Business and Employment Law，1500 words

Contract law requires a legal agreement for contractual obligations to have legal effect. Looking at the postal rule, assess the significance of the rule in relation to the development of modern technology, focusing on its effects regarding online shopping and emails.

Guidance: The starting point is the postal rule and what it means against the law in terms of when a contract is established. You may regard online provisions regarding the ability to rescind a

contract but note when a contract is actually formed online. With email, you should consider the

postal rule in regard to the case of Thomas v BPE Solicitors [2010] EWHC 306 (CH). While the main issue in the case was negligent, the issue of the postal rule and it application to emails was considered. Is an email instantaneous or not? What can parties do to ensure that the postal rule is not relevant?

Key Marking criteria will include:

Initiative: originality, innovativeness of answer Assignment Structure: clarity of aims, objective, structure and presentation Quality of Writing: Readability and ability to convey key message(s) concisely Quality/Scope of Literature Review: Understanding of established knowledge Suitability of Literature: Use of suitable sources, focused to answer key research aims Literature Analysis: Quality/level of analytical skill demonstrated Insightfulness of Analysis: Interest and usefulness of findings, conclusions drawn. Understanding: Assignment demonstrates students have understood key topics Overall Quality of Assignment Subject：Business and Employment Law
Individual coursework assignment of 1,500 words
Coursework Brief：
Contract law requires a legal agreement for contractual obligations to have legal effect. Looking
at the postal rule, assess the significance of the rule in relation to the development of modern
technology, focusing on its effects regarding online shopping and emails.
Guidance: The starting point is the postal rule and what it means against the law in terms of
when a contract is established. You may regard online provisions regarding the ability to rescind a
contract but note when a contract is actually formed online. With email, you should consider the
postal rule in regard to the case of Thomas v BPE Solicitors [2010] EWHC 306 (CH). While the
main issue in the case was negligent, the issue of the postal rule and it application to emails was
considered. Is an email instantaneous or not? What can parties do to ensure that the postal rule
is not relevant?
Key Marking criteria will include:
• Initiative: originality, innovativeness of answer
• Assignment Structure: clarity of aims, objective, structure and presentation
• Quality of Writing: Readability and ability to convey key message(s) concisely
• Quality/Scope of Literature Review: Understanding of established knowledge
• Suitability of Literature: Use of suitable sources, focused to answer key research aims
• Literature Analysis: Quality/level of analytical skill demonstrated
• Insightfulness of Analysis: Interest and usefulness of findings, conclusions drawn.
• Understanding: Assignment demonstrates students have understood key topics
• Overall Quality of Assignment
Notes on Style and Word Count：
The assignment should be in an essay format with an introduction stating your aims, a main body
in which case, statutory and directive references are included and a conclusion reflecting on the
main body of the work. Full academic referencing using the Harvard APA (7th Edition) referencing
style should be used throughout the assignment
NB As a law essay, I am happy to discuss the use of footnotes for primary references. These
include citations for cases, acts of Parliament, EU Directives.
To gain higher marks, students are required to show analysis and reflection rather than simple
description. They should use multiple sources of academic literature to frame and justify their
analysis. All sources should be correctly identified – students are reminded the University
enforces strict penalties for plagiarism (up to and including withdrawal from the University).
Business and Employment Law
Lecture Three
The Law of Contract.
Introduction
There are several theories underpinning the law of contract in the UK. This is partly
due to the fact that the law has to facilitate contracts between a large variety of people
e.g. consumers and retailers, private individuals, business and business. Below are
some of the theories used:
1. Laissez Fairism: A policy of non intervention by the law, this theory is based
on the freedom of everyone being able to enter a contract on the terms they
choose. The problem here is that some groups are more powerful than others
so the result would be unfairness, e.g. consumer and retailer.
2. Consumer welfairism: A more recent concept, it recognises that for an
economy to grow in retail sales, the consumer must be confident that there is
access to a remedy if the contract is breached in some way. So the Sale of
Goods Act 1979 (as amended), is an example of a consumer welfare statute
and the net result is that all consumer goods sold at retail must be of
‘satisfactory’ quality. This is an implied term of the contract (see later notes)
Creating a Valid Contract
A contract must contain the following:
Offer and acceptance
Consideration
Intention to create legal relations
Form
Legality
Capacity
These concepts are not always as clear as you first think and below we shall look at
cases which illustrate this. However it is very important that we discover when a
contract has come into force as it results in so consequences and legal responsibilities
for both parties.
