English for Tax Administration Study 3 Lecturer: Miljen Matijašević e-mail: miljen.matijasevic@gmail.com G10, room 6, Tue 10:30-10:30 Session 5, 27 Nov 2012

Today’s session Revision of the Previous Session Contract Case studies The Angry Shopper (case study)

REVISION OF THE PREVIOUS SESSION

Revision of the previous session What is English civil law and how do we classify it? What is a tort? How are torts regulated in English law? What is the job of the court in tort cases? Can the same act be considered a crime and be subject to a civil lawsuit? Elaborate What are the available remedies in torts? What does compensation include?

Explain the following terms NUISANCE v. TRESPASS TO LAND SLANDER v. LIBEL ASSAULT v. BATTERY TRESPASS TO CHATTELS v. CONVERSION CONVERSION v. THEFT DAMAGE v. DAMAGES LOSS OF EARNINGS v. LOSS OF EARNING CAPACITY

Unit 30 CONTRACT

Definition of contract Think about the following questions: What is a contract? How does it differ from a regular agreement? In what situations do we enter into contracts?

Definition of contract A contract can be defined as: a legally binding agreement between two or more parties which the courts will enforce In order for an agreement to be considered a contract it must meet certain essential requirements.

Elements of a contract The four essential elements of contract are: Offer Acceptance Consideration Legal Capacity and Intention In addition to these, certain other elements need to be present as well.

Offer and Acceptance one party must have made a binding offer to another, containing the basic terms of the agreement if the other party accepts the offer with all the basic terms a contract is formed (unqualified acceptance)

Offer and Acceptance If the other party tries to negotiate by suggesting different terms, this is referred to as a qualified acceptance A qualified acceptance does not result in a contract, but constitutes a counter- offer If, in turn, the other party gives unqualified acceptance to the counter- offer, a contract is formed

Offer and Acceptance Possible issues that may arise: Was there an unqualified acceptance? Was the acceptance communicated? In some cases, acceptance does not even have to be communicated – it is implied from conduct (e.g. the everyday situation of buying a product in a retail store)

Consideration Refers to the promise between the contracting parties to give each other something of value e.g. goods, price paid for the goods, service, etc. In addition, the object of the contract must not be disapproved by the law

Legal Capacity and Intention The contracting parties must have legal capacity to contract (poslovna sposobnost) Also, intention to create legal relations must be present (this can be disputed if there is evidence to the contrary)

Additional requirements Contracts can be made orally, although some contracts are only effective if made in writing: contracts for the sale of land, contracts for transfer of shares, hire-purchase contracts lease contracts, etc. Contracts must be enforceable – if either party fails to perform the contract, the courts must be able to enforce it

Defective contracts void voidable unenforceable Contracts which do not meet the requirements can be: void voidable unenforceable

Void contract A void contract is one lacking one of the essential elements, i.e. a contract is not formed at all Examples: one or both parties do not have legal capacity the object of the contract is illegal

Voidable contract A voidable contract is a contract which has a defect in its formation and can be cancelled (avoided) by one of the parties if they choose Examples: terms agreed under duress there was fraud or misrepresentation one of the parties is a minor

Unenforceable contract An unenforceable contract is valid but will not be enforced by the court Examples: promise to pay a gambling debt the limitation period for bringing action against the breaching party has expired (six years after the breach)

Available remedies Remedies available in an action for breach of contract are: compensation specific performance rescission

Available remedies SPECIFIC PERFORMANCE RESCISSION court ordering the breaching party to perform the contract, i.e. to finish building the house RESCISSION the contract is rescinded (cancelled or annulled) by the court

Key terms binding offer terms of contract acceptance counter-offer unqualified acceptance void contract qualified acceptance voidable contract consideration unenforceable contract specific performance legal capacity rescission

Case studies

Davis v. General Foods Corp. (1937) Facts: P. had an idea for a new food product. P. wrote a letter to D. offering to reveal such idea, and D. responded with a letter stating that they would consider her idea, "but only with the understanding that the use to be made of it by [D.], and the compensation, if any, to be paid therefor, are matters resting solely in our discretion." P. revealed her idea, which D. used, and paid P. no compensation. P. sued.

Davis v. General Foods Corp. (1937) Nature of the Risk: When a seller discloses an idea after allowing the buyer the unlimited right to determine the price after use of the idea, he assumes the risk that the compensation may be less than he hoped. Issue: Was there an implied promise to pay a reasonable value for the P.'s recipe?

