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Aspects of contract negligence for business
Unit - 05
Assignment-1: business contractSubmission date:
Contract: A contract is a legally enforceable promise, made in writing or orally
Offer: is a statement of willingness by one party to enter into a contract with acceptance. With the intention that it shall be binding upon the offeror as soon as it is accepted by the offeree Case; Carlill v Carbolic Smoke Ball Company
Invitation to treat: Invitation to treat is not an offer Case; Fisher v Bell
Display of goods: Display of goods is an invitation to treat. Case; Fisher v Bell .Because there is no intention.
Intention: After a valid offer, there must be an intention to be legally bound by the contract Consideration: It needs to move from the person who acts on the promise Case; Thomas v Thomas and need not to move to the person who makes the promise. Case; Tanner v Tanner. Past consideration is not good consideration. Case; Lamplugh v Brathwait
Acceptance: It is the final and unqualified assent to the terms of the offer.
Capacity (to enter a contract)
- S/he is above the age of 18 and
- Is mentally stabled
There can be different types of contract such as:
Written: Signature (A person is always bound by his/her signature) Case; L'Estrange v F Graucob Ltd
- Distant selling: Contracts, which are made via telephone, mail, internet, letter, etc.
Face to face: Oral or verbal contract
Implied term: An implied term is not stated
Expressed term: An expressed term is stated
- Condition: It is an essential term of the contract, which goes to the root, or the heart of the contract. Breachof these termsrepudiatesthe contract, allowing the other party todischargethe contract; Case; Couchman v Hill. One can claim damage with termination or simply affirm (continue) and still claim damages.
- Warranty: It is a lesser, subsidiary term of the contract. A breach of warranty only enables the claimant to claim damages, thus, no right to terminate the contract. Case; Bettini v Gye
- In nominate terms: Not a condition or warranty. It is a minor term which if broken may have actions, if the claimant can prove that s/he has suffered significant
2.1 & 2.2
Mumita placed an advertisement in a newspaper on 1st January 2010. The advertisement was for a train set, which was offered for $1500. As we have earlier discussed that, an advertisement is not an offer, it is an invitation to treat Case; Patridge v Crittenden
Therefore, Mumita was not legally bound.
On 2nd January Shihab, an interested buyer called Mumita and offered $1000 for the train set, where the actual price offered by Mumita was $1500
Mumita in reply said that she will not negotiate and will not sell the train set for anything less than $1500. She promised Shihab that she will give him some time of about 6pm until 3rd January to make up his mind.
From the Case; Routledge v Grant it can be said that a promise has no legal binding
On the same day that is, 2nd January another interested buyer, Farial called Mumita and offered $1200 (which was also not the actual price offered by Mumita) for the same product. Mumita this time, asked for some time to decide. On the following morning, Mumita discovered that the market value or the actual price of the train set was around $800 Mumita called Farial and informed that she is willing to sell the train set for $1200 (as Farial offered). Therefore, there was a offer (from Farial), an expression of willingness, intention to be legally bound, a consideration, and a sign of acceptance
Farial informed Mumita, that he will collect the train set on 3rd January and make the payment.
Meanwhile, Shihab took his time to make a decision and called Mumita around 2:00pm on 3rd January and told her, that he is willing to buy the train set for $1500, the price Mumita asked for (without any negotiation). Mumita agreed and by 4.30pm on the same day, Shihab cleared all the payments. Here, we can see that there was an offer of $1500, an intention to be legally bound by the law (from both the parties), consideration and acceptance
On the same day, Farial came in the evening and heard what happened. Farial now claims the train set and believes that Mumita entered into a contract with him and she was legally bound to Farial. On the other hand, Shihab claims that he is the owner of the train set as he cleared all the terms and payments, and entered into a valid contract with Mumita.
According to the whole scenario, it is safe to assume that Mumita went on with a valid contract with both the parties.
There was a valid contract between Farial and Mumita. As Farial offered Mumita, an amount for the train set, she agreed and showed an expression of willingness, there was consideration, intention, followed by acceptance.
On the other hand, there was also a valid contract between Shihab and Mumita as in this case also there was an offer, an expression of willingness (from both the parties), consideration, intention and acceptance.
Mumita already went into a verbal contract with Farial. It was not a promise where Mumita was legally bound to sell the train set to Farial at the given price Mumita went into a contract with him he can claim damages
Saddam promised Nafis, his friend, a cup of coffee and that he will pay him BDT 200 for typing each task of the assignment. Nafis in honest belief did so. Saddam kept treating him with cup of coffee for each task but he never paid him the money that he promised. When Nafis asked for the money, Saddam told him that, he is keeping a record of it and will pay him the entire money altogether. However, when Nafis completed the assignment and submitted it to Saddam. Saddam refused to pay the money to Nafis. According to Saddam, Nafis did not do his assignment properly, and Saddam just promised Nafis and he never really meant it.
Nafis believes that he has a solid claim against Saddam as they both entered into an agreement.
Here it was merely a promise and not a contract. It was not an offer but a promise, there was a consideration (typing the assignment) but Saddam had no intention to create legal relation.
