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Published: Fri, 02 Feb 2018

Advice for breach of contract

In order to advise Brad, it is necessary to establish whether there is a contract between Amenda and Brad and if so whether there has been a breach of that contract.

In the formation of a contract, there must be a firm offer by way of a proposal by one party(the offeror) to enter into a contract with another party(the offeree), on a particular set of terms [1] .

It is first necessary to establish that there is an offer. The distinction between an offer rather than an ‘invitation to treat’, which does not constitute an offer, is highlighted in Pharmaceutical Society v Boots(1953). [2] In Partridge v Crittenden(1968) [3] advertisements are dismissed as offers. The advertising of Amenda’s classes is a secondary fact and of no consequence to the substance of the offer which in itself is not an invitation but a concrete offer.

The terms of the offer must be certain. An oral agreement is valid in contrat law [4] , although there are difficulties associated with oral agreements as highlighted in Daulia Ltd v Four Millbank Nominees Ltd(1978) [5] and Steadman v Steadman (1976) [6] . Amenda’s terms are clear specific and explicit in the manner, time and place of the act.

The offer must also be final and not part of a negotiating process [7] . The authority for this principle comes from Harvey v Facey(1893) [8] in which a series of three telegraphs negotiating the sale a property was dismissed as an offer and the court held that there was no contract. There is no negotiation or ambiguity involved in Amenda’s offer.

In unilateral contracts a one way offer by the offeror must be matched by the acceptance of the terms of the other party by way of the performance of an act by the offeree [9] . The need to communicate the acceptance to the offeror prior to the engagement of the act was rejected in Carlill v. Carbolic Smoke Ball Company(1893) [10] which is the leading case for this principle. The Harvey case also established that the terms of acceptance must be expressed and could not be implied. In this scenario, it can be concluded that Amenda has made a certain, complete and firm offer with explicit acceptance terms, accepted by Brad by performing the act on the proposed terms without varying these terms or adding new terms, in the context of a unilateral contract.

The offer and acceptance must further be supported by sufficient consideration, a principle established in Eastwood v Kenyon (1840) [11] , but need not be adequate as determined in Thomas v Thomas (1842) [12] and must have some value, a principle established in White v Bluett(1853) [13] in which a son’s promise not to bore his father with complaints was not held as good consideration. Consideration in later years was more clearly stated in Dunlop Pneumatic Tyre Co v Selfridge & Co Ltd (1915). [14] £100 is in this context sufficient consideration.

Amenda’s defence could claim that the £100 was a conditional gift in return for Brad dressing up as Lady Gaga and wearing a placard reading ‘Amenda’s contract classes are outrageously good’ involving no liability and no obligations to pay this sum. The law does not enforce the promise of a gift [15] . In Milroy v Lord (1862) [16] an executory gift is enforced distinguishing it from a conditional gift [17] , in Dickinson v Abel(1969) [18] the principle of a conditional gift is affirmed. Differing opinions of the Court of Appeal is apparent in  Wyatt v Kreglinger and Fernau(1933) [19] . In common low the guidance for this distinction is drawn from the intention to create legal relations, considered further on.

The question of liability of an adult contracting with a child could be of consequence, as Brad’s age is not specified. The family Law reform Act 1969 s1 defines the age of 18 to be the relevant age for the incapacity of minors. [20] If a minor is under the age of 18, the application of the basic rule implies that the minor is not bound by the contract with some exceptions but an adult is and a claim may be brought upon the contract, either on behalf of the child or by the child himself after he attains full age. Brad would therefore have a case either in the present or upon acquiring the age of contract capacity.

In relationships of trust such as Aunt-Nephew there is a presumption of undue influence affecting the bargaining power. The case of Royal Bank of Scotland v Etrige (2002) [21] states clearly that the burden of proof shifts to the wrongdoer to prove that the complainant has entered the transaction freely as explained by Lord Browne-Wilkinson in his leading judgement. Whilst it can be argued, that the bargaining power tilts towards Amenda, there is no indication in the facts of this case that there is actual undue influence putting Brad at a disadvantage. As Brad is not seeking to escape from the agreement [22] and presumably is seeking to enforce it, the issue of influence is of no consequence here.

In domestic and social agreements there is a presumed lack of legal intention, necessary to establish the validity of a contract. This is evident in Jones v Padavatton(1969) [23] ; The reasoning of Danckwerts LJ in Balfour v Balfour(1919) [24] finds court action ‘deplorable’ and that these ‘comparatively small’ differences should be settled out of court. This has resulted, in practice, reluctance by the courts to enforce such contracts through fear of opening the ‘floodgates’ making the system unworkable.

However, there are instances when this underlying assumption is questioned and there is disagreement amongst the judges as in Shadwell v Shadwell(1860) [25] .

