F4 Course Notes – Very useful (I think!)

After having to sit the F4 ENG paper a few times, I put together my own notes. These notes are pretty detailed, but please be aware that they dont cover the whole syllabus.

Its a large document, so here you go (if you want this in word, send me a msg with your e-mail address and i’ll e-mail it over to you);

ACCA Paper F4 CORPORATE AND BUSINESS LAW (ENGLISH)

Contents
Structure Of The Legal System 14
Civil Law 14
Criminal Law 14
Distinction between Civil and Criminal Law (Tip Dec 09) 15
Sources of Law 15
Case Law 15
Common Law 15
Judicial Precedent 16
Ratio Decidendi 16
Obiter Dicta 16
Equity 16
Advantages of case law 17
Statute Law / Legislation 17
Forms of legislation 17
Advantages of statute law 17
Disadvantages of statute law 17
Delegated Legislation 17
Advantages / Importance of delegated legislation 18
Disadvantages of delegated legislation 18
Parliamentary procedure 18
COURTS – Hierarchy of the Courts 18
European Court of Justice (ECJ) 18
Supreme Court (SC) (previously know as House of Lords (judicial capacity)) 19
Court of Appeal (C of A) 19
High Court (HC) 19
Crown Court (Crown C) 19
County Court (County C) 19
Magistrates Courts (MC) 19
Tribunals 19
Tracking 19
Statutory Interpretation Rules (Kaplan Jun 09 Mock Q1) 20
Literal rule 20
Fisher v Bell 20
Golden rule 20
Re Sigsworth / Whitely v Chappell / Adler v George (1964) 20
Mischief rule 20
Gorris v Scott 20
Purposive rule 20
Gardner v Sevenoaks RDC (1950) 20
Eiusdem Generis 20
Evans v Cross (1938) 20
Powell v Kempton Park Race Course Co (1899) 20
Expressio unius est exclusio alterius 20
Noscitur a socis 20
In pari material 21
Statutory Interpretation Presumptions 21
Aids to Interpretation 21
Intrinsic 21
Extrinsic 21
Interpretation Act 1987 22
Contract Law (Invitations, offers and acceptance) 22
Essential elements of a contract 22
Offers 22
Termination of Offer 23
Lapse of time 23
Ramsgate Victoria Hotel v Montefiori (1866) 23
Counter-offer / Rejection 23
Hyde v Wrench (1840) 23
Death (personal services) 23
Notification of death (non-personal services) 23
Bradbury v Morgan (1862) 23
Failure of a condition precedent 24
Financings Ltd v Stimson (1962) 24
Notice of revocation may be communicated through a reliable third party 24
Dickinson v Dodds (1876) 24
Request for information 24
Stevenson v Mclean (1880) 24
Privity of contract 24
Tweddle v Atkinson (1861) 24
Acceptance 24
Communicated by a reliable third party 25
Powell v Lee (1908) 25
Business agreements (ex-gratia) 25
Edwards v Skyways (1964) 25
Binding in honour only 25
Jones v Vernon Pools (1938) 25
Acceptance may be by conduct 25
Brogden v Metropolitan Railways Co (1877) 25
Silence is not enough 25
Felthouse v Bindley (1862) 25
Postal rule applies 25
Adam v Lindsell (1818) 25
Acceptance by prescribed means 25
Yates Building Co v R J Pulleyn & Sons (York (1975)) 25
Advert offering reward 25
Williams v Carwardine (1833) 25
Invitation to treat 26
Partridge v Crittenden (1968) 26
Pharmaceutical Society of Great Britain v Boots Cash Chemist (1952) 26
Fisher v Bell (1961) 26
Grainger v Grough (1896) 26
Consideration 26
Currie v Misa (1875) 26
Privity of contract 26
Williams v Roffey 27
Carlill v Carbolic Smoke Ball Co (1893) 27
Adequacy 27
Thomas v Thomas (1842) 27
Sufficiency 27
Chappell & Co v Nestle Co (1960) 27
Executed 27
Executory 27
Past consideration 28
Re McArdle, Roscorla v Thomas 28
Exceptions to past consideration 28
Letter of comfort 28
Kleinwort Benson Ltd v Malaysia Mining Corporation Bhd (1989) 28
Letter of intent 28
Privity of Contract 28
Beswick v Beswick 28
Keech v Sandford 28
Tulk v Moxhay 28
Exceptions to the rule that third parties cannot enforce contracts; 29
• Beswick v Beswick (1968) 29
• Shanklin Pier v Detel Products Ltd 29
• Linden Garden Trust Ltd v Lenesta Sludge Disposals Ltd (1994) 29
Collateral Contracts 29
Unilateral Contracts 29
Regina v Clarke (1927) 29
Williams v Carwardine (1833) 29
Pinnell and its exceptions (part payment of debt) 29
Promissory Estoppels Doctrine; 29
• Central London Property Trust v High Trees House (1947) 29
• Combe v Combe 29
• D & C Builders v Rees 30
Intention to Create Legal Relations 30
Domestic Arrangements 30
Balfour v Balfour 30
Merritt v Merritt 30
Simpkin v Pays / Jones v Padavatton / Parker v Clark 30
Commercial Arrangements 30
Rose & Frank v Crompton (1923) 30
Jones v Vernon Pools / Appleson v Littlewoods 30
Carlill v Carbolic 30
Voidable contracts 30
Contractual Terms 30
Condition 31
Poussard v Spiers (1876) 31
Warranty 31
Bettini v Gye (1876) 31
Innominate Terms 31
Bunge Corporation v Tradax SA (1981) 31
Hong Kong Fir shipping Co Ltd v Kawasaki Kisa Kaisha Ltd (1962) 31
The Hansa Nord 31
Sources of Terms 31
Express 32
Les Affreteurs v Walford (1919) 32
Implied 32
? Poussard v Spiers 32
? Bettini v Gye 32
? The Hansa Nord 32
Exclusion Clauses 32
Incorporated by Notice 33
Olley v Marlborough Court Hotel 33
Thompson v LMS Railway 33
Incorporated by Signature 33
L’Estrange v Graucob 33
Misrepresentation of Clause (exception) 33
Curtis v Chemical Cleaning Co 33
Consistent course of dealings 33
J Spurling v Bradshaw (1956) 33
Hollier v Rambler Motors (1972) 33
Hardwick v Suffolk 33
Contra-Proferentum 33
Andrews v Singer 33
Photo Productions v Securicor (1980) 34
Unfair Terms Legislation (Unfair Contract Terms Act (UCTA 1977) 34
Template Answer – Exclusion Clause 34
Signature 34
Notice 34
Conra-poferuntum rule 35
Course of dealing 35
Unfair Contract Terms Act 35
Breach of Contract 35
Anticipatory 35
Express 35
Implied 35
Hochster v De La Tour (1853) 36
White and Carter Councils v MacGregor (1961) 36
Avery v Bowden 36
The Mihalis Angelos 36
Hochester v De La Tour (1853) 36
Repudiatory / Actual (aka During) 36
Common Law Remedies 36
Damages 37
Liquidated Damages 37
Penalty Clause 37
Remoteness 37
The Wagon Mound (1961) 37
Hadley v Baxendale (1854) 37
Victoria Laundry (Windsor) v Newman Industries (1949) 37
Jarvis v Swan Tours 37
Measure 37
C & P Haulage v Middleton 37
Thompson v Robinson 37
Anglia Television Ltd v Reed (1972) 37
Alexander v Rolls Royce 38
Ruxley Electronics v Forsyth 38
Other common law remedies 38
Equitable remedies 38
Mitigate loss 38
Payzu Ltd v Saunders (1919) 38
Tort 38
Trespass to land 38
Trespass to person 38
