Contract Formation Retail Transactions

A Billy v Rowland

Goods displayed in shops are normally invitations to treat and not offers. The customer makes the offer to purchase a good when they pick it from the shelf and take it to the counter. It is then up to the shopkeeper to decide in whether they are going to accept the offer. Shopkeepers however always need to be careful when accepting offers to avoid discriminating on the customer and fail to accept their offer on the basis of their gender reassignment, disability, age, religion, race or sexual orientation. Whenever one refuses to accept a customer’s offer it is always prudent that they have a sound reason.

In the case of the Pharmaceutical Society of Great Britain v Boots, Boots had introduced the new self-service system into their shops whereby customers were to pick goods they desired from the shelves and then they would subsequently take them to the cash till for purposes of paying. An action had been brought by the Pharmaceutical Society of Great Britain to determine the system`s legality with regard to sale of pharmaceutical products which the law required were to be sold in the presence of a pharmacist. The court held that goods on shelves constituted offers and not invitations to treat. The assistant at the shop then chooses whether to accept the offer or not in the presence of a pharmacist. As such, the contract is concluded at the till where the pharmacist is present.

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A binding contract is only formed when valid acceptance happens. There are rules related to acceptance; it is a must that acceptance is communicated to the offeree, the acceptance`s terms must be matching with the offer`s terms and it is a must that the agreement is certain. There is no possible way through which Ronald could launch a successful complaint against Billy. When Ronald picked the pineapples from the shelves, he made an offer to buy and it was then up to Billy to either accepts or refuse the offer, to which he refused. In his defence, Billy could argue that he refused to sell to Ronald because he is always troublesome. In the case of Fisher v Bell, the defendant had displayed a flick knife in the window of his shop. Offering such flick knives for sale had been made an offence by statute. The court quashed the conviction on the basis that displaying goods in a shop does not amount to an offer but amounts to an invitation to treat. The literal rule of interpretation of statutes was used by the court here.

Billy v Carlton

Just like with written agreements, verbal contracts also require that an offer is made, accepted and consideration must also be present. Consideration here is what would be offered in exchange. When a complete verbal agreement is made between two parties that are competent, it becomes just as legally binding as a written contract and any of the parties can make a claim against the other whenever a breach happens.

Consideration could be anything of value for example; promises, services, money, goods or any of these and every side of a party provides quid pro quo to support their side of the bargain. Mutual promises usually make up consideration for each other. In the case of Billy v Carlton, there is a mutual promise which validates their contract. According to the case of Currie v Misa, it was established that considerations for particular promises are present where some benefit, profit, interest or right comes about to the person making the promise as a direct result of some responsibility, loss, detriment or forbearance that has been undertaken, suffered or given by the promisee. Forbearance to acts can only be viewed as consideration only if one of the parties surrenders some legal rights.

Bill asks Carlton to work for extra hours and promises him that if he works for extra hours, he would have Aisha`s wages for that day. It however rained and the Berwood festival did not happen as had been planned. Carlton however completed both his tasks and those of Aisha. Carlton now wants to be paid but Billy does not want to pay because no extra money was made. In English contract law, the doctrine of frustration sets aside contracts where the obligations of the contract are rendered impossible by unforeseen events or to some radical extent, changes the principal purpose one of the parties had in entering into the contract.

The case of Tony v Caldwell established the doctrine of frustration. The claimant had hired out a music hall in Surrey for purposes of holding several grand concerts. The claimant had incurred huge costs and considerable time was spent to organise the event. However, an accidental fire destroyed the music hall before the first concert happened. The claimant sought to bring a breach of contract action against owners of the hall for the expenses that had been incurred and for failing to provide the hall. The judge in the case held that the fire had frustrated the contract because the contract could no longer be performed. The action for breach of contract brought about by the claimant failed.

There are several limits that have been imposed by courts on where a contract becomes frustrated, which makes releasing parties from their contractual obligations not so easy. One such limitation is that bad bargains and economic hardships cannot render contracts frustrated. In the case of Davis Contractors v Fareham UDC the court refused to render a contract for building work because there had been increments in the prices of materials and labour. In his ruling Lord Rei said that in contracts of such kinds, where contractors endeavour to do some piece of work for a sum of money that is definite and he estimates the risk of the cost being less or greater than foreseen. In the event delays come into being as a result of nobody`s fault, that may be in the contracts contemplation and there may be provision for awarding of extra time: to the extent the other party bears the delay risk. In deciding whether a contract is frustrated, it is necessary to establish that there was no way possible that either party to the contract induced the event that frustrated the contract.

