1. “The law does not recognize the existence of a general duty to disclose information during
the process of contractual negotiation – the process of contractual negotiation is therefore
left unregulated” Critically examine the above statement.
Introduction include due diligence
A contract may be defined as a legally binding agreement between two parties which can be oral or
written. When two or more parties attempt to engage in trade contract management becomes
important as it attempts to refute against malpractice and safeguard against unfair conduct thus
ensuring that parties stick to the terms of agreement. Though all contracts are an agreement not all
agreements can be termed a contract. With that said there are five elements to determine whether
an agreement can be made out for the contract or not. The elements are as follows.
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Offer and Acceptance- a party must make an offer and another party must accept
Mutuality of obligation- both parties must intend to be legally bound
Consideration- something of value is exchange for something of value or action for
inaction
Capacity -each party must be legally able to enter a contract
Legality- the contract must be for legal purposes
Noticed should be made that the elements of agreement are all subjected to the terms of the
contract. The contractual terms which juxtapose mere representation is used to identify what
parties have agreed upon, more so the sources of terms are expressed terms and implied terms.
Express terms deals, terms of agreement made orally or in writing, whereas implied terms are
implied into the contract by the courts
In essence where these elements of agreement are sound the contractual negotiations may move
forward. Moreover, considering the elements of contractual negotiation this essay seeks to disagree
with the premise because thou the law does not regulate the disclosure of information in the
process of contractual negotiation this discourse is regulated as party or parties may be affected by
misrepresentation, mistake and illegality in contractual negotiation.
Misrepresentation
Conceptualizing misrepresentation, we aim to identify the way in which its aids in regulating
contractual negotiations. Misrepresentation embodies a false statement of fact, used to induce a
party or parties to enter into a contract. There are three types of misrepresentation, innocent,
negligent and fraudulent.
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Fraudulent- a persons knows or assumes that statement made to be untrue
Negligent- where false representation has been made knowingly
Innocent – a false statement of material fact by the defendant
all of which requires different types of proof when attempting to redeem on their rights to
damages. In addition, the effects of the findings of misrepresentation considering the affected party
can provide proof of that statement that induced them would allow for the contract to be voidable
by the affected party or parties. N.B the contract still exist however may be set aside by the affected
party. Additionally, when considering the remedies at hand for the different types If
misrepresentation, notice should be made that there are also different type of remedies existing
generally along the lines of recission and/or damages. For example, the remedy for innocent
misrepresentation is, recission of the contract without the benefit of gaining for the damages
attained.
In the case of Bisset v Wilkinson [1927] The plaintiff purchased land from the defendant for the
purpose of sheep farming, on the basis that during negotiations the defendant confirmed that the
pasture would be sufficient for carrying 2000 sheep. This induced that plaintiff into purchasing the
land, however because the statement made by the defendant wasn’t one of fact, but an opinion that
court ruled that in the absence of fraud the purchase had no right to rescind the contract
Mistake
Analysing Mistake as it solidifies the thought that the discourse is regulated. According to the
(contracts act 2010) “A mistake refers to an erroneous belief concerning something and must be
one of the fact and not of law” A common contributor to mistake arising in contract is the subject
matter of the terms of contracts. Three mistakes recognized by the common law in contracts are
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Unilateral Mistake- non mistake party knew of the mistake
Common mistake- where both parties to the contract make the same mistake
Mutual- where both parties are mistake about the same aspect
Moreover, exemplifying unilateral mistake, as it relates to the aforementioned elements of
agreement, it does not attest to the certainty of offer and acceptance as one party does not have
the same knowledge as the other when entering the agreement thus rendering the contract void ab
initio (from the beginning). It should also be noted that this takes a different stance as compared to
misrepresentation, as the breach of misrepresentation makes the contract voidable, mistake makes
it void ab initio (from the beginning). When a mistake arises, it signifies that there is some type of
underlying information that has not been addressed, and thus may again affect the elements of
agreement on the basis of the meeting of the minds.
Additionally, when analysing mistake Non-Este Factum must also be considered as it relates to when
a person signs an agreement believing it to be another, thus the person is not accompanied by the
mind during the act of signing.
