Should we extend the definition of marriage to encompass same-sex partnerships (Civil Partnerships)?
It is impossible to provide a single definition of marriage. However, one thing is for certain, and that is marriage is not a union between two people of the same sex (at list for now). Even though lack of a single definition of marriage has been said to be a reflection of religious, cultural and ethnic diversity , however regardless of how far we have advanced socially, marriage still is and arguably should be one of the most important institutions in the society . With this in mind, in the course of this essay it will be argued that extending marriage to homosexual couple is to infringe religious concepts of marriage upon which sanctity of marriage is enrooted , and this might lead to a political turmoil more profound than imaginable. On the other hand, it will be appreciated that if marriage was to be extended to homosexual couples that would undoubtedly achieve greater equality and uniformity. Nonetheless, the costs of such an extension outweigh its advantages.
In Ghaidan v Mendoza , Lord Millet following Hyde v Hyde defined marriage as a union of a man and a woman. However, such a blanket exclusion of same couple was argued to be unjustifiable. Baroness Hale in the same case suggested that instead of focusing on sexuality, marriage should have a defacto meaning based on its essential quality in light of intimacy, stability, social and financial dependency. Nonetheless, English law still holds that for a marriage to be valid its content should be that of a man and a woman .
Such a stringent condition of marriage was thought to be denying homosexual couples with equal rights as heterosexual couples . To address this problem in 2004 the Government enacted the Civil Partnership Act 2004 which aimed at achieving a degree of equality between same-sex couples and heterosexual couples. The Act enables homosexual couples to enter into a civil partnership which eventually as stated by Baroness Hale in SSWP v M, grants them same legal recognition that the law grants to heterosexual couples. As voiced by Anderson the Act is a generous invention with loud political and social message. He argues that by giving homosexual couples the same legal status as married couples the government has made it possible for homosexual couples to obtain full social recognition.
Nonetheless, the argument that civil partnership is nothing but second rate marriage is somewhat incorrect and undermines the significance of CPA. Baroness Hale writing extra-judicially unequivocally suggested that civil partnerships ‘are marriage in all but name’ . This idea of equality between civil partnership and marriage was echoed in Wilkinson v Kitzinger . In Wilson v Kitzinger it was explicitly voiced that civil partnership and marriage are almost equal save the name. This argument can be supported by the fact that the CPA accords to same-sex relationships effectively all the rights, responsibilities, benefits and advantages of civil marriage save the name. However, despite all the glimpse of equality between civil partnership and marriage, one can still argue that civil partnership is inferior to marriage. As pointed by( ) couples in civil partnership do not enjoy the same universal recognition as married couple. This is evident in Kitizinger case where a Canadian married homosexual couple was failed to be recognised as husband and wife in the UK. However, that reluctance to equate civil partnership with marriage is justified on religious, sociological and cultural factors to be discussed later.
Nonetheless, the question remains whether we should extend marriage to same-sex couples. Without sounding homophobic this part of the essay will focus on pressing arguments against such a call.
Marriage is sacred and regardless of the religious beliefs, for decades British have largely agreed on the sanctity of marriage. Since the ancient times, marriage has always been viewed as a union between one man and one woman to the exclusion of all others . This union is important not only to the parties themselves but to the society at large . On one hand the union brings rights and responsibilities to the parties but on the other-hand, it is important for reproduction, and child rearing . Therefore extending marriage to gay partners will undermine the everlasting portrayal of marriage and this can be said to cause ‘cultural genocide’
However, the above concerns are somehow obsolete. First, to equate a legal meaning of marriage to a religious one is dangerous considering the disparities in religious beliefs, and also the fact that some religious groups support gay marriages . Further, the argument on heterosexual marriage as a mechanism for reproduction and child rearing is outdated. In the modern society, homosexual couples are as well equipped to engage in child reproduction due to advances in technology, notably assisted reproductive technology and the emergence of surrogate mothers. However, my biggest concern still is whether these technological advances uphold and conform to our laws of nature?