Capacity
Minors
Mental incapacity: There are some contracts that a minor cannot enter because of his
age e.g. S2 Law of Property (Miscellaneous Provisions) Act 1989.
However, a minor can enter into a contract if it is necessary:
Case: Nash v Inman [1908] 2 KB 1
Facts: A minor ordered 17 waist coats from a tailor then refused to complete on the
contract.
Held: A waistcoat was necessary as the minor was an undergraduate at Cambridge but
17 were not necessary so the contract could be set aside.
Also a minor will be bound if the contract is in his best interests.
Case: Doyle v White City Stadium [1935] 1 KB 110
Facts: Here a minor was given a training contract to be a boxer which involved a tour
around the world.
Held: This was in his best interests as it formed part of his career and thus he was
bound to the contract.
Offer
In order for the contract to be complete there must be both a valid offer and an
acceptance. We must be sure to know when an offer has taken place otherwise there
will be no agreement.
Case: Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256
Facts: The defendants had advertised a cure for flu and stated in the advert that if
someone took the cure and got flu, they would be given £100.00. Mrs Carlill took the
cure and got flu. She sued.
Held: The advert constituted an offer as it was supported by consideration. The
defendants had placed £1000.00 in a bank account in order to pay anyone who made a
claim. The advert was held to be a universal offer and a unilateral offer. This is an
unusual case as adverts are usually only an invitation to treat (see below)
Offers through Correspondence
Case: Gibson v Manchester City Council [1979] 1 WLR 294
Facts: Manchester City Council wrote to Gibson stating they would be ‘willing to sell’
him his council house. He wrote back saying he would be happy to purchase it. Then
the council changed party and the sale of council houses was suspended. Was there an
agreement to sell?
Held: House of Lords said ‘No’, there was insufficient communication from the
council to constitute and offer and ‘willing to sell’ were insufficient words.
Case: Storer v Manchester City Council [1974] CA
Facts: Again a sale of a council house but here correspondence between the parties
had developed further and terms and conditions of the sale had been agreed.
Held: There was sufficient evidence of a contract of sale here.
NB: For clarity both cases would now be subject to s2 Law of Property
(Miscellaneous Provisions) Act 1989 and neither would constitute a contract.
Counter Offers
Certainty is required. Once an offer has been countered with a counter offer, the
original offer is ended. It cannot be reinstated but has to be re offered.
Case: Hyde v Wrench (1840) 3 Beav. 344
Facts: Defendant offered to sell his home for £1000.00. The claimant countered with
£950.00. Claimant then agreed to £1000.00 but defendant refused to sell.
Held: The counter offer of £950.00 set aside the original offer and thus there was no
agreement to enforce.
The Invitation to Treat.
This is confused with the concept of offer as it is often displayed in retail outlets.
When you see something ‘on offer’ in a shop, it is in fact on ‘invitation to treat’ and the
purchaser is the one who makes the offer. If this were not the case, every time you
picked something from the shelf in a supermarket would result in a contract.
Case: Pharmaceutical Society of Great Britain v Boots [1953] EWCA Civ 6
Facts: Under an Act of Parliament, it was illegal to offer for sale certain controlled
drugs without a pharmacist. Here Boots were alleged to be doing just that when they
changed their shop into an aisle based store and people could put certain controlled
drugs into their shopping trolley.
Held: While on the shelf, the drugs were not on offer but on ‘invitation to treat’. As a
result, the offer was only made at the till and here there was a qualified pharmacist.
The offer comes from the customer not the retailer.
Case: Partridge v Crittenden [1968] 1 WLR 1204
Facts: Rare birds were being sold in a newspaper contrary to the law. The CPS
brought a charge of offering for sale rare birds that were protected.
Held: Again the birds being advertised were not being offered as the advert
constituted only an invitation to treat.
Case: Fisher v Bell.[1961] 1 QB 394
Facts:
Held:
The Postal Rule
Today there are so many media in which to conduct a contract e.g. post, telephone,
computer etc. Certain rules have evolved surrounding the different media so that it is
more certain when a contract is complete and an offer and acceptance (forming an
agreement) has occurred.
Case: Byrne v Van Tienhoven (1880) 5 CPD
Facts: A company in Cardiff offered to sell tin to a company in New York and posted
the offer. The company then wanted to withdraw the offer and a few days later
withdrew it by post. By the time the withdrawal had reached New York, the company
in New York had posted an acceptance to the offer and so the acceptance and the
withdrawal crossed in the post.
Held: There was a valid contract. The postal rule states that an acceptance occurs as
soon as the letter of acceptance is posted while a letter to withdraw must reached the
offeree to be effective.
