Law Of Obligations

Law Of Obligations- Contract Law Assignment 2009

This problem question has many different issues to be addressed with the possible arguments for and against the positions the parties find themselves in. The underlying theme of the problem scenario revolves around the “Doctrine of Consideration”. The doctrine has many aspects which apply to these situations which will be addressed and critiqued for each individual. This answer will set out the main issues for each position analysing the relevant facts, important case law, application of the case law for the position and finally advise for the parties with respect to their position.

Issues Between William And Sharon:

The first problem that arises within this problem question revolved around the necklace that was “given” to Sharon by Judith. There are two positions relating to this issue, was the necklace given as a pure gift? Or was the necklace part of a semi-formal contract between Judith and Sharon?

The first issue to be addressed will discuss whether or not there was any consideration between Judith and Sharon regarding the shopping, and secondly whether the necklace was part of a contractual agreement between Sharon and Judith for the shopping. For a contract to arise an agreement must fulfil four criteria. There must firstly be an offer (made by the offeror). An offer can either be to a specific party as in most instances, or it can be an offer open to the general public as in Carlill V Carbolic Smoke Ball [1893]. An offer to the general public will normally form a unilateral contact whereas offers between two parties will form a bilateral contact. The second stage in forming a contact is acceptance of the offer, acceptance was described by Blackburn J in Tinn V Hoffman and Co. (1873) as there being “two assenting minds”. Again there are different ways of acceptance occurring. For bilateral contacts the standard methods of communicating acceptance are orally or in writing (with technology this is no longer just post as seen in Entrores Ltd V Miles Far East Corporation [1955]), in some instances acceptance of an offer can be via conduct as in Taylor V Allon [1966] and Carlill. The third criteria for forming enforceable simple contacts are consideration. The Doctrine of Consideration is defined in Currie V Misa (1875) as broadly a benefit accruing to one party and some form of detriment undertaken by another. Consideration consists of sub-principles of which three are appropriate for this problem:

  1. Consideration may be executed or executory but not past.

  2. Consideration must move from the promise but not necessarily to the promisor.

  3. Consideration must be sufficient though not necessarily adequate.

The principles of the Doctrine of Consideration were clarified in the House of Lords case Dunlop Pneumatic Tyre Co Ltd V Selfridge and Co. Ltd [1915]. Finally for a contract to be formed there must be intention to create a legal relationship. There are two rebuttable presumptions to intention, firstly as set out in Balfour V Balfour (1919) by Atkin LJ there is no intention to created legal relations between social or domestic parties. Although this rule was not adhered to in Merritt V Merritt [1970] where the agreement was upheld by Lord Denning, as the agreement was in writing and the parties were soon to be divorced. The second rebuttable presumption is that there is intention to create legal relations in commercial agreements as in Esso Petroleum Ltd V Customs and Excise Commissioners [1976] unless there is clear evidence to the contrary as in Jones V Vernon's Pools [1938]. If all of the four aspects of a contract as discussed are present there is a fully enforceable legal contract, if however one is missing in almost all cases there is no contact.

The situation between Judith and Sharon brings about the issue of whether or not there was any consideration for the shopping. Taking the first approach that there was no consideration, the case law in the judgements in Re McArdle [1951] will be examined. For this “past consideration is no consideration”. This applies as the act of doing the shopping has occurred before the promise of payment was made. It is argued that Sharon did the shopping with out consideration and if a promise to pay was made at a later date that would not be enforceable, as in Roscorla V Thomas (1842). When a situation such as this occurs it is described as being an “expression of gratitude, a gift and nothing more”. In this instance if the necklace had not been handed over to Sharon, she would not be able to enforce the contract for the necklace. However, as the necklace is in her possession the necklace is treated as a complete gift. As a complete gift Sharon has full rights to the item as a chattle and William unfortunately has no powers to recover the item.

If the approach is taken that the giving of the necklace was indeed part of a formal (all be it oral) contract it must be viewed with respect to the “previous request devise”. There are some instances where past consideration can indeed form good consideration, this being against the Doctrine of Consideration. This idea first came about in Lampleigh V Braithwait (1615). This devise can apply to this situation as it could be argued that the two criteria of the previous request devise can be fulfilled:

  1. Was there a request for the party to perform the act?

  2. Can it be said that this request carries an implied promise to pay or compensate the party?

Here the consideration is assumed because although no official exchange of promises occurred it is accepted that the party acting upon the promise would not have done so if it was not for the implied payment or remuneration. This point was further confirmed in Re Casey's Patents [1892] and later re-stated by Lord Scarman in Pao On V Lau Yiu Long [1979]. For this argument to be valid it must be proven that Judith asked Sharon to do the shopping for her, rather than it being offered by Sharon. This would be a point for litigation, as there is insufficient information within the text to draw sufficient inference. The second criterion above is easier to prove. The idea of payment is discussed “if you didn't do it, I would have had to pay someone else to do it for me.” This acceptance that shopping has to be paid for seems reasonable proof that there would have been an implied or accepted understanding to compensate. If these two points can be fulfilled it could be argued that in this case although initially the consideration is past consideration, and thus not good, it will form good consideration based on the case law set about above.

