Introduction to Legal Problem Solving - Part 3 – Using Case Law Introduction to Legal Problem Solving - Topic 5 Glenn Dennett

Source of legal rights Contract Torts Statute

How to Use Case Law We will use the Law of Contract to illustrate how we use case law to solve legal problems The Law of Contract is complex so we will give you basic concepts

What is a contract? How do we know whether or not a contract has been formed? Case law

A Contract is an agreement that is enforceable at law.

How do we find the law of contracts? Mainly case law e.g. Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256 There are some statutes that also determine the law of contracts eg. Unfair Contracts Act

Carlill v Carbolic Smoke Ball [1893] 1 QB 256 Unilateral contract – ie. an offer can be made to world at large Distinguish offer from invitation to treat by looking at intention of offeror Unilateral contract – offer made at large, but only accepted by those who actually perform Unilateral contract – communication of acceptance not required Consideration can equal detriment/effort

The Elements of a Contract OFFER + = AGREEMENT ACCEPTANCE INTENTION CONSIDERATION CONTRACT + + 🡻

An Offer is “the indication by one person to another of his or her willingness to enter into a contract with that person on certain terms” Carter and Harland, “Contract Law in Australia” 4th edn p28 Case law?

An offer is not.... From Harvey (Purchaser) to Facey (Vendor) A request or the supply of information Harvey v Facey [1893]AC 552 From Harvey (Purchaser) to Facey (Vendor) Will you sell us Bumper Hall Pen? Telegraph lowest cash From Facey to Harvey Lowest price for Bumper Hall Pen £900.“ From Harvey to Facey We agree to buy Bumper Hall Pen for the sum of nine hundred pounds asked by you. Please send us your title deed in order that we may get early possession.

Harvey v Facey [1893]AC552 Lord Morris at 556 “the mere statement of the lowest price at which the vendor would sell contains no implied contract to sell at the lowest price.” Lord Morris at 556

An offer is not... An invitation to treat Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd [1953] 1QB 401

Examples of Invitations to Treat advertisements/circulars price lists displays of goods in shops calls for bids at auctions, and calls for tenders. So, is every ad an invitation to treat?

What do the cases tell us about offers? The offeror must intend to be bound by the offer E.g Harvey v Facey Boots case We can often determine this intention by looking at the amount of detail in the offer (it should contain enough detail to allow a binding contract to come into existence) E.g Carlill v Carbolic Smoke Ball The offer must be communicated to the offeree All cases

All an Offer needs is a ‘yes’ to make a contract

The Elements of a Contract OFFER + = AGREEMENT ACCEPTANCE INTENTION CONSIDERATION CONTRACT + + 🡻

Acceptance An Acceptance is a FINAL and UNQUALIFIED assent to the terms of an offer made in the manner specified or indicated by the offeror An Acceptance is the “yes” which ends negotiations

Acceptance must respond to the offer So, only those persons: to whom the offer was made; and who have the offer in mind at the point of “acceptance” may accept

R v Clark (1927)40 CLR 227 Must accept offer with offer ‘in mind’

R v Clarke “it is not an absolute proposition of law that one who, having the offer before him, acts as one would naturally be induced to act, is deemed to have acted on the faith of or in reliance upon that offer. It is an inference of fact and may be excluded by contrary evidence.” Starke J at 244

Acceptance must be communicated Silence is not sufficient Felthouse v Bindley (1862) 142 ER 1037

The Elements of a Contract OFFER + = AGREEMENT ACCEPTANCE INTENTION CONSIDERATION CONTRACT + + 🡻

Intention to Enter into Legal Relations “To create a contract there must be a common intention of the parties to enter into legal obligations, mutually communicated expressly or impliedly” Atkin LJ in Rose & Frank Co v JR Crompton & Bros Ltd [1923] 2 KB 261 at 293

Rebuttable presumptions In social and domestic agreements there is a presumption against and intention to enter into legal obligations Balfour v Balfour [1919] 2 KB 571 Cohen v Cohen (1929) 42 CLR 91 Jones v Padavatton [1969] 1 WLR 328 The presumption is rebuttable Merritt v Merritt [1970] 1 WLR 1211 Wakeling v Ripley (1951) 51 SR (NSW) 183

Balfour v Balfour [1919] 2 KB 571 “There are agreements between parties which do not result in contracts within the meaning of that term in our law. The ordinary example is where two parties agree to take a walk together, or where there is an offer and acceptance of hospitality. Nobody would suggest in ordinary circumstances that those agreements result in what we know as a contract, and one of the most usual forms of agreement which does not constitute a contract appear to me to be the arrangements which are made between husband and wife…they are not contracts because the parties did not intend that they should be attended by legal consequences.” Atkin LJ at 578

Rebuttable presumptions In business or commercial agreements, there is a rebuttable presumption that the parties did intend to create legal obligations Carlill v Carbolic Smoke Ball [1893] 1 QB 256 Rose & Frank Co v Crompton & Bros Ltd [1925] AC 445 Honour clause

The Elements of a Contract OFFER + = AGREEMENT ACCEPTANCE INTENTION CONSIDERATION CONTRACT + + 🡻

Consideration... Consideration is the price paid for the promise

Wedding cake As well, Mavis is being threatened with legal action by Chrissie Saranrap. Chrissie was married a month ago and was expecting Mavis to provide her specialty – the “nouveau doveau” - a tiered tower of cupcakes, iced in white and arranged to resemble the wings of doves – as the centrepiece cake for her wedding reception. Mavis loves doing cakes for weddings – in fact she now makes more money from doing wedding cakes than she does from her regular cooking classes.