Case: Dickinson v Dodd (1876) LR 2 Ch D 463
Facts: The defendant had offered the claimant some land for sale and said the offer
would remain open for three days. The claimant was told by a reliable third party after
two days that the land had been sold to someone else. The claimant then tried to sue.
Held: The offer had been revoked. The claimant had heard of the sale and thus
revocation of the offer from a reliable third party and thus could not enforce the
contract.
ACCEPTANCE
Conduct
As we have seen above, acceptance must be of the whole offer or it will be deemed a
counter offer. Agreement is key here and acceptance can be inferred from conduct.
Case: Brogden v Metropolitan Railway Co (1877) LR 2 App Cas 666 (HL)
Facts: The claimant argued that a formal agreement between his partnership and the
defendants was unenforceable because it had not been formally signed. This was the
fault of the defendants. However, both parties had acted in accordance with the
agreement even though it had not been formally signed.
Held: Agreement was inferred by conduct and the terms of the unsigned contract were
binding.
Silence
Silence cannot generally constitute an acceptance. This is to ensure the protection of
vulnerable people e.g. postal selling of books stating ‘If we do not hear anything from
you we shall assume you wish to accept our books’. There would be no contract here.
Case: Felthouse v Bindley (1862) 11 CB (NS) 869
Facts: The claimant sought specific performance against a stud farm. He had
contacted his nephew stating he wished to buy a horse and that if he heard nothing
from him, he would assume the horse was his. The nephew failed to reply and the
horse was sold at auction.
Held: Specific performance could not be awarded. Silence cannot constitute an
acceptance of an offer to purchase so there was no obligation on the stud farm toward
the uncle or indeed the auction house.
Cf
Case: Re Selectmove [1985] EWCA Civ 8
In obiter, the judge here stated that if parties agreed that silence could constitute
acceptance then this would be fine. This appears to be based on the facts and is
appropriate for business arrangements. The law here is more flexible for this reason.
Letters of Intent
These can give rise to a claim if they cause detriment to the person seeking to rely on
them.
Case: British Steel Corpn v Cleveland Bridge Engineering Co. [1984] 1 All ER
504
Facts: Steel nodes were delivered and used even though the terms of the contract were
still being negotiated. All the defendants had given was a letter of intent to buy.
Held: This was not a contract but allowed the claimant to claim for the value of the
nodes to them as they had been used. Restitution was awarded.
Battle of the Forms
This is known as ‘last shot’ terms. If there are two companies enering a contract and
they each want their standard terms to be used, the terms of the last reply will be the
terms of the contract if they go unchallenged.
Case:Butler Machine Tool v Ex-Cell Oil Co 1[979] 1WLR 401 (CA)
Facts:
Held:
Communication of Acceptance
As we saw above, there are rules relating to the post when being used to accept a
contract. What about other forms of media?
Telex of fax?
Case: Entores v Miles [1955] 2 QB 327
Facts: A contract was taking place between London and Amsterdam. The medium
used was a telex machine. The contract was concluded in London as this is where the
telex machine confirmed the terms and conditions and not where they were written.
Held: There is an immediacy using a telex or facts which involves no third party. Thus
acceptance occurs not when the paper is sent but when it arrives.
Case: Brinkibon v Stahag Stahl [1983] 2 AC 34
Held: Confirming Entores but refining the decision stating that acceptance would be
inferred only during office hours.
What if the acceptance is lost?
Case: Household Fire and Carriage Accident Insurance Co v Grant (1879) LR
4Ex D216 (CA)
Facts: Mr Grant bought shares in a company but the acceptance letter of the company
was lost in the post. The company went bankrupt and sought monies from Mr Grant
for the shares. He argued there was no contract because of the lost acceptance.
Held: A contract existed. Using the postal rule, acceptance occurred as soon as the
company posted it.
NB Electronic Commerce (EC Directive) Regulations 2002 (SI 2002/2013)
Defining Instantaneous
Case: Thomas v BPE Solicitors [2010] All ER (D) 306 (Feb)
In the case of Thomas & another v BPE Solicitors [2010] EWHC 306 (Ch), 19
February 2010, this question faced Blair J, a question he admitted was not a
straightforward one, and did not appear to be settled by authority.
The issue arose in the context of a professional negligence dispute over whether a
share purchase transaction had been completed or not on a particular day. An email
had been sent between solicitors acting for the respective parties at 18:00 hrs on a
Friday evening before a bank holiday weekend. The defendant solicitors submitted
that the email was not effective from the moment it was received because it was sent
after working hours, and it could not have been effective until it came to the
recipient’s eye on the Tuesday morning. The claimant, however, submitted that the
email was effective from 18:00 hours Friday evening by analogy with the postal rule
(ie effective at the moment of dispatch).
