Commercial law and legal relations

Did Rebecca and Simon with Humphrey intend to create an enforceable contract?

What is the relevant law?

Commercial in Nature: When Simon and Rebecca received the quote from Humphrey they accepted and arranged a date with Humphrey to start the work, it means they agreed and made a contract with Humphrey in a business environment.

Legal relations intended: In these circumstances the law says there is a presumption that Simon and Rebecca intend their agreement to be a contract. This means they intend that the agreement which was Simon and Rebecca accepted could be an enforceable obligation.

Case authority:

Carlill v Carbolic Smoke Ball Co (1893) 1 QB 256; (1891-4) All ER Rep 127 (Gerbic & Lawrence, 2006, p. 144)

Legal relations are not created: rebut the presumption. In the case of Appleson v H Littlewood Ltd [1939], it illustrated that if the clause or phrase is clear in meaning and properly communicated in a transaction (such as, the phrases is “binding in honour only"), the courts have held that a clause or phrase in an agreement can replace the normal presumption. That means the implied contractual intention in a business arrangement can be avoided by the use of specific words or phrase. There is no evidence of these words in this agreement. As a result, a legal relationship was not created.

Case authority:

Appleson v H Littlewood Ltd (1939) 1 ALL ER 464 (CA) (Gerbic & Lawrence, 2006, p. 138)

Apply the law to the facts of the problem

In the quote the total expense is $165,000, but Andersons said the final cost of the work was likely to be in the $200,000 to $225.000 range.

Humphrey replied that contract Simon and Rebecca had accepted was only a quote and was not legally binding.

Also, according to the case information, the final document about the quote from Humphrey stated that “it is a quote only – while care is taken to ensure costs are kept under the figures quoted above, all figures are approximate only." This note indicated that Humphrey did not wish to be bound at this stage by a legal relationship.

Conclusion:

There is no legal relations created between Simon and Rebecca with Humphrey, they are not intending to create an enforceable contract.

Part Two: Offer and acceptance

What is the legal issue?

Has a valid contract been formed between Andersons and Premier Renovation during the course of these negotiations?

What is the law relevant to this issue?

1 Sept: This is an invitation to treat because it is offering work of the company’s prices which are competitive and their workmanship is professional. Simon sees the advertisement of Premier Renovation, and then the company posts a brochure to Simon. If it is offered, it is likely to be accepted.

Case authority:

Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd (1953) 1 QB 401; (1953) 1 ALL ER 482 (CA) (Gerbic & Lawrence, 2006, p. 143)

3 Sept: This is not an acceptance because enquires or requests for information are not acceptance. Simon and Rebecca just called Frank to have a discussion and to ask for more details about the work.

Case authority:

Stevenson v McLean (1880) 5 QBD 346 (Gerbic & Lawrence, 2006, p. 146)

14 Sept: This is an offer. The terms are clear and specific and the statement shows the work will cost $205,000 inclusive of labour, materials; taxes etc and work will begin on October 1 to enter into a contract with Simon and Rebecca, if they accept. In this case, they spent two hours discussing the details about renovations, which mean all the terms are communicated.

Case authority:

Fitch v Snedaker (1868)

This is a counter offer because it cannot form an acceptance as it expressed or implied rejection of an existing offer. Terms are clearly and already happened that Simon and Rebecca have set a limit of $200,000 for the renovations, so it does not match the terms of the offer Frank made before. The legal effect of a counter offer is to instead of the original offer and replaces a new offer.

Case authority:

Hyde v Wrench (1840) 3 Beav 334; 49 ER 132 (Gerbic & Lawrence, 2006, p. 149)

21 Sept: Simon and Rebecca phoned Frank and said they were prepared to pay $205,000 for the work completed. It is likely a new offer has been made by Simon and Rebecca. There is not an acceptance because Frank refused Simon and Rebecca’s requirement of $205,000 maximum. He also said this is not possible and he has taken a new contract with a third party.

