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					         Legal Aspects

              CIPS L6-10
           Graduate Diploma




www.pennwood.org.uk
                      malcolm.harrison@pennwood.org.uk

                                                 1
Welcome, Safety and
     Security




                      2
Legal Aspects


An Introduction to Law




                          3
Legal Aspects
Judicial precedent
Rescission
Unconditionally appropriated
Collateral warranty
Nemo dat
Misrepresentation
Force majeur
Quantum meruit.....
                                4
The Buyer - Seller
Relationship

Business Relationship – use it,
 develop it – see avoid court article

Legal Relationship – strong position
 – if things go wrong.. See Baird
 article

Trust! – that’s up to you!
                                        5
The meaning of Law

LAW - Rules established by a
 governing authority to institute and
 maintain orderly coexistence.
Law consists of a body of rules laid
 down by society to regulate human
 conduct.
If broken, penalties and other
 sanctions can be imposed.
                                        6
Classification of Law


Criminal Law – wrongdoings against
 the state

Civil Law – concerned with the rights
 and duties of individuals towards
 each other

                                      7
Criminal Law


offences against the state

is enforced on behalf of the state

aims are to deter or punish wrong
 doers

                                      8
Civil Law

is concerned with the rights and
 duties of individuals towards each
 other

Law of Contract
Law of Tort
Law of Property

                                      9
Distinction Criminal / Civil
            Criminal        Civil
Parties    R v Smith      Claimant v
                           Defendant
Aim       Punish /         Redress
           Deter
Proof     Beyond all ..   On balance
                            of prob.
Terms     Procecution      Claimant
              Guilty!         granted

                                        10
The Café

Alice is treated to a lobster lunch at
 ‘the Fat Cat Café’ by Cyril.
Subsequently both Alice and Cyril
 become ill with food poisoning,
 which they claim was caused by …..

Offer Legal Advice to both Alice and
 Cyril.
                                          11
Sources of Law

Case Law – Henry II …..

Legislation - Acts of Parliament

Law of the European Union – 1972 ..
 EU Law – Regulations, Directives,
 Decisions

                                       12
Dispute Resolution
Negotiate – cup of tea!

Alternative Dispute Resolution ADR
Mediation, shuttle diplomacy
Tribunals – employment, lands …

Arbitration Arb. Act 1996 –private, less ..

Litigation – see you in the press!!
                                               13
Fin.




       14
Legal Aspects No2

CIPS Graduate Diploma
Level 6

Malcolm Harrison




                        15
Essentials of a Contract

A Contract is an agreement which is
 intended to be enforceable by Law.

Not a social agreement




                                       16
Law of Contract

Does a contract exist? (5 essential
 elements)
Is the agreement one which the Law
 should recognise and enforce?
When do the obligations of the parties
 come to an end?
What remedies are available if either party
 is in breach of contractual obligations?


                                          17
General Principles

1. Freedom of Contract – parties may
 make their own bargain, courts will not
 interfere.

2. Sanctitiy of Contract – the agreement
 can not be interfered with. Once
 agreement is made a party must abide by
 it unless released by the other party.


                                            18
Privity of Contract

Parties who have not ‘contributed’ to
 a contract cannot usually sue on it if
 it is breached.
They are not ‘privy to the contract’.
Dunlop Rubber Co. Ltd v Selfridge
 1915



                                      19
Exceptions to Privity rule

Agency

Collateral Warranties - Shanklin Pier
 v Detel Products 1954




                                     20
Invitation to Treat

Advertisements – Partridge v Crittenden
 1968

Display of Goods – Fisher v Bell 1961
Pharmacutical Society of GB v Boots 1953

 Catalogues –

Auctions -
                                           21
Letter of Intent

No legal obligation or rights

No promise of contract BUT liable to
 pay for work.

BSC v Cleveland Bridge 1984


                                        22
Essential elements of a
valid contract
Agreement – Offer and Acceptance

Intention to create Legal relationships

Consideration

Legal Capacity to make the contract

Correct form
                                           23
The Offer

Is a promise which is capable of
 acceptance, to be bound by
 particular terms.

Not a statement of intention, supply
 of information or invitation to treat.



                                          24
The Offer

…Must be clear express or implied

…Can be to a definite person or to
 the whole world – unilateral offer.
Carlill v Carbolic Smoke Ball Co 1893

…Must reach the offeree. R v Clarke
 1927 (Aus)
                                        25
Termination of the Offer

Can be anytime prior to acceptance

Must be received by the offeree

Counter offer Hyde v Wrench 1840

Request for further details does not
 constitute a counter offer.

                                        26
Termination of the Offer

By lapse of time:
Specific time period
‘Reasonable time’
Death!

Method – 3rd party,


                           27
Acceptance

Acceptance of an offer creates a
 contract, but the acceptance must
 correspond with the terms of the
 offer.




                                     28
Acceptance

An unconditional assent to all the
 terms of an offer.

Enquiry about delivery times? OK
Enquiry about price? Not OK

Acceptance can not be ‘subject to
 contract’.
                                      29
Acceptance

Brogden v Metropolitan Railway
 1877 - conduct
Felthouse v Bindley 1963 - silence!
Adams v Lindsell 1818 - postal rule




                                       30
Exercise - Byrne v Van
Tienhoven 1880 - Postal Rule

Van T in Cardiff. B in New York
1/10 - Van T posted an offer
8/10 - Van T changed his mind and posted
 a letter of revocation
11/10 - B receives offer and accepts by
 telegram
15/10 - B confirms by letter
20/10 L of R received by B.
Over to you!
                                        31
Let Battle of the Forms
commence

Exercises: Butler m/c tool P27

Toms vintage car.