Case law shows that Judges are also prepared to depart from this policy if considering legal consequences would cause a grossly unjust result; in Tanner v Tanner(1975) [26] the court acknowledged an agreement between an unmarried mother and her partner and held that ‘the court has to ‘to do what is just and equitable to restore the position as fairly as it can in the circumstances’. In Parker v Clark(1960) [27] , the court held that the agreement between Mrs Parker(the Aunt) and Mrs Clark(the niece) is legally binding, based on Mrs Parker’s decision to sell her property on a promise of accommodation by Mrs Clerk, later denied from Mrs Parker.

Clearly Brad has incurred expenses by hiring a costume trusting Amenda’s offer and has demonstrated his commitment in performing and concluding the act on the agreed terms, in the rain, thus fully expecting the agreed consideration. It can be argued that the courts could choose to apply the judgement in Parker due to the similarity in the facts, although the courts could also distinguish this case from Parker as the damages suffered as a result of the breach are of lesser proportions and consequence.

In conclusion, it is submitted that whilst this agreement has all the essential constituents of a legally enforceable contract, a question mark remains over the intention to create legal relations. On balance, should Brad choose to take legal action, social policy pressures mean that he does not a have realistic prospect of winning a claim of breach of contract.

Advice to Brad for second scenario

To advise Brad effectively, it is necessary to establish whether Amenda’s withdrawal by text the night before constitutes a legally valid revocation of the offer.

Was the revocation effective? In unilateral contracts, the promise to keep an offer open for the duration of the specified time is not binding on the offeror, as determined in Dickinson v Dodds (1876) [28] , thus the offer may be revoked at any time before the acceptance of the offer as established in Payne v Cave (1789) [29] and this revocation must be communicated to the offeree. The acceptance of an offer is by the completion of the performance of the act as established in Carlill. The acceptance cannot be revoked upon the completion of the act as held in Byrne v Van Tienhoven (1880) [30] or even upon the entering the performance of the act as held by Lord Denning in Errington v Errington and Woods (1952) [31] and in the Daulia Ltd once the offeree has embarked on performance it is too late for the offeror to revoke this’ affirmed [32] by Geoff LJ .As Brad had already commenced and completed the act before he became aware of the revocation of the offer, the revocation was too late to have an effect.

Was the revocation communicated? The offeror must take reasonable steps to ensure that a potential offeree is aware of the revocation of the offer. There is no guarantee of instantaneous transmission of text messages. Therefore it is necessary to establish when the withdrawal communicated, i.e. upon reaching the person/business or upon the withdrawal message being read. [33] Whilst the revocation by post follows the same rule as offer by post and is effective upon the letter being received as decided in Byrne & Co v Leon Van Tienhoven & Co. (1880) [34] , in a contract formed by telex communication a different judgement was passed; in Brimnes(1975) [35] the Court of Appeal held that a withdrawal notice sent by telex was effective at the moment of reception by the telex machine and not when actually read.

There appears to be no relevant authority in non-simultaneous contracts conducted by electronic or telecommunication means and no case law applicable to revocation by text. In a commercial context, The Electronic Commerce (EC Directive) Regulations 2002/2013 2(a) does not explicitly clarify when the revocation of an offer is effective in a transaction [36] but does state that when a customer makes an offer by placing an order the ‘acknowledgement of receipt will be deemed to be received when the parties to whom they are addressed are able to access them’ and also requires member states to allow contracts to be concluded by electronic means [37] . There is no provision in any Telecommunications act clarifying contract law and the Electronic Communications Act 2000 has not resulted, as yet, in English law being brought in line with the mentioned EC directive [38] , although the Law commission approves of the essence of this directive for emails [39] in the context of the Interpretation Act 1978. It seems reasonable to propose that the law in this area is inadequate and in need of statutory reforms.

In the light of this uncertainty, if the courts take guidance from the general rule of offer and acceptance in EU electronic commercial contracts, they could overrule Brimnes which now seems outdated and not good law.

In the proposed problem, the fact that the phone battery was dead meant that Brad was not able to access the text before text till after the performance. Brad could not reasonably be expected to have his mobile charged up at all times especially that he had no reason to suspect that the offer would be withdrawn, therefore it can be concluded that Amenda did not take reasonable steps to notify Brad of the revocation by text the night before and there was no effective communication.

Was the method of communication acceptable? The revocation must also be of equal notoriety to the offer. The authority in this respect, albeit in the context of offer to the world at large, comes from an American case, of persuasive nature only but still standing as good law, Shuey v. United States(1875) [40] in which it was concluded that the offer may ‘before rights are accrued under it, be withdrawn through the same channel in which it was made’. It is reasonable to presume that the offer was made face to face, therefore, if the courts follow Shuey, it can be concluded that a revocation by text is not a valid way of communicating Amenda’s revocation.

In conclusion, as the revocation of the act was not in time, not in an acceptable form and ineffective, Brad completed the act before receiving a legally valid revocation of the offer. The advice given in the first scenario would therefore be equally applicable to the second scenario.

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