29 Sept: There is an acceptance because the offer made by Simon and Rebecca is not lapse of time and nobody has accepted. Also, the communication is effective to reach the offered. This indicates a final acceptance of all of the terms of the offer and creates a contract.

Case authority:

Attorney- General v Barker Bros (1976) 2 NZLR 495 (CA) (Gerbic & Lawrence, 2006, p. 130)

Conclusion:

Above all, there is a valid contract existing between Andersons and Premier Renovation because they have already made a contract during the course of these negotiations.

Part Three: Consent

What is the legal issue?

Is there having a misrepresentation between Rebecca and Simon with Regency Revitalisations Ltd?

In this case the relationship is between Simon & Rebecca and Maurice. Maurice made a verbal statement to Simon and Rebecca about the advantages of his company. None of these statements was included in the final contract. There were nothing become a term of the contract, and it was made by the company and Simon & Rebecca.

‘Maurice had personally been in the industry for 45 years’ which proved that Maurice already had some experience about building buildings.

‘Regency Revitalisations had not had a single dissatisfied customer’ which proved that the company which is Maurice had a good reputation.

‘Maurice assured the Andersons that they would not regret their decision and showed them a number of glowing testimonials from previous satisfied clients’ which proved that they had good sales.

‘The advertisement in the yellow pages had stated that Regency was competitive and professional’ which proved that the company had a good ability.

However, when Simon and Rebecca accepted and signed the contract with Maurice, Simon and Rebecca found lots of information was different from what had been verbally agreed.

Firstly, the claim that industry has been operating for 45 years is a puff, because Simon found that the company had only been established three months ago. A puff is not regarded as a fact. Advertisement and statements of praise and recommendation, even when they relate to the present or the past, are not actionable at common law, because any sensible person would not take them seriously (Gerbic & Lawrence, 2006, p. 196). Persuades party to enter contract, it makes people believe the company had lots of experience, good reputation and established a good loyalty with customers.

Case authority:

Jolly v Palmer (1984) INZLR 658 (Gerbic & Lawrence, 2006, p. 200)

Conclusion:

According to the Contractual Remedies Act, the claim that the company has been running for 45 years is fraudulent, because the statement is made dishonestly. Simon and Rebecca can cancellation under s 7 (3) (a) that the party induced him enter into a contract by misrepresentation.

Secondly, Maurice had owned two companies before, but both companies had gone into liquidation after being successfully sued by dissatisfied clients, and between times Maurice was just bricklayer’s labourer. It is opposite from the claim that Regency Revitalisations had not had a single dissatisfied custom. An incorrect statement of law is not a fact. An incorrect statement of law arises when a person erroneously explains what the law is in certain circumstances. The law, however, is different from the facts and for this reason any incorrect statement of law is not a misrepresentation (Gerbic & Lawrence, 2006, p. 198). Persuades party to enter contract, it would let customers believe that the company has a good reputation.

Case authority:

Wakelin v Jackson Ltd

Conclusion: It may be innocent or fraudulent, so S6 and S7 can be used of the Contractual Remedies Act 1979.

Thirdly, they had not done building or repair work for any of the people. It is the opposite of what they showed them as a number of glowing testimonials from previous satisfied clients. Simon also found out they were the first customers for Regency Revitalisations. It is a misrepresentation. The testimonials had been written by Maurice’s mates at the pub the previous Saturday night. Statements made by anyone not a party to the contract are not misrepresentation. It is not a misrepresentation. Persuades party to enter contract, it let customers believe that the company has a good sales.

Case authority:

Fair Trading Act 1986

Conclusion: The Company may be guilty so Simon can get some compensation from Maurice.