Nuisance 39
Defamation 39
Deceit 39
Passing-off 39
Ewing v Buttercup Margarine Co Ltd (1917) 39
Negligence 39
Loss of damage as a result of the breach 40
Barnett v Chelsea & Kensington HMC (1989) 40
Defences against claim for negligence 40
Contributory negligence 40
Sayers v Harlow UDS (1958) 40
Volenti non fit injura 40
Professional Negligence 40
Caparo Industries v Dickman & others (1990) 40
ADT Ltd v Binder Hamlyn 40
Candler v Crane, Christmas & Co (1957) 40
Barings Plc v Coopers & Lybrand (1997) 40
Duty of care 40
Donoghue v Stevenson (1932) 41
Richley v Fould (1965) 41
Proximity 41
Breach of Duty of Care 41
Res ipsa loquitur 41
Mahon v Osbourse (1939) 41
Employment Law 41
Contract of Employment 41
Employee 41
Dismissal and Redundancy 42
Notice and termination of contract by breach 42
Constructive Dismissal 42
Reduction in pay 42
Industrial Rubber Products v Gillon (1977) 42
Change in nature of job 42
Ford v Milthorn Toleman Ltd (1980) 42
Failure to follow disciplinary procedure 42
Post Office v Strange (1981) 42
Failure to provide suitable working environment 42
Waltons & Morse v Donnington (1997) 42
Failure to implement proper procedure 42
WA Goold (Pearmak) Ltd v McConnell & Another (1995) 42
Suspended without pay 42
Western Excavating (ECC) Ltd v Sharp (1978) 42
Summary Dismissal 43
Wilson v Racher (1974) 43
Unfair dismissal 43
Massey v Crown Life Assurance (1978) 43
Remedies for unfair dismissal 43
Criteria for unfair dismissal 43
Wrongful Dismissal 43
Justifiable reasons for dismissal; 43
Potentially fair reasons for dismissal 44
Automatically Fair reasons for dismissal 44
Automatically Unfair reasons for dismissal 44
Criteria to obtain compensation for unfair dismissal 44
Exceptions to one year’s continuous service 45
Remedies for wrongful dismissal 45
Criteria for obtaining wrongful dismissal 45
Redundancy 45
Employed v Self-Employed 45
Employee 45
Self-Employed 45
Ferguson v John Dawson & Partners (1976) 46
Ferguson v John Dawson & Partners (1976) 46
Reasons for distinction 46
Employment Control Test 46
Massey Docks & Harbour Board v Coggins & Griffiths (Liverpool) (1947) 46
Employment Integration Test 46
Cassidy v Ministry of Health (1951) 46
• Mersey Docks & Harbour Board v Loggins & Griffith (Liverpool) Ltd (1947) 46
• Cassidy v Ministry of health (1957) 46
Economic Reality 46
O’Kelly v Trusthouse Forte Plc (1983) 46
Ready mix concrete (south east) v Ministry of pensions & national insurance (1968) 46
Employment Relationships 47
Ferguson v John Dawson & Partners (1976) 47
Massey Docks & Harbour Board v Coggins & Griffiths (Liverpool) (1947) 47
Job Existence 47
North Riding Garages v Butterwick (1967) 47
Agency / Partnership 47
Actual Authority 47
Express Authority 47
Implied Authority 47
Watteau v Fenwick (1893) 47
Ostensible Authority 48
Freeman & Lockyer v Bukhurst Part Properties (Mangal) (1964) 48
Panarama Developments Ltd v Fedelus Furnishing Fabrics (1971) 48
Types of Agent 48
Agency workers 48
Frank v Reuters Ltd (2005) 48
Motorola v Davidson and Melville Craig (2001) 48
Partnerships 48
Retiring Partners 48
• Contract of Novation 48
Sleeping Partners 49
Company Law 49
Advantages of forming a company as compared to a partnership 49
• Salomon v Salomon 49
Disadvantages of forming a company as compared to a partnership 49
Formation of company 50
Memorandum of Association 50
Articles of Association 50
Form 10 50
Form 12 50
Alteration to articles 50
o Greenhalgh v Arderne Cinemas Ltd (1950) 51
Effect of articles 51
• Hickman v Kent 51
• Eley v Positive Government Security Life Assurance Co (1876) 51
Restrictions to alterations of articles 51
Company Auditor 51
Appointment 51
Termination 51
Duties 52
Rights 52
Company Secretary 52
Appointment 52
Responsibilities 53
Qualifications 53
Ostensible Authority 53
Powers of Company Secretary 53
Panorama Developments Ltd v Fedelus Furnishing Fabrics (1971) 53
Dividends 54
Directors 54
• Bamford v Bamford 54
Appointment 54
Removal 55
Powers 55
Freeman & Lockyer v Buckhurst Park Properties Mangal Ltd (1964) 55
Howard Smith v Ampol Petroleum 55
Greenhalgh v Arderne Cinemas Ltd (1950) 55
Fiduciary Duties 55
• Smith v Fawcett Ltd (1942) 55
• Hogg v Cramphorn (1966) 56
Statutory Duties 56
Remedies for breach of director’s duties 56
Regal (Hastings) Ltd v Gulliver (1942) 56
Industrial Development Consultants Ltd v Cooley (1972) 56
Weighted voting rights 56
Bushell v Faith (1970) 56
Shadow directors 57
Executive director 57
Non-Executive Director 57
Difference between Executive and non-Executive directors 57
Management Director 57
Company Meetings 58
Annual General Meeting 58
General Meeting 58
Class Meeting 58
Company Resolutions 58
Key Terms 60
Structure of the legal system 60
Binding precedent 60
Young v Bristol Aeroplane Co (1944) 60
Purpose of Binding Precedent 60
Advantage of Binding Precedent 60
Disadvantage of Binding Precedent 60
Avoidance of Binding Precedent 60
Reversing 60
Overruling 61
Distinguishing 61
Recission 61
Fiduciary 61
Indictment 61
Bonafide 61
Mitigate 61
Repudiatory 61
Cease 61
Indemnity 61
Rescind 61
Ultra-vires 61
Ostensible 61
Requisite 62
Codification 62
Consolidation 62
Repeal law 62
Alteration to articles 62
Appellate cases 62
Per incuriam 62
Stare decisis 62
Dissipate 62
Gratuitous promises 62
Plaintiff 62
Prima facie 63
Renunciation 63
Purportedly 63
Convenant 63
Doctrine of restituition 63
Volenti no fit injuria 63
Proximity 63
Res ipsa Loquitor 63
Nouus actus intervieniens 63
Exonerate 63
Quasi partnership 63
Quantum meruit 63
Indictable offences 64
Summary offences 64
Capital Maintenance 64
Corporate Governance 64
Knowledge Gap 64
Importance of good corporate governance 65
Cross 65
Insider dealing 65
Law 65
Lifting the veil 65
By statute 65
To prevent evasion of obligations 66
Group Situations 66
Adam v Cape Industries (1990) 66
Limited by Shares 66
Limited by Guarantee 66
Money Laundering 66
Plaintiff 67
Postal rule 67
Adam v Lindsell 67
Presumption 67
Rebuttal 67
Transfer of undertakings 67
List of cases 68
Legal Personality 68
Salomon v Salomon & Co Ltd (1897) 68
Quasi Partnership 68
Ebrahimi v Westbourne Gallaries Ltd (1973) 68
Dunlop Pneumatic Type Co Ltd v Dunlop Motor Co Ltd (1907) 68
Tips 68
Terms 68
Structure Of The Legal System
Civil Law
Private law

