Contract law means a set of promises that can be enforced legally. It governs and recognises the duties and the rights which arise out the agreements. At law there are five important elements that are necessary to legally ensure the formation of the contract. These are offer, acceptance, consideration, capacity, intention and certainty. The contract law is very much essential in the field of business. The business is full of agreements between the individuals and the companies. As oral agreement can be used but most of the business prefer formal written contracts while engaging in their operations. The written contract provides the individual with the legal document that states the expectations of both the parties. Contracts are made to safeguard the resources of the companies and they are enforceable legally in the court of law.
A tort is the Civil wrong other than the breach of contract. Torts can be sued on by the private individuals against other private or state individuals so that they could compensate the wrong with damages. The elements of torts of negligence are duty of care, breach of duty and causation. Tort is said to be that kind of law that permits the injured person to gain compensation from that person who caused him the injury.
The purpose of this paper is to discuss the provisions of contract and tort law in the light of two case studies. The paper addresses the case studies through the application of the ILAC methodology.
Issue
Rule
A legal offer and acceptance is required to form a valid contract. To be valid at law they must be in compliance with principles of common law regarding meeting of minds and an agreement.
An offer has been defined as a statement or an expression that is made from the part of the parties who is known as the offeror (The person who makes the offer) in the law of contract. The creation of the contract is being initiated by the offeror. The term offer is consisted of those words that help in making of the terms that is enforced upon the other party who is known as offeree (The person who is presented with the offer) once acceptance is completed. The offer can only be considered as a valid law if a rational person will be encouraged to get in the contract and it is complete. The validity of the offer can only be completed if the intention of the offeror is to make the offeree bind legally in the terms of the contract. Through, the case of Smith v Hughes (1871) LR 6 QB 597, the court stated that, intention can be derived in an objective manner. The validity of offer is till that time that has been provided through it. If the time gets over there the offer will not be accepted at the time has elapsed.
The next step of the offer is acceptance. In order to form a contract, the offeror has to wait for the offeree to accept the offer. Once there is acceptance of offer, then a legal contract will be formed.
The major requirement for forming a valid contract is that the acceptance must be communicated until and unless there is any kind of unilateral offer that has been made and it has been noticed in the case of Carlil v Carbolic Smoke Ball co [1893] 1 QB 256. The court said in the case named Entorress v Miles Far East [1955] 2 QB 327 that the offeree must accept the offer in that manner as it was desired by offeror. There is no fixed way to accept the offer. The acceptance can be made in any kind of position by the offeree only if it is not prohibited by offeror through the offer. The postal rule of acceptance can be applicable only if the acceptance is made by the post.
The postal rule has been given by the case Adams v Lindsell (1818) 106 ER 250. The judge made a statement that if the acceptance has been done by post then the acceptance is considered to be finished when the post is made and it is not required to reach to the offeror. The validity of postal rule can only be done if it has been posted correctly to the adress.
There must be no alteration in the acceptance. This states that they should not be any kind of changes to the original matter of the offer. If the original matter is changed then it will not be considered as the valid acceptance but a counter offer is made as stated in the case of Hyde v Wrench (1840) 49 ER 132. Once the counter offer has been made then the previous offer will not be considered and will be a rejected offer. This makes the offer unavailable to be accepted again. In case of a request or asking for information where there is no change in the original offer it will not be considered as a counter offer.
The offeror can revoke a legal offer. Revocation is a process that helps the offeror to signify that they don’t want to take forward this offer and wants to bring this to an end. The case of Byrne & co v Leon Van Tien Hoven & Co [1880] 5 CPD 344, provides that the validity of the revocation requires communication to offeree before they had made the acceptance that the offer has been revoked. A clarification has been done by this case that the revocation can be successful once the offeree has received the revocation and not when it has been posted.