Finally, the work did not begin on time and was not of a standard. It is opposite from what they had advertised in the yellow pages which was professional standards. And Simon hired an independent contractor and the man said the workmanship was below industry standard, not competitive as mentioned before. Also, the work was significantly behind schedule, not professional. Deal with each of the problems; it may be opinion or also a puff. A statement of opinion is not fact. An opinion is a statement of a belief, usually is cannot be proved correct or otherwise at the time of making. But, opinion may be regarded as a misrepresentation (Gerbic & Lawrence, 2006, p. 198). False statement or fact about past or present, it is a puff that under the Fair Trading Act 1986 shows it was an exaggeration. In fact, they did not complete the work competitive and professional. Persuades party to enter contract, it may be mislead people into thinking they have good skills to do the building work and to ask them to build or repair buildings without hesitation.

Case authority:

Bissett v Wilkinson (1927) (Gerbic & Lawrence, 2006, p. 198)

Conclusion:

The statements here are made dishonestly. Simon can use Contractual Remedies Act s 6 (1) and s 7(3) to sue that company.

However, if not entering these texts, it is not misrepresentation whether the practice sue for remedies. The case I suffer it was a misrepresentation. Relevant the law, for a statement to be a misrepresentation it must be

False statement, a statement about the present or the past and it must be a statement of fact.

It must be made by one party to another.

It must not be a term of the contract.

It have to be persuades party to enter contract.

Apply law to the facts the statement was made in the pre-contract negotiations. Later it turned out the contract statement was false, such as Maurice had not done building or repair work for any of the people he mentioned before. It was a statement about present. Also, this statement was made by the party Simon and Rebecca to another party Maurice. The statement was not a term of the contract, because it was not include in the final contract that was signed. It was just made by Maurice to persuade Simon and Rebecca to enter the contract. Also, none of these statements were included in the final contract was false, so the contract was a misrepresentation of the four statements. All statements were representation in the pre-contract negotiations.

Conclusion:

Above all, there is not a case of misrepresentation here because we cannot prove all elements necessary to establish our claim. Therefore, Regency Revitalisations do not need to refund the money Simon and Rebecca paid. The court has the power to award damages if a case of misrepresentation is proved.

Damages:

Legal term means money compensation.

Part Four: Capacity

What is the legal issue?

Whether Todd and Amy can avoid their contract with Simon and Rebecca?

What is the relevant law?

According to Minors Contracts’ Act 1969 (as amended in 2005) Amy is a minor. For example, she was at the time she signed the contract with Simon and Rebecca aged 16 years. There is no evidence that a court has approved the contract made by Simon and Rebecca under section 9 of the Minors Contracts’ Act. There is a contract Todd and Amy with Simon and Rebecca, therefore section 5 of the Minor Contracts’ Act does not apply. Therefore, the contract is covered by section6 of the Minors Contracts’ Act. Simon and Rebecca will be able to enforce the contract against Amy if the terms of the contract are fair and reasonable in section 6(3) Minors Contracts’ Act. The circumstances that the court can take into account in deciding whether or not the contract is fair and reasonable include: Amy’s age, whether she got independent legal advice, the actual terms of the contract, the nature of the contract , how much money was involved.

Case authority:

Morrow & Benjamin Ltd v Whittington (1989) 3 NZLR 122 (Gerbic & Lawrence, 2006, p. 187)

National Bank v Ram

Minors Contracts’ Act 1969 (as amended in 2005)

Apply the relevant law to the facts of the problem:

According to Minors Contracts’ Act of section 6, before the contract will be enforced against Amy, and the court must decide that the terms of the contract are fair and reasonable. A contract can be fair but also can be unreasonable. The circumstances that suggest that the contract is fair and reasonable would include:

Amy’s age: She was close to 18 years when she signed the contract with Simon and Rebecca.

She agreed and signed the contract with Simon and Rebecca that were on the usual terms agreed by all ‘tradesperson required’ customers who sign the contract; therefore we can say the terms were fair. The circumstances suggest that the contract might be unreasonable (even if the terms were fair) are:

Amy’s age — she was under 18 years.

A lot of money was involved ($2,200).

She got no legal advice.