To settle disputes between individuals

No concept of punishment, if liable, then compensation payable

Objective is to compensate the wronged party

Need to prove ‘on the balance of probability‘

Plaintiff (claimant) and defendant

Personal action brought by the aggrieved party

Court may award an equitable remedy if damages are inappropriate

Example case: Carlill v Carbolic

Criminal Law
Public law

A wrongdoer has broken the law

A wrong done to society

If guilty, then punished (community service, fine or imprisonment)

Prosecutor and accused

Need to prove ‘beyond reasonable doubt’

Police decide whether to prosecute, this decision is reviewed by the Crown Prosecution Service

Example case: R v Jones (Regina v Jones) / Sale of Goods Act (1979)

Distinction between Civil and Criminal Law (Tip Dec 09)

It is not the act or event which creates the distinction but the legal consequences. The proceedings can be made clear as the below 3 facts are different;
1. The courts where the case is heard
2. The procedures (objective)
3. The terminology

All other differences can be picked up from civil law and criminal law details mentioned above

Sources of Law
Case Law
Forms of case law include;

Common Law
• Introduced the system of precedent
• The only remedy was damages – a monetary award
• Rigid and inflexible

Development started with effect from 1066

King’s representatives attended local courts, then met in London on a regular basis to discuss

Over a period of 200 years, law was commonised – “Common Law”

Cornerstone of Common Law is judicial precedent (Ratio decidendi and obiter dicta)

With commonisation came recognition of deficiencies

Highlighted the need for alternative remedies – Equity

Common Law courts were separate from court of equity until the late nineteenth century

Judicial Precedent
Ratio Decidendi
Ratio is ‘the reason for the decision’

Definition – Any rule of law expressly or impliedly treated by the judge as a necessary step in reaching his conclusion, having regard to the line of reasoning adopted by him, or a necessary part of his direction to the jury (cross).

Ratio is binding on future judges in similar cases of equal or lower courts. And it is only persuasive for courts higher in the hierarchy

Ratio not binding if too obscure

made without care (per incuriam)

in conflict with a basic principle of law

in conflict with European law

too wide

Obiter Dicta
Obiter are words in a judgement which are said ‘by the way’. They do not form part of the ratio decidendi and are not binding on future cases but merely persuasive.

Equity
• Began as a form of appeal
• More flexible than common law
• Introduced new discretionary remedies such as injunctions and specific performance
• Concerned with fairness

Grew from the recognition of deficiencies of Common Law

If a monetary award of damages was not appropriate, there was nothing else to offer

In fourteenth century, Aequitas

Chancellor’s court

Early seventeenth century, Earl of Oxford’s case (1615) – Where equitable rules conflict with common law rules, then equitable rules will prevail

Confirmed by 1873 – 1875 Judicature Acts

Main remedies: Specific performance, Injunction, Rescission or Rectification

Remedies are given at Court’s discretion

Only given if damages are inappropriate

Main remedies for Equity;
• Specific Performance
• Injunction
• Recission
• Rectification

Advantages of case law
• Certainty
• Clarity
• Flexibility
• Detail
• Practicality

Statute Law / Legislation
Statute may be fresh legislation or it may be a consolidation of existing statutes and their amendments, i.e., CA (2006), or it may be a codification of existing statutory and case law, i.e., Sale of Goods Act (1979)

Parliament passes laws (statutes), and only parliament can change / repeal those laws

Forms of legislation
Direct Legislation, i.e., Acts of Parliament

Indirect legislation, i.e., delegated legislation (see below)

Advantages of statute law
• The house of common is elected at intervals of not more than 5 years, hence the law making procedure is theoretically responsive to public opinion;
• Statute law can in theory deal with any problem;
• Statutes are carefully constructed codes of law;
• A new problem in society or some unwelcome development in case law can be dealt with by passing an Act of Parliament

Disadvantages of statute law
• Bulky;
• Parliament often lacks time to consider draft legislation in sufficient detail;
• A substantial statute can take up a lot of parliament time;
• Statute law is a statement of general rules. Those who draft it cannot anticipate every individual case which may arise

Delegated Legislation
Rules of law, often of a detailed nature, made by subordinate bodies to whom the power to do so has been given by statute.

Statutory instruments (responsible ministers)

Bye – laws (Burnley) – i.e., no ball games

Rules of Court (made by judiciary)

Professional regulations (ACCA) – regulation by the professional body of the conduct of its members

Orders in Council (Privy Council – very rare)

Advantages / Importance of delegated legislation
• Saves parliamentary time
• Greater Flexibility – regulations can be altered later without the need to revert to parliament
• Allows general principles to be written into statute, with fine detail added later by minister with consultation with professional bodies
• Allows very quick passing of statute in cases of e.g. national emergency
• Prevents parliament from being overwhelmed with excessive work-load

Disadvantages of delegated legislation
• There are concerns over the accountability of parliament. Individual MPs and their civil servants effectively become the source of law
• Because delegated legislation can be produced in bulk, individual MPs and the public find it difficult to keep up-to-date with developments

Parliamentary procedure
Green paper – A proposal for new law

White paper – After comments received a draft for the new law

First reading – Introduction to the House

Second reading – Debate about the merits of the proposed legislation

Committee stage – All-party committee discussion and amend the draft

Report stage – The amended draft then presented to the House for approval

Third reading – Final approval by the House

Same procedure in the other house

Royal Assent

COURTS – Hierarchy of the Courts
European Court of Justice (ECJ)
Binds all English courts not bound by anyone, not even itself

Supreme Court (SC) (previously know as House of Lords (judicial capacity))
Binds all English courts, but not itself bound by ECJ

Court of Appeal (C of A)
Binds all lower courts, bound by ECJ, SC and itself – unless

Unless two similar decisions conflict – must then decide which to follow;
Earlier decision conflicts with a later SC decision;
Earlier decision made per incuriam

High Court (HC)
3 divisions (Queens Bench Division, Chancery & Family). Binds all lower courts, bound by all higher courts and itself. A single judge’s decision is not binding on cases where multiple judges reside on.

