Contract Law Problem Question - Essay Example

Order 257760 Total Price: $40 Messages: 10 total The first step that needs to be considered here is whether there is an agreement between theparties, i.e. between Jayne and Swot Encyclopaedias and secondly between Jayne and her landlord. The second question that will be addressed within the first issue of a valid contract is whether consideration flowed from both sides Another issue that needs discussion is the issue of the detrimental reliance of Jane and whether this would result in the functioning of a promissory estoppel in her favour First we shall consider the contract between Jayne and Swot Encyclopaedias (SE). It is assumed on the basis of the presentation of facts that SWOT ENCYCLOPAEDIAS are not denying what they said to Jayne about making a 4,000. Swot Encyclopaedia's likely argument upon denying her the money would be the lack of agreement on the basis of their subjective intention i.e. that even though it may have seemed to Jane that they were entering into a separate valid contract they never actually intended to conclude any such contract and the work done by Jayne was part of the original contract. Jane on the other hand will argue the opposite and claim that this particular trip was not part of the main contract and that this trip was as a result of a separate contract. This raises another subsidiary issue here which is not very clear on the facts available. She attended the conference as a part of the terms of her contract in September 2007. It remains ambiguous what the contract says in terms of her discretion is choosing to go to the conference and her entitlement of the bonus or any additional money. We shall not dwelve into this much due to the lack of clear instructions but shall proceed on the assumption that the contract remains silent on these issues. It is pertinent to mention here that the general rule adopted by the courts is that they will look at the intention of the parties objectively. This was decided in the case of Centrovincial Estates plc v. Merchant Investors Assurance Company Limited [1983]. In this case the claimants let premises to the defendants at a yearly rent of 68,320 but when they received the written acceptance they quickly informed the defendants that they intended 126,000. The courts held that there was a valid contract and that it was contrary to well-established principles that after the acceptance in the way stipulated by the contract, that the claimants turn around and say that they made a mistake which the offeree neither knew nor could reasonably have known when he accepted it. Here, Jayne can argue that while making the representation she could not have reasonably known that SE was making a mistake and that they never intended to make a separate contract. However, critics like Professor Atiyah basing their argument on the case of The Hannah Blumenthal [1983] argue that a subjective approach should be adopted and that without any detriment to the offeree, the courts should not hold this to be a valid contract. In our situation the idea of detriment to Jayne is questionable. First, it is true that in admitting her son to the Westbrook Academy and paying the first year's fees of 5,000, she had acted to her detriment. The matter that is doubtful is whether she would have done that anyways or was it solely based on the expectation of a bonus of 4,000. The courts will probably also look at the fact that there was a difference of 1,000 between the fees and the bonus. But this is an evidential matter. The courts adopting an objective approach will look at what the objective man would have done in this situation and implement their own view. The courts will however also look at a subjective view if evidence could be led that Jayne somehow knew that the company was making a mistake or that the money will never be paid to her, this can be done on the pretext of SE's approach with reference to other employees experiences that Jayne knew about or her own previous experiences with SE (Scriven Bros. v. Hindley [1913]). It is however concluded on a balance of probabilities, applying an objective test to the facts available that there was an agreement between SE and Jayne and that she acted to her detriment in reliance of this offer by admitting her son to Westbrook Academy and paid the first year's fees of 5,000. As far as Jayne's agreement with her uncle is concerned, adopting all the arguments put forward above, and looking at the availability of facts, the problem at hand remains whether there was a valid agreement between the parties. Prima facie, assuming an absence of duress, there was clearly an offer in the sense that Jayne asked her uncle to reduce the rent and that her uncle accepted 250 less each month, for a whole year, to enable her to pay the fees Clearly indicates towards the acceptance of the offer put forward by Jayne applying the above mentioned objective test. The other aspect that should be hotly contested is whether this agreement is actually a valid contract by virtue of the presence of all the elements of a contract i.e. an offer, acceptance and consideration. The issue of an offer and acceptance, based on the facts is not debateable and we shall proceed on the assumption that there was an offer and an acceptance. The question remains whether there was consideration. The general rule is that there has to be reciprocity between the two contracting parties i.e. that a promise should not be able to get anything unless he gives or promises to give something in return to the promisor [Curie v. Misa (1875)]. In our situation, in the agreement between SE and Jayne, SE promised to give 4,000 and in return Jayne attended the training conference. There is however, the issue of the consideration being adequate and whether performance of contractual duties could form sufficient consideration. In the case of the adequacy of the consideration, the law is quite settled here owing to the case of Chappel & Co. v. Nestle [1960] in which mere chocolate wrappers accounted for sufficient consideration. Hence, we can easily conclude that her trip to Dublin shall suffice this requirement easily in SE's case. The problem starts where we set out to ascertain whether Jayne's going to Dublin which she was already bound to do under her contract earning her 25,000 annually would suffice as consideration in the exchange of the bonus. The traditional rule under English has been that performance of an existing contractual obligation is no consideration. This rule can be traced back to the old case of Stilk v. Myrick (1908). However, recently this approach has altered owing to cases like Williams v. Roffey Bros. & Nicholls (Contractors) Ltd [1991]. This case stands for the proposition that in fulfilling contractual obligations, the promisor who induced the performance had