Chrissie saw information about Mavis’ cake services after an article in the local paper, and called round to see Mavis, and look at the different cakes she could make. They discussed possibilities and pricing and Chrissie left with a price list. Apparently, Chrissie called and left Mavis a message on the answering machine ordering the “nouveau doveau” for her wedding, to be delivered on 2nd May at the wedding reception, for $2,000 COD. In her message, Chrissie had said: “If I don’t hear to the contrary, I’ll assume everything is OK. Call me if there is a problem – otherwise I will see you on the 2nd. Looking forward to your lovely creation.”

Unfortunately, because of all the work being done to the kitchen and problems with electrical work and electrical supply, Mavis had experienced a number of black outs which had interrupted her answering machine. Mavis – never received the message from Chrissie, and so of course, had not provided the cake. Chrissie is very angry and claims her wedding was ruined without the cake. She has threatened to sue Mavis.

Contents of a Contract Terms

Part of contract Puff Misrepresentation: No action in equity Statement prior to contract Representation Misrepresentation: Not contract Possible action in equity or statute (s18) Puff No action in equity Possible action under statute (s18) Term Part of contract

Term or Representation ? What was the intention of the parties Objective test – ‘the reasonable man’ test Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41 Indicative factors include Importance of statement Time between statement and contract Special knowledge or skill or access to truth of one party Inclusion of statement in any subsequent document Ellul & Ellul v Oakes (1972) 3 SASR 377

What kind of term? A term may be either: a Condition Essential term Breach – entitlement to terminate/or damages a Warranty Ancillary term Breach – damages, but no termination an Innominate term Intermediate term Breach – termination if sufficiently serious

Condition or Warranty ? “The question whether a term in a contract is a condition or a warranty, i.e. an essential or a non-essential promise, depends upon the intention of the parties as appearing in or from the contract. The test of essentiality is whether it appears from the general nature of the contract considered as a whole, or from some particular term or terms, that the promise is of such importance to the promisee that he would not have entered into the contract unless he had been assured of a strict, or a substantial, performance of the promise, as the case may be, and that this ought to have been apparent to the promisor…. Jordan CJ in Tramways Advertising v Luna Park

Tramways Advertising Pty Ltd v Luna Park (NSW) Ltd (1938) CLR 633 ‘ Tramways Advertising Pty Ltd v Luna Park (NSW) Ltd (1938) CLR 633 Associated Newspapers Limited v Bancks (1951) 83 CLR 322 Associated Newspapers Limited v Bancks (1951) 83 CLR 322

Innominate terms “There are, however, many contractual undertakings of a more complex character which cannot be categorised as being “conditions” or “warranties”….Of such undertakings, all that can be predicated is that some breaches will, and others will not, give rise to an event which will deprive the party not in default of substantially the whole benefit which it was intended that he should obtain from the contract; and the legal consequences of a breach of such an undertaking, unless provided for expressly in the contract, depend on the nature of the event to which the breach gives rise and do not follow automatically from a prior classification of the undertakings as a “condition” or a “warranty”.” Diplock LJ J in Hong Kong Fir Shipping v Kawasaki Kishen Kaisha [1962] at 69/70

Innominate terms Approved by High Court in Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd [2007] HCA 61

Fridge She also advised that her mother was having problems with Whitegoods World from which she had bought her fridge. Kylie advised that her mother required a “French door” fridge with freezer drawers underneath to accommodate the large baking trays she used for her cakes. She had ordered the fridge she needed from Whitegoods World but had experienced delivery problems.

Her oven purchase was much more successful than her fridge which, on the very day it was due to be delivered – not only did not arrive, but the shop called her to advise that delivery was delayed for one month. Mavis said to the shop keeper: “Well that’s no good to me. I ordered that fridge for today. I need that fridge today. I told you when I needed the fridge. The only reason I ordered from you was that you told me I could have it today. If you can’t give it to me today, you can just keep your fridge!! I don’t want it anymore.” Mavis then rang Quick Fridge and ordered and received another fridge that afternoon– suitable for her requirements.

However, one month later, Whitegoods World delivered the fridge originally ordered and demanded payment. Mavis refused to accept the fridge or to pay, and advised them that the order had been cancelled. They are threatening to sue Mavis for the price of the fridge - $5,500.