Audit: Doctrine of Privity and Case Study Essay Sample

Doctrine of privity of a contract dictates that merely parties to a contract will hold rights or duties originating under a contract to impede the infliction of loads on and the granting of contractually enforceable rights to 3rd parties. The philosophy constitutes a barrier to freedom of contract that can thwart the purpose of the parties by non leting them to confabulate reciprocally advantageous benefits on 3rd parties. or lead to negative results such as unfair enrichment and the bar of 3rd parties from justifiably justifying their rights under the chief contract. Therefore. exclusions and options redresss have emerged to get the better of state of affairss where the philosophy would take to an unjust or unwanted consequence. The effects are the bureau. the Contract ( Rights of Third Parties Act ) 1999. claims in civil wrong. the impression of consent to a load in contractual webs and assignment. Dunlop Pneumatic Tyre Co Ltd V Selfridge and Co Ltd ( 1915 )

The claimant sold Surs to Dew & A ; Co. on status that Dew would non resell or let retail merchants to sell the Surs for lesser than the list monetary value. Dew sold the Surs to the suspects. who retailed them below list monetary value. The claimant sought an injunction and amendss. The action failed because although there was a contract between the suspects and Dew. the claimant was non entitled to implement the contract against Selfridge because it was non a party to the contract.

Purpose to make legal dealingss
The demand of purpose to make legal dealingss in contract jurisprudence is aimed at sifting instances which are non appropriate for tribunal action. To find which understandings are lawfully adhering and have an purpose to make legal dealingss. the jurisprudence draws a differentiation between societal. domestic understandings and understandings made in a commercial context. Social. Domestic and Family Arrangement

The tribunal by and large would non step in where an understanding is made between members of a household. but would go forth the parties to screen out their ain agreement. Example instance is Balfour v Balfour ( 1919 ) . The hubby agreed to direct care payments to his married woman. but stopped when their relationship turned rancid. The married woman sued her hubby for the care he had non paid. The understanding was a strictly societal and domestic understanding and it was presumed that the parties did non mean to be lawfully bound. Commercial or Business Agreement

When free gifts are offered in a commercial scene to advance a concern. it is presumed the parties intended to come in into a legal relationship. Such as the instance of Esso Petroleum v Custom & A ; Excise ( 1976 ) where they argued whether the coins were ‘produced in measure for general resale’ if so they would be subjected to revenue enhancement. The House of Lords decided that coins were offered in a commercial context which raised a given that Esso did purpose to be bound. However. the coins were non exchanged for a money consideration and there the coins were non for resale.

Introduction
This inquiry requires application of regulations of the jurisprudence of contract with peculiar respects to the regulation of offer and credence. An offer is a proposal made on certain footings by the offerer with a promise to be bound by that proposal if the offeree accepts the term as per the instance of Gurthing 5 Lynn ( 1831 ) . An offer can merely be accepted if it has been communicated either by written. spoken or by behavior. An offer may be accepted by the offeree or instead the offer may be terminated in a several ways. such as annulment. counter offer and many more. Where else an credence is the unconditioned understanding to all footings of the offer. The issue of this instance is whether the show of the old-timer coin made by Ann was an invitation to handle or an offer to Billy. Collin and Daisy. An “Invitation to treat” may look to be a contractual offer by one party but is really ask foring others to do an offer of their ain. Once a legitimate contractual offer is accepted. a binding contract is instantly formed. and the footings of the original offers can non be farther negotiated without the consent of both parties. An invitation to handle may be seen as a petition for looks of involvement as per the instance of Fisher V Bell ( 1961 ) .

a ) As to her legal relationship / duties to Ben
The first scenario provinces that Ann an antique coin trader displayed gold plated 1839 five lbs ( 299g ) 86X7 mm coin along with a description for offer at ?350’ . Ben noticed the offer as he walked past the store and wanted to purchase it. Unfortunately he was running out of clip as he has to go to a meeting. After his meeting. he went back to Ann’s store to inquire farther inquiries about the coin. Ben told Ann that he would give a definite reply by Monday. Later that same twenty-four hours. he wrote a missive holding to purchase the coin at the declared monetary value of ?350. On Monday forenoon. Ann received Ben’s missive before Daisy arrive to do her payments. By virtuousness of Ann seting the coin on show for sale is simply an invitation to handle as per the instance of Fisher v. Bell. whereby the show of a flick knife in a store is the same. as it was held in the instance that by exposing a merchandise is nil more than an invitation to handle and it is up to the ‘would-be purchaser’ to pick up the goods. in this instance is the coin and convey it to the teller to do an offer as per the instance of Pharmaceutical Society of Great Britain v. Boots Cash Chemist.

