LAWS 211 Class and Reading Notes PDF

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Summary

Prebble: Formation of Contracts 02/28/Week 1 Lecture 1 Monday 29 Feb Readings Notes:
History:
Contact elements: Offer, consideration, acceptance
Contract law had many varied classifications in past, didn’t exist as one type of law as such
Wrongful detention = olden days term most similar to ...

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Prebble: Formation of Contracts

02/28/2016

Week 1 Lecture 1 Monday 29 Feb Readings Notes:  History:  Contact elements: Offer, consideration, acceptance  Contract law had many varied classifications in past, didn’t exist as one type of law as such  Wrongful detention = olden days term most similar to breach of contract  No legal wrongs, simply called ‘debt’, personal obligations rather than legal wrongs  Primitive and archaic people were realists; these systems were based on personal wrongs rather than rights (past rather than future)  Contracts allow some control of future actions   Common Law and Equity History: 

Local Courts/Feudal Courts + King’s Courts (more equitable, people preferred these courts) had conflict  Statute of Westminster II passed meaning that the King’s Courts were not able to issue any new form of writs  Focused more on procedure rather than substantive law  Equity judgments variable as depends on judge, equity = moral sense/natural justice  Dual system developed to incorporate both Equity Courts and Common Law Courts  19th Century Equity and Common Law courts fused by Judicature Acts  Much discrepancy as to whether this was full fusion or not, general consensus is that the two are joined however remain to have their separate identities/purposes  Equity is superior, however is only corrective and supplementary   Paulger v Butland Industries Ltd [1989] p. 17 CM V2:  

Judge: Hardie Boys J (appeal)

Issue: Whether letter to creditor amounted to an offer, whether director was liable

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Paulger (defendant) business in financial difficulty, entered into a contract for the sale of the business, sent letter on company’s letterhead advising client’s that they would receive funds within 90 days, “the writer personally guarantees all due payments will be made”, but company put into receivership before sale completed and creditors not paid  Butland (plaintiff) made claim against Paulger, claiming that a contract had been made (through guarantee, which like a contract consists of offer, consideration, and acceptance)  The defendant (Paulger) tried to argue upon the Contractual Mistakes Act 1977, ruled that no mistake was made as Parliament’s intended meaning of contractual mistake as it was plainly written as a guarantee, so rather Paulger and Butland had different interpretations (mistake = understanding something different of the plain and clearly written meaning), mistaken impression of boundaries of contract not considered a mistake, therefore no mistake by law was made and Paulger

was contractually bound  Appeal dismissed   Lecture 1 Monday 29 February Class Notes:   

Course introduction:

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Executory Contracts (contracts that ensure future payment):  Promises for future performance  Credit sales  Sales of land  Forward sales of agricultural produce 

Not promises to make gifts

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Is there a Contract?  Phenomena of agreement, i.e. offer and acceptance  Consideration  Intent to create legal relations

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Domestic and international contracts:  Sale of Goods (UN Convention) Act 1994 (only brief reference)

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* = reference to case printed in course materials

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History and context: A. Early Common Law 1. Pre-European Law: Maori custom  Koha (recognition of expense and prestige, you as the visitor give gifts, if you are the visitor you may give more generous gifts)  Utu (revenge, paying back debts for benefits that one has received, e.g. something like koha but more imperative than koha)

 2. Anglo Saxon and early Norman periods:  Little need for executory agreements  Typical of primitive law (in primitive law you don’t often at all need agreements, payment made at time)  3. Primitive executory agreements:  Betrothal (wed from groom)  Treaty after homicide  

Third party sureties Pledges of faith

4. Writing (written contracts):  None before 1066  

After Norman Conquest: first written contracts Written contract = evidence of meeting of minds (a contract can be considered this, meeting of minds)

 5. Effect of Writing  Not the contract itself (the agreement), but rather evidence of the contract 6. Meaning of “Common Law”:  King’s law for whole realm  Contrast Canon Law (middle ages and earlier many different kinds of law applied, Cannon law is law that applies between clergy & law that applies between clergy and others)

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Other laws:

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May have had primitive contracts