Crown Court (Crown C)
Criminal cases, binds no-one, not even itself, bound by all higher courts

County Court (County C)
Civil cases, binds no-one, not even itself, bound by all higher courts. Civil cases appealed to C of A. a bankruptcy case appealed to HC (Chancery Division)

Magistrates Courts (MC)
Binds no-one, not even itself, bound by all higher courts

Tribunals
(i.e., Employment Tribunal) – Less formal procedures, quicker, hears disputes between employees and employers, can appeal to;

Employment Appeal Tribunal (EAT) – Equal status as SC, can further appeal to C of A, but only on a point of law, not on a matter of fact

Tracking
3 types of tracking: small claims, fast & multi track

Small claims track claim < £5,000, quick, informal, no need for legal representation Fast Track claim £5,000 < £15,000, trial will last < 1 day, less formal court procedures, claim will be determined within 30 weeks Multi Track claim £15,000, full court hearing, but management conference held to encourage alternative dispute resolution, which are faster and cheaper Statutory Interpretation Rules (Kaplan Jun 09 Mock Q1)
Literal rule
Ordinary everyday meaning, even if it produces undesirable outcome, unless;
Fisher v Bell

Golden rule
If literal rule would lead to absurd results, chose a result which produces the least absurd result. This is an extension to the literal rule
Re Sigsworth / Whitely v Chappell / Adler v George (1964)

Mischief rule
What mischief is the statute trying to control?
Gorris v Scott – the spread of contagious disease only

Purposive rule
What is the purpose of the act / Rule?
Gardner v Sevenoaks RDC (1950)

Eiusdem Generis
The Euisdem Generis rule follows the premise that statutes often list a number of specific things and end with more general words. In that case the general words are to be limited in their meaning to other things of the same kind as the specific items which precede them

Evans v Cross (1938) – charged with driving his car in such a way as to ‘ignore a traffic sign’ (driving on the wrong side of the road)

Powell v Kempton Park Race Course Co (1899) – prohibited betting in a ‘house, room or other place’

Expressio unius est exclusio alterius
To express one thing is by implication to exclude anything else

Noscitur a socis
It is presumed that words draw meaning from the other words around them. For example, ‘children’s books, children’s toys, and clothes’, would mean children’s clothes

In pari material
If the statute forms part of a series which deals with similar subject matter, the court may look to the interpretation of previous statutes on the assumption that Parliament intended the same thing.

Purposive approach, for example, civil partnerships

Cannot interpret statute which would lead to conflict with European Law

Statutory Interpretation Presumptions
As well as being bound by rules, judges are also bound by presumptions, which include;

• Statute is not to alter existing common law

• Where statute deprives a person of his property, statute does not operate retrospectively

• Statute does not bind the Crown

• Statute is not to deprive a person of their liberty

• Statute operates throughout the UK, but not in conflict with Europe

• Unless perfectly clear, statute is not to create an offence of absolute liability

• Statute is not to conflict with existing statute

Aids to Interpretation

2 types: Intrinsic and Extrinsic

Intrinsic
Intrinsic aids are those words contained in the Queen’s printer’s copy of the statute.
• The title of the statute may give an indication of its objective E.g. Anzac (Restriction on Trade Use of Word) Act 1916.
• The preamble – the introduction to the statute at the start of the document
• Interpretation section within the statute
• Margin notes (summary notes in the margin)

Extrinsic
Extrinsic aids are those found elsewhere (other than the Queen’s printer’s copy of the statute)
• Reports of committees
• Hansard
• Dictionary Books of authority

Interpretation Act 1987

Contract Law (Invitations, offers and acceptance)
An invitation must be distinguished from an offer

is not capable of acceptance

is inviting another person to make an offer

Goods in a supermarket are invitations (Pharmaceutical Society of Great Britain v Boots Cash Chemist (1952))

Goods in a shop window are invitations (Fisher v Bell (1961))

Adverts are normally invitations (Partridge v Crittenden (1968))

Very occasionally, adverts may be taken to be offers (Carlill v Carbolic Smoke Ball Company (1893))

Mail catalogues are invitations (Grainger v Gough 1896)

The process of an auction sale constitutes the auctioneer inviting offers to be made (Barry v Davies (2000))

An advert offering a reward is an offer, not an invitation (Williams v Carwardine, R v Clark, Carlill v Carbolic)

Essential elements of a contract
• Offer and Acceptance
• Consideration
• Intention to create legal relations

Offers
A definite promise to be bound on specific terms

Must be certain (Gunthing v Lynn (1831)) – Horse if lucky. Offer was too vague, and contract could not be formed

Half of the ‘agreement’

An expression of willingness to be bound on specific terms

Carlill v Carbolic Smoke Balls (1893) – £100 reward for anyone who contracts influenza after having used the smoke ball three times, claimant used the smoke ball as prescribed but still caught influenza, offer valid, as £100 already deposited in the bank

Must still exist when ‘accepted’

Must be distinguished from invitations

Must be distinguished from statements of intent (Harris v Nickerson (1873)) – advert to say an auction is taking place. If auction doesn’t take place, potential buyers cannot sue

A response to a request for information is not an offer (Harvey v Facey (1893)) – A mere statement of a min price one would consider. The telegram was not an offer

Bigg v Boyd Gibbons (1971) – However, if the vendor states the lowest price he will accept for a sale, that statement may be an offer which can be accepted

A request for information is not a counter offer (Stevenson v McLean)

Revocation must actually be communicated to the offeree (Byrne v Van Tienhoven)

May be made to the world at large (R v Clark, Williams v Carwardine)

Termination of Offer
An offer may only be accepted while it is still open. In the absence of an acceptance, an offer may be terminated in any of the following ways;
• Rejection
• Counter-offer
• Lapse of time
• Revocation by the offerror (must be communicated to offerree)
• Failure of a condition to which the offer was subject
• Death of one of the parties

May be revoked at any time before acceptance, revocation must be communicated to the offeree

Postal rule does not apply

Lapse of time
Ramsgate Victoria Hotel v Montefiori (1866) – The defendant applied for shares in June and paid deposit, the acceptance by the company was sent in November and asked for the balance due. The defendant contented that the offer had expired and could no longer be accepted. The offer was for a reasonable time, and five months was much more than that. The offer had lapsed

Counter-offer / Rejection
Hyde v Wrench (1840) – Original offer of £1,000 was terminated by the counter-offer of £950

A counter-offer is a final rejection of the original offer. If a counter-offer is made, the original offerror may accept it, but if rejected, the original offer is no longer available for acceptance.

Death (personal services)

Notification of death (non-personal services)
Bradbury v Morgan (1862) – The death of the offeree terminates the offer. The offeror’s death terminates the offer, unless the offeree accepts the offer in ignorance of the death, and the offer is not of a personal nature

Failure of a condition precedent
Financings Ltd v Stimson (1962) – Contract stated that agreement will not be binding unless signed by claimant. The claimant signed the agreement after the car was stolen, hence the defendant was not bound to take the car

Notice of revocation may be communicated through a reliable third party
Dickinson v Dodds (1876) – Property offered for sale until specified time, before the end of time, the defendant sold the property to a third party who had been an intermediary between Dickinson and Dodds, that intermediary informed the claimant of the sale, the claimant sent a formal letter of acceptance before the end of the deadline. The defendant was free to sell, as the claimant was reliably informed of the sale.