Although, many among being Baroness O’Cathain are of the view that it is just wrong to ‘create a parody of marriage for homosexual couples’ , it can however be argued that extending civil partnership to marriage can achieve greater equality. I am of the view that homophobia, male dominance and gender imbalances are not legal but sociological and psychological problems whose remedies lie in the society itself. Unless we challenge the traditional views that a man should marry a woman and in most cases live in a subordinate relationship, we can never eradicate these problems. It is about time we shape the notion of marriage not on sexuality but on commitment, love, equality, and respect. Thus, by according same sex couple with the right to marry, we shall be moving a step closer to a society where sexuality does not dictate authority in the family, and gay people are to be regarded as not two men/two women doing immoral acts but rather be viewed in the same perception as heterosexual couples, that is ‘two people who love, and respect each other, and who have committed their lives to each other, till death do them part’.
Nonetheless, my question is, should we really throw all that our society has forever embraced- that is marriage is a respectable union between a man and a woman responsible for reproduction and child rearing, so that a few minorities can claim equality and uniformity? Or we should rather uphold to our strongest values, but yet respect the privacy of others (homosexual couples) as well as granting them equal rights as heterosexual couples?
Undoubtedly, equality has already been achieved by CPA. The Act has created the best of both worlds for Government in appeasing both the gay and anti gay lobbies. To extend this situation might lead to political problems more profound than imaginable. We should always remember, as argued by Lynn Wardle, the union of two persons of different gender creates a union of unique potential strengths and inimitable value to society. As such, as poignant as it may sound, such gender difference is still prevalent in today’s world, and cannot be masqueraded by equating a union of two people of the same sex with a civil marriage between a man and a woman.
Showing posts with label Law. Show all posts
Showing posts with label Law. Show all posts
Auditing- Internal audit(ACCA Qns)
Qns
Matalas Co sells cars, car parts and petrol from 25 different locations in one country. Each branch has up to 20 staff working there, although most of the accounting systems are designed and implemented from the company’s head office. All accounting systems, apart from petty cash, are computerised, with the internal audit department frequently advising and implementing controls within those systems.
Matalas has an internal audit department of six staff, all of whom have been employed at Matalas for a minimum of five years and some for as long as 15 years. In the past, the chief internal auditor appoints staff within the internal audit department, although the chief executive officer (CEO) is responsible for appointing the chief internal auditor. The chief internal auditor reports directly to the finance director. The finance director also assists the chief internal auditor in deciding on the scope of work of the internal audit department. You are an audit manager in the internal audit department of Matalas. You are currently auditing the petty cash systems at the different branches. Your initial systems notes on petty cash contain the following information:
1. The average petty cash balance at each branch is $5,000.
2. Average monthly expenditure is $1,538, with amounts ranging from $1 to $500.
3. Petty cash is kept in a lockable box on a bookcase in the accounts office.
4. Vouchers for expenditure are signed by the person incurring that expenditure to confirm they have received re-imbursement from petty cash.
5. Vouchers are recorded in the petty cash book by the accounts clerk; each voucher records the date,reason forthe expenditure, amount of expenditure and person incurring that expenditure.
6. Petty cash is counted every month by the accounts clerk, who is in charge of the cash. The petty cash balance is then reimbursed using the ‘imprest’ system and the journal entry produced to record expenditure in the general ledger.
7. The cheque to reimburse petty cash is signed by the accountant at the branch at the same time as the journal entry to the general ledger is reviewed.
Required:
Explain the issues which limit the independence of the internal audit department in Matalas Co.
Ans
Factors limiting independence of internal audit
Reporting system
The chief internal auditor reports to the finance director. This limits the effectiveness of the internal audit reports as the finance director will also be responsible for some of the financial systems that the internal auditor is reporting on. Similarly, the chief internal auditor may soften or limit criticism in reports to avoid confrontation with the finance director. To ensure independence, the internal auditor should report to an audit committee.
Scope of work
The scope of work of internal audit is decided by the finance director in discussion with the chief internal auditor. This means that the finance director may try and influence the chief internal auditor regarding the areas that the internal audit department is auditing, possibly directing attention away from any contentious areas that the director does not want auditing. To ensure independence, the scope of work of the internal audit department should be decided by the chief internal auditor, perhaps with the assistance of an audit committee.
Audit work
The chief internal auditor appears to be auditing the controls which were proposed by that department. This limits
independence as the auditor is effectively auditing his own work, and may not therefore identify any mistakes.
To ensure independence, the chief internal auditor should not establish control systems in Matalas. However, where controls have already been established, another member of the internal audit should carry out the audit of petty cash to provide some limited independence.