Local: barons, sheriffs Fairs & boroughs Law merchant

8. 12th, 13th, & 14th Centuries:  Common law established as coherent system  King’s courts would not enforce private agreements  Actions for debt  Deeds under seal (wax with signate ring displaying code of arms used to make impression in place of signature)  No executory agreements  

B. Developing Common Law: a. The forms of action:  Developed 14th and 15th centuries  Many different writs (writs were important documents)  Common law didn’t develop very fast  Eventually no new writs were allowed to be issued and people had to find writs that suited their case, and must follow such form, this was an issue however as there were not enough existing writs to develop the law of contract, therefore people needed to invent cunning ways of developing existing forms of writs   

Lecture 2 Wednesday 2 March Class Notes Court proceedings:  Piece of paper stating claim, same as in times of Cicero  A writ is sent to D ordering them to turn up and if they do not turn up, this allows and automatic judgment against them  Claim/case set out in formulaic way  Once claims were framed in such a way, others were able to use these formula for their cases o The scope of these were then extended (to the detriment of Local Courts), through people trying to fit their cases to existing writs in order to be able to get judgment by King’s Courts (preferred court, more equitable decisions)

o No remedy if existing writs couldn’t be fitted to case at hand

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Forms of action became ‘frozen’, in that if you couldn’t fit your case to an existing writ then you received no form of remedy

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Cases went to trial and were fought out until was abolished in

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early 19th century There were also jury trials and trial by ordeal (not used in claims of contractual nature)

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Contract developed as there was originally no form for contract

Trespass [Carried on from Monday]: 2. But frozen  Different text  Different forms of trial 

Therefore must be adapted

 3. 14th and 15th Centuries:  Trespass

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o Trespass on the case  Assumpsit  Indebitatus Assumpsit Jury damages

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Suitable for contract Allowed narrative

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Assumpsit Undertaking Done badly (Before enforceable contracts existed)

5. The Humber Ferry (1348) case (facts)  Agreement  Carry mare across River Humber  Overload  Capsize  Mare drowned

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6. The Humber Ferry (1348) case (law)  Version of trespass  Tort of deceit  That is, ferryman “deceived” customer about carriage (misfeasance)

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7. 15th and 16th Centuries:  By mid-16th Century: o Nonfeasance (promises going both ways, one person promises goods and the other promises money, this is the remedy for failure to perform).

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8. Indebitatus Assumpsit:  Allege  Debt, undertaking, failure

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9. Advantages over debt:  Debt not popular  Jury (Wager of Law) o Old claim about debt, used the wager of law procedure, whereby each party brought with them a party to speak for them in order to back up their case and points based on their relationship, etc., these people were known as “waging their law”  Wager of law however is not necessarily a very good way of getting at the truth, and therefore that debt was not a very good way of action as proper justice and truth may not be upheld

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King’s Bench (Common Pleas were the alternative)

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Barristers (Sergeants were the alternative)

Development:

o Trespass  Trespass on the case o Assumpsit

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Indebitatus Assumpsit (refers not just to the promise, but to a subsequent promise, e.g. promise to pay the money in a month – second admission, agreement of being indebted)

C. Contract: early modern period 1. Slade’s case 1602 – Executory Contract introduction o Forward sale of wheat from Slade’s field o Morley purchaser o Dishonoured promise o Jury: no subsequent promise (although Morley had agreed to buy wheat at certain price, he never repeated that promise, as he simply declined to pay at all rather than offering to pay at a later date, therefore Indebitatus Assumpsit – subsequent promise, couldn’t apply), this is an irrefutable assumption o Held: Assumpsit presumed 

2. Developments after Slade’s case  No law of evidence o Statute of Frauds 1677  Passed to make contracts only enforceable if in writing

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3. In NZ  Contracts Enforcement Act, (abandoned in 2007): o Gave way to the Property Law Act 2007 (similar)  S24 Disposition of land  S27 Contracts of guarantee

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4. Indebitatus Assumpsit continued  Promise presumed: e.g., in hotel  Presume promise to pay for lodging 5. Consideration: some value must be promised in order to

establish creation of contract  Replaces the Assumpsit (presumed)  Crucial element in modern contracts 