Law application
Ann had sent a letter to Jack on the date of 1st March and she mentioned in the letter that intention is to sell him her car the rate of $12, 000. Initially it needs to be determined that whether this letter can be considered as a legal offer or not. An offer is considered to be valid if it is complete and there is an intention to bind the offeree. The offer made by Ann is valid as it has the product description, time and price. The validity of the offer is till 7th of March and according to the rules that have been discussed above, the offer will elapse if there is no acceptance before the time provided.
Ann’s mind changed and she do not want to continue with her offer. Before any kind of acceptance was made Ann had posted one letter to Jack for the similar reason. It is said that in order to make the revocation valid, the offeror must communicate with the offeree before any kind of acceptance is made and it has been stated under the case of Byrne & Co Leon Van Tien Hoven & Co. Therefore in this situation there might be the validity of the revocation. However, the offer cannot be considered to be revoked as soon as it was sent by post like the postal rule of acceptance and it must reach to the offree to get revoked successfully. Jack did not receive any letter before he had sent the letter of acceptance. Therefore, the offer was there to get accepted as there is no revocation.
Jack had sent a letter to Ann on the date of 3rd March p.m. and he requested that he is ready to accept offer at the price that was suggested by Ann. However, he made another statement that he would pay in instalments. A valid acceptance was made by Jack as this letter was posted to Ann as per the application of postal rule.
There should be no changes in the acceptance in relation to the original matter of offer and if the original matter is altered then there will be no legal acceptance and it will be taken as a counter offer as mentioned in the case Hyde v Wrench. The letter that was sent to Ann stated that he would want to buy that car at the instalment of $1000. This has been considered as a counter offer and no further inquiry was done that the original offer was rejected by him. This states that there will be no acceptance in the original offer again. The principles of Hyde v Wrench states that there will be no validity to accept the offer again once she received the cheque of $16000.
As the rules of the offer and acceptance were not followed, no valid contract was formed between Jack and Ann.
A question that arises in the given situation with Qualal motors and Betty that whether under the rule of negligence, will Qualal is responsible for those damages which were caused by Betty. It is also to be determined that can Qualal limit their responsibilities by the notice that has been given at the backside of the vehicle and at the garage. (exclusion clause)
In order to establish the tort of negligence in the situation there must be three elements that has been identified. There are three main elements at establishes in tort of negligence and they are a duty of care, causation, breach of duty of care according to the judgement stated by the judge in the case of Grant v Australian Knitting Mills HCA 35, (1933) 50 CLR 387.
The identification of such elements can be done in any kind of situation by setting out the common law test that has been used by the different legal cases. The establishment of the negligence can only be established if these three elements are satisfied and not the otherwise and it has been clarified in the case of D’Arcy v Corporation of the Synod of the Diocese of Brisbane [2017] QSC 103. If one element has been established then it cannot be verified as negligence. It needs to be verified in the step-by-step way. Firstly the applicant must verify that there was duty of care and it was violated and such violation made him suffer an injury.
Cases of Donoghue v Stevenson 1932 AC 562 and Caparo Industries pIc v Dickman [1990] 2 AC 605 stated that an establishment of duty of care can only be done by applying the foreseeability test and proximity test. The duty of care will only be present if an injury might be foreseen.
The application of objective test can help to drive the breach of duty of care at the common law. This objective test is based in the terms of care on the notion of reasonability. This test is used and discussed by several cases. One such case is Diocese of Brisbane v Greenway [2017] QCA 103. This test does the placement of a sensible person in defendant’s place. The judges investigate that given the chances of the damage and the importance linked with it states that whether such reasonable individual will consider the care to avoid that injury in comparison to what the defendant had actually taken.
The application of “but for” test helps in deriving the position factor at common law. There will not be any kind of negligence until the causation element has been satisfied. This test helps in determining whether the basic injury caused is breach of duty or not and if the cost injury has been done because of the breach then it is said that the test is positive and if this injury has been caused on the other way then the test is stated as negative and it has been given in the case of Liverpool Catholic Club Ltd v Moor [2014] NSWCA 394. In order to prove negligence a person needs to be injured because of the duty of breach.
