Sample/practice exam 8 November 2014, answers - This is a model answer for a formative assessment. PDF

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Feedback on Formative Contract Assessment Suggested outline answer. Refer to guidance provided in workshop 1 on referencing. Please note that this is not the only solution to this problem and you may well have chosen to place your emphasis on different aspects of the question – we have tried to deal...

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Feedback on Formative Contract Assessment Suggested outline answer. Refer to guidance provided in workshop 1 on referencing. Please note that this is not the only solution to this problem and you may well have chosen to place your emphasis on different aspects of the question – we have tried to deal with all elements in detail to reflect this. It is also clearly well over the word limit given for your own formative submissions – you cannot submit work in excess of a given word limit. We have drafted a fuller answer to show the level of analysis that should be used when you tackle a more in depth piece of work such as your coursework. You should read this carefully and consider improvements which could be made to your own work. At the end of this work there is guidance on common problems seen in student answers. This question concerns the issue of agreement; does Mick form a binding contract with Yummy Chocolate? For the agreement to be binding there must be an intention to create legal relations and consideration. The courts will consider objectively whether an agreement has been formed.1 For agreement there usually needs to be offer and acceptance.2 Treitel defines an offer as an expression of willingness to be bound by specified contract terms acceptance of which leads to a legally binding agreement3. Acceptance is the unequivocal assent to the terms of the offer 4. The first issue is whether the advert dated 3 rd March amounts to an invitation to treat or an offer. An invitation to treat is an invitation to receive offers and therefore cannot be converted into a contract by acceptance. Advertisements are generally seen as invitations to treat as opposed to offers5 because the necessary element of intent is lacking or alternatively certainty of terms. In Partridge v Crittenden 6, Parker LCJ highlighted that “unless they come from manufacturers, there is business sense in their being construed as invitations to treat and not offers for sale…” because manufacturers are able to meet demand. This can be contrasted with Carlill v Carbolic Smokeball Co.7 where the advertisement did amount to a unilateral offer, that is a promise in exchange for an act. The necessary intent was evident in the advertisement because money was placed in a bank to cover the reward and the terms stated were certain. Objectively, the terms of Yummy Chocolate’s advertisement are sufficiently clear to be certain; Mick must walk from Manchester to an address in Birmingham by a specified date. Yummy Chocolate may argue that the advertisement does not specify the starting address but the court is likely to view this as any starting point in Manchester. It could be argued that the advert does not specify the amount of chocolate, merely a year’s supply. In Carill v Carbolic Smokeball Co.8, LJ Lindley interpreted the unspecified period of time for protection against influenza as a reasonable period after use. The court here may consider the 1 Storer v Manchester City Council [1974] 1 WLR 1304 2 Gibson v Manchester City Council [1979] 1 WLR 294 3 Peel, Treitel: The Law of Contract (13th ed, Sweet & Maxwell, London 2011) p 9 4 ibid p 18 (ibid means in the same place as the last citation and here we have added the page number as this time we are relying on p 18) 5 Partridge v Crittenden [1968] 1 WLR 1204 6 Ibid p 1209 7 Carlill v Carbolic Smokeball Co. [1893] 1 QB 256 8 ibid

advert to offer a reasonable amount of chocolate. Applying the objective test, a reasonable person would believe that intention to be bound is evident because Yummy Chocolate is a manufacturer who could manufacture additional supplies. On balance the advertisement will be viewed as an offer. The second issue is whether and when Mick accepts the offer. This could be commencement of performance or completion of performance. Lord Goff stated in Daulia v Four Millbank Nominees9 that in the case of unilateral offers the offeror is unable to enforce the contract until there has been complete performance. Winfield 10 argues that commencing performance is the acceptance but the law is not clear on this. Mick started the walk on 21st March which may be commencement. The next issue is whether the advertisement dated 20 th March revoked the offer. Revocation can usually be effected until the offer is accepted but is not effective until communicated to the offeree11. An offer stated to be open for a specified period of time cannot be revoked before expiry of that period if the offeree has provided consideration for the promise to keep it open.12 No consideration was given here so the offer could be revoked. Following Shuey v US 13, an American case, and the European Principles of Contract Law 14 an offer made to the public can be revoked by the same means used to make the offer. Whilst this is not directly binding on English law, it is likely to be the approach of English courts. Revocation could therefore be effective even if the claimant did not see the notice. Here the original advertisement was published in several national newspapers but the revocation in a trade newsletter. This will not reach the same audience as the national newspapers and therefore will be effective only as against those who read the newsletter and not against Mick. However, we need to consider whether an offeror can revoke a unilateral offer after the offeree has commenced performance. The law on this issue is not yet settled. In Errington v Errington15, Lord Denning stated the unilateral offer “could not be revoked once the couple had entered on performance of the act, but it would cease to bind him if they left it incomplete and unperformed…” This approach was applied by Longmore LJ in the Court of Appeal in Soulsbury v Soulsbury 16. In Luxor v Cooper17 a claim by the estate agent payable upon sale of a property failed when the sellers withdrew. The House of Lords refused to imply a term into the contract that the sellers would not withdraw from the sale and would be liable for the commission if they did. This case was not discussed in Errington or Soulsbury and might be limited to situations where the nature of the promise is revocable.