Length of service of internal audit staff
All internal audit staff at Matalas have been employed for at least five years. This may limit their effectiveness as they will be very familiar with the systems being reviewed and therefore may not be sufficiently objective to identify errors in those systems.
To ensure independence, the existing staff should be rotated into different areas of internal audit work and the chief internal auditor independently review the work carried out.
Appointment of chief internal auditor
The chief internal auditor is appointed by the chief executive officer (CEO) of Matalas. Given that the CEO is responsible for the running of the company, it is possible that there will be bias in the appointment of the chief internal auditor; the CEO may appoint someone who he knows will not criticise his work or the company.
To ensure independence, the chief internal auditor should be appointed by an audit committee or at least the appointment agreed by the whole board.
Auditing - Subsequent Events
Qn
You are the auditor of Oil Rakers, a limited liability company which extracts, refines and sells oil and petroleum related products.
The audit of Oil Rakers for the year ended 30 June 2005 had the following events:
Date
Event
15 August 2010
Bankruptcy of major customer representing 11% of the trade receivables on the balance sheet.
21 September 2010
Financial statements approved by directors.
22 September 2010
Audit work completed and auditor’s report signed.
1 November 2010
Accidental release of toxic chemicals into the sea from the company’s oil refinery resulting in severe damage to the environment. Management had amended and made adequate disclosure of the event in the financial statements.
23 November 2010
Financial statements issued to members of Oil Rakers.
30 November 2010
A fire at one of the company’s oil wells completely destroys the well. Drilling a new well will take ten months with a consequent loss in oil production during this time.
Required:For each of the following three dates:
15 August 2010;
1 November 2010; and
30 November 2010
(i) State whether the events occurring on those dates are adjusting or non-adjusting according to IAS 10 Events after the Balance Sheet Date, giving reasons for your decision;
(ii) Explain the auditor’s responsibility and the audit procedures that should be carried out.
Audit procedures to be used prior to the audit report being signed include:
Reviewing procedures established by management to try and ensure that subsequent events are identified.
Reading minutes of the meetings of directors, the audit committee and shareholders and enquiring into unusual items.
Obtaining and reading the company’s latest interim accounts as well as any budgets and cash flow forecasts.
Obtaining additional evidence if possible from the company’s lawyers concerning litigation and claims.
Asking management as to whether any subsequent events have occurred such as
New borrowing commitments
Significant sales of assets
New shares or debentures issued
Assets being destroyed by flood fire etc or impounded by the government
Unusual accounting adjustments made or being contemplated
Checking whether any events have occurred that could call into question the validity of the going concern assumption.
(a) 15 August 2010
The bankruptcy of a major customer provides additional evidence of conditions existing at the balance sheet date. The customer will not be able to pay debts due, therefore receivables are overstated and the bad debt provision on the profit and loss account is understated. An adjustment for the amount of the receivable should be made in the financial statements.
The bankruptcy of the major customer takes place after the end of the year but before the financial statements and the auditor’s report are signed. As the auditor’s report has not been signed, the auditor is responsible for identifying material events that affect the financial statements. This means that audit procedures should be carried out which are designed to identify this event.
Specific procedures undertaken include:
Confirming that the customer will not pay to a letter from the receiver or similar authorised person
Confirming the amount due from the customer to invoices raised prior to the year end, and if possible to a positive direct confirmation letter
Auditing the adjustment to the financial statements decreasing the receivable balance and increasing the bad debt write off in the profit and loss account
Including the amount in the management representation letter to confirm no other amounts are due from the customer
1 November 2010
The accidental release of toxic chemicals occurred after the balance sheet date. Assuming that the inventory was not on the balance sheet at the year end, then the spill is indicative of conditions that arose subsequent to the year end. No adjustment appears to be necessary. However, the event may be significant in terms of the operations of the company (a large legal claim could arise) and so disclosure of the event would be expected.
The accidental release of toxic chemicals takes place after the auditor’s report has been signed but before the financial statements are sent to the members. At this stage of the audit, the auditor does not have any responsibility to perform procedures or make inquiries regarding the financial statements. The management of Oil Rakers is responsible for telling the auditor about any significant events, such as this one.
However, as the auditor is now aware of the event and this materially affects the financial statements in terms of disclosure being required, the auditor does have to discuss the event with management.
Specific procedures to be undertaken include:
Obtain information concerning the chemical release from management, reading local press and if possible the company’s lawyers – the latter may be able to indicate whether there is any legal liability.