Hereby. it is a low sentiment that on the facts within the first paragraph. there was no offer made in that blink of an eye. Ben. after his meeting at 12noon. went over to the store to “ask Ann some questions” ; this should non be confused with doing an offer. as per Harvey v. Facey where it stated that mere enquiries do non represent an offer. Therefore. there is no offer made in this point in clip. However. Ben wrote a missive to Ann stating that he would accept the coin for ?350. However the issue is that his offer merely crystallizes upon the reception of his missive by Ann. On the other manus. it is submitted that if the postal regulation applies for offers. and non merely credence. By virtuousness of Ben authorship and posting the missive to Ann. it could represent an offer but it is non as there is no consideration involved between them.

B ) As to her legal relationship / duties to Collin
In the 2nd scenario. Collin who visited Ann’s store said that he liked the coin but was willing to pay ?200 for it. Ann refused and said that she would accept ?300 alternatively nevertheless Collin insisted that he would merely pay ?200 and left the store. On Sunday forenoon. Collin sent an electronic mail to Ann saying the monetary value offered by her was excessively much and asked would she accept ?200 for the coin. Ann read the electronic mail but did non answer. Later that afternoon. Collin realized that ?300 was a good monetary value and he wrote another electronic mail to Ann holding to pay ?300. his missive was posted at 6pm. Ann merely received Collin’s missive on Monday forenoon. A store proprietor exposing their goods for sale is by and large doing an invitation to handle. They are non obliged to sell the good to anyone who is willing to pay for them. even if extra signage such as “special offer” accompanies the show of the good.

Collin made an offer when he visited Ann’s store ; he even emailed her about the monetary value he wanted. However was refused by Ann but said that she would accept at ?300 for the coin. Therefore. the offer made by Ann to sell the coin at ?300 is no longer open as Collin had made a counter offer to pay ?200 alternatively which is a rejection of the original offer. Even though Collin made other offer the 2nd clip. it can non be accepted because the counter offer of ?200 can non be accepted in future. Therefore. there is no contract made between Collin and Ann. In a similar instance of Hyde v Wrench ( 1840 ) . whereby Wrench offered to sell his land to Hyde at a monetary value of ?1. 200. the offer was rejected. Wrench so offered to sell his land for ?1000. Hyde made a counter offer to purchase the land at ?950. Wrench refused to the land. There is no contract. Hyde’s offer to pay ?950 constitutes a counter offer. efficaciously a rejection of the original offer and a new offer. Once rejected. an offer can non be revived by subsequent credence.

degree Celsius ) As to her legal relationship / duty to Daisy
In the concluding scenario. merely before shutting clip. Daisy who happens to be around the country saw the show of the old-timer coin. she so offered Ann ?200 for the coin. Ann agreed to sell the coin. Daisy promised to return on Monday forenoon with her payments. Around Monday midday. Daisy arrived at Ann’s store with ?200. Unfortunately. Ann refused to give Daisy the coin or accept the ?200. The coin displayed in Ann’s store was simply an invitation to handle. Daisy made an offer to purchase the coin at the monetary value of ?200 and was accepted by Ann. Daisy said that she would return on Monday to do her payment. There is no consideration paid by Daisy to Ann hence. no contractual duty arose. In the instance of Routledge V Grant ( 1828 ) . the suspect offered to purchase the claimant’s house. stating that he would give him six hebdomads to see the offer. Before the clip was up. the suspect withdrew his offer. which shortly afterwards the claimant purported to accept. Revocation is uneffective unless it has been communicated to the offeree. However. for this instance. the suspect can retreat his offer at any clip before the claimants’ credence. On our current facts of Daisy. the suspect withdrew her credence after she accepts it. However. the similarities lie is that both Daisy and the claimant in Routledge v. Grant ( 1828 ) were non given valuable consideration. Therefore was no contract between Daisy and Ann.

Decision
To stop this study. I would state that the show of the coin is simply an invitation to handle ; hence proper communicating may it be orally or by written should be encouraged between Ann. Ben. Collin and Daisy in order for a contract to be lawfully adhering and there should be some consideration between them. Although Ben and Collin may take a firm stand that they have a contract with Ann to buy the coin and that she was contractually bound to sell the coin to them. However. lawfully they do non carry through the standards of a lawfully binding contract. Therefore. Ann needs non be concerned should they convey her to tribunal as they win in their suit against her.