CIPS Exam paper (Earnshaw Fabs)



                                   32
Intention to Create Legal
Relationships


Balfour v Balfour 1919




                            33
Capacity to Create Legal
Relationships


Over 18

Not mad ......

Agents?


                           34
Consideration

Currie v Misa 1875 P29- to constitute
 a benefit to one party or a detrement
 to the other.

Dunlop v Selfridge 1915 P30- the
 price by which one party bought the
 other party’s act or promise.

                                       35
Consideration

The price of a promise.

‘Simple’ contracts require
 consideration.
(Deeds)
Sufficient (valuable) but not
 adequate.

                                 36
A valid Contract

5 requirements present

Unenforceable – Limitation Act
Illegal - .... Your example!
Void contract – never was
Voidable – now we move to
 misrepresentation...

                                  37
Fur coats

Olley v Marlborough Hotel 1949

When was the contract made?




                                  38
Discharge of a contract

Performance

Agreement

Breach

Frustration – Kings Coronation
                                  39
Legal Aspects 3


CIPS Graduate Diploma
Core Module

Malcolm Harrison


                        40
Terms of a contract

Conditions

Warranties

Innominate



                      41
Terms of a Contract

may be:

Implied – Sale of Goods Act

Express – specifically communicated
 by offeror.

Innominate -
                                   42
Condition

Fundamental part of the agreement

Breach gives injured party right to
 freedom from further contractual
 duties and claim compensation.

Poussard V Spiers and Pond 1876

                                       43
Warranty

A subsidiary obligation in the
 agreement.

Breach does not give the right to
 terminate the contract. Only
 damages available.

Bettini V Gye 1876

                                     44
Terms

Exemption clause
Limiting liability
ROT - Romalpa, Peachdart
Force Majeure
LD




                            45
Unfair Contract Terms Act
1977

St Albans city and District Council V
 Int. Computer Ltd 1996

Exclusion Clauses.




                                         46
Void and Unenforceable
Contracts

Vitiating Factors
Misrepresentation.

Mistake in contract.

Duress and undue influence.

Void, voidable and illegal contracts.   47
Misrepresentation

A statement
of fact
which is false
made by one contracting party
and which induced the contract.

Nottingham Patent Brick V Butler 1886


                                         48
Exercises

Gordon V Sellico 1986 – deliberately
 concealed dry rot.
Bisset V Wilkinson 1927 – field could
 carry 2k sheep if farmed.




                                     49
Fraudulent
Misrepresentation

If M. knows it is untrue.
Sue in tort of negligence and / or
obtain damages and / or
rescind the contract.




                                      50
Negligent
Misrepresentation

Prof. Man not checking facts.

Rescission of Contract and damages.

Misrepresentation Act 1967



                                   51
Innocent
Misrepresentation

Rescission of Contract

Or Damages in lieu of rescission




                                    52
In practice


Rescission – is equitable remedy.
 Restores the parties to their pre-
 contractual position.
You give me my money back and you
 get your DVD.



                                  53
Mistakes

Common mistakes

Mutual mistakes

Unilateral mistakes



                       54
Common Mistake

Both parties have made the same
 mistake

Couturier V Hastie 1852
Goods destroyed in the course of
 voyage.


                                    55
Mutual mistake

Both parties operate under ‘different’
 misapprehension

Rafles v Wichelaus 1864
HMS Peerles

Contract void.

                                      56
Unilateral mistake
One party is mistaken

‘Rogue’

Voidable contract




                         57
Duress

Contract is voidable.

Atlas Express v Kafco 1989
Economic duress




                              58
Undue influence


‘Stronger mind’

Rescission of the contract




                              59
Consequences

Void

Voidable

Illegal



               60
Void Contract

A contract which has no legal force
 from the moment of making.

Restrictive Practises




                                       61
Voidable Contracts

A contract which is valid when made,
 but ……. may be effected by
 rescission

E.g.: misrepresentation




                                    62
Illegal contracts

Are void

To commit a crime




                     63
Discharge of a Contract

Performance

Agreement

Frustration

Breach
                          64
Performance

Normal way

Quantum meruit




                  65
Agreement


Must be bi-lateral – mutual exchange
 of promises
One party provides consideration to
 be released from obligations




                                    66
Frustration

Permits a party to a contract to be
 excused.

Taylor v Caldwell 1963
Music hall burnt

Krell v Henry 1903
Coronation cancelled

                                       67
Frustration

Money repaid

Expenses deducted

Benefits received paid for



                              68
Force Majeur Clause

 Events outside control of a party –
  war




                                    69
Breach

Fails to perform

States they will not perform

Performs in a defective manner

Condition or Warranty?
                                  70
Remedy for Breach

Damages

Putting the injured party into the position
 he would have been in ………

Liquidated Damages – a genuine pre-
 estimate of loss for breach of contract

Mitigation -
                                           71
Remedy for Breach

Quantum meruit
BSC v Cleveland Bridge and Eng Co

Specific Performance – court instruction
 to carry out obligation if damages not
 adequate

Injunction – enforcing a party to do or not
 do something.

                                            72
Law of Contract

Source of Law
Forming a Contract
Terms
Void Contracts
Discharge of a Contract
Remedies for Breach


                           73
Law Test




   Contract Law




                  74

				
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