Discuss the appropriate accounting treatment with the directors, confirming that disclosure is required in the circumstances.
Read the disclosure note to confirm that the matter is adequately explained in the financial statements.
Obtain an updated letter of representation from the directors confirming that there are no other events requiring disclosure.
Amend the auditor’s report to include an emphasis of matter paragraph to draw attention to the full disclosure noted in the financial statements. Date the new auditor’s report no earlier than the date of the amended financial statements.
30 November 2010
The fire at an oil well means that Oil Raker’s oil production and presumably profits will fall in the next financial year. The fire though does not provide additional evidence of conditions existing at the balance sheet date as at this time there was no indication that this would occur. The event is therefore non-adjusting in the financial statements. However, disclosure of the event should be made so that the financial statements do not give a misleading position.
The fire at an oil well takes place after the financial statements have been issued. At this time, the auditor has no obligation to make any inquiry at all regarding the financial statements.
If the auditor becomes aware of the event, then the potential effect on the auditor’s report must be considered.
Specific procedures undertaken include:
Checking the board minutes, insurance claims and similar documents to ensure that the fire will be covered by insurance and there is no contingent liability for replacing non-current assets or clearing up any environmental damage.
Inquiring of the directors how the members will be informed of the situation.
If the directors plan to re-issue the financial statements, ensure that appropriate disclosure is made of the event.
If the directors do not intend to amend the financial statements, and you consider the matter to be material to understanding the accounts, consider attempting to contact the members directly, depending on the methods available in your country.
If necessary, contact the auditor’s lawyers to discuss what action can be taken regarding the lack of disclosure.
Auditing - Audit Program for Trade Creditors
Audit Program for Trade Creditors
Risk Alerts
Condition Possible reason / risk
There are large number of unfilled order Goods have been received but have not been processed.
There is high incidence of returns to suppliers Inadequate provision for returns has been made.
Controls and procedures relate primarily to year-end adjustments.
Common controls
There are defined cut off procedures specifically monitored by appropriate personnel.
Supplier statement reconciliation is regularly performed.
Unmatched goods received notes/receiving reports are followed up.
Substantive procedures
Analytical
- Compare trade creditors, purchases and payments to prior periods and budgets seeking explanations for unusual items and significant variances.
- Review monthly movement of trade creditors in comparison to purchases and payments particularly around the period end.
- Analyses the turnover of trade creditor – ratio of creditors to total operating costs (ie not financing and investing activities) – and compare to prior periods and budgets, seeking explanations for unusual items and significant variances.
- Analyze the ratio of purchases in the last month of the period to total purchases.
- Review the gross profit margin achieved particularly around the period end and compare to prior periods and budgets seeking explanations for unusual items and significant variances.
- Review the ratio of individual expense accounts to sales or other appropriate base.
- Review invoices recorded after the period end and review subsequent cash payments.
- Enquire whether there are any significant purchase or expenses around the period end. Check that these have been accounted for in the correct period.
Other
- Vouch a sample of goods received notes around the period end to ensure cut off procedures have been correctly applied.
Auditing- Financial Statement Assertions
Financial statement assertions are the set of information that the preparer of financial statements is providing to another party. Financial statements represent a very complex and interrelated set of assertions.
There are basically five different financial statement assertions that the auditors collect to justify each and very item in the financial statement.
Financial statement assertions are classified into the following five:
1. Existence: The assertion on existence is made to check whether the specified assets and liabilities are present at the given date. It is also required to check that the transactions that are recorded took place at the specified date. In order to test these items of the
financial statement
, it is not sufficient that only books are consulted which record the assets or the liabilities. There should be proof of the existence of the physical assets or liability. For checking existence help is also sought from outside.
2. Completeness: Checking completeness of a financial statement is to analyze whether all the transactions that are already given in the financial statement are rightfully included. In order to abide by the completeness assertion, the auditors prove with the help of sufficient evidence that all the recorded transactions deserve to be included. This is further supported with an external document so as to provide evidence regarding the occurrence of the transaction.
3. Valuation: Valuation basically checks whether the different components of the financial statement have been included in the right proportion. The components are assets, liabilities, expense and revenue. The auditor does this with the help of GAAP.
4. Rights and obligations: This is to check whether the assets that are included in the financial statement are the rights and the liabilities are the obligations of the company. In order to ensure this, sometimes special purpose entities are created.