Blair J decided that the issue must be resolved by reference to the intentions of the
parties, by sound business practice and in some cases by a judgment as to where the
risks should lie. In the context in which the email had been sent (that is, a transaction
which all had agreed could have been completed that evening), then the email was not
outside working hours. Therefore, the email was available to be read within working
hours, despite the fact that its intended recipient had gone home. If that email had
been an acceptance (which Blair J held it was not in this case for other reasons), then
it would have taken effect at 18:00 hrs.
Collateral Contracts
These can run parallel to the main contract and can determine who is sued as a result
of a breach.
Case: Shanklin Pier v Detel Products Ltd 1951
Facts: The trustees of Shanklin Pier employed painters to pain the pier but entered
into an agreement with the producers of the paint that the paint would be guaranteed
for 10 years. After only a few months the paint began to blister.
Held: The trustees could sue the paint company and not the painters because of the
collateral agreement regarding the use of the paint.
Consideration and Intention to Create Legal Relations.
We have looked at the importance of knowing when an agreement has taken place by
addressing the concept of offer and acceptance. In this part of the lecture we shall
address the importance of consideration upon forming a contract and during the
duration of the contract, if the terms are to be altered. We shall also look at the
importance of having an intention to create legal relations for contracts to have legal
validity.
Consideration:
This has been described as ‘an act or forbearance from one party that binds the other’.
Without consideration it would be nearly impossible to enforce a contract, or alter its
terms but there are, as you may have realised by now, always exceptions in UK law.
Consideration can be money, a service, chattels or goods and its importance that we
look at what is valid consideration before we conclude whether a contract is legally
enforceable. It’s primary reason for being key in a contract is that it provides evidence
of a contract. Many legal contracts are verbal and therefore consideration is proof that
an agreement has taken place. There are several rules relating to consideration that we
will now consider.
1.
Consideration must either be present at the time of the contract or at some
point in the future. Consideration cannot be rior to an agreement. Past consideration is
usually not good consideration.
Case: Re McArdle [1951] 1 All ER 905
Facts: Mrs McArdle lived with her husband and in law in the in law’s house. She used
her money to renovate the property. When the in law died, the husband and his
siblings agreed to pay her a sum of money for the renovations. They then changed
their minds.
Held: Mrs McArdles consideration for the agreement was prior to the agreement. As it
was in the past, it was deemed insufficient to constitute legal consideration.
Consideration either had to be executed (in the present) or executory (in the future).
Cf
Case: Lampleigh v Braithwaite [1615] EWHC KB J17
Facts: The defendant asked the claimant to go to London to get a pardon from the
King. He received the pardon and on return the defendant offered to pay him. He then
refused.
Held: Claimant successfully sued for the money. Even though his consideration was
past in terms of the offer of money, the reason for going to London came from a
request from the defendant.
2.
Consideration must come from the person making the contract.
Case: Tweedle v Atkinson (1861) 1 B&3 393
Facts: The father of the bride offered the father of the groom money for his daughter’s
marriage. However, the father died. Could the estate of the other in law enforce the
agreement?
Held: The couple getting married were providing the consideration and not the in law
so there was no privity between the consideration and the contract.
3.
Consideration need only be nominal, it does not have to represent the market
value of the item of service being sold.
Case: Thomas v Thomas (1842) 2 QB 841
Facts: Husband died leaving in his will a lease to his wife of the farm at £1.00 per
annum. The brother of the deceased who was the executor tried to get the agreement
set aside for lack of consideration.
Held: Contract was valid as consideration need only be sufficient and not adequate.
Case: Chappell & Co Ltd. v Nestle [1959]2 All ER 701
Facts: Nestle was offering a record for every five chocolate wrappers sent in by
customers. The issue was whether this meant the record was a gift and not subject to a
copyright fee or was a contract which meant it was.
Held: The wrappers were effective consideration and thus this was a contract and a
royalty fee was owed by Nestle.
4.
Consideration is inadequate if you were already under a duty to do something.
The duty means your actions cannot constitute consideration.
Case: Collins v Godfrey (1851) 1 B&Ad 950
Facts: A witness was offered money to attend court and then sued when it was not
paid.
Held: The witness was already under an existing duty to attend the court so offered no
fresh consideration by going.