To reiterate the remedies for mistake are rescission, to place parties back to their precontractual
positions, this renders the contract void. Additionally, rectification of the written agreement, may
also be reached so that it restates the actual statement agreed upon. This only occurs once the party
claiming mistake bears proof that the mistake took place.
Case in point Cooper v Phibbs (1867)- The case entails a situation where a nephew was told by his
uncle that he was entitled to a fishery, however the uncle later passed the fishery was passed down
to his daughters from which the nephew decided to engage in an agreement to rent the fishery from
them, however the fishery belonged to the nephew. The house of lords held the mistake as only
cause of the contract. Lords later decided that is was voidable on that basis that it was a mutual
mistake to the respective rights and thus the result is that the agreement can be set aside.
Illegality
Illegality also can be used to exemplify how the law regulates contractual disclosure. Illegality refers
to contracts which gives rise to illegal act or may also arise from situations which are not criminal
acts but are immoral and may also breach certain statutory provisions. Considering the development
of a contract, contracts may be illegal as formed or as performed. Illegally formed contracts may be
void while illegally performed contracts, are subjective and may not necessarily be void. More so
generally there are two types of illegality, those under common law and those under statue.
Based on common law on the grounds of public policy there are different types of agreements help,
some examples of this categories are
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Contracts to commit crimes or torts or fraud
Contracts involving sexual immorality
Contracts that promote corruption in public office
Whereas under statue legislation imposed by law my make a contract void for illegality, this void
may arise through breach of express statutory or implied provision. Moreover, with all considered
the courts would never enforce contracts inciting unlawful or immoral activities as these contracts
cannot give rise to rights and obligations. To assist in regulating the effects the law imposes
remedies such.
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Enforcement
Restitution- Enrichment by wrongdoing, only attainable when the claimant can provide
proof that the defendant has enriched himself from as his expense
Severance
In attempt to support the remedy of restitution, the case of Tinsley v Milligan (1993) must be
considered. In this case the claimant and defendant were lovers who purchase property from
which the ran a business together renting out rooms, however the house was only registered un
the claimants name, to allow the defendant to claim social security benefits which would go into
their join bank account. They eventually separated and the claimant declared control of the
house, the defendant sought declaration that the property was owned by both parties. The
court applied a test of conscience which resulted in allowing the claimant to keep the whole
interest in the house.
Limitations- Though, Misrepresentation, mistake and illegality may all contribute to regulating
the disclosure of information in contractual negotiations its does not extend full protection onto
parties in their claim. As they are all subjective to terms expressed and implied terms and their
ability to provide proof.
Conclusion
The paper has effectively, created a sound stance that the law does aid in regulating the
disclosure of contractual information during the negotiation stages, this was done through
exemplifying and analysing, misrepresentation, mistake, and illegality. Misrepresentation which
embodies a false statement of fact, used to induce a party or parties to enter a contract and can
be remedied through the recission of the contract which makes it voidable and or the
compensation for damages. Mistake refers to an erroneous belief concerning something and
must be one of the facts and not of law. More so the remedies that are aligned with mistake are
rescission which places parties back to their precontractual positions, this renders the contract
void. Not to be mistaken for voidable in misrepresentation. Illegality refers to contracts which
gives rise to illegal act or may also arise from situations which are not criminal acts but are
immoral and may also breach certain statutory provisions, and the remedies associated with this
are enforcement, restitution, and severance. Each point when examined and backed by a
respective case gave light and compounding assurance that the law does regulate disclosure of
information in negotiation.
“In a contract for the provision of service involving the construction of a major highway in the South
of Tawil city, the liabilities of the parties in the discharge of the service rest only on the proper
interpretation of the terms of the contract”
There is no secret that is contract is a legally binding agreement between two or more parties that
governs the rights of parties, whereas as provision or service contract is an agreement between two
parties where at least one party will perform a service to another for financial compensation among
other things. Thus, failure to provide service or good as promised may incite breach of contract in
most cases a breach leads to a discharge of contract which basically relieves parties of their
contractual obligation. Moreover, this essay attempts to discuss how interpretation of a contract
terms may possibly give rise to liabilities as a result of a discharged service some of the tools used in
the discussion are, Vicarious liabilities, exclusion clauses, statutory provisions of contract. In
examining the discourse, the premise that has been put forward is one that I agree upon as the
proper interpretation of the terms of the contracts can reduced the chance of a situation of
discharge of service arising thus avoiding liabilities in a provision of service contracting involving the
construction of a major highway in the south of Tawii city.