Case authority:

Morrow & Benjamin Ltd v Whittington (1989) 3 NZLR 122 (Gerbic & Lawrence, 2006, p. 187)

Nation Bank v Ram

Conclusion:

The court is likely to find that the terms of the contract are fair but that in the particular circumstances of Amy’s case (Her age, the amount of money, and the fact that she got no legal advice it is mean that it is an unreasonable to enforce the tract). Therefore, Todd and Amy are not bound to Simon and Rebecca, and also Todd and Amy can avoid their contract with Simon and Rebecca.

Under the Minors Contracts’ Act 1969 s 6(2) (b) Remedies, the Court has discretion to:

Cancel the contract

Entitle the minor to cancel the contract-conditions can be imposed

Order compensation or restitution of property

Part Five: Consideration

What is the legal issue?

Whether Simon is required to pay Fantabulous Foliage for the plan?

Whether Simon is required to pay the full amount claimed by Landscape Architects Ltd?

A simple agreement:

No consideration = no contract

Consideration + other elements = contract

Consideration is an exchange between the parties, or a promise of such exchange.

1): What is the relevant law?

Consideration may be current and not past.

General Rule: past consideration and no consideration. Simon had not discussed payment with the Fantabulous Foliage Ltd, and Fantabulous Foliage just had a promise to Simon that they will complete their work in 10 hours. Therefore, it would not have a consideration between Simon and Fantabulous Foliage Ltd, so that the contract would not be exist.

Case authority:

McArdle, Re [1951] Ch 669; [1951] 1 All ER 905 (Gerbic & Lawrence, 2006, p. 177)

Conclusion:

Simon is not required to pay the money of the Fantabulous Foliage Ltd for the plan.

2): What is the relevant law?

Landscape Architects Ltd completed the work on schedule, and Simon is satisfied with the work of Landscape Architects Ltd, that is a consideration, doing something can be consideration. Simon brings the money to the contract and that money will be a consideration. However, the final account was $8,700 a little more than Simon had budgeted for, and then they had a discussion. Finally, Simon would pay $4,000 immediately and another $4,000 in two months’ time. Landscape Architects Ltd agreed that and not to require payment of the additional $700. But when Simon paid the $4,000 and he received a receipt for the money paid which indicated the remaining balance to be $4,700.

Agreements to accept a lesser amount than that due require valid consideration.

Case authority:

Pinnels Case (1602) 5 CO Rep 117a; 77 ER 237 (1558-1774) ALL ER Rep 612 (Gerbic & Lawrence, 2006, p. 180)

Foakes v Beer (1884) 9 App Cas 605 (PC) (Gerbic & Lawrence, 2006, p. 180)

Conclusion:

Simon is required to pay the full amount claimed by Landscape Architects Ltd.

Part Six: Discharge

(a)

What is the legal issue?

Did Rebecca and Simon be able to release the contract with a gardening firm?

Applying the law to the facts of the problems:

In this case, Simon and a gardening firm had a contract that including mowing the lawns, trimming the edges and remove all garden rubbish on a weekly basis. However, the gardening contractor has not do the work in first two weeks which he promised before. A problem arises in connection with the effect of partial completion, and the extent to which such partial completion may discharge a contract (Gerbic & Lawrence, 2006, p. 259).

The gardening contractor was not complete his obligation for the whole contract, so his conduct has been discharged the contract. Where a contract is an “entire" or “indivisible" contract, then it must be completed in full and to letter to amount to a discharge. Failure to do so leads to breach, and also does away with the requirement of payment (Gerbic & Lawrence, 2006, p. 259). The performance of the gardening contractor has not finished. Also, this an performance general rules, because the full performance is not required.

Case authority:

Cutter v Powell (1795), Bolton v Mahadeva (1972) 2 ALL ER 1322 (CA) (Gerbic & Lawrence, 2006, p. 259).