9 Daulia v Four Millbank Nominees [1978] Ch 231, at 238 10 Winfield, Pollock’s Principles of Contract, (13th ed, Stevens, 1950) 11 Byrne v VanTienhoven (1880) 5 CPD 344 12 Routledge v Grant (1828) 4 Bing 653 13 Shuey v United States (1873) 92 US 73 14 European Principles of Contract Law 2.202 15 Errington v Errington & Woods [1952] 1 KB 290 16 Soulsbury v Soulsbury [2007] EWCA Civ 969 17 Luxor (Eastbourne) v Cooper [1940] AC 108

The legal basis for the rule that you cannot revoke such a promise is not clear. Pollock18 argues that acceptance takes place upon commencement of performance but that the offeree is not obliged to complete it, approved obiter in Schweppe v Harper19. A further explanation for the approach in Errington was that Lord Denning was applying estoppel. This is doubted since promissory estoppel has limited application, e.g. it cannot found a cause of action 20. In obiter dicta from Daulia v Four Millbank Nominees21, Lord Goff suggests that there is an implied collateral promise not to revoke the offer once performance is commenced. McGoveny 22 agrees this is binding because of a collateral promise. However, this explanation does not deal with Luxor. Foster 23 argues that the cases may be reconciled if one takes the view that different offers have different approaches, in some cases there is the possibility of revocation of the offer but not in others. The reason that there was no implied term in Luxor is therefore that the courts looked at the nature of the agreement and determined where the risk of withdrawing should lie. Since the agent was to be well rewarded he should bear the risk of withdrawal from the sale and losing his commission. Such an approach would leave the law uncertain as to when promises could be revoked. Poole 24 argues that the collateral promise approach might also not prevent revocation but would provide merely a remedy for breach of a collateral promise. In the circumstances the court is likely to follow the approach adopted in Daulia and find that there is an implied collateral promise preventing Yummy from revoking their offer once the offeree, Mick, has commenced performance. If the court follows this approach it will mean that Damien’s explanation of the withdrawal will be irrelevant. Also, if the court follows this approach then we need to consider when performance of the act is commenced. Is it when he starts the walk or when he joins the gym/purchases equipment? There is no direct authority on this. Despite the fact that he is demonstrating an intention to complete the act it is unlikely that commencing training or buying equipment would be considered commencement of performance as this was not stipulated in the advert. However, if the court were to allow revocation of the unilateral offer, as the notice in the trade magazine is not an effective revocation we need to consider the effect of Damien telling Mick of the withdrawal of the offer. Revocation can be made via a reliable third party.25 This rule has been criticised by Treitel 26 because it places the burden of deciding whether the third party is reliable on the offeree. It is likely in those circumstances that Damien’s communication would be effective revocation. Would he be entitled to compensation for his expenses if the offer is effectively withdrawn? This is unlikely following Harris v Nickerson 27 where the claimant was Pollock, Principles of Contract Law (13th ed, Stevens & Sons, 1950) 19 [2008] EWCA Civ 442 20 Combe v Combe [1951] 2 KB 215 21 Daulia v Four Millbank Nominees [1978] Ch 231 22 McGoveny, Irrevocable Offers (1914) 276 Harv L Rev 644 23 Steve Foster, Auctions with reserve [2000] Cov LJ 108 24 Poole, Textbook on Contract Law (11th ed, OUP, Oxford 2012) p 74 25 Dickinson v Dodds (1876) LR 2 Ch D 463 26 Ibid n.3 p44 (NB we have added n.3 to refer to the previous citation for Treitel at footnote no.3) 27 Harris v Nickerson (1873) LR 8 QB 286 18