Advise To William Re Sharon

There are two different arguments clearly set out. Firstly there was only past consideration for the shopping and thus the transfer of the necklace was only a gift. Secondly that the transfer of the necklace was part of an oral contact where the previous request devise is applicable and the past consideration for the shopping is indeed good consideration due to the implied payments for the service. It is clear that there are two sides of the same coin as in neither case can William recover the necklace from Sharon, unless misconduct can be proved with regards to the taking of the necklace.

Issues Between William And D.I. Blunt

The issues between these two parties revolve around D.I. Blunts entitlement to claim the reward for information leading to the capture of the murderer. The first fact to take note of is the position of D.I. Blunt regarding the murder investigation. He is the main investigating officer in the case and has an obligation to investigate the case to find the offender. What needs to be addressed in this matter is D.I. Blunts actions with reference to his pre-existing duty and secondly his motives for exceeding this public duty.

From the facts set out in the problem it is possible to ascertain that Blunt is acting outside his pre-existing public duty. It seems reasonable to assume that the expected public duty will be to do all that is possible within his contracted working hours. Work that happens when Blunt is off duty is reasonable to describe as being above the expected duty when this is not claimed for as working time (i.e. overtime). The rule for existing legal duties was established in Collins V Godefroy (1831), performing an existing legal duty does not form good consideration and is not enforceable. If this is to be applied to Blunt it would appear that he is unable to claim the reward or enforce it. However this rule does not apply in this instance as the actions are deemed outside the obligations of the existing duty. The reference case setting out this position is Glasbrook Bros V Glamorgan County Council [1925]. In Glasbrok although the facts of the case are different, similarities can be drawn. In the case of Glasbrook the work over and above the public duty was posting police to the site, rather than just patrolling the area. This can be reflected by Blunt working overtime to solve the case rather than just working in his normal contracted hours. The existing duty is to capture the offender using the time and resources available during contracted working hours. Blunt works both on and off duty thus exceeding his basic obligations. This being the case his actions form good consideration and actions act as acceptance of the unilateral contact (reward) offered by William. This position has been affirmed by the judgement in Harris V Sheffield FC Ltd [1987] and has been incorporated into statute S25 of the Police Act 1996, although different again in facts the judgement and legislation set out where police duties are over and above what is expected from them. It can be argued that the courts find consideration in these cases based on public policy considerations and go to great lengths to find good consideration as seen in Ward V Byham [1956].

There is a similar case England V Davidson (1840) which provides substantial precedent which can be applied here. The facts are very similar, a police constable claims a reward for providing information leading to the capture of a certain criminal, the offeror then refuses to pay the reward claiming that the officer was only performing his existing public duty. It was held that the constable could claim the reward as it was in the interest of justice. The only possible way England can be distinguished from Blunt will be the role of the officer within the case. It seems that in England the PC was not a major participant in the case, whereas in this situation Blunt is the main investigating officer. It may be that an officer in this position is expected to dedicate more time to the situation. It is also worth considering the terms on which the reward is payable. It is stated that the reward is for information leading to the arrest of the murderer, it could therefore be argued through lengthy litigation that Blunt did not supply the information leading to the arrest and merely collated information from other sources. If this position is adopted as true, then the reward would be payable to a currently unidentifiable third party.

Another issue to be addressed is that of Blunt attempting to claim the reward examines the idea of consideration with his “motivation” to go above and beyond his expected duty. This concept was developed in the West Australian judgement in R V Clarke (1927). In Clarke an individual gave evidence to convict two criminals, in return he received a pardon for the part he played in the original crime. After the criminals were convicted Clarke tried to claim the offered reward for information leading to the conviction of the two men. He was refused the reward and sued. It was held that his claim of the reward did was not available to him, as his main motive to provide information was for the pardon not the reward. The court decided that there was no consideration on this point as he would have given evidence even if there was no reward. Similarly Blunt was working above and beyond the expected duty imposed legally in this case, not to fulfil the obligations to receive the reward, but to secure a promotion. As the reward is clearly not his reasoning for exceeding the public duty of a D.I. there is no consideration regarding the unilateral contract. Unfortunately this position as with many legal ones has strong counters in case law, the earlier case of Williams V Carwardine (1833) where it was decided that as long as the offeree has knowledge of the reward and accepted to respond to it, the motive is irrelevant. The criteria of prior knowledge of the reward was also reiterated in Gibbons V Proctor (1891) where the party was unable to recover the reward when the criteria were fulfilled but knowledge of the reward was not known at the time of the action.

Advise To William Re D.I. Blunt

Again there are two areas to be considered when advising William as to the reward and Blunt. In this situation there is no issue as to whether or not Blunt was acting above his public duty. This being so the case following the precedent set in the above mentioned case, it seems, that Blunt has an entitlement to claim the reward. This position is finally confirmed by Lord Denning in the judgement of Ward V Byham [1956] where it was decided that performance of an existing duty is consideration so long as it is not contrary to public policy. In the case of Blunt it is clear that his actions are for the benefit of the public. Finally, Blunts motives for collecting the reward do not matter so long as he had knowledge of the reward as set out in Williams and Gibbons. Taking this into account it seems that Blunt has a strong case to claim the reward from William.