Request for information
Stevenson v Mclean (1880) – Defendant offered to sell iron at a specified price, ‘open till Monday’. The claimant enquired whether he would agree to deliver over two months. The defendant did not reply and within the stated time sold the item to a third party. The claimant accepted the original offer, and was able to sue as the request was merely for information

Privity of contract
Tweddle v Atkinson (1861) – Only a person who is party of a contract has enforceable rights or obligations under it

Acceptance
A positive act by a person to whom an offer has been made which, if unconditional, brings a binding contract into affect

The other half of the ‘agreement’

Acceptance must be complete and unconditional

Acceptance must be an unqualified agreement to the terms of the offer and must not introduce new terms

Acceptance cannot vary the original offer. That would be a counter-offer (Northland Airlines v Dennis Ferranti Meters)

The offer must still be ‘open’ at the time of acceptance (Hyde v Wrench)

Acceptance can be express (oral or written) or implied and must be communicated to the offerror unless offeror waives the need of communication (Carlill v Carbolic)

Acceptance must be communicated to the offeror, but offeror may waive the right of communication (Carlill v Carbolic)

Communicated by a reliable third party
Powell v Lee (1908)

Business agreements (ex-gratia)
Edwards v Skyways (1964) – ‘ex-gratia’ payment as part of a larger negotiation is binding

Binding in honour only
Jones v Vernon Pools (1938) – the conditions stated that the transaction should not ‘give rise to any legal relationship, but be binding in honour only’

Acceptance may be by conduct
Brogden v Metropolitan Railways Co (1877) – Actions of the parties. Had been dealing with each other for a number of years, claimant suggested they should have a written agreement. Defendant’s agent sent a draft for consideration, but no-one signed it. The parties applied their dealings to the terms of the draft agreement. The conduct of the parties was only explicable on the assumption that they both agreed the draft agreement.

Silence is not enough
Felthouse v Bindley (1862) – Defendant wrote to his nephew offering to buy his horse, adding ‘if I hear no more about him, I consider the horse mine’. The nephew instructed the auctioneer to sell the horse, the horse was sold, the uncle sued the auctioneer, and he failed.

Postal rule applies
Acceptance must be made within a reasonable time (Household Fire Insurance Co v Grant (1879)) – the defendant handed a letter of application for shares in the claimant’s company agent. The company’s acceptance of application never arrived. The defendant called up the money for shares, the defendant had to pay as the contract had been formed when the acceptance was posted.

Adam v Lindsell (1818) – acceptance occurs as soon as the letter is posted

Acceptance by prescribed means
Yates Building Co v R J Pulleyn & Sons (York (1975)) – the offer called for acceptance by registered or recorded delivery. The offerree sent an ordinary letter, which arrived on time and the offerror suffered no disadvantage, hence acceptance was valid

Advert offering reward
Williams v Carwardine (1833) – Plaintiff (Mrs Williams) gave evidence for a case, but did not disclose everything she knew. Sometime later the victim’s brother placed an advert asking for more information; she came forward and gave the additional evidence. She was entitled to the reward as it was apparent that after the first murder trial, Mrs Williams had been savagely beaten by Mr Williams

Invitation to treat
An indication that a person is prepared to receive offers with a view to entering into a binding contract.

Partridge v Crittenden (1968) – placed an advert to sell birds, which were supposed to be preserved. RSPCA failed to bring a case against him, as it was an invitation to treat.
Pharmaceutical Society of Great Britain v Boots Cash Chemist (1952) – drugs which had to be supervised were placed in a self-service shop. Customers could still reject the goods at the till.
Fisher v Bell (1961) – shop owner being prosecuted for displaying an offensive item for sale. Shelf displays are only invitation to treat.

Grainger v Grough (1896) – circulation of price list

Consideration
Consideration is what each party brings to the contract

Consideration need not be adequate but must be sufficient

A valuable consideration in the sense of the law may consist either in some right, interest profit or benefit accruing to one party, or some forbearance, loss or responsibility given, suffered or undertaken by the other

Every contract must be supported by consideration.

Consideration is a two-way thing in simple / Parol contracts (only one-way is necessary in specialty contracts/deeds)

Currie v Misa (1875) / Dunlop v Selfridges

Consideration must be legal and possible

Privity of contract – Consideration must move from the promisee

Courts may imply an implied promise to pay a reasonable sum (Lampleigh v Braithwait)

Courts will not look at the adequacy of agreed consideration

Consideration must have some value (sufficient) (Chappell v Nestle)

Not sufficient if in accordance with a natural duty already owed (White v Bluett)

Not sufficient if in accordance with a legal duty already owed (Collins v Godefroy)

Not sufficient if in accordance with a contractual duty already owed (Stilk v Myrick) – 2 crew members deserted, captain unable to recruit substitutes, and promised the remaining crew that they would share the deserter’s wages. Upon arrival at Bombay, the captain refused the additional pay, and weren’t liable, as the crew did not give consideration for the promise of extra pay.

If over and above a natural duty, OK (Ward v Byham)

legal duty, OK (Glasbrook v Glamorgan)

contractual duty, OK (Hartley v Ponsonby)

Williams v Roffey

Carlill v Carbolic Smoke Ball Co (1893) – £100 reward for anyone who contracts influenza after having used the smoke ball three times
Consideration is what each side brings to the contract. Mrs Carlill gave consideration by using the smoke ball

Adequacy
It is presumed that each party is capable of serving his own interests, and the courts will not seek to weigh up the comparative value of the promises or acts exchanged

Thomas v Thomas (1842) – widow to occupy house for £1 rent per annum. Compliance with the husband’s wishes was not valuable consideration (no economic value attached to it), but the rent was sufficient consideration.

Sufficiency
Consideration is sufficient if it has some identifiable value. The law only requires an element of bargain, not necessarily that it should be a good bargain

Chappell & Co v Nestle Co (1960) – defendant offered to supply a record to anyone who sent in a postal order for 1s 6d and three wrappers from 6d bars of chocolate. The wrappers were part of the consideration, as they had commercial value to the defendant.

Executed
An act in exchange for a promise
That which takes place at the present time. Thus in a contract for the sale of goods, the consideration is executed if the price is paid at the same time that the goods are delivered.

Executory
A promise (to perform an act at a future date) in exchange for a promise (or an act)

That which is to take place at some future time. The consideration for the delivery of goods would be executory if it is a promise to pay at a future date.

Past consideration
Re McArdle, Roscorla v Thomas – There is no consideration. Children were entitled to mother’s house after her death. One of the children’s wives made improvements and the others agreed in writing to pay her, but at the mother’s death, they refused to pay her. The work on the house had been done before the documents were signed, so promise not binding

Something which has already been done at the time the promise is made. An example would be a promise to pay for work already carried out, unless there was implied promise to pay a reasonable sum before the work began.

Exceptions to past consideration
• Bill of exchange
• Request for service – it may be implied that the person will pay for them

Letter of comfort
Kleinwort Benson Ltd v Malaysia Mining Corporation Bhd (1989) – letters of comfort to creditors are not binding

Letter of intent
A letter of intent is a means by which one party gives a strong indication to another that he is likely to place a contract with him.