Conclusion:

It has been discharged by the gardening contractor not finish his obligation of the work under assuming a valid contract exists between Simon & Rebecca and him. So, Simon and Rebecca can release the contract with a gardening firm.

(b)

What is the legal issue?

Did Simon and Rebecca be able to release the contract with a catering firm?

Applying the law to the facts of the problems:

In this case, Rebecca had a contract with a catering firm which to provide premium frozen desserts for the residents. Also Rebecca agreed to purchase 60 of these desserts on the first day of each two month period for 24 months. However, Rebecca had thought that they have a large storage on the property but not a commercial grade freeze which they cannot afford when the contract at the time of making. Then, they decided to forego having a storage freezer altogether and therefore no longer have space to store the desserts.

However, impossibility or frustration arises when:

—An external events.

—Not contemplated by the parties to a contract.

—Makes a contract impossible to perform or makes performance itself very difficult and different.

The Courts have evolved a doctrine that states that, when legal frustration happens, the contract is discharged. This doctrine has been applied in a variety of circumstances (Gerbic & Lawrence, 2006, p. 265).

Case authority:

Rayneon (New Zealand) Ltd v Fraser (1940) NZLR 825 (Gerbic & Lawrence, 2006, p. 266)

Conclusion:

It has been discharged by Rebecca foregoing to purchase the frozen desserts for the residents. So, Simon and Rebecca can release the contract with a catering firm.

(c)

What is the legal issue?

Did Simon and Rebecca be able to release the contract with Acorn Linen?

Appling the law to the facts of the problems:

In this case, Rebecca had a contract with Acorn Linen to supply freshly laundered and starched linen for the guest rooms each week. While the contract was originally for 12months Acorn have agreed that if Rebecca and Simon use the service for three months they want to discontinue if they want, they must pay the $100 for the discontinuation. It means they can do the agreements to release. Agreements to release; record and satisfaction — the promise to release is binding only if:

A: It is made in deed form; or

B: It is accompanied by consideration supplied by the party to be released.

Such a contractual agreement to release by way of a promise in return for a fresh consideration creates a discharge by way of accord and satisfaction. The accord is the agreement to discharge, and must consist of an offer, acceptance and consensus ad idem. The satisfaction is the consideration which makes the agreement operative at common law, in the absence of deed form (Gerbic & Lawrence, 2006, p. 262).

Case authority:

Haines House Haulage Co Ltd v Gamble (1989) 3 NZLR 221 (Gerbic & Lawrence, 2006, p. 264)

Conclusion:

It has been discharged by Acorn Linen’s suggestion about the fee of discontinuation. So, Simon and Rebecca can release the contract with Acorn Linen.

Part Seven: Remedies

In this case we can clearly to see there are three main problems:

Tap fittings.

Plumping in ensuite bathroom.

Kitchen fittings and tiles.

1)

What is the legal issue?

Lower quality tiles have been supplied by Heaven Scent Plumbing Ltd.

Applying the law to the facts of the problems:

Damages (compensation) are about putting the “innocent" party back in the position they would have been in if the contract had not been broke. Also it is the appropriate remedy (Section 6 of Contractual Remedies Act) (Gerbic & Lawrence, 2006, p. 241).

Amount of damages (compensation) will be the normal expected losses that result from the breach of contract, the Heaven Scent Plumbing Ltd supply of the lower quality of the taps. Hadley v Baxendale (1854) 9 Exch 341 is set the basic rule for how to determine the scope of consequential damages arising from a breach of contract that one is liable for all losses that ought to have been in the contemplation of the contracting parties. Victoria Laundry (Windsor) Ltd v Newman Industries Ltd [1949] 2 KB 528 is a case on the remoteness of damage principle.

