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Task 1

The case of Mary v Tom can be analysed using various cases for explanation. There are great similarities between this case and that of Hyde v Wrench. This case will be of great use when identifying what remedies, if any, Mary has against Tom. Hyde v Wrench shows authority that a counter offer acts as rejection and ‘Kills’ the original offer, the offer is no longer valid, neither is it up for acceptance at a later date. In the case of Mary v Tom there are multiple counter offers. The first offer from Tom of £25 for the two books was rejected by Mary when she responded on 1st July with the counter offer of “both textbooks for £40”. Following the precedent and authority set by Hyde v Wrench the original offer of £25 no longer can be accepted. The counter offer “killed” the previous offer. In Hyde v Wrench; the original offer from the defendant of selling a farm for £1000 was rejected by the counter offer of £950. The Plaintiff then attempts to accept the offer to pay £1000. This could not be done; it was held that there was no contract concluded. Lord Langdale (MR): “There is no contract. The offer to buy at £950 rejected the offer to sell at £1000, and it was not competent to the plaintiff to “revive” it by acceptance”. There was no offer of £1000 “on the table” for acceptance by the plaintiff. This can be compared to Mary v Tom, the original offer of £25 being rejected by the counter offer of £40 by Mary.

Tom then responded “I accept your offer to supply one S/H law textbook for£20”, this can be interpreted in two ways; firstly it could be seen as a counter offer, the offer from Mary was “£40 for two textbooks” it was never specified that one would be £20, meaning Tom’s £20 acted as a counter offer. Mary then responds with a further counter offer of £25 for one textbook. If seen as a counter offer, following the authority set from Hyde v Wrench this would reject the previous £40 and £20 offers. If this is so, no acceptance took place within the case. No contract was ever formed. Mary would have no remedies against Tom, except to return the book, it was purely a series of negotiations and counter offers.

It is far more likely to be viewed as a “Clarification of Offer” Tom’s offer of £20 was not acting as a counter offer but a letter of intent/clarification of terms. Mary’s response of £25 for one textbook was acting as clarification of the offer. This means an offer had been clarified and upon final acceptance a binding contract will have be formed.

The problem for Mary is that even if this was seen as a ‘clarification of offer’ it does not count as acceptance, she relied on silence as a form of acceptance and as set out in the case of Felthouse v Bindley, it was is held that “Silence does not amount to acceptance”. In this case it was ruled that “Acceptance must be communicated clearly and cannot be imposed due to silence of one of the parties”. As a result of this Mary’s position is severely weakened, there are few if any remedies against Tom. Although there was intention of completing the sale there was no final acceptance communicated, no contract was formed. Effective communication of acceptance did not take place.

Mary’s original advertisement can be analysed, was it an offer capable for acceptance? Or an “Invitation to treat” whereby Mary is not obliged to accept any offer. This can be compared to two main cases; firstly Spencer v Harding and also Carlill v The Carbolic Smoke Ball Co. Mary’s advert states no prices, and contains little information. Like in Spencer v Harding it does not state any justification or selection procedure for acceptance for the tender or in this case for Tom. Therefore it can be described not as an offer but simply an explanation that Mary is ready to bargain and receive offers for the textbooks. She is not obliged to accept any offer. Just like Harding was not obliged to accept Spencer’s tender. This means the first offer came from Tom with £25 for the two textbooks. As a result Tom would have little or no remedies against Mary about having to accept any of his offers.

If the advertisement had quoted figures i.e. an asking price for the two textbooks, then this would have been classified as an offer e.g. to sell the two textbooks for £25. As a result of this Mary would have been obliged to accept Tom’s first offer of £25. This is exemplified in Carlill v The Carbolic Smoke Ball Co, it was held that the advert offering £100 was an offer capable of acceptance. So following the precedent from this case Tom would be able to take action against Mary if she had advertised in such a way and did not accept his offer. Mary had not done this; she merely provided an invitation to treat.

Alternatively if like in the Harvela Investments v Royal Trust of Canada case it was “undertook to accept the highest offer” Mary will have been obliged to accept and form the contract.