5. Presentation and Disclosure: This assertion is to ensure whether the items in the financial statements are classified in the right way. It is important to check that the account balance is calculated as well as disclosed properly.
2. Completeness: Checking completeness of a financial statement is to analyze whether all the transactions that are already given in the financial statement are rightfully included. In order to abide by the completeness assertion, the auditors prove with the help of sufficient evidence that all the recorded transactions deserve to be included. This is further supported with an external document so as to provide evidence regarding the occurrence of the transaction.
3. Valuation: Valuation basically checks whether the different components of the financial statement have been included in the right proportion. The components are assets, liabilities, expense and revenue. The auditor does this with the help of GAAP.
4. Rights and obligations: This is to check whether the assets that are included in the financial statement are the rights and the liabilities are the obligations of the company. In order to ensure this, sometimes special purpose entities are created.
5. Presentation and Disclosure: This assertion is to ensure whether the items in the financial statements are classified in the right way. It is important to check that the account balance is calculated as well as disclosed properly.
Auditors decompose these broad assertions into a detailed set of statements referred to as management assertions, separated into three categories:
1.Transactions:
· Occurrence: The transactions actually took place
· Completeness: All transactions that should have been recorded have been recorded
· Accuracy: The transactions were recorded at the appropriate amounts. This is not an assertion in Voyager.
· Authorization: All transactions were properly authorized
· Cutoff: The transactions have been recorded in the correct accounting period
· Classification: The transactions have been recorded in the proper accounts
2.Accounts balances:
· Existence: Assets, liabilities and equity balances exist
· Rights and Obligations: The entity holds or controls the rights to its assets and owes obligations to its liabilities
· Completeness: All assets, liabilities and equity balances that should have been recorded have been recorded
· Valuation and Allocation: Assets, liabilities and equity balances are included in the financial statements at appropriate amounts and any resulting valuation or allocation adjustments are appropriately recorded.
3.Presentation and disclosure:
· Occurrence: The transactions have occurred
· Rights and Obligations: The transactions pertained to the entity
· Completeness: All disclosures that should have been included in the financial statements have been included
· Classification and Understandability: Financial statements are appropriately presented and described, and information in disclosures is clearly expressed.
· Accuracy and Valuation: Financial and other information is disclosed fairly and at appropriate amounts.
Effective Negotiation Plan
Negotiation plan
CLIENT: Name.
REPRESENTATION: Stryver, Barsad & Co Solicitors
LIST OF ISSUES TO BE COVERED (in sequential order) i. e varying from the most crucial but complex issues, to less significant and minor issues;
1. Introduction
2. brief summary of the key facts and key issues to be covered
3. First issue to be negotiated: Refund of deposit, and compensation for all the losses incurred/ moving on with the contract on original terms including providing Mr. Unga with the specified car under the same rates.
4. Payment for non-pecuniary losses- Note: Less significant, and difficult to achieve.
5. Agreement on how to record this negotiation- tape recording, solicitor’s letters.
OFFERS/ CONCESSIONS TO BE CONSIDERED
1) The first issue that we should try to negotiate with the other party is the return of deposit and compensation for the losses incurred by Mr. Unga in preparing for that holiday. This should act as the foremost objective of our negotiation. It is of significant importance to try and persuade the other party to reach a consensus on the refund of deposit and compensation for all the losses since this is a primary aim that our client wants to achieve out of this negotiation process.
Deposit worth £2700
Costs incurred.
£1350 for Insurance,
£1012 booking costs,
£ 800 clothing and equipments
This should be the first issue to be covered because it appears to be the most complex one, and as such it might end up requiring a lot of negotiation, and time as a consequence.
