In order to form a legally binding contract, there are certain key elements which have to be present compulsorily and one of these elements is consideration. A promise made under the contract is not valid till the same is supported by consideration; though, promissory estoppel can be deemed as a part exception to this rule (Paterson, Robertson & Duke, 2012). Promissory estoppel can be best defined as the equitable doctrine where in certain specific situations an individual can be stopped from going back on the promise made by them, where such promise is not supported by a value of consideration. In order to apply this doctrine of promissory estoppel, there is a need to fulfil certain requirements, which limits the applicability of this doctrine. These requirements include the presence of a legal obligation or a pre-existing contract which has to be modified; there has to be a very clear and unambiguous promise; there has to be a change in position; and lastly, allowing the promisor to go back on their promise has to be inequitable (Blum, 2007).
This doctrine was born through an obiter statement in Central London Property Trust Ltd v High Trees Ltd [1947] KB 130 by Denning J. In this case, the rent had been reduced by a mutual understanding between the plaintiff and the defendant owing to the hardships being faced by the plaintiff due to the war times. Upon the war time being over, the defendant asked to get back to the original rent and a claim was made in the court. It was held by the court that the claimant was right in his claims and the rent had to be increased. However, an obiter statement was made by Denning J where he stated that had the defendant claimed the reduced rent for the war period, the same would have been disallowed. This was due to the promise made between the parties, even when the same was not supported with consideration. Thus, with this case, the principle of promissory estoppel was given a new life and thus the courts can stop the promisor from going back on their promise (Stone & Devenney, 2014).
As was touched upon in the previous segment, consideration is a key requirement of drawing up any contract. It denotes the value to be paid for the other party carrying on the promised work. A lack of proper consideration can make the contract invalid (Elliot, 2011). A consideration can be anything, so long as it has an economic value, particularly in the eye of law. A leading example of this is the case of Chappell and Co Ltd v Nestle Co Ltd [1960] AC 87 in which it was held by the court that as there was the presence of a condition precedent, the three wrappers would be a valid consideration and thus, the contract would be valid one (E-Law Resources, 2017). A consideration too has certain requirements or rules per say which have to be followed in order for the consideration to have legal validity in the eyes of law. These include the consideration to be present and not to be past; it needs to be sufficient, instead of being adequate; it is crucial that the consideration moves from the promisee to the promisor; a present public duty cannot be deemed as a valid consideration; a pre-existing contractual obligation also cannot be deemed as a valid consideration; and lastly, partial payment of a debt cannot be deemed as a valid consideration for promising to forego the pending amount (Treitel & Peel, 2015).
While deciding upon the matter of consideration, there is a need to make certain that the bargaining process had been fair. In other terms, if a particular consideration has been decided owing to the presence of vitiating factors, then the consideration would not be valid. For instance, where a particular amount of consideration has been agreed between the parties, owing to the presence of undue influence, duress or cohesion, the party using such tactics would be deemed to hold higher bargaining power in comparison to the other contracting party, as a result of which, such other party has to bear a loss. Hence, it is crucial that the consideration value is decided where the contracting parties hold equal bargaining position (Marson & Ferris, 2015).
Issue
The key issue in this case relates to the legal positions of the three parties of the case study, particularly with respect to the possibility of contract having being formed between Campbell-Gibson and Campbell- Mckay and the possible breach of these contracts.
A contract is a promise made whereby one party promises to fulfil the requirement of consideration and the other party promises to fulfil the performance of certain act. In order to create a legally binding contract, there is a need for the contract to have some components. These components are an offer, an acceptance, consideration, capacity, intent and clarity (Clarke & Clarke, 2016).
The first step in contract formation is an offer being made. It is important to differentiate between an offer and an invitation to treat. In an offer, there is an intention of forming legal relations; whilst in an invitation to treat, the intent is of negotiating upon a possible contract. The newspaper advertisements in general are invitation to treat based on the case of Partridge v Crittenden [1968] 1 WLR 1204. Though, where a unilateral offer is made, as was done in Carlill v Carbolic Smoke Ball Company [1892] EWCA Civ 1, the court held that as the advertisement could be acted upon to give acceptance, an offer was made (Latimer, 2012).
The next requirement is for the offer to be accepted by the parties. The offer has to be accepted by the party to which the offer has been made. Also, the offer has to be accepted in the exact terms in which it was made. Any changes can result in a counter offer being made, as per Hyde v. Wrench (1840) 3 Beav 334, which leads to expiration of original offer. It is also important that acceptance is given before the offer is revoked (Marson & Ferris, 2015). While giving acceptance, the date is deemed as the date on which the communication of acceptance reaches the offering party. However, when postal rules of acceptance become applicable, the date of posting the letter is deemed as the date of acceptance. This is because the postal office is considered as the implied agent of the offering party (McKendrick & Liu, 2015).