In order to analyse the damages that the distressed party can claim, the concept of reasonable foreseeability can be used. According to the case of The Wagon Mound no 1 [1961] AC 388, the damages that is reasonable person must be compensated.
The contract can add an implied term if seems to be necessary to provide business efficiency to a contract and not as it seems to be fair and just as given by the case of The Moorcock (1889) 14 PD 64.
In order to limit the responsibilities the application of an exclusion clause has been done. This exclusion clause needs to be added in the contract in such a way so that it can be valid. The liability might be limited by this clause both in tort law and contract law.
Notice is that way through which the clause could be added. There must be visibility of the notice of the clause to the party. The clause can only be added to the contract if there is a visibility of the clause to the party prior to the formation of the contract and it has been mentioned by the court in the case of Curtis v Chemical Cleaning Co [1951] 1 KB 805
Application of Law
The Qualal Motors is referred to as the defendant and Betty is the claimant or the applicant. It has been given in this case that the Betty’s car needs to be pulled for repairing to the garage. The present situation states that a claim can be made by Jane under the tort law and contract law from the defendant. The rules of the case “The Moorcock” states that the implied terms can be added to the contract if it seems to be important and obvious. Therefore the implied term is that the vehicle will be pulled with the diligence and care and no such damages must be caused. There was breach of the term and therefore the damages can be claimed.
There is a duty of care from the defendant to the applicant and it has been stated in the principles of the tort law by the application of the proximity and foreseeability test. The reason behind this is if any sensible person will see that there is any kind of defect in the towing van, then it may damage the vehicle that is being carried by it and can cause damage in proximity to any individual. As it has been insured by the reasonable person that no defect is there in the towing vehicle and therefore the duty of care is breached and thus the objective test has proved to be positive as per the case of Diocese of Brisbane v Greenway
No such damages would have been suffered by the car or no injury would have been suffered by the applicant if it was assured that the towing car is in a proper condition to carry it. Therefore the damage and the injury has been caused because of the breach of the duty of care and thus “the but for test” has been proved by the applicant as given in the case of Liverpool Catholic Club Ltd v Moor
It is reasonably predictable for respondent to foresee if any defect is there in towing vehicle that will provide the damage to the car that is being carried and cause damage to the person in proximity. Therefore the damages that has been caused to the claimant and the car seems to be foreseeable that means they are entitled to be compensated. The respondent is responsible for the negligence and he has to pay for the injuries that have been caused to the car and the injury that has been given to the applicant.
Furthermore, it has been stated that an exclusion clause was there that explains that there is no responsibility of the defendant for any kind of injury that has been given to the person who are using their amenities. There is no validity of this clause it is neither incorporated validly nor does it seem to be reasonable. This clause might save the respondent if the applicant has notified about this clause before the contact because the clause that was present at the garage and at the back of the towing Van was not noticeable to the applicant. Furthermore, the clause used the terms “howsoever caused” or “any damage or injury” is valid as it is not reasonable and unambiguous.
The applicant is legal entitled to claim for his damages that were caused by Betty in relation to the loss that was caused to her and her car.
Conclusion
Thus through the application of contract law and tort law in the business situations provides that in the first case study there was no contract formed and in the second case study garage is responsible for the damages caused to car and the plaintiff irrespective of the exclusion clause as it is not valid.
References
Caparo Industries pIc v Dickman [1990] 2 AC 605
Civil Liability Act 2002 (NSW)
Curtis v Chemical Cleaning Co [1951] 1 KB 805
D’Arcy v Corporation of the Synod of the Diocese of Brisbane [2017] QSC 103
Diocese of Brisbane v Greenway [2017] QCA 103
Donoghue v Stevenson (1932) AC 562
Donoghue v Stevenson 1932 AC 562
Grant v Australian Knitting Mills HCA 35, (1933) 50 CLR 387.
Liverpool Catholic Club Ltd v Moor [2014] NSWCA 394
Synod of the Diocese of Brisbane [2017] QSC 103
The Moorcock (1889) 14 PD 64.
The Wagon Mound no 1 [1961] AC 388
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