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6. Root of consideration:  ‘In consideration’ for the Assumpsit  ‘Quid pro quo’ for debts (the thing for which you have incurred a debt)  Canon law: “causa promissionis’ (cause of promise)

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7. Lord Mansfied, 18th Century  Attempt to abandon consideration  Thought promise to be sufficient  Moral basis  Attempt failed

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8. 19th Century  Development of modern law of contract

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Lecture 3 Friday 4 March Reading Noes: Carlill v Carbolic Smoke Ball Company [1893]: Advertisement offering to pay people out if they contracted influenza whilst (/within a reasonable time after, this is debated in the case) using their Smoke Balls (in a specified manner, for a specified

period).  The original case judgment (Hawkins J) was appealed and the appeal was judged by L. JJ Lindley, Bowen, and A.L Smith.  Hawkins J in the original case ruled that P were entitled to the claim, thereby D appealed.  Lindley LJ judgment:  D tried to argue was really bet/policy, this was shot down by the judge in ruling that there was an express promise.  The 1st contention of D was whether there was a promise, ruled that there was.  The 2nd contention of D was whether or not the advertisement was binding, ruled that again yes it was (due to offers in advertisements not requiring notification of acceptance, rather the carrying out of the conditions is enough to be considered as such). The exception to the rule for advertisements is name “continuing offer”. In general conduct there is a requirement for notification of acceptance to offer, but there are some exceptions (such as advertisements).  Precedent cases:

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Williams v. Carwardine – decision upon advertisements offering rewards.  Brogden v. Metropolitan Ry. Co – if notice of acceptance required, the person who makes the offer gets notice of acceptance contemporaneously with his notice of the performance of his condition. (Lord Blackburn).  The 3rd contention of D was the consideration. D claimed nudum pactum (that there is no consideration). Lindley LJ explore whether there was advantage to D of customers using Smoke Ball enough to constitute consideration (satisfied), and whether there is a distinct inconvenience on the customers end that is enough to constitute ample consideration (satisfied).  Precedent: 

Gerhard v Bates – no consideration extended to P, therefor ruling for D as the promise was not to him and he was not bringing the action in

the name of the original bearer offered such promise.  Overall ruling: “ It appears to me that the Defendants must perform their promise …”  Bowen LJ judgment:  D tried to argue that advertisement was too vague, Bowen LJ disagreed, saying the advertisement must be read as it was intended to be read by the intended group, and consider the ordinary person’s response. Upon this, ruled that there were 2 possible interpretations, both supporting P (1. being contracting influenza during use or 2. within a reasonable period after use).  Ruled that there appears to be an intended offer (intended to be acted upon) and that such offer is binding.  Satisfies advertisement as contract.  Explores rule of law: must be notified of acceptance of offer to legally confirm meeting of minds, however not necessary in some cases (some exceptions, e.g. advertisements of this kind, “…performance of the condition is sufficient acceptance without notification.”)  Precedent (both cases used to support Bowen LJ’s acceptance arguments):  Harris’s Case  Brogden v Metropolitan Ry. Co  Nudum Partum: no consideration for promise

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Offer precedent (to back up argument that there was request to use involved in offer):  Victors v Davies   

Fisher v Pyne Consideration precedent: Laythoarp v Bryant – “Any act of the plaintiff from which the defendant derives a benefit or advantage, or any labour, detriment, or inconvenience sustained by the plaintiff, provided such an act is performed or such inconvenience suffered by the plaintiff, with the consent, either express of implied, of the defendant.”  Gerhard v Bates – The action failed as P didn’t allege that the promise was made to the class alone of which P was a member therefore no privity between P and D.  Overall ruling: “…there is ample consideration for the promise.” And a contract exists.  (3rd judgement omitted)   Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern( LD. [1952]:  Judge: C.J. Lord Goddard.  Shop with self-service, contained “chemist’s department”.  Section 17 (1) of the Pharmacy and Poisons Act 1933 compliance explored in this case.  Must be supervision of registered pharmacist of drugs being brought (of which there was upon the customer bringing selection to counter).  Ruled that the customer selecting goods to buy from shelf did not amount to an offer by the shop, rather it was ruled that the offer to sell by the shop was complete once the customer had made the offer to buy the goods (by bringing the goods to the counter after selection), and the shopkeeper accepted this and gave the customer permission to buy the goods after OK’d by the registered pharmacist.  Main question posed in this case: whether sales were in accordance with s18 (1) (a) (iii) of the Pharmacy and Poisons Act, 1933.  Existence of offer is the main focus of case.  Precedent:  Carlill v Carbolic Smoke Ball Co. – performance of the condition is a sufficient acceptance without notification.