gained a practical benefit. In this case, the promisor had promised a contractor already under a contract to refurbish flats to pay an extra 10,300 on completion of work if done on time. The defendants later refused to pay the amount on the pretext that the work was already a part of the claimant's contractual duties. The courts considered various factors before giving the judgement. These included that the work was done on time and this spared the contractors trouble and expense of engaging other people to finish the carpentry work and that the new method of payment devised under the promise was more formal rather than the old haphazard scheme et al. In our situation, even though the facts are not detailed enough for us to be able to ascertain the practical benefit derived by SE but some analogous hypothesis could be presented. First, it could be argued that they avoided the hassle of arranging and preparing another employee to go. Secondly, their staff became better equipped to deal with whatever the training was aimed at, i.e. increased efficiency, thirdly, by promising payment, the employee would have attended the training wholeheartedly resulting in the proper utilization of the training program, etc. Hence, on the basis of the above stated hypothesis and the approach of the courts in Williams, it can be said that there was consideration that flowed from the promise. We shall not consider the doctrine of estoppel by representation as applied in Avon County Council v. Howlett [1983] as this doctrine clearly excludes promises. Irrespective of the fact that a valid contract being upheld by the courts in favour of Jayne, SE might still be able to argue that by not going to court earlier and assumingly still continuing to work for them, she had waived the requirement of the performance of their part of the contract [Hickman v. Haynes (1875)]. But it needs to be pointed out that here it seems unlikely that this argument will hold good ground as she clearly is within the limitation period of three years for contractual disputes as laid down by the Civil Procedure Rules, Part 17. Hence, as far as SE and Jayne are concerned, prima facie, Jayne should be able to claim 4,000 plus interest from them. A more interesting problem regarding consideration arises with respect to Jayne's uncle who is also her landlord. The extent of facts that we know only state that the uncle reluctantly and in order for Jayne to be able to pay her son's fees agreed to reduce the rent by 250 each month and continued to do so for a whole year. The facts are silent on what benefit he accrued from this deal. However, we shall discuss this issue in consideration of the persisting law. As we are unsure of the landlord's motive behind the reduction of rent apart from the education of Jayne's son it is best to first elucidate the law by virtue of some settled case law. It is settled law that natural affection is itself not sufficient as consideration. In White v. Bluett, a son's promise not to bore his father with complaints was not taken to be consideration. The decision of this case is arguable and Professor Atiyah argues against this on the basis of American case law. But as it, it stands as settled case law. Hence, if the only reason the uncle allowed Jayne to pay lower rent was affection foe her or the child and in the absence of a father-son relationship, in light of the case of White, it seems unlikely that the courts will hold that there was any consideration flowing from Jayne. Further, in the absence of any practical benefit to the landlord, even the principal in Williams v. Roffey (above) seems inapplicable. However, Jayne would be well advised to consider the doctrine of Promissory Estoppel as laid down in Hughes v. Metropolitan Railway Co. (1877) and re established by Lord Denning in the famous case of Central London Property Ltd v. High Trees House Ltd [1974] if she can establish that the purpose of the reduction of rent was to make Jane stay in the belief that he will not get a better tenant as the rents were generally low because of the poor economic conditions or that Jayne was a good tenant and would keep the property in good condition and it was this motive that induced him to lower the rent by 250 per month. In the High Tree case, "In 1937 claimants let a block of flats in London to the defendants on a 99- year lease at an annual rent of 2500. In 1940 the defendants discovered that, as a result of the outbreak of war and the evacuation of people from London, they were unable to let many of the flats. So the claimants agreed to reduce the rent to 1250". When the property market became normal in 1945 the claimants demanded that the entire rent from 1945. Denning J held that they were entitled to do so but he also opined that they would not be able to claim the rent between 1940- 1945 i.e. the reduction in rent. This essentially entails that promissory estoppel has a suspensory effect. Thus, if the reason was as stated above, after the normalcy of economic conditions or of the landlord being able to find a good tenant, he can, from September 2008, start charging the full amount of rent. However, in this situation, he cannot claim the amount of arrears from September 2007 to September 2008. Taking this further, if Jayne could prove that if the landlord had not reduced the rent and induced her to stay she would have been in a better position to find a more suitable and cheaper accommodation during the time of the economic downturn, etc and this would have continued, then the courts might hold that the effect of the promissory estoppel is permanent and that the landlord cannot still charge a higher price. Such a view is supported by commentators like Dugdale and Yates, 1976 and Thompson, 1983. But if we are to proceed on the assumption that the reduction in rent was only so that Jayne could pay the school fees then Jayne might be able to argue that in reliance of the promise of the landlord she had paid the fees and acted to her detriment. This assertion however, will be difficult to support on the facts as they clearly state that she had already paid the fees even before going for her trip to Dublin i.e. as soon as she was promised the 4,000 by SE. Thus, it seems possible that her uncle will be able to claim both the enhanced rent along with the arrears for the time the rent was reduced by 250. Thus, she should be able to claim the 4000 from SE but her case seems weak against her uncle and landlord on the available facts. Approximately 2347 words. References: 1. Koffman, Lawrence, The Law of Contract, UK, Butterworths Tolley, 2001. 2. Davies, Francis Ronald and Robert Upex, Davies on Contract, UK, Sweet & Maxwell, 1995. 3. McKendrick, Ewan, Contract Law, UK, Palgrave Macmillan, 2003. 4. Atiyah, P. S., An Introduction to the Law of Contract, UK, Clarendon Press, 1995 Read More