If Ann had a contract with Daisy. she has breached the contract and Daisy could action her. If Ann did non hold a contract with Daisy. Ann can sell the coin to Ben but she must foremost revoke her credence to Daisy. otherwise the credence would still be valid. My advice is that Ann should sell the coin to Daisy. In footings of Ben and Collin. it is opined that they simply made an offer. that Ann has yet had the chance to accept. Whereas where Ann and Daisy is concerned. Daisy made an offer. which Ann has accepted. Therefore. in my low sentiment. Daisy had gone the extra measure. by obtaining Ann’s credence to sell the coin at ?200. which nevertheless was later revoked. In the absence of any consideration from Ben. Collin. and Daisy. Prima facie. Daisy should acquire the coin as she has obtained credence from portion of Ann. ( 1992 words )

Mention

1. Gibson A. and Fraser D. Business Law. 5th Edition. Pearson 2. Keenan D. and Riches S. . Business Law. 8th Edition
3. Lecture 3 Slides. Introduction to Contact Law
4. Lecture 4 Slides. Formation Of Contract
5. Lucy Jones. ( 2011 ) . Introduction to Business Law. Chapter 4 6. Miller R. L and Jentz G. A. . Business Law Today. 6th Edition


Cases
* Balfour v Balfour ( 1919 ) . 2 KB 571 ( CA ) . Lucy Jones. pg 119 * Dunlop Pneumatic Tyre Co Ltd V Selfridge & A ; Co Ltd ( 1915 ) . AC 847 ( HL ) . Lucy Jones. 1ST Edition. pg 148 * Esso Petroleum Ltd V Commissioners of Customs and Excise ( 1976 ) 1 WLR 1. Lucy Jones. pg 122 & A ; 123 * Fisher V Bell ( 1961 ) 1 QB 394. Lucy Jones. pg 93

* Gurthing 5 Lynn ( 1831 ) 2 B Ad 232. Lucy Jones. pg 91
* Harvey V Facey ( 1893 ) AC 552 ( Personal computer ) . Lucy Jones. pg 97
* Hyde V Wrench ( 1840 ) 3 Beav 334. Ct Ch. Lucy Jones. pg 103 * Pharmaceutical Society of Great Britain 5 Boots Cash Chemists ( Southern ) Ltd ( 1953 ) 1 QB 401 ; ( 1953 ) 2 WLR 427. Lucy Jones. pg 93

* Routledge V Grant ( 1828 ) 4 Bling 653. Lucy Jones. pg 100

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[ 1 ] . Requirement of offer. Business Law Today. Miller Jentz. pg 271 [ 2 ] . Dunlop Pneumatic Tyre Co Ltd V Selfridge & A ; Co Ltd AC 847 ( HL ) . Lucy Jones. 1ST Edition. pg 148 [ 3 ] . Purpose to Legal Relation. Denis Keenan & A ; Sarah Riches. 8th Edition. pg 215 and 216 [ 4 ] . Social. Domestic and Family Agreement. Denis Keenan & A ; Sarah Riches. 8th Edition. pg 235 [ 5 ] . Balfour v Balfour ( 1919 ) . 2 KB 571 ( CA ) . Lucy Jones. pg 119 [ 6 ] . Commercial or Business Agreement. Denis Keenan & A ; Sarah Riches. 8th Edition. pg 232 [ 7 ] . Esso Petroleum Ltd V Commissioners of Customs and Excise ( 1976 ) 1 WLR 1. Lucy Jones. pg 122 & A ; 123 [ 8 ] . Requirement of offer. Business Law Today. Miller Jentz. pg 210 & A ; 211 [ 9 ] . Gurthing 5 Lynn ( 1831 ) 2 B Ad 232. Lucy Jones. pg 91

[ 10 ] . Requirement of offer. Business Law Today. Miller Jentz. pg 220 [ 11 ] . Invitation to Treat. Denis Keenan & A ; Sarah Riches. 8th Edition. pg 215 and 216 [ 12 ] . Fisher V Bell ( 1961 ) 1 QB 394. Lucy Jones. pg 93

[ 13 ] . Fisher V Bell ( 1961 ) 1 QB 394. Lucy Jones. pg 93
[ 14 ] . Pharmaceutical Society of Great Britain 5 Boots Cash Chemists ( Southern ) Ltd ( 1953 ) 1 QB 401 ; ( 1953 ) 2 WLR 427. Lucy Jones. pg 93 [ 15 ] . Harvey V Facey ( 1893 ) AC 552 ( Personal computer ) . Lucy Jones. pg 97 [ 16 ] . Hyde V Wrench ( 1840 ) 3 Beav 334. Ct Ch. Lucy Jones. pg 103 [ 17 ] . Requirement of offer. Business Law Today. Miller Jentz. pg 223 [ 18 ] . Routledge V Grant ( 1828 ) 4 Bling 653. Lucy Jones. pg 100

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