In conclusion, for a binding contract to be formed an offer needs to be accepted, this did not happen in this case, therefore Tom is not obliged to pay for and accept the books, no contract was formed. There is only one remedy Mary can have against Tom, she can demand Tom to return the textbook, but there can be no claim to receive payment for this book.

Task 2

The case of Donoghue v Stevenson established that there are circumstances in which one person owes another for a breach of a duty of care. They are liable in negligence. Lord Atkin defined “this case is authority for negligent acts or omissions being actionable when actual physical damage or injury results”. Donoghue v Stevenson was a landmark case in English law and the tort of negligence. Prior to this case the liability of a manufacturer was limited to “contract” i.e. no contract, no liability. A case prior to Donoghue v Stevenson where this was the case was in Winterbottom v Wright. In this case there was a contract between stagecoach and the defendant (Wright) for the safe up keeping of the coach. The plaintiff (Winterbottom) was seriously injured whilst driving the coach, the legal issue being whether or not the plaintiff is entitled to claim against the defendant for his injury. The defendant claimed it was the plaintiff’s fault and it was due to his poor working. At this time, the court still looked at these cases in the privity of contract. It was judged that Winterbottom was not entitled to claim against Wright as no contract had been breached. Winterbottom v Wright was used for some of the judgement s of Donoghue v Stevenson. Post Donoghue v Stevenson no contract needs to be present, the manufacturer has a duty of care and would be liable.

Facts Of Case:

Plaintiff = Donoghue

Defendant = Stevenson

Court = House of Lords (HOL)

Mrs Donoghue purchased a bottle of ginger beer; in a sealed opaque bottle. She poured half of the bottle out into a glass with ice cream. When her glass was empty again her friend poured the remaining ginger beer out into her glass, at this point a decomposed snail emerged from the bottle. Mrs Donoghue suffered gastric illness and shock from consuming the defected ginger beer. She claimed against Stevenson, claiming as a manufacturer they owed her a duty of care to prevent the presence of any dangerous hidden defect in the product. This duty, she alleged, had been broken and she had suffered damage as a result, in the form of illness and shock.

Main issue of case = Did Stevenson owe Donoghue any duty of care? Has this duty been broken in negligence?

Judges = Lord Atkin, Lord Thankerton, Lord Macmillan, Lord Buckmaster, Lord Tomlin

Judgement = 3:2 in favour of Mrs Donoghue, Stevenson as a manufacturer was liable and had breached its duty of care, even though no contract was present.

Assenting = Lord Atkin, Lord Thankerton, Lord Macmillan

Dissenting = Lord Buckmaster, Lord Tomlin

Summary Of Judgements:

Dissenting:

Lord Buckmaster used the case of Winterbottom v Wright as his precedent for judging Donoghue v Stevenson. Within his judgement Buckmaster quotes Alderson B who stated “The only safe rule is to confine the right to recover to those who enter into the contract”, Lord Buckmaster based his judgement on Winterbottom v Wright, as previously explained no action could be taken against Wright because there was no contract in place between the two, there was no contract between Donoghue and Stevenson and therefore Stevenson cannot be seen as liable. Buckmaster “There can be no special duty attaching to the manufacture of food, apart from those implied by contract”.

Lord Tomlin judged that there cannot be an exception for food over other articles; it would risk the rules being applied too widely. Lord Tomlin “If the appellant is to succeed it must be upon the proposition that every manufacturer or repairer of any article is under a duty to everyone who may thereafter legitimately use the article to exercise due care in the manufacture or repair…There can be no distinction between food and any other article.” Lord Tomlin fearedif an exception was made from the conventional “contract” view on the case this would then be too widely applied, so judged dissentingly.