BUT
Case: Glasbrook Bros. Ltd v Glamorgan County Council [1925] AC 270
Facts: The claimants called the police to end a demonstration outside their colliery
which was part of the general strike. The police claimed money for the expense of the
policing.
Held: Generally the police would be under an existing duty to do this but as they had
used horseback officers, this was additional consideration and thus the cost of
policing could be enforced.
What about your employees? If you employ someone on a salary and then ask them to
do more work, is the extra work consideration which means they can get more money?
Case: Stilk v Myrick (1809) 2 Camp 317
Facts: Some sailors deserted a ship and the remaining crew were promised a pay rise
for the extra work. When ashore, the rise was not given.
Held: There was only marginal increase in the amount of work the existing sailors
had to do and thus they could not claim the extra money as the extra work was part of
their existing duty.
BUT
Case: Hartley v Ponsonby (1857) 7 EL and BL 872
Facts: As above but this time the majority of sailors left.
Held: As the increase in workload was considerable, the sailors could claim the extra
money.
Altering the terms of a contract?
Generally speaking there has to be fresh consideration from both parties to alter the
terms of an existing contract. If you work for an hourly rate for say 40 hours a week,
then if you had to work more hours than what was originally agreed then your
employer would be legally obliged to pay you more money. However, there are times
when the law allows for alterations to the terms of a contract without the need for
fresh consideration. Flexibility is an important aspect of the business contract.
Case: Williams v Roffey Bros. [1990] 1 All ER 512 CA
Facts: A head contractor was subject to a penalty clause of £50,000 if he didn’t
complete the work on time. The sub- contractor needed extra money to complete his
part of the work on time. This was considerably less. The head contractor promised
the sub- contractor the extra money then refused to pay claiming he was already under
an existing duty.
Held: The sub -contractor could claim. There was no fraud and the new deal
benefitted both parties.
However you will not be allowed to force changes to the terms of a contract if you are
acting with economic duress
Case: D and C Builders v Rees [1965] 3 All ER 837
Facts: D and C Builders completed work but the defendants, knowing the contractors
were financially vulnerable said the work was negligent and offered them a lower sum
which the builders accepted. The builders sued for the original sum.
Held: The builders could get the original sum. The defendants had acted with
economic duress and this meant the original consideration could not be altered.
Promissory Estoppel
Sometimes you can defend a discount in your contract if you have relied upon the
promise of the other party that you would get a discount. This can only be used as a
defence to a claim against you.
Case: Central London Properties v High Trees House Ltd [1947] KB 130
Facts: A block of flats in London during WW II. Tenants were told by the landlord
that the rent would be reduce by 50% until the end of the war if they stayed. This they
did. Then in the last quarter of the rent during the war, the landlord tried to get the full
rent.
Held: The tenants had relied on his promise and thus he was estopped from going
back on it.
Limitations on the use of Promissory Estoppel.
Case: Re Selectmove [1995] 2 All ER 531
Facts: Business had entered into an agreement with the inland revenue to pay tax by
instalments. The IR then claimed the whole sum. The defendant relied on promissory
estoppel.
Held: The doctrine could not be used in debt claims where there had been a voluntary
arrangement in place.
Case: Combe v Combe [1951] 2 KB 215
Facts; During a divorce case a husband promised to pay his wife maintenance. Then
he refused to pay. The wife claimed the payments via promissory estoppel.
Held: Promissory estoppel could only be used as a shield or defence and not as a
sword or claim.
Intention To Create Legal Relations:
Commercial Agreements. There is a presumption in contract law that everyone who
enters a commercial agreement intends the agreement to be legally binding.
Case: Edwards v Skyways Ltd [1964] 1WLR 349 CA
Facts: In an employment contract there was an ex gratia payment clause if the
employment ended. This was a clause which generally would not be responded with
consideration.
Held: As it was in a commercial contract, the intention was that all the clauses were
legally binding because there was an intention to make them so.
However please note LETTERS OF COMFORT. They are not legally binding and
often used to show integrity of the company prior to the contract or business
arrangement.
Domestic Contracts.
These may not be legally binding but the presumption of not being legally binding can
easily be rebutted.
Case: Merritt v Merritt [1970] 2 All ER 760
Facts: Husband promised to pay wife, from whom he was legally separated so she
could clear the mortgage, then transfer the property to her. She paid the mortgage but
then he changed his mind and would not transfer the property.
Held: As they were legally separated there was an intention to create legal relations
and the transfer was ordered.
FORM:
Sometimes contracts must be in writing in order to be valid.
S2 Law of Property (Miscellaneous Provisions) Act 1989
Consumer Credit Act 1974 AS AMENDED