Even if Nafis can prove it, it can be assumed that Nafis cannot sue Saddam nor can he claim any damage. Moreover, Saddam is also reluctant to pay Nafis because he is now faced with some financial crisis. Saddam has recently moved to Junaid’s house (Nafis’s cousin). Before moving to Junaid’s house Saddam sold his car as Junaid promised him that Saddam will have equal share in his car if he stays with him. After few months, Junaid and Saddam are having some problems living together. As a result, Junaid wants Saddam to move out from his house. Now Saddam believes he is entitled to get some compensation and the share of the car as he sold his car and left his house for Junaid. According to Junaid, Saddam should get nothing, as he never meant the promise to have any legal impact.
If Saddam can prove it he can sue Junaid and can claim damages Case; Parker v Clarke
In this case, it can be advised that Shibly can sue Nikita and can claim the property back, as during the agreement, Shibly was drunk or intoxicated by Nikita and was unable to take a decision for himself, at that time. He was intoxicated during the agreement; Shibly can claim his shop back.
Also, If Shibly was 14 years old (minor; under 18), instead of being intoxicated and if he signed the contract with proper knowledge he still could claim his property back.
Raisa decided to purchase a washing machine for her mother. Raisa visited a local store ‘X’, which sells washing machine. The seller Faisal, showed her the machine on display and explained her, how to operate the machine. Raisa was happy with the performance and expressed her willingness to buy the machine. Faisal informed Raisa that if she wishes to buy the machine she would have to sign some papers. Raisa was not sure whether she should and Faisal assured her that it is a mere formality for the shop, which should have no effect. Raisa loved the machine and though she could not get a better deal (BDT 20,000/=) than this one, hence without being bothered to read the papers, she signed them. When all the formalities were completed, Faisal moved away from the counter to attend another customer, Raisa then noticed a ‘notice’ in small prints behind the counter. The notice states- ‘All purchases are made at the request of customers and after signing the agreement the authority has no responsibilities whatsoever on the matters that are specified in the agreement’. Raisa did not bother, as she was confident that she would have no complaints as assured by Faisal. After a week from the day of purchase when Raisa’s mother started using the machine, they both realized that the machine makes extreme noise, which results in complaints from neighbors. They also noticed a wired scratch on the machine and realized that the spinner does not function properly. Raisa was disappointed as she requested for a white colored machine but the shop has packed a blue one.
On the 4th day of use, the machine broke down and stopped working completely. Raisa went to the shop to return the machine, where Faisal pointed out the terms of the contract, which she has signed. The main points of the contracts were that:
- The buyer must pay BDT 27,000 to the shop ‘X’.
- The buyer may change the goods within 2 days from the day of purchase, however s/he cannot return the goods if it is defective due to purchaser’s fault.
- Goods must be returned in the same condition as it was taken.
- If the condition changes then the shop ‘X’ has the right to refuse to take return of the goods.
- Goods will only be regarded sold once full payment has been made.
- In case of non-payment of the full amount, the shop ‘X’ has the authority to take the goods back.
- Full payment must be made within 20days of purchase
- By signing the agreement, the purchaser consents to the fact that s/he has checked and are satisfied with the quality and look of the good.
- The authority is not responsible for any damages caused by the product.
- In this case, Raisa
- signed the papers where all these terms were included, she should have read all the terms and conditions. As once a signature is put, a person is always bound by an agreement to which he/she has put the signature.
- Case; L’Estrange v F Graucob Ltd
If she fails to read the terms and signs the contract, it is her fault and the shop cannot be blamed here. If she signs a contract, she is bound by the terms
However, there are few acts
- S 13(1) provides that where the buyer is sold goods by description, the goods must correspond with this description. Case; Harlingdon v Christopher Hull.
However, the quality of the machine was not satisfactory as it made extreme noise, the spinner did not function properly, there was also a wired scratch on the machine
In addition, she asked for a white washing machine but the shopkeeper gave her a blue one. Here the color was the warranty
- S2 of UCTA-1977 provides that any obligation for death or personal injury cannot be excluded.
Here, if Raisa or her mom got injure while operating the machine then Raisa could have sued the shop or the authority of the shop as UCTA states that any obligation for personal injury cannot be excluded.
Jerin bought a sandwich from a shop, which was described as fresh. But after having a bite from it, she realized it was 2days old. Here the description given, did not match with the quality.
According to the law goods must meet up with the descriptions .So she can sue the shop as their description did not match with the quality of the product. Also if my little brother felt ill after having the sandwich, she could sue the shop for any personal damages or health issue made by or because of the sandwich, as UCTA (1977) protects the consumers or the customers if anything causes health issues or sickness.
Jerin bought a waterproof watch from a shop that had a notice in large prints ‘the authority takes no responsibility as to the working conditions of any of our products’ and she noticed the statement before purchasing it. Later, she went to swim with the watch on and after some time the watch stopped working.
Now in this scenario she can sue the shop for the watch although they already mentioned that the authority will not be responsible, still she can sue the shop because according to the goods of sales act, goods must meet with the descriptions.