LW 290 Exam notes 2013
Q1
The advert is an invitation to treat (Boots v Pharmaceutical Society; Partridge v
Crittenden). Therefore:
a) Eric’s letter and cheque is an offer that John can accept or reject. No contract.
(20 marks)
b) Lawrence’s 1st offer is rejected. The second offer is live only for a limited
amount of time. When John accepts it is too late – offer has lapsed
(Ramsgate Victoria Hotel v Montefiore). No contract. (20 marks)
c) John makes an offer. Penny attempts to accept but it is not communicated to
John. Communication to her friend Sammy not enough ( Entores v Miles Far
East Co). No contract. (20 marks)
d) John makes an offer to Tammy. Tammy accepts by post. Application of postal
rules – contract has been made as acceptance takes place on posting of letter
on assumption properly addressed and stamped (Adams v Lindsell). Further
issue of Intention to create legal relations arises as Tammy is a friend. But as
a commercial arrangement intention is present – therefore contract is valid.
(20 marks)
e) If Mo accepts the offer by cleaning the windows at the back contract will be
formed. Consideration does exist as Mo doing more than his contractual duty
(Hartley v Ponsonby). (20 marks)
Q2.
a) An agency agreement may be created by express appointment – usually a
written contractual document and the agent is appointed to carry out specific
tasks or general functions. (10 marks)
In the absence of an express agreement agency can come about by implied
appointment (e.g. employer/employee – implied from position in company that
employee has authority to act and be bound); necessity, where the agent is in
control of the principal’s property and a genuine emergency has arisen
requiring the agent to take action to protect the principal’s interests and it is
impossible to get the principal’s instructions (Great Northern Railway v
Swaffield; Springer v GWR); (10 marks) estoppel, where the principal’s words
or actions give the impression that he/she has consented to a person acting
as an agent on his/her behalf (Freeman v Buckhurst Properties); (10 marks)
ratification, where originally the agent did not have authority but the principal
gives authority for the contract after it has been made. (10 marks) Valid where
ratification takes place within a reasonable time and principal must adopt the
whole contract (Kelner v Baxter).(10 marks)
b) The question re Roy is whether an agency relationship has been made via
ratification. Although ratification has taken place within a reasonable time and
Peter was in existence at the time, Yvonne was an undisclosed principal. (10
marks) The rule is an undisclosed principal cannot ratify (Keighley Maxted v
Durant). Therefore his initial ratification is invalid and he is not bound by the
contract. (10 marks) Re the 1901 painting - Yvonne has broken the duty to
act strictly according to her instructions. (10 marks) Re the painting she kept–
Yvonne has broken the duty to account for all profits and has acted in her own
interests, not the principal’s.(10 marks) Re the painting to Agatha – must
account for all benefits to the principal and if a potential bribe breach of duty
of good faith. (10 marks)
Q3
a) Where goods are sold in course of a business certain terms are implied into a
contract for sale of goods. Under section 14(2) the goods must be of
‘satisfactory quality’. (10 marks) Satisfactory quality is a standard a
reasonable person would consider satisfactory, considering the price, the
description and other relevant circumstances which may include, fitness for all
the purposes for which goods of the kind in question are commonly supplied,
appearance and finish, freedom from minor defects, safety, and durability
(Clegg v Andersson, Hazlewood v Lion Foods). (10 marks) The buyer only
needs to show that the goods are defective, not that the seller was to blame
or how the defect happened. However, the section does not apply where the
defect is drawn to the attention of the buyer or the buyer examines the goods
and defect was obvious. (10 marks)
Section 14(3) provides that goods must be reasonably fit for their purpose
When consumers buy goods which they put to their usual purpose it will be
implied that they had made known that purpose, and that they relied on the
sellers skill and judgment to supply goods which are fit for that purpose. (10
marks) Unusual purposes must expressly be made known to the seller. The
seller can avoid liability if it is proved that the buyer did not rely on the seller’s
skill or judgement or that the buyer did rely on the seller’s skill and judgement
but it was unreasonable for the buyer to do so. Griffiths v Peter Conway. (10
marks)
b) The sale of the curtain material is both a sale by description: that the material
is 100% silk, and is a sale by sample: Gloria took a swatch home with her and
bought the bulk of the curtain material on the basis of that sample. (10 marks)
In particular, she plainly relied on the sample as showing what shade the
curtains would be. The bulk of the fabric when it was delivered is plainly in
breach of both sections 13 and 15 of the SGA 1979. (10 marks) There is a
breach of section 13 in that the fabric provided is 50% silk, 50% viscose. It is
not clear whether the description was placed on the sample by the seller or by
the manufacturer, but in either event the shop (the seller) is liable even though
the fabric is not defective in any other way (Arcos v Ronaason). (10 marks)
Section 15 is an implied term that the bulk corresponds with the sample and