The parties need to have the contractual capacity to enter into the contract, for which they need to be of sound mind, of legal age and to not be bankrupt. The contract needs to have consideration amount. And lastly, the terms of the contract have to be clear. Only when all these factors are clubbed together, is a contract formed (Ayres & Klass, 2012).
The contract is discharged through frustration when the commercial purpose of the contract is no longer available. And in such cases, the breach of contract cannot be claimed upon the parties, which can normally be done when the contractual party fails to uphold the obligation made under the contract (Andrews, 2015).
In the given case study, an invitation to treat was present in the newspaper offer based on Partridge v Crittenden. From this advertisement of Campbell, Gibson made an offer of purchasing the car for $8,000. However, on this, a counter offer was made by Campbell for $10,000; and with this, the offer of $8,000 expired based on Hyde v. Wrench. This offer was not accepted by Gibson and so, a counter offer was made by Campbell for $8,000 which was open till September 24th noon. As this offer was not supported with consideration, Campbell was not under an obligation to reserve the car for Gibson. So, a contract was not formed between the two.
Campbell attempted to create a contract with McKay for the car for $10,000. But this contract cannot be deemed to have been created as McKay was bankrupt, which meant he did not have the capacity to enter into a contract. So, a contract was not formed between these two.
The acceptance of Gibson was given before the offer had been revoked and the same was given through a latter on Monday evening. This would be the date of acceptance based on postal rules of acceptance and also covered the delivery date of the car. It is irrelevant when Campbell actually got the letter and a contract would be deemed to have been formed between the two.
This contract could not be fulfilled as the car was burnt, resulting in the contract being discharged through frustration, as the commercial purpose was destroyed. And so, a claim cannot be made by Gibson for the breach of contract towards Campbell and even when the same is made, it would not be successful.
Conclusion
Thus, a contract was formed between Campbell and Gibson but the contract was discharged owing to frustration.
Issue
Whether Ned would be successful in his claims under negligence against James and against the two doctors, or not?
Negligence refers to the contravention of obligation of care, particularly when the actions of the duty owning person, results in the duty bearer person being harmed or injured. For making a case of negligence, it is necessary to show that a duty of care was owed, which had been breached in a manner resulting in injury, the foreseeability of loss, proximity between parties and the remoteness of loss (Greene, 2013). In Rogers v Whitaker (1992) 175 CLR 479, the court held that the standard for professionals is higher than normal people and so, special care is to be undertaken by professionals, which is higher than the one owed by the general people (Health Law Central, 2017).
In the given case study, a duty of care was owed by James towards Ned to be responsible while driving the cruiser. It was reasonably foreseeable that by giving the boat to his kid, an accident would happen. Hence, he breached his duty of care and would have to pay compensation to Ned for his leg injury. There was also a failure on part on the two doctors as they failed to uphold the standard of duty of care, which their profession demanded from them. Thus, on the basis of Rogers v Whitaker, the duty of care was breached by the two doctors. As a result of this, they would have to compensate Ned for the wrong surgery.
Conclusion
Thus, Ned can obtain compensation from both Ned and the doctors for their negligent behaviour.
References
Andrews, N. (2015). Contract Law (2nd ed.). UK: Cambridge University Press
Ayres, I. & Klass, G. (2012). Studies in Contract Law (8th ed.). New York: Foundation Press.
Blum, B.A. (2007). Contracts: Examples & Explanations (4th ed.). New York: Aspen Publishers.
Clarke, P. & Clarke, J (2016). Contract Law: Commentaries, Cases and Perspectives (3rd ed.). South Melbourne: Oxford University Press.
E-Law Resources. (2017). Chappel v Nestle [1960] AC 87 House of Lords. Retrieved from: https://www.e-lawresources.co.uk/Chappel-v-Nestle.php
Elliot, C. (2011) Contract Law (8th ed.). London: Pearson.
Greene, B. (2013). Course Notes: Tort Law. Oxon: Routledge.
Health Law Central. (2017). Rogers v Whitaker (1992) [1992] HCA 58; 175 CLR 479. Retrieved from: https://www.healthlawcentral.com/rogers-v-whitaker/
Latimer, P. (2012). Australian Business Law 2012 (31st ed.). Sydney, NSW: CCH Australia Limited.
Marson, J., & Ferris, K. (2015). Business Law (4th ed.). Oxford: Oxford University Press.
McKendrick, E. & Liu, Q. (2015). Contract Law: Australian Edition. London: Palgrave Macmillan
Paterson, J.M., Robertson, A., & Duke, A. (2012). Principles of Contract Law (4th ed.). Rozelle, NSW: Thomson Reuters (Professional) Australia.
Stone, R., & Devenney, J. (2014). Text, Cases and Materials on Contract Law (3rd ed.). Oxon: Routledge.
Treitel, G H., & Peel, E. (2015). The Law of Contract (14th ed.). London: Sweet & Maxwell.
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