unable to recover expenses against an auctioneer who withdrew an advertised lot from sale. The court found no obligation on the auctioneer to proceed and sell the item simply because it had been advertised as no contract had been formed between the claimant and auctioneer. In conclusion, the advert evidences intention and certainty and will be considered a unilateral offer. Yummy Chocolate attempted to withdraw their offer but did not publish to the same audience that their offer reached. The notice of withdrawal will therefore not be effective. Mick may be accepting the offer by commencing the walk but is not obliged to complete it. After he has commenced performance the court is likely to follow Soulsbury v Soulsbury 28 and prevent the offeror from revoking their offer. In completing the walk Mick is entitled to the reward and he has a strong claim against Yummy Chocolate. However, the law is not certain in relation to revocation of unilateral offers and if the courts were to permit revocation after performance has been commenced they are likely to hold that communication of the revocation by Damien is effective and Mick’s claim would fail.

28 [2007] EWCA Civ 969

Bibliography Cases Byrne v VanTienhoven (1880) 5 CPD 344 Carlill v Carbolic Smokeball Co. [1893] 1 QB 256 Combe v Combe [1951] 2 KB 215 Daulia v Four Millbank Nominees [1978] Ch 231 Dickinson v Dodds (1876) LR 2 Ch D 463 Errington v Errington & Woods [1952] 1 KB 290 Gibson v Manchester City Council [1979] 1 WLR 294 Harris v Nickerson (1873) LR 8 QB 286 Luxor (Eastbourne) v Cooper [1940] AC 108 Partridge v Crittenden [1968] 1 WLR 1204 Routledge v Grant (1828) 4 Bing 653 Shuey v United States (1873) 92 US 73 Schweppe v Harper [2008] EWCA Civ 442 Soulsbury v Soulsbury [2007] EWCA Civ 969 Storer v Manchester City Council [1974] 1 WLR 1304 European Principles of Contract Law 2.202

Books Peel, Treitel: The Law of Contract (13th ed, Sweet & Maxwell, London 2011) Pollock, Principles of Contract Law (13th ed, Stevens & Sons, 1950) Poole, Textbook on Contract Law (12th ed, OUP, Oxford 2014)

Journals / Articles McGoveny, Irrevocable Offers (1914) 276 Harv L Rev 644 Steve Foster, Auctions with reserve [2000] Cov LJ 108

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Poor spelling and grammar – always proof read your work. Too brief overall and in particular on the major issues. On the other hand some answers exceeded the word limit – any work beyond the word limit would not be marked which may mean that you lose the conclusion from your essay, impacting on your structure and the strength of your conclusions. You must declare your word count in your work. Always define legal terminology clearly. Provide a case as authority for each legal issue raised. Provide a reference for each case cited – this can be done in word using CTRL + ALT + F.

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Often students identified a principle from a case but did not fully consider why the case came to the conclusion that it did and therefore provide a reasoned application to the current facts. E.g. in distinguishing between Carlill v Carbolic Smokeball Co. and Partridge v Crittenden failed to fully explain the issue of intention to be bound. Follow the IRAC approach for each issue (Issue > Rule > Application > Conclusion). Do not state conclusions before you have argued through a point with authority – your conclusion should result from and follow your reasoned arguments both for and against the application of particular authority that you cite. Generally you should make your arguments/draw conclusions in the third person, e.g. do not use "I believe" or "I think" but instead use "it is suggested", "it is submitted" or "the court may conclude" etc... Misapplying authority – consider carefully what principle each case may be cited as authority for. You must carefully define the ratio/obiter from each case you cite and also consider whether the authority you cite is obiter or from an inferior court. Credit the source of arguments that were raised, e.g. author and text/article. Remember that you will be required to submit final assessments through the University’s TurnItIn software which identifies likeness to published work and other students’ work. Students found to have breached the academic regulations for final assessments will be subject to disciplinary proceedings which may impact on their ability to qualify as a solicitor or barrister. Ensure that you understand the rules on referencing, plagiarism and collusion. You will find additional guidance on what is and how to avoid plagiarism in the Skills Online section in Moodle. Please access this resource in your own time. Did not follow a sensible structure – some students started with an argument over revocation of an offer before they’d even considered whether the advert amounted to an offer. Many students did not consider that the rules from Daulia and Errington conflicted with Luxor or deal with the recent Soulsbury case. Where important cases conflict you need to attempt to reconcile them or explain that one is wrongly decided. The lack of certainty in the area of revocation of unilateral offers is a key issue in this case. Failing to read widely – this will broaden the scope of your answer and will reflect a more balanced answer with all of the possible arguments raised. Use additional sources such as quality texts and articles. Many students did not provide a bibliography. See notes from workshop 1 on referencing in general and the Oscola method of referencing...