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P argued that D was giving an offer to the customers in the form of “Help yourself to any of these articles, all of which are priced”. The judge contended this and ruled that “…the mere exposure of goods for sale indicates to the public that the shopkeeper is willing to treat but does not amount to an offer to sell.”, the judge ruled that the contract is only complete upon the shopkeeper’s acceptance of the customer’s offer to buy.  Rules that self-service in this circumstance is no different to in any other shop with tills (due to registered pharmacist check, etc.)  Ruled that the section is satisfied, “There must therefore be judgement for the defendants.”   Lecture 3 Friday 4 March Class Notes:  D. Development and influence of equity:  1. References  

2. Early history: Common law increasingly rigid, unable to develop new remedies, people turned to kind, delegated to Lord Chancellor King initially would interfere in cases where there was no remedy available and would provide a remedy (only if you were able to get the King’s attention/of high hierarchical placing) 3. Middle history: Equity grew, threat to supplant common law, 17th century Coke CJ & Parliament, compromise: no further encroachment by equity onto common law, dual system of courts, moral rules more weight than system of precedent 4. 18th and 19th centuries: Equity became rigid, procedural reforms occurred in early 19th century, fusion of law and equity, administered in some courts often there were different aspects of the same case Both common law courts and equity courts could deal with both common law and equity law as often same case had common law and equity law points to them 5. Different remedies:

Injunction, specific performance (most applies to land transaction, as each is different), equity law “in personam”: against person (the defendant), common law: “in rem”: in remedy (doesn’t require a person) E. The law of contract in context: 1. Moral stance: Adam Smith – Scottish scholar with “Laissez faire” theory of markets which endorsed that people are the best judges of their interests Legal stance: that the law does not take a moral stance  

2. Result:

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People are free to make their own contracts to govern their legal relationships, the governments do not interfere. Courts simply enforce agreements intended to be binding.  3. Late 19th and 20th centuries: Swing away from laissez faire, certain people need protection, or kind of contract cause trouble   4. Result:

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Move away from contract to status, or kind of transaction, e.g. employee, tenant, customer, borrower, investor  Change usually by legislation       

Examples: Tenancy legislation Employment legislation Bills of Exchange Act, now Cheques Act 1969 6. Contract law as a backstop in commercial relations

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Most commercial deals, law in background rather than main consideration  Hague Rules bill of lading – partly a document of entitlements, partly a contracts   

7. Even if law against one party Other will not necessarily enforce, e.g. trader may permit customer to cancel with no order penalty

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8. Additional reference: modern position Lecture 4 Monday 7 March Reading Notes:

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Barry v Davies : - The issue to decide in this case is whether the bidder is entitled to damages for the auctioneer’s refusal to sell at bid price where a lot was entered into an auction without reserve then withdrawn due to the bid not being thought high enough by the auctioneer.  - In the original case, the judge favoured the plaintiffs arguments and he won the case accordingly.  - Held in the original case that a collateral contract was created between the auctioneer and the highest bidder.  - Consideration both in the form of detriment to the bidder and benefit to the auctioneer.  - Precedent relied upon:  Warlow v Harrison [1859]

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Fenwick v MacDonald Fraser & Co. Ltd. (1904) Harris v Nickerson (1873) Johnston v Boyes [1899] Mainprice v Westley (1865) Payne v Cave (1789)

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- Appealed decision  Judge 1: Sir Murray Stuart Smith o Breach of contract in refusing to sell to P as highest bidder o D’s grounds of appeal:  No collateral contract existed  No consideration to support such an agreement between P and D  Without reserve doesn’t mean bound to sell o Judge disagreed with above, as Mr. Cross has said that machines were to...