Privity of Contract
Only a party to a contract may sue to enforce it, but there are exceptions

A person entitled to benefit under third party motor insurance can sue the insurer

A principal may sue to enforce a contract entered into by his agent

A holder-in-due-course of a bill of exchange can sue all prior parties

Beswick v Beswick – Where a special relationship exists; for example, an executor may sue to enforce a contract entered into by the deceased

Keech v Sandford / Shamia v Joory – A beneficiary may sue a trustee

A manufacturer of goods may be sued by the ultimate consumer (Donahue v Stevenson)

An employer may be sued for the negligent acts (tort, not contract) of its employees

Tulk v Moxhay – Restrictive covenants on land apply to subsequent owners

Exceptions to the rule that third parties cannot enforce contracts;
• Where the contract has been validly assigned to the third party
• Beswick v Beswick (1968) – Where they act in another capacity – widow suing as deceased husband’s admin
• Shanklin Pier v Detel Products Ltd – Where the contract is a collateral contract
• Linden Garden Trust Ltd v Lenesta Sludge Disposals Ltd (1994) – Where there is foreseeable loss to a third party – a third party in the contemplation of both parties when contract was made

Collateral Contracts
A contract where consideration is provided by the making of another contract. For example, if there are two separate contracts, one between A and B and one between A and C, on terms which involve some concerted action between B and C, there may be a contract between B and C.

An injured party can sue even though the other party is not a party to the contract (Shanklin Pier Ltd v Detel Products Ltd (1951) – defendant gave assurances that the paint was satisfactory and durable if used to paint the claimant’s pier. Claimant had an agreement with X to use the defendant’s paint, which was the consideration for a contract between the claimant and the defendant)

Unilateral Contracts
A contracts where the terms of the offer are fulfilled by the actions of the offerree.

Regina v Clarke (1927) – no acceptance without knowledge of offer. Information given on the arrest and conviction of a murderer.

Williams v Carwardine (1833) – provided info about criminals with knowledge of the reward. Acceptance was related to the offer.

Pinnell and its exceptions (part payment of debt)
General principle – part payment of a debt does not achieve full settlement (Pinnell’s case)

Illustrated by Foakes v Beer, but there are exceptions

Receiving something different to which you were not already entitled

Goods instead of cash; settlement before the due date

Arrangement with creditors generally that collectively they agree to accept only part payment

Payment by someone other than the debtor (Welby v Drake); payment at a different location than originally agreed

Promissory Estoppels Doctrine;
• Central London Property Trust v High Trees House (1947) – reduced rent during war time, then wanted to reclaim the reduction. The agreement had estopped any claim
• Combe v Combe
• D & C Builders v Rees

Intention to Create Legal Relations

May be express or implied

Presumed unless rebutted

Domestic Arrangements
Presume no intention to be legally bound
Balfour v Balfour – husband and wife, living together, monthly allowance.

Merritt v Merritt / Spellman v Spellman – presumption rebutted, as husband and wife separated / living apart

Simpkin v Pays / Jones v Padavatton / Parker v Clark – other than husband and wife

Commercial Arrangements
Presume intention to be legally bound
Rose & Frank v Crompton (1923) – claimant appointed distributor for USA, when order placed, defendant terminated agreement. Claim for breach of contract failed, but damages for non-delivery of goods succeeded because the order was accepted when placed.

Jones v Vernon Pools / Appleson v Littlewoods – Express exclusions – binding in honour only. Wording of contract stated ‘binding in honour only’. Therefore, no intention to be legally bound

Presumptions – assumed until proved otherwise

Rebuttal – disproving a presumption

Carlill v Carbolic – payment of £1,000 into bank account

Voidable contracts
These may be cancelled by one party if they choose to. They may continue as a valid contract if the affected party chooses to.

Contractual Terms
As a general principle, the parties to a contract may include in their contract, whatever terms they choose. The agreement reached on the terms must be complete in order to be legally binding and those terms must be sufficiently clear and precise (Scammell v Ousten (1941))

Condition
A term which is a condition is fundamental to the contract

Breach of a term which is a condition allows the injured party to treat the contract as discharged and sue for damages

Poussard v Spiers (1876) – opera singer unable to appear on the opening night due to illness.
Warranty
A warranty is superficial to the contract

Breach of warranty allows the injured party to claim damages only

But the contract is not discharged

Bettini v Gye (1876) – opera singer did not arrive for rehearsal 3 days before opening night (out of a possible 6) due to illness. Rehearsal was subsidiary to the main purpose.
Innominate Terms
Bunge Corporation v Tradax SA (1981) – The courts will seek to construe what was the intention of the parties at the time of the contract as to whether a broken term was to be a condition or warranty

Innominate terms are those where it is not clear, until breached, whether they are fundamental or merely superficial

Remedy depends on the effects of the breach

Hong Kong Fir shipping Co Ltd v Kawasaki Kisa Kaisha Ltd (1962) – claimant to provide a ship that was ‘in every way fitted for ordinary cargo’, ship was only available for 17 out of 24 months

The Hansa Nord – some of the ships cargo arrived in poor condition. Buyer rejected the whole cargo. Held only remedy was damages.

Sources of Terms
May be express or implied

Term Representation
Condition Warranty Innominate Induces contract
Fundamental to contract Superficial to contract Not clear until breached Does not become part of the contract
Routledge v McKay (1954)

Express
Express terms are those agreed by the parties and may be written into the contract or simply agreed orally and the court will ascertain whether any oral statement constitutes a term of the contract or simply a representation

Les Affreteurs v Walford (1919) – Express terms override any terms that are implied by custom

Implied
Implied terms may be judicially or statutorily implied by the nature of the contract, by custom & usage

Judicially implied terms – business efficacy (The Moorcock (1889)) (Express Newspapers v Silverstone)

– trade custom (Hutton v Warren (1836)) – the defending landlord gave notice to the claimant to vacate the farm, the claimant should continue to farm the land during the notice, and was entitled to ‘a fair allowance’ for seeds and labour from which the received no benefit

– course of trade (Hillas v Arcos)

Statutorily implied terms, e.g., Sale of Goods legislation

Powers of partners / MDs to bind partnerships / company

Limited ability to exclude statutorily implied terms

Term re title cannot be excluded in ANY contract

Others from Sale of Goods legislation cannot be excluded in a consumer contract

• Implied – covered by statute – company secretary ordered a van for hire
• Express – oral or written
o Terms – put on top of the contract. Contractually binding part of contract. Generally written.
? Poussard v Spiers (opera singer failed to attend opening night) – Conditions – Essential, goes to the heart of the contract
? Bettini v Gye (opera singer failed to attend rehearsals) – Warranties – subsidiary term of contract. Contract can be performed with adjustments, i.e., new car delivered which was not cleaned. Generally oral. Breaching party liable to pay damages only.
? The Hansa Nord (some cargo arrived in poor condition) – Innominate Terms – cannot determine if condition or warranty. Breach insufficient to justify treating contract as ended
o Representations – throw away inducements – do not form contract

Exclusion Clauses
Must be incorporated into the contract either by signature, notice or previous dealings.

Definition – a clause in a contract which purports to exclude liability altogether or to restrict it by limiting damages or imposing other onerous conditions. They are sometimes referred to as exemption clauses.

Used in contracts in an attempt to eliminate or limit the extent of a breaching party’s liability

Incorporated by Notice
Olley v Marlborough Court Hotel – Must be communicated to the other party at the time the contract is entered into – sign in a hotel room not incorporated as it is not seen until after the contract is made

Thompson v LMS Railway – Should be brought to the attention of the other party – elderly lady asked niece to purchase train tickets. Exclusions printed on the back of the ticket, stating that the ticket was issued subject to conditions contained in the company’s timetable excluding liability for injury. Conditions adequately communicated, therefore accepted.

