Describe about the Introduction to Business Law for Cases and Materials.
Wendy has entered into what appears to be an agreement with Dave that upon completion of the run within an hour he will pay her $3000. On the other hand she meets her old friend Bill who promises her that he will cater for the expense of running shoes or clothes incase she needed them . Wendy acquires the clothes and shoes and participated in the run to finish in 58 minutes. Wendy claims her rewards from the two people above but her efforts come to naught. The issue for determination that is presented here is whether there was an intention to create a legal relationship in the two agreements.
Law
From the outset it should be noticed that there are two relationships here. One seems to be a commercial agreement that is between Dave and Wendy and the other one actually a social relationship between two friends. According to Carter and Harland (1998) the litmus test for determining the intention of the parties has always been determined by the rebuttal presumption.
In social agreements the presumption is that the parties do not always intend to be legally bound by the agreement (Balfor v Balfour 1919). In Jones v Padavatton, (1969) a mother promised her daughter that she will pay her if she gives up her job and went to London to study for the bar. It was held that the agreement was a family agreement and therefore there was no intention to be legally bound. Of particular significance is the fact that the court, mentioned that there was no sufficient evidence to rebut the presumption that an intention to be legally bound did not exist. It is apparent from foregoing assertions that if sufficient evidence is adduced to rebut the presumption in family agreement then an intention can be found to exist in a family agreement (Esso Petroleum v Customs & Excise, 1976).
In commercial agreements the presumptions that usually exists is that the parties intend to be legally bound. In Edwards v Skyways Ltd (1964) the defendants had promised that they will make a payment with an ex gratia amount and even went to publish the promise in the newspaper. The claimant who was a pilot never received the extra amount that was promised because the company claimed that they had rescinded their decision. It was held that there was no sufficient evidence to rebut the presumption that the intention to be legally bound existed.
It is imperative to note that the court have since developed a modern approach towards determining the intention of the parties which appears to be extinguishing the rebuttable presumption test. A more persuasive approach has been entrenched by Australian jurisprudence where Gray v Gray (2004) there was a loan agreement between a mother and son the courts were reluctant to apply the rebuttable resumption. They stated that an objective test should be applied on a case to case basis depending ion the facts of each case.
In Tadrous v Tadrous (2010) it was held that an objective examination should be done to determine whether the parties intended to be legally bound or the agreement was just an expression of love and trust. In Ashton v Pratt (2012) the court held that one should look at the subject matter of agreement , why the agreement was being made and the personal relationship of the parties at the time of making the agreement. The courts in aforementioned three cases entirely avoided the use of rebuttable presumption test in determining the intention of parties in a social agreement.
It can be submitted that the relationship between Wendy and Bill was a social agreement and therefore by applying the test provided above it will indeed be an uphill battle for Bill to rebut the presumption that that an intention to be legally bound did not exist. However if the objective test that was set in in this case it will be discovered that Wendy went through a lot of expenses to acquire the pair of shoes and clothes and therefore Bill is bound to meet the agreement. In Wakeling v Ripley (1951) it was held that in determining the intention of the parties consideration has to be placed on expense that was involved in coming to perform the promise. It can thus be firmly stated that the agreement between Wendy and Bill is a binding one.
As for the agreement between Wendy and Dave, there seems to be no legal intention because by Wendy stating that ‘thanks that sounds generous’ the assertions are vague and do not amount to a certain acceptance of the offer made by offer. Rebutting the presumption will not be an onerous task as is typical of commercial agreements.
Conclusion
It is thus advised to Dave he does not have any legal obligations towards Wendy because from the agreement, an intention to be legally bound did not exist. On the other hand with regards to Bill, it is advised that the financial sacrifice that Wendy made incepted an intention to be legally bound.
Dani wanted her Mercedes car upholstery to be restored to its original pristine condition and after being fascinated by Vintage upholsters that she in the web she decided to give them her car. Contrary to her expectation at the end of the work the car was in worse condition than she left it and it was seriously damage. She has discovered that there is a clause in the contract that excluded the ‘upholsters’ from liability. The issue here is whether the exclusion clause is valid and whether there has been any breach of terms by the ‘upholsters’.
Law
The general principle in law is that the contracting parties are bound by the terms of the contract when they signed it regardless of whether one read and understood the terms of the contract. (L’Estrange v Graucob, 1934) However where a term in a contract seeks to oppress one party in a contract the party is usually protected by common law from such unfair terms. It is submitted that the exclusion clause or term must be brought to the attention of the party before the contract was formed or at the time it was being formed (Thornton v Shoe Lane Parking, 1971). Thus it has been held that a party who is seeking to enforce an unfair term must demonstrate that they provided sufficient notice of the term to the other party (Thompson v LMS Railway 1930).
In addition, if the operation of the clause is seriously onerous to the other party, it must be demonstrated that far reaching steps were undertaken to bring the terms to the attention of the other party (Interfoto Picture Library v Stilletto, 1989). It should be borne in mind that where a term in the contract was misrepresented by one party, the clause will have no legal effect to the party it was misrepresented to (Curtis v Chemical Cleaning, 1951). From the aforementioned assertions, it begs the critical question whether an exclusion clause can justify the breach of an implied condition in a contract. A condition is a fundamental term of the contract that goes to the root of the contract. An implied condition is one that is not expressly mentioned in the contract but due to the nature of the promise made between the contracting parties it is expected that the contract will be performed in a certain way (Beale 2004). It has been held that a breach of a condition will entitle the innocent party an award of damages and also the right to repudiate the contract (Poussard v Spiers, 1876). The innominate term approach which was established in Hong Kong Fir Shipping v Kawasaki Kisen Kaisha (1962) is to the effect that where a breach of the term of the contract substantially denies the innocent party a benefit of the contract the contract can be treated as to have ended and the innocent party can claim damages (Benson 2001).
Application
It can be conceded that the ‘upholsters’ had made reasonable steps in ensuring that contract exclusion clause which is deemed unfair was brought to the attention of the Dani. The term was conspicuously put in every reasonable place that one can see. However it should be noted that on entering the place Dani read a poster that assured her that the staff were highly qualified and that the end result is manifest of quality work. It can be inferred that there was a misrepresentation of terms in the contract and therefore the clause will not be operative. The breach of the implied condition that the work will be one that is presentable will entitle Dani an award for damages for the loss and serious damage that was made on her car. Dani could also repudiate the contract.
Conclusion
It can be concluded that the ‘upholsters’ will be liable in this case and Dani will have to be given compensatory damages to restore her in the position the car was before the damage caused by the repairs occurred.
References
Ashton v Pratt [2012] NSWSC 3
Beale, H 2004, Chitty on Contracts, Sweet & Maxwell
Benson, P, 2001, The Theory of Contract Law: New Essays Cambridge University Press, Cambridge
Carter J, W, & Harland, D, J 1998, Cases and materials on contract law in Australia, Butterworths
Curtis v Chemical Cleaning [1951] 1 KB 805
Edwards v Skyways [1964] 1 WLR 349
Esso Petroleum v Customs & Excise [1976] 1 WLR 1
Gray v Gray [2004] NSWCA 408
Hong Kong Fir Shipping v Kawasaki Kisen Kaisha [1962] 2 QB 26
Interfoto Picture Library v Stilletto [1989] QB 433
Jones v Padavatton [1969] 2 All ER 616
L’Estrange v Graucob [1934] 2 KB 394
Poussard v Spiers (1876) 1 QBD 410
Tadrous v Tadrous [2010] NSWSC 1388
Thompson v LMS Railway [1930] 1 KB 41
Thornton v Shoe Lane Parking [1971] 2 WLR 585
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