Davis v. General Foods Corp. (1937) Holding: Where the buyer retains an unlimited right to determine the price of goods, and the seller acts relying upon the good faith and sense of fairness of the buyer to provide reasonable value for the goods, the courts cannot enforce a payment by the buyer. Reasoning: The court reasoned that the wording of the letter was too vague to consider a contract, and that the P. acted voluntarily at the mercy of the D..

Austin v. Burge (1911) Facts: The Defendant received and read a newspaper over the course of several years. He had at one time subscribed for a two-year period, but claims that after the expiration of those two years, he requested that service be stopped. The Claimant is the newspaper owner, who claims he never received notice of stoppage. Nature of the Risk: In the absence of a contract, the Claimant assumed the risk that the Defendant would not pay for his newspaper.

Austin v. Burge (1911) Issue: Was there a contract implied by the conduct of the Defendant in reading the newspaper? Holding: One who accepts an unsolicited newspaper, and reads it, is liable for the cost of the newspaper subscription if it is understood that the newspaper is not free.

Austin v. Burge (1911) Reasoning: The court stated that although one cannot be forced into a contract unilaterally by the newspaper company, the Defendant's actions of reading the newspaper, which he knew was not free, implied that he had to pay for it. The court constructed a quasi- contract due to the Defendant's deriving benefit, and held the Defendant liable for the subscription price.

case study The Angry Shopper

The Angry Shopper Charles Tholthorpe bought a cheap, simple laptop at Carmecom Computers on 25 November 2008. When he arrived home and turned it on, he discovered that it had a burnt pixel in the middle of the screen. He went back to the shop, asking for a replacement. The salesman refused to replace the laptop, as under the guarantee, replacements are issued only if there are seven or more burnt pixels. This made Mr Tholthorpe angry because if he had known there was a burnt pixel, he would not have bought the laptop.

The Angry Shopper (cont.) Mr Tholthorpe then asked for a complete refund. This was refused as well. He felt helpless and angry and threatened to write to various Internet mailing lists and post on forums telling people not to buy products from Carmecom and left the shop, leaving the laptop behind. As he walked outside, he noticed many people entering and leaving the shop. He realized that it was the season of Christmas shopping and saw an opportunity for hurting Carmecom.

The Angry Shopper (cont.) He stood outside the shop and told everyone who wanted to come in exactly what had happened. He told them not to buy anything from Carmecom, that their computers were rubbish. Having seen this, a Carmecom salesman came to him and promised to call his boss to see about a replacement and said that they would contact Mr Tholthorpe within a few days. He asked for his address, which Mr Tholthorpe was only too happy to provide. A few days later, he received a letter...

The Angry Shopper In your opinion... Is either party at fault in this case? Was a contract formed? Was there a breach of contract? Was a tort committed? By whom? What tort was committed? What arguments wold the claimant have to sustain his case in court?

Dear Mr Tholthorpe Our client: George Hardy, Carmecom Ltd. Your defamatory action of 25 November 2008 We represent George Hardy of Carmecom Ltd. in relation to an incident that took place at their store on 25 November 2008. According to our client, you visited his store in a state of some excitement and went directly to the front of a queue of shoppers. You then demanded a refund for a laptop computer you had bought earlier that day. Mr Hardy asked you if you would mind waiting your turn. You then dropped a bag containing the computer onto the cash desk and threatened to send libellous postings to a number of Internet mailing lists. Following this, you left the store shouting various defamatory comments about our client. You remained outside the front entrance of Carmecom and harassed Mr Hardy’s potential customers in an effort to convince them not to enter the store. Based on what our client has learned from some of these customers, it is our understanding that these efforts involved the repetition of a serious of slanderous statements concerning both the quality of Carmecom’s products and their business practices.

At this point, our client noticed that you were carrying a second bag of similar size and shape to the one containing the computer you had recently bought from Carmecom. The bag was from one of our client’s competitors, who we have learned was selling the same laptop for £150 less than the price you paid for it. Our client believes that he has lost a significant amount of business as a result of your actions. We have advised him that he would be successful in any action against you. In order to avoid such action, please sign and return the enclosed retraction by 15 December 2008. If you choose not to sign the retraction, we will be forced to commence proceedings immediately. We look forward to hearing from you. Yours sincerely James Lott Eastwood, Lott and McCarthy Solicitors

The Angry Shopper What new information do we learn from the letter? What would you advise Mr Tholthorpe to do?