free from any defect not apparent on reasonable examination (Godfrey v
Perry). Thus here there is also a breach of section 15 in that the sample was
mustard yellow but the curtains are canary yellow. (10 marks) This is not a
defect which would be apparent on examination of the sample. The terms
implied by sections 13 and 15 are conditions and Gloria can therefore reject
the material and claim a full refund of the price. (10 marks)
Q4
Jacques – The written statement is not the contract per se. It is the employer’s
evidence of what has been agreed (System Floors v Daniel). (10 marks)
Therefore John can bring contrary evidence in play to demonstrate that he is
entitled to the bonus scheme (British Gas v Robertson). (10 marks) The question
is – what has been agreed? Jacques will argue that the contractual agreement
was made on appointment and the statutory statement was an attempt to vary
the contractual terms on this issue. But for a variation to be valid you need to
demonstrate consent. Jacques has not consented. (10 marks)
The contractual provision in Jacques’s contract of employment is prima facie void
against public policy as in restraint of trade. (10 marks) Question is – is Karen
protecting a business interest, how reasonable in time and geography is the
restraint? On these facts, taking account of relevant case law (Lamson v Phillips;
Home Counties v Skilton; Empire Meat v Patrick, amongst others) the restriction
is arguably too restrictive in time and geography. The cases tell us the longer the
period of time or wider the area the more likely the restraint is unreasonable. (20
marks)
Helen – She will be in breach of the implied terms not to compete with your
employer (Hivac Ltd v Park Royal) (15 marks) and not to disclose confidential
information (Faccenda Chicken v Fowler; Bullivant v Ellis). (15 marks) This would
justify dismissal at common law. (10 marks)
Q5
a) Ian – He is not redundant as his place of work is defined as Sussex, not just
Brighton (O’Brien v Associated Fire Alarms; High Table v Horst) (20 marks).
Thus, his work has not been reduced or diminished by reference to the
statutory definition in the Employment Rights Act 1996 section 139. (20
marks)
b) Jake will have to show that he has acted fairly by reference to the test
contained in s.98 of the Employment Rights Act 1996 and subsequent case
law. Kevin – Jake would argue that Kevin has been dismissed for “Some
Other Substantial Reason” – the failure to agree to changes in his contract or
if it could be shown that this is simply a new way of doing his job – for a failure
to obey reasonable orders – thus an issue of misconduct (St John of God v
Brooks; Creswell v Inland Revenue). (20 marks) The second scenario is the
most likely option. Jake must ensure he has consulted with Kevin and offered
appropriate training and then if Kevin still refuses to engage in the additional
duties Jake needs to give him oral and written warnings as indicated in the
ACAS Code before dismissal takes place. (10 marks)
Charles - Jake would argue that he has been dismissed for misconduct as
well. On the basis of the merits test it would seem to be a reasonable
response of a reasonable employer (Iceland Frozen Foods v Jones) to sack
someone for behaving as he did. (10 marks) Again the procedural
requirements must be considered (Burchell v BHS; ACAS code). Has Charles
been warned re his lateness and has he turned up at work before smelling of
alcohol? (10 marks) Possibility that being drunk at work is gross misconduct
that justifies instant dismissal without reference to warnings. Reference may
be made to other authorities on these issues e.g. Whitbread v Mills; Connelly
v Liverpool CC. (10 marks)
Q6
Liability/formalities – There is a need to compare and contrast the distinctions in
this area and comment on the relevance of this to the three budding business
persons. For example, in a general partnership the business has no legal identity of
its own. The risks and liabilities involved in running the business belong to the
individuals involved in owning and managing it. Apart from personal liability for all the
debts of the business partners also have responsibilities to each other e.g. ss.9/10
Partnership Act 1890 introduces joint and several liability. (20 marks) Further
explanation required as to how Partnership Act impinges on issues of liability, e.g.
ss.28/29/30, details rights and responsibilities re agency/express/apparent authority.
In a company separate legal personality – liable only for the money etc put into the
business, but like partnerships there is a degree of regulation – there are extensive
duties and responsibilities of directors and members. (20 marks) Formalities –
candidates should state definition of partnership, note little formal process required.
For a company – list and explanation of the registration requirements necessary and
the documents and their significance. Mention of other possible models – LLP. (20
marks)
Advantages and disadvantage generally – explanation of tax advantages, liability
issues, ease of expansion re finance etc. Note that all three may want different
things. Therefore if the partnership model is selected a partnership agreement
outlining the responsibilities of each partner and amending the default criteria in the
Partnership Act would be required eg re sharing equally (s.24). Likewise the
company model would require a drafting of specific Articles of Association. Likely Joe
may prefer this model especially taking into account liability issue. (40 marks)