Incorporated by Signature
L’Estrange v Graucob – Where a document apparently has a legal affect, should make sure before you sign it – slot machine sold under condition which excluded the claimant’s normal rights under the Sale of Goods Act (1893) – conditions binding as she signed the contract, even if she didn’t read or understand it

Misrepresentation of Clause (exception)
Curtis v Chemical Cleaning Co – Oral statements by an employee can destroy the effectiveness of an exclusion clause – shop floor assistant stressed the exclusion of the damage to beads and sequins, dress badly damaged in dry cleaning, so defendant liable.

Consistent course of dealings
J Spurling v Bradshaw (1956) – Where parties have a history of trade, other party may be deemed to be aware of the exclusion clause – customer never read the terms and conditions. He gave a few barrels to be stored they were returned empty. Defendant not liable.

Hollier v Rambler Motors (1972) – But this course of trade should be more than 3 or 4 occasions in the previous 5 years – used garage 3/4 times over 5 yrs, car damaged in fire by negligence of garage employees. Defendant (garage) liable, as there was no evidence to show that the claimant knew of and agreed to the condition as a continuing term.

Hardwick v Suffolk – more than 100 times in a 3 year period

Contra-Proferentum
Andrews v Singer – Any ambiguity will be read strictly against the party seeking to rely on it

Photo Productions v Securicor (1980) – Possible to exclude liability for fundamental breach – one of the defendant’s security guards deliberately started fire on the claimant’s premises that he was guarding. The exclusion clause stated that the defendants were not liable for any damage caused to the property or to its contents however caused. Claimant’s claim failed, as this was before the Unfair Contract Terms Act (1977) came into force.

Unfair Terms Legislation (Unfair Contract Terms Act (UCTA 1977)
Unfair Contract Terms Act 1977 and Unfair Terms in Consumer Contract Regulations 1999

Restricts or limits the extent of liability for negligence in consumer contracts

Some are void, others are subject to a test of reasonableness

Cannot exclude liability for negligence resulting in death or personal injury

Cannot exclude liability for partial or incomplete performance by the seller

Cannot have a term which binds the consumer but allows seller to avoid the contract

Reasonable? S11 UCTA 77 takes account of : Relative bargaining power. Any inducement offered, or normal trade custom Special ordered goods Fair and equitable treatment of the consumer by the seller Extent of ability to cover by insurance

Regulations apply to terms which have not been separately negotiated

A consumer is a ‘natural person who is acting for purposes outside his business’

An unfair term is “any term which causes a significant imbalance in the parties’ rights and obligations to the detriment of the consumer”

Template Answer – Exclusion Clause
Exclusion clauses can be incorporated into contracts by;
• Signature
• Notice
• A course of dealing (for the court to decide)

Signature
Signatory is taken to know of the terms even if he could not read them (L’Estrange v Groucob (1934))

Notice
With regards to notice, it must be shown that the person seeking to rely on the exclusion clause has taken reasonable steps to bring the existence of the clause to the attention of the other party at the time the contract was made (Olley v Malborough Court (1949))

Conra-poferuntum rule
In deciding what an exclusion clause means, the courts interpret any ambiguity against the person seeking to rely on the exclusion clause.

This rule would be applied if there is any ambiguity or if the terms are particularly unusual or wide

Course of dealing
Where the parties deal frequently under the same terms, the exclusion clause is taken to be incorporated in the previous dealing, even if the claimant never read it (Spurling v Bradshaw (1996)). The position is not so straight forward if the dealings have not been on a consistent basis (Hollier v Rambler Motors (1972))

Unfair Contract Terms Act
Even if the clause is incorporated and can be interpreted to cover the loss, statute imposes some very important restrictions on the use of exclusion clauses. These are covered under the Unfair Contract Terms Act (1977), which divides these clauses into two;

1. Those which are void
2. Those which are valid only as far as they are reasonable

Void
• Cannot exclude liability for negligence resulting in death or personal injury
• Cannot exclude liability for partial or incomplete performance by the seller
• Cannot have a term which binds the consumer but allows the seller to avoid the contract

Valid if reasonable
• Relative bargain power
• Any inducements offer to the buyer the ability of the party to insure against the liability
• Fair and equitable treatment of customer – whether the buyer knew or ought to have known of the existence and extent of the term

Breach of Contract
May be ‘during’ or ‘anticipatory’

Anticipatory
One party gives notice, before the contract start date that they will not go ahead with their obligations

Anticipatory breach can be;
Express – one party declares they have no intention of performing the contract
Implied – one parry does something which makes performance impossible

Hochster v De La Tour (1853) – Injured party may sue immediately – claimant was informed by the defendant before his European tour started that he was no longer needed. Claimant entitled to sue as soon as the anticipatory breach occurred.

White and Carter Councils v MacGregor (1961) – Or ignore, go ahead with their obligations, and then sue – claimants provided free bins, as the defendant contracted to pay them for advertising space, the defendant wrote to claimant to cancel the contract, but the claimant continued and was entitled to sue.

Or wait, and hope the other party will change their minds

Avery v Bowden – But if they choose to wait, they could lose their right to sue

To be able to achieve full compensation, the injured party must have been in a position to complete their obligation at the date the contract was due to start

The Mihalis Angelos

Hochester v De La Tour (1853) – tour guide sent confirmation that he will not be able to attend

Repudiatory / Actual (aka During)
One party refuses to continue

Becomes apparent at or after the time set for performance

Definition – a repudiatory breach occurs when a party indicates, either by words or by conduct, that he does not intend to honour his contractual obligations or commits a breach of condition or commits a breach, which has very serious consequences for the injured party. It usually occurs when performance is due.

Injured party may treat the contract as discharged (if a breach of condition) and sue for damages immediately

Types of repudiatory breach;
• Refusal to perform (renunciation) – Hochster v De la Tour (1853) – one party renounces his contractual obligations by showing that he has no intention to perform them
• Failure to perform an entire obligation – complete and precise performance is a precondition
• Incapacitation – a party prevents himself from performing his contractual obligations
• Breach of condition –
• Breach of innominate term –

Common Law Remedies
Monetary compensation, not punitive

Damages
Damages are a common law remedy intented to restore the party who has suffered loss to the same position he would have been in if the contract had been performed.

Liquidated Damages – genuine pre-estimate of expected loss. Enforceable by the courts

Penalty Clause – threatens large damages for breach. Unenforceable

2 parts to ‘damages’- Remoteness and Measurement

It is not intended as a punishment

Remoteness
The Wagon Mound (1961) – oil leaked out of defendants boat and ignited when it came in contact with cotton waste – defendant not liable, as possibilit too remote

Only awarded if the damage suffered should have been in the reasonable contemplation of the ordinary man

Loss suffered should either arise as a natural consequence of the breach or,

The breacher was aware of the special circumstances of the injured party

Hadley v Baxendale (1854) – mill-shaft broke, contract made with the defendant to transport the broken milk-shaft to serve as a pattern for making a new shaft. Delayed in transport caused the mill to be out of action for longer, the defendant was not made aware of the fact that the mill will be idle until the new shaft was delivered to the mill

Victoria Laundry (Windsor) v Newman Industries (1949) – Defendant contracted to sell boiler for ‘immediate use’, and boiler broke down causing the claimant to lose a ‘lucrative contract’. As the defendant was not made aware of the abnormal profits from the ‘lucrative contract’, only the normal profits were recoverable