Assenting:

Lord Atkin states that there should be a right to sue in negligence on the basis of “moral wrongdoing”. He relates this to the 10 commandments “Thou shalt love thy neighbour as thyself”. The “neighbour principle” was created. Atkin said “The rule that you are to love your neighbour becomes in law: You must not injure your neighbour” and that “You must take reasonable care to avoid acts or omissions which you can reasonably foresee would be likely to injure your neighbour. Who then, in law, is my neighbour? The answer seems to be persons who are so closely and directly affected by my act” Therefore Stevenson had a duty to ensure anything that my harm (decomposed snail) their neighbour (Donoghue) was not present. Atkin uses the judgement of Brett in Heaven v Pender; in this case an owner of a dry dock supplied ropes which supported a stage over the edge of a ship. The stage failed causing injury to the employee, who attempted to claim. Although Brett was in the minority judgement he suggested there was a wider duty to be responsible in tort to those who might be injured if “ordinary care and skill” was not exercised. Stevenson had not exercised such skill and care and Atkin used this to judge Stevenson as breaching their duty of care.

Lord Thankerton judged alongside Lord Atkin; “I have had the privilege of considering the discussion of these authorities by my noble and learned friend LORD ATKIN in the judgment which he has just delivered, and I so entirely agree with it that I cannot usefully add anything to it”. He added that “the defender was required to exercise due and reasonable care for her safety”.

Lord Macmillan; “In my opinion, he owes to those whom he intends to consume his products”. “He manufactures his commodities for human consumption” and this “imposes upon him a duty to take care to avoid injuring them”.

Donoghue v Stevenson’s Ratio Decidendi has been used in a number of cases and has impacted greatly on construction companies, per Lord Buckmaster “…If such a duty exists ….I cannot see any reason why it should not apply to the construction of a house….if a house be, wit sometimes is, negligently built, and in consequence of that negligence the ceiling falls and injures the occupier or anyone else. It was influential in Voli v Inglewood Shire Council, in this case the Plaintiff was injured when a stage in new public building collapsed. The builder was claimed against, it was their duty to ensure it was safe whilst on their site. If a builder is negligent in the performance of its works then the principles of Donoghue v Stevenson will be applied.

How Companies Protect Themselves And Advice To Builders:

Main advice is to ensure they perform with ‘skill and care’ and a due diligence system is in place, meaning quality is constant throughout. This can be done in a number of ways; ensure training is of high standards, meaning high quality skilled staff. Ensure all materials used are of good quality and their sources are traceable i.e. keep records just in case needed as evidence (form of quality assurance.) Ensure all systems of business are set up alongside ‘good practise’. These can be put into a contract as implied terms or as expressed terms. There is an obligation to the customer.

Ensure they comply and look closely at the Occupiers Liability Act and the Defective Premises Act, in terms of not breaching their statutory duty. All site users and visitors can claim against the builder therefore there is an obligation to all 3rd parties on site.

Businesses reduce their risk by protecting themselves using various types of insurance:

It is advised that any insurance policy covers:

Task 3

Consideration is one of the three main elements needed to form a valid contract, alongside an agreement and an intention to be bound. If consideration is not present then the contract will be void and invalid. Consideration represents the “price” of the promise. It can take the form of money, goods or services. Consideration does not have to be equally balanced in value on both sides of the contract. Consideration must be legal. A contract cannot be formed if there is a promise to do something for a consideration which has already happened in the past. There are two forms of consideration; executory consideration where there is a promise to perform in the future and executed consideration which is consideration given when forming the contract.

Stilk V Myrik

This was a dispute between the crew of a ship and its owners. The crew were being employed to sail the ship from London to the Baltic and back again. On the way some of the crew deserted. As a result the captain promised the crew that the wages of those who deserted would be split equally to the remaining crew if they sailed the ship back. When the ship returned to London the owners refused to follow through with this promise.

It was held that the crew could not claim against or recover from the owners. This decision was based on the crew not actually being forced by contract to continue the sailing of the ship, if it was in the contract then they will have had consideration to do so, because it was not they hadn’t actually provided consideration to do so and therefore this cannot be recovered.

William V Roffey Bros & Nicholls

The defendant subcontracted carpentry work to the plaintiff and agreed a price of £20,000 for work on 27 flats. Whilst working the plaintiff ran into financial difficulties and expressed that the work had been undervalued, he might not be able to complete the works. The defendant agreed, and in fear of breaching their own contract due to missing completion dates and incurring penalty charges they agreed to pay an extra £10,300 in instalments for the remaining work. The defendant only made one further payment and then no further. The plaintiff stopped work and attempted to claim and recover against the defendant.