In the case of Ocean Tramp Tankers Corporation v V/O Sovfracht, where a ship was allowed to travel through the Suez Canal by a charterer. Following the closure of the canal during the wartime, the ship became stuck. Additionally, in instances where frustrating events are induced foreseeably, frustration claims are normally denied. In the case of Maritime National Fish Ltd v Ocean Trawlers Ltd, that was exemplified. Maritime National Fish and Ocean Trawlers Ltd had gotten to a contract whereby Maritime National Fish hired a steam trawler that was fitted with an otter trawl. Both parties were well aware that it was illegal to use such a vessel without a license. Maritime National Fish had applied for five licences from the Canadian government, but only three were granted. On the basis that the contract had been frustrated, Maritime National Fish refused to name the hired vessel as one of the vessels that had been licensed. On the grounds that they had taken on the risk that there was a possibility that some licenses would be denied, their appeal was denied.

In the event the contract between Billy and Carlton is considered to have been frustrated by the rain which disrupted the celebrations, the obligations that Billy had towards Carlton will also be effectively ended. Under previous common law principles that would bring about results that were potentially inequitable for instance, if one party received a prepayment from the other, there was no way the prepayment could be recovered. In the case of Chandler v Webster, it was agreed that such rules were contrary to the equity principles. In the case, the prepayment that had been made for hiring the flat under contract was deemed unrecoverable. It was further established that as a further obligation to pay the whole balance had happened before frustrating event, that was also due. The case of Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd however established that payments that were made in return for zero consideration were supposed to be recovered.

In the case of Whincup v Hughes, a watchmaker had passed away after only performing a year of his contractual obligations. The watchmaker had already received £25 for the contract and it was determined that none of the money he had already received could be recovered even though the portion of the contractual obligation that had been fulfilled was very small.

Billy v Davina

In formation of contracts, the intention to create legal relations is normally one of the necessary elements. This element is defined as an intention to enter a contract or agreement that is binding legally. If there were no intentions to create legal relations, there is no possible way through which the contract would be enforceable, binding nor legal. And without intentions to create legal relations no party can sue the other.

There exists a general presumption that contracts between members of the same family are never intended to create legal relations. The presumption is normally derived from human nature and the experience of life which shows that in such circumstances, there are never intentions amongst women and men to create legal obligations and rights, but solely rely on their family ties of affection and mutual trust. Equally, the presumption is normally based on the fact that agreements between members of the same family are never negotiated or bargained. As such, it is only possible to enforce a contract between family members when there exists evidence that the contract was aimed at creating legal relations. The evidence that could rebate this presumption is proving that even though a person was a member of your family, the execution of the contract was in commercial circumstances.

In the case of Jones v Padavatton, a mother promised her daughter that she would pay her 200 monthly if she agreed to give up her job in the United States and go to London for her bar studies. At first, the daughter was rather reluctant because the job she had was well paying and she was settled and happy. However, her mother constantly persuaded her that it would be in her interests to do so. The idea of the mother was that her daughter would join her in Trinidad as a lawyer. While the daughter had actually thought that the money would be paid out in US dollars, it turned out that it was in Trinidad dollars. That meant that the money she ended up receiving was half what she had thought she would be receiving. That was too little for the daughter and she only managed to rent a single room where she lived with her son. Eventually, the mother agreed to buy her daughter a house where she could comfortably live in. She went ahead and bought a big house which had very many extra rooms which her daughter could rent out and earn income for her maintenance. The daughter however did not finish her studies as she got married and dropped out.

The court held that the agreement was entirely a domestic agreement which then raised the presumption that the parties never had intentions of being bound legally by the agreement. There existed no evidence to rebut this presumption.

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Table of Cases

  • Chandler v Webster
  • Curie v Misa Davis Contractors Ltd v Fareham Urban District Council Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd
  • Fisher v Bell Jones v Padavatton Maritime National Fish Ltd v Ocean Trawlers Ltd Ocean ramp Tankers Corp v V/O Sovfracht Pharmaceutical Society of Great Britain v Boots Cash Chemists
  • Tony v Caldwell Whincup v Hughes
  • Works Cited

  • Austen-Baker, Richard. Implied terms in English contract law. Edward Elgar Publishing, 2017.
  • Stone, Richard and James Devenney. The modern law of contract. Routledge, 2017.

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