt acceptance Byrne v Van Tienhoven Revocation must be communicated - no postal rule Def. offered in a letter 1st Oct to sell tin plate to claimant. Letter received 11th Oct and offer accepted by telegraph. On 8th Oct def. sent a letter of revocation received on 20th Oct. POSTING RULE - ACCEPTANCE EFFECTIVE MOMENT IT IS POSTED, OFFER, REVOCATION, REJECTION NOT EFFECTIVE UNTIL RECEIVED.October 1 D wrote from Cardiff to NY offering to sell tinplates to the P in New York October 8 D wrote withdrawing or revoking the offer October 11 the first offer reached P who accepted immediately by telegram and letter October 20 letter of withdrawal reached P. Court said offer was accepted and contract formed on October Getreide-Import Gesellschaft v Contimar Misaddressed letter. postal rule doesn't apply. It is only valid when it arrives. [misaddressed letter]Acceptance - if addressed incorrectly a postal acceptance is only valid from when it arrives Payne v Cave Revocation can occur any time before Acceptance. Acceptance at the fall of the hammer. Payne v Cave At auction, bids are offers, and the hammer fall is acceptance. and revocation can occur any time before acceptance . Aas well What about prescribed modes of acceptance? Case = Manchester Diocesan Council v Commercial & General Investments, if offeror has specified particular mode, but must be extremely clear). However, if another method is 'no less advantageous', may be OK (Tinn v Hoffman) Tinn v Hoffman If the offeror fails explicitly to exclude alternative modes then another mode that is no less advantageous will suffice (Tinn v Hoffman). Manchester Diocesan Council for Education v Commercial and General Investments Acceptance can be prescribed in a method where an offer is explicit and rules out all alternatives (e.g. acceptance by [X] only) Tinn v Hoffman Cross offers do not amount to contract. identical offers Communication of acceptance. In the case of a cross offer, no contract exists. Two parties each at the same time made cross offers (by post) without reference to the neither, so neither was accepted. This is quite rare (old case). Cross offers do not constitute a contract . Blackburn J: 'The promise or offer being made on each side in ignorance of the promise or offer made on the other side, neither of them cane construed as an