Jarvis v Swan Tours – can’t usually recover for loss of enjoyment, unless contract is one designed to give enjoyment

Measure
Courts determine how much award is necessary to put the injured party into the position they would have achieved if there had been no breach

C & P Haulage v Middleton

Thompson v Robinson – May take account of speculative loss

Anglia Television Ltd v Reed (1972) – But may not. Actor pulled-out at the last minute, and project was abandoned. Claimants claim for expenditure such as hiring other actors and research were granted. Had the claimed for loss of profits, they would not have succeeded

Alexander v Rolls Royce – But may not

If the cost of ‘repair’ far outweighs the loss suffered, courts may make an award based on loss of amenity

Ruxley Electronics v Forsyth

The injured party has a duty to mitigate their loss

Other common law remedies
• Action for price – Retail price of item
• Quantum Meruit – calculation of value of item
• Specific Performance – return your item back. Cannot use in personal service contracts, i.e., individuals. Equitable remedy

Equitable remedies
• Injunction – through the courts – order someone to do or not to do something
• Recission
• Rectification
• Mareva Injunction

Mitigate loss
Mitigation – Reducing your loss
Payzu Ltd v Saunders (1919) – contract for the supply of goods and for the payment to be in instalments. The claimant failed to make the first payment when due, and the defendant stopped further delivery, then the price rose. The claimant should have mitigated the loss by accepting the seller’s offer of delivery against cash.

Tort
Trespass to land
• Entering land
• Remaining on land
• Placing objects

Trespass to person
• Battery – intentionally bringing of a material object into contact with another
• Assault – intentional act of putting another in reasonable fear or apprehension of immediate battery
• False imprisonment – unlawfully arresting, imprisoning or preventing a person from leaving

Nuisance
• Causing distress to another by, e.g., noise, smell, etc
• Private – unlawful interference with a person’s use or enjoyment of land or some right or in connection with it
• Public – acts of omissions that materially affect the reasonable comfort and convenience of the life of a class of Her Majesty’s subjects

Defamation
Libel refers to visible acts such as writing, pictures and even effigies. This is a criminal act.
Slander refers to spoken acts or gestures. This is a civil injury, where damage must be proved.

Deceit
Deliberately misleading another into a detrimental position

Passing-off
Use of a name, mark or description by one business that misleads a consumer to believe that their business is that of another

Ewing v Buttercup Margarine Co Ltd (1917) – using a similar name to an established margarine retailer.

Negligence
Carelessly carrying out an act and breaking a legal duty of care owed to another causing them loss or damage.

This is the most important modern tort. The claimant must prove that;
• The defendant had a duty of care to avoid causing injury, damage or loss
• There was a breach of that duty by the defendant
• In consequence, the claimant suffered injury, damage or loss

Loss of damage as a result of the breach
Barnett v Chelsea & Kensington HMC (1989) – negligent doctor sent patient home, but the patient would have dies anyway

Defences against claim for negligence
Contributory negligence
A court may reduce the amount of damages paid to the claimant if the defendant establishes that the claimant contributed to their injury or loss

Sayers v Harlow UDS (1958)

Volenti non fit injura
Voluntary acceptance of the risk of injury / unless expressly consented to risk – i.e., boat race case

Professional Negligence
Caparo Industries v Dickman & others (1990) – the auditors duties does not extend to potential investors nor to existing shareholders increasing their stakes.
ADT Ltd v Binder Hamlyn – advising on takeovers. Binder Hamlyn was held to have specifically assumed responsibility for its statements at a meeting held to discuss the audited results, which made it liable outside the usual sphere laid down by Caparo.
Candler v Crane, Christmas & Co (1957) – special relationship
Barings Plc v Coopers & Lybrand (1997) – auditors liable for group companies
Auditors not liable to potential investors
• Foreseability
• Proximity
• Fairness

Duty of care
A person might owe a duty of care to another with whom he had no contractual relationship.
• Was the harm reasonably foreseeable
• Was there a relationship of proximity between the parties
• Considering the circumstances, is it fair, just and reasonable to impose duty of care
o Is it just and reasonable that they should be relying on your info – just for shareholders, but not investors and shareholders wanting to increase their stake

Donoghue v Stevenson (1932) – a purchased a bottle and B drank from it, which contained the remains of a decomposed snail, and became ill. Defendant responsible.
Richley v Fould (1965) – car skidded to the other side of the road. Careless driving

Proximity
Special relationship. Legal neighbour. Does that person have a close enough relation to you to rely on your advice?

Breach of Duty of Care
Res ipsa loquitur
The facts speak for themselves. If an accident occurs which appears to be most likely caused by negligence, the court may apply this maxim and infer negligence from mere proof of the facts.

Applies in circumstances where the cause of the injury was under the control of the defendant and that the incident would not have occurred if they had taken proper care.

Mahon v Osbourse (1939) – The burden of proof is reversed and the defendant must prove that s/he was not negligent.

Employment Law
Contract of Employment
A contract of employment is ‘a contract of service or apprenticeship, whether express or implied, and (if it is express) whether it is oral or in writing’

An independent contractor is a person who contracts to provide services for another party (contract for service)

Employee
An employee is an individual who has entered into, or works under a contract of employment (ERA 1966)

Someone employed by an employer under the terms of a formal contract of employment (a contract of service)

Dismissal and Redundancy
Notice and termination of contract by breach
An employment contract is terminated by breach of the following;
• Summary dismissal
• Constructive dismissal
• Employer unable to continue
• Employee repudiates contract

Constructive Dismissal
This is when employer, although willing to continue the employment, repudiates some essential term of the contract, for example by the imposition of a complete change in the employee’s duties, and the employee resigns. The employer is liable for breach of contract.

This is where the employer commits a breach of contract, thereby causing the employee to resign. By implication, this is also dismissal without notice

Reduction in pay
Industrial Rubber Products v Gillon (1977)

Change in nature of job
Ford v Milthorn Toleman Ltd (1980)

Failure to follow disciplinary procedure
Post Office v Strange (1981)

Failure to provide suitable working environment
Waltons & Morse v Donnington (1997)

Failure to implement proper procedure
WA Goold (Pearmak) Ltd v McConnell & Another (1995)

Suspended without pay
Western Excavating (ECC) Ltd v Sharp (1978) – defendant suspended for misconduct, this caused him financial harm, and was also refused advance holiday pay, so he left. Employer had not repudiated the contract, so no dismissal.

Summary Dismissal
This is when the employer dismisses the employee without notice. He may do this if the employee has committed a serious breach of contract and, if so, the employer incurs no liability.

Wilson v Racher (1974) – a gardener swore at his employer. The employees case for wrongful dismissal succeeded, as the employer’s actions provoked the outburst.

Unfair dismissal
This is a statutory concept introduced by employment protection legislation. As a rule, every employee has the right not to be unfairly dismissed

Correspondingly, fair dismissal is a statutory concept where a person has been dismissed as a result of a fair reason under legislation

The distinction between wrongful and unfair dismissal is in the remedies available.

Massey v Crown Life Assurance (1978) – employee became self-employed for some role, then got sacked, then sued for unfair dismissal, claim to be a dismissed employee failed

Remedies for unfair dismissal
• Compensation
o Limited to £60,600
• Re-instatement – same job without break
• Re-engagement – new employment with terms specified in the order by the court – very rare

Criteria for unfair d