Issues Between Mrs Wilson And The Residents

The main for these two parties is whether a contract was formed, or was the offer to contribute towards the sofas just a “mere puff”. The first problem regarding the position between the two parties is the uncertainty of terms used. If it is taken that a contract was intended and formed the terms used, it instantly raises concerns as to how much a contribution is. In the case of Foley V Classique Coaches Ltd [1934] uncertainty of terms relating to the contract price of petrol which was never agreed. What was found in this case was the petrol should be of “reasonable quality” and at a “reasonable price”. This could therefore be used to help determine how much the residents should contribute to the sofas based on their relationship with Mrs Wilson and the quality of the sofas. What has emerged from the case of Scammell & Nephew Ltd V HC & JG Ouston [1941] is that terms in a contract can be so uncertain that it is impossible for the courts to find a contract. This approach is most likely to apply when the relationship between the two parties as in this instance is limited.

Another issue that arises from this scenario is that there is a unilateral contract which was accepted by the actions of Mrs Wilson. The residents proposed an offer all be it ambiguous, and Mrs Wilson by completing what was asked of her formulated the necessary acceptance as in Carlill. Acceptance by action was confirmed in the case of Brogden V Metropolitan Railway Co. (1877) and applies to this situation where the acceptance occurs when the sofas are purchased. Acceptance by performance is also a key aspect of unilateral contracts as in Carlill and this same principle could be applied here. This would be of particular importance if there is a history of the residents requesting Mrs Wilson to purchase items and the residents contributing towards the cost. When this argument is accepted, the consideration starts as executory consideration with both parties promising to perform certain acts in the future, when the sofas are purchased this then becomes executed consideration. It is at this point that the residents become obliged to contribute towards the cost of the sofas. If this situation was slightly different the principles of promissory estopple as in the case of Central London Property Trust Ltd. V High Trees House Ltd [1956] could be addressed. This can not apply in this instance a the principle that estopple can only work as a “shield and not a sword”. It is however worth acknowledging that if this situation were slightly different this would form a very important aspect of any case.

Advise To Mrs Wilson Re The Residents

Due to the nature of the issue of uncertainty, here it is very difficult to come to a definite conclusion as to their legal positions. If a legal contact can be found for this instance based either on acceptance by actions or imposed by the courts the exact amount the residents would need to contribute is still unclear. This situation would benefit from more information regarding any past dealings between the two parties. If such dealings were found the courts would be able to conclude what contribute consists in the case. A final point to consider adding more context to the issue regards the redecorating. Mrs Wilson chose to redecorate due to the blood stains in the dining room from the murder. It is accepted that redecorating in this instance only relates to the dining room and not the entire nursing home. The courts may decide for Mrs Wilsons, in that there was never any mention of changing the sofas until the residents suggested the purchase of new luxury ones.

Bibliography:

Statute:

Police Act 1996

Cases:

Balfour V Balfour (1919) 2 KB 571

Brogden V Metropolitan Railway Co. (1877) LR 2 App Cas 666

Carlill V Carbolic Smoke Ball [1893] 1 QB 256

Central London Property Trust Ltd. V High Trees House Ltd [1956] 1 All ER 256

Collins V Godefroy (1831) 1 B & Ad 950

Combe V Combe [1951] 2 KB 215

Currie V Misa (1875) LR 10 Ex 153

Dunlop Pneumatic Tyre Co Ltd V Selfridge and Co. Ltd [1915] AC 847

England V Davidson (1840) 1 Ad and El 856

Entrores Ltd V Miles Far East Corporation [1955] 2 QB 327

Esso Petroleum Ltd V Customs and Excise Commissioners [1976] 1 WLR 1

Foley V Classique Coaches Ltd [1934] 2 KB 1

Gibbons V Proctor (1891) 64 LT 594

Glasbrook Bros V Glamorgan County Council [1925] AC 270

Harris V Sheffield FC Ltd [1987] 2 All ER 838

Jones V Vernon's Pools [1938] 2 All ER 626

Lampleigh V Braithwait (1615) Hob 105

Merritt V Merritt [1970] 1 WLR 1121

Pao On V Lau Yiu Long [1979] 3 All ER 65

R V Clarke (1927) 40 CLR 227, HC (Aus)

Re Casey's Patents [1892] 1 Ch 104

Re McArdle [1951] 1 All ER 905

Roscorla V Thomas (1842) 3 QB 234

Scammell & Nephew Ltd V HC & JG Ouston [1941] AC 251

Taylor V Allon [1966] 1 QB 304

Tinn V Hoffman and Co. (1873) 29 LT 271

Ward V Byham [1956] 2 All ER 318

Williams V Carwardine (1833) 172 All ER 1101