Case authority:

Hadley v Baxendale (1854) 9 Exch 341; 156 ER 145 (Gerbic & Lawrence, Understanding Commercial Law, 2006, p. 242)

Victoria Laundry (Windsor) Ltd v Newman Industries Ltd [1949] 2 KB 528; [1949] 1 All ER 997 (CA) (Gerbic & Lawrence, Understanding Commercial Law, 2006, p. 242)

The normal expected losses suffered by Simon and Rebecca as a result of Haven Scent Plumbing Ltd supply of lower quality of taps in the difference between the lower cost of the poor quality taps and the value/cost of the taps that should have been supplied. The cost of having the work done to remove the lower quality taps and replace with the taps referred to in the contract.

Conclusion:

Damages were awardable to Simon and Rebecca of the poor quality of the taps in the normal basis only. This was foreseeable by Heaven Scent Plumbing Ltd, because the company entered into a contract to provide the high quality of taps to Simon and Rebecca. So the company would aware that the taps were not the same with the contract. According to that, Simon and Rebecca can release the contract and ask for some compensation from Haven Scent Plumbing Ltd.

2)

What is the legal issue?

One ensuite room’s plumb was deficient caused another two rooms were water damaged.

Applying the law to the facts of the problems:

A party to a contract who suffers loss by reason of the other’s breach must take reasonable steps to minimise, or “mitigate", the loss sustained. This is therefore a duty on the potential plaintiff. If he or she fails to mitigate, in the opinion of the Court, then he or she cannot recover more than the amount which need not have been lost (Gerbic & Lawrence, Understanding Commercial Law, 2006, p. 244).

A party faced with an anticipatory breach need not mitigate the impending loss, however, but can wait and see if the other decides to perform after all.

Case authority:

White and Carter (Councils) Ltd v McGregor (1962) AC 413; (1961) 3 ALL ER 1178 (Gerbic & Lawrence, Understanding Commercial Law, 2006, p. 244)

Reasonable steps to minimise loss, plumbing in the sink of one ensuite was deficient and when the installation finished after two weeks, the pipes burst and water spilled out caused another two rooms water damaged. Also, some expensive antique furniture had to be replaced and one off affected guests to stay in the motel to instead.

Conclusion:

Damages were awardable to Simon and Rebecca to lose several money about the two rooms water damaged, and the expensive antique furniture had to be replaced and the payment of the motel what is affected to the guests. So, the company would aware that these problems caused some damages to Simon and Rebecca. According to that, Simon and Rebecca can release the contract and ask for some compensation from Haven Scent Plumbing Ltd.

3)

What is the legal issue?

When the company did some work for the kitchen fittings’ plumbing, some of the wall tiles be removed and caused three of the imported ceramic has were broken.

Applying the law to the facts of the problems:

Difficulty in assessment of damages, and damages action is not barred through. The Court must fix the amount it considers appropriate (Gerbic & Lawrence, Understanding Commercial Law, 2006, p. 243).

The amount of damages was fixed by a jury, which does not have to give reasons for its decision that result from the breach of contract ,the tiles have been plumbed and the imported ceramic tiles cannot be replace.

Case authority:

Chaplin v Hicks (1911) 2 KB 786 (CA) (Gerbic & Lawrence, Understanding Commercial Law, 2006, p. 244)

The difficulty of assessment suffered by Simon and Rebecca as a result of Heaven Scent Plumbing Ltd let “plumbed into" the walls and some of the wall tiles be removed so that repairers could gain access to the fittings. And also caused the imported ceramic tiles were broken and these tiles were “end-of-line" stock no more could be supplied. The cost of having the work done to remove the plumbed tiles and replace with the tiles referred to in the contract.

Conclusion:

Damages were awardable to Simon and Rebecca to lose several imported ceramic tiles in the normal basis only. However, the three of imported ceramic tiles were broken in the process of removal and cannot be replace them. So, the repairers of Heaven Scent Plumbing Ltd would aware that the tiles have been plumbed and the imported ceramic tiles cannot be replaced. According to that, Simon and Rebecca can release the contract to against the company of Heaven Scent Plumbing Ltd and ask for some compensation from Haven Scent Plumbing Ltd.