It was held in favour of the plaintiff; the defendant had agreed this renegotiation and had received practical benefits from the promise, including avoiding a penalty charge for the delay of the contract/work. Therefore the defendants promise was binding.

In the case of Williams v Roffey Bros it was judged that consideration was present and therefore the plaintiff could claim back against the defendant. This was because as a result of the promise the defendant received practical benefits and therefore was legally binding, not paying therefore breached this contract. Whereas in Stilk v Myrick this consideration was not present, therefore the promise of the defendant was not binding and the plaintiff could not claim against the defendant. In Williams v Roffey there was a clear agreement entered voluntarily, whereas in Stilk v Myrick there was a risk of blackmailing occurring. In Williams v Roffey there was no issue of improper pressure being put upon the defendant. In Stilk v Myrick the defendant did not seek to avoid delays for example, no practical benefit was received as a result.

It is for the reasons above why the judgements of these two cases differ even though the scenario appears very similar.

Task 4

The case of Hire Lorry (HL) v Cut&Cart Ltd (C&C) is a case of looking at misrepresentation. Advice can be given to HL via the use of other cases on misrepresentation. Howard Marine v A Ogden is very similar to this case. Based on the judgements of this case advice can be given to HL as follows. It can be advised that in terms of contractual warranties HL should not be concerned; there was a lack of intent to be bound in the statements made about lorry capacities of 20Te, these were not contractual warranties, they will not be liable. On the other hand these statements about lorry capacities of 20Te could make them liable under the Misrepresentation Act 1967; this is because C&C relied on these statements without reason for doubting their validity. This expressed clearly in the judgement of Lord Denning in Howard Marine v Ogden. Likewise, under section 3 of the act, it would be found that no exclusion clause would be effective for Hire Lorry because it was not “fair and reasonable”. So under the Misrepresentation Act HL would be found liable and should therefore seek to avoid action against them from C&C. Under the breaching of “duty of care”, under the rule of Hedley Byrne v Hellers and Partners, it is advised Hire Lorry were not under a duty of care and if they were like judged for Howard Marine, this had not been breached.

Further information on the situation is needed to give more detailed advice, for example were the statements made verbally or communicated in writing? If written did the quotation form part of the final contract? I presume the contract was simply to supply the lorries, no capacities were specified. If communicated in writing this can be looked at alongside British Steel v Cleveland Bridge, and if the contract was based on the supply of lorries (no capacities quoted) then the statement of 20Te can be viewed as a letter of intent meaning HL was not contractually bound. Therefore HL should expect payment of Quantum Meruit (reasonable sum), like received by British Steel. Without more information such advice cannot be definite.

There is little information given as to how the 20Te information was asked for, if it was asked for as advice then advice has to be paid for, if not it is just information and not legally binding. If it was not paid for HL should be confident C&C cannot prove this 20Te statement was made.

If HL had made these statements as contractual warranties then they would have been liable, via breaching this contractual warranty. This is like Esso being found liable in Esso Petroleum v Mardon. Esso had a duty of making a forecast of skill and care. This is not the case for Hire Lorry though, as the statement about lorry capacity was not binding contractually.

In conclusion, giving advice to Hire Lorry is extremely difficult due to a lack of information about the situation. It can be clearly stated that HL can sue C&C for hire payments as I presume although not stated at some point there was a contract between the two, to supply the lorries. Hire Lorry supplied the lorries and have not been paid. C&C are merely attempting to retrieve the liquidated damages for delay from their supplier.

If the contract did not state capacities, and that HL guided C&C about capacity sizes in good faith they should be fine. C&C will have a lot of explanation and proving to do if they are going to be successful, for example proving the capacity of the lorries caused the fundamental delay, and also depending on how these statements were communicated that HL are liable based on their “20Te” statement. They were not contractually bound therefore claiming of the liquidated damages is unlikely. Without more detailed information this advice is uncertain, more information is needed.