Terms of a Contract
A contract consists of several terms, however not everything said in the precontractual stage is
considered a term of a contract, two terms often examined are express terms and implied terms.
Express terms are conditions which are agreed upon by both parties at the time of making the
contract, consequently implied terms are terms which have not been mention but will however be in
cooperated. These terms are implied because contract does not make any commercial sense without
them. The sources of implied terms are as follows.
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Terms implied by custom- commercial or otherwise
Terms implied by statue – rules of law or public policy
Terms implied by common law- Implied in fact and implied in law
In conceptualizing the discourse in its entirety, the terms that require proper interpretation as to
reduce liabilities are terms of “implied law” the term looks at contract not on a basis of parties’
relationship but treats it as a general incidence of relationship of employer and employee.
To further understand terms of contract an understanding of how they are interpreted In the court
must be identified courts attempt to ascertain and to implement to terms into scenarios of tension
of the party.
Discharged service
In the Concluding of contractual obligation may a discharge of service arise this is in the case where
proper interpretation of the contractual terms are undertake and accurate measure are taken to
perform duties required by the contract, when each performance occurs and the task is completed
this is the end of the contract, however when non-performance arise this indicates that obligations
are not met this force the termination of the contract. There are several ways which a contract may
be discharged some of which are as follows; by performance, frustration, and breach.
Conditions of performance by which contracts may be discharged the terms relate to the task that
must be performed at a mutually agree time and place, it also considered where no time has been
specified it must still be completed in due reasonable time. In this situation with the terns expressed,
considering proper interpretation is made discharge of service may occur. However, consider a
situation when Party A (employer) gives Party B a vehicle to drive during the weekday and not on
weekends, however party B decides to drink while driving on the weekend and ends up engaging
someone into a accident, the persons sues and the Party A is being considered under the law of
vicarious liability because the vehicle is in his company name. Though the employer owes a nondelegable duty to hire a competent staff, he cannot be claimed under the law of vicarious liability as
he particularly told Part B to not drive the vehicle on weekends. With that said Party b not only has
to secure his own depts but because of non-performance in the discharge of his contract the
relationship is now terminated. This hypothetical scenario shows the instance where improper
interpretation of the terms may lead to liabilities arising from discharge or service as well as financial
damages that must be paid (case study)
Additionally, examining frustration basically this encompasses and issue where a sudden event
occurred which releases parties from their obligation also it should be noted that no party is at fault
here. In a case of Statutory intervention, the law voids the contract. Case in point Metropolitan
Water Board v Dick Kerr and Co Ltd [1918]- this case shows the frustration of the agreement, Dick
Kerr, and Co ltd was contracted to build a reservoir for the Metropolitan water board however part
of their contract recommended they apply to the engineering for extension in an event that
something might happen, two years later 21st of Feb 1916 due to the war the Ministry order them to
stop work, subsequently Dick Kerr was sued to complete the reservoir. With this said, the issue as it
relates to the interpreting of the terms, in this case the situation was one of implied terms of
custom. Which even thou may have interpreted the terms properly the intervention by the
Government is forced to relieve parties of their liabilities. The remedies that are available for
discharge by frustration are restitution restores the claimant to the position it was in before the
defendant had been unjustly enriched at its expense.
Furthermore, by breach brings and end to obligations enforced by the contract due obvious breach
in a contract on part of each. Discharge by breach may make guilty party obligated to pay damages
this obligation is seen as a remedy, a case which exemplifies discharge by breach is Hochster v De la
Tour (1853) The claimant agreed to be a courier for the defendant for 3 months from the 1st of June
to 11th of May, the defendant abandoned his service and refused to pay compensation. The
defendant obtained another service contract elsewhere but did not start as yet, with that knowledge
being acquired by the plaintiff an action was brought against him for breach of contract on the 22nd
of May. The man was held accountable and sued for breach of contract. This case was a clear
representation of negligence which arise from the breach of duty of care, this non-performance lead
to the termination of the contract and as a result allowed the plaintiff to seek remedies for damages.
The liabilities from the discharge of services therefore fell on the defendant in this instance