However, since we want to reach a compromise, the first offer that we should put on the table which seems to be beneficial to both parties is;
a) Maddisons Ltd should not exactly refund our deposit in cash, but rather they should hold onto our deposit, pay for the ferry, and insurance costs, as well as giving us the agreed discount on rental (£900, instead of £950) of the original car which might be available by now. If this happens we shall be able to move on with the frustrated contract which could not move on at the first place due to the occurrence of such frustrating events. If we agree on this,
Benefits on both parties: if the contract pushes on, Maddisons Ltd will get a chance to receive the amount they intended to receive out of the contract, while Mr. Unga will get a chance to go for his dream vacation. (Best negotiated Outcome)
b) However, if this fails, another alternative offer that we should try to compromise on is; Incase they disagree with paying our reliance costs, as per costs of insurance, booking costs, we can be flexible and convince them to pay only for the insurance costs, and leave other expenses which involves Mr. Unga directly (ferry booking, clothing and equipment costs) - (BATNA)
c) If all the above negotiations fail, the worst offer that we can accept which can however be somehow satisfactory to MR. Unga is; Maddisons Ltd can keep hold of the deposit, but give Mr Unga the agreed discount on rental of the agreed car, and we shall be able to excuse the payment for the ferry booking, insurance costs and clothing costs since in one way or another we could have incurred them despite the breach of the previous contract. (Worst acceptable outcome)
d) The WATNA that can occur out of this negotiation is for Maddisons Ltd to forfeit the deposit, refusing to pay all the losses suffered by Unga, and even worse claiming for the outstanding payment (£ 8100), and the mechanical costs (£200).
2. The second issue that we shall negotiate on is payment for non pecuniary losses, as to loss of time and annoyance. This issue has not been given much weight as the first one, because not only it is less significant, but the winning prospects are also minimal. However, the best negotiated outcome is for Maddisons to accept this. On the other-hand there appears not to be any WATNA, since as stressed above, this claim is hard to reach a compromise on, because the other party can hardly accept to do so.
Strengths:
Maddisons Ltd breached the contract.
Mr. Unga tried to mitigate losses by accepting a substitute vehicle at the same rates.
The loss that occurred was in contemplation of both parties by the time of formation of the contract
Weaknesses:
The signature binds Mr Unga i. e terms were incorporated
Recording of the negotiation
Once we have successfully conducted the negotiation, then we should record the agreed terms in a manner which epitomises ‘settlement outside the court’. This process can involve two stages;
a) First we can tape record all the agreed terms
b) We can put the agreement in writing which will be signed by both parties. We can address the written agreement as ‘Settlement and Compromise Agreement’, so as to show that, there was a common ground of understanding which was reached by both parties, for the benefits of both clients, under the expense of none.
CLIENT: Name.
REPRESENTATION: Stryver, Barsad & Co Solicitors
LIST OF ISSUES TO BE COVERED (in sequential order) i. e varying from the most crucial but complex issues, to less significant and minor issues;
1. Introduction
2. brief summary of the key facts and key issues to be covered
3. First issue to be negotiated: Refund of deposit, and compensation for all the losses incurred/ moving on with the contract on original terms including providing Mr. Unga with the specified car under the same rates.
4. Payment for non-pecuniary losses- Note: Less significant, and difficult to achieve.
5. Agreement on how to record this negotiation- tape recording, solicitor’s letters.
OFFERS/ CONCESSIONS TO BE CONSIDERED
1) The first issue that we should try to negotiate with the other party is the return of deposit and compensation for the losses incurred by Mr. Unga in preparing for that holiday. This should act as the foremost objective of our negotiation. It is of significant importance to try and persuade the other party to reach a consensus on the refund of deposit and compensation for all the losses since this is a primary aim that our client wants to achieve out of this negotiation process.
Deposit worth £2700
Costs incurred.
£1350 for Insurance,
£1012 booking costs,
£ 800 clothing and equipments
This should be the first issue to be covered because it appears to be the most complex one, and as such it might end up requiring a lot of negotiation, and time as a consequence.
However, since we want to reach a compromise, the first offer that we should put on the table which seems to be beneficial to both parties is;
a) Maddisons Ltd should not exactly refund our deposit in cash, but rather they should hold onto our deposit, pay for the ferry, and insurance costs, as well as giving us the agreed discount on rental (£900, instead of £950) of the original car which might be available by now. If this happens we shall be able to move on with the frustrated contract which could not move on at the first place due to the occurrence of such frustrating events. If we agree on this,
Benefits on both parties: if the contract pushes on, Maddisons Ltd will get a chance to receive the amount they intended to receive out of the contract, while Mr. Unga will get a chance to go for his dream vacation. (Best negotiated Outcome)
b) However, if this fails, another alternative offer that we should try to compromise on is; Incase they disagree with paying our reliance costs, as per costs of insurance, booking costs, we can be flexible and convince them to pay only for the insurance costs, and leave other expenses which involves Mr. Unga directly (ferry booking, clothing and equipment costs) - (BATNA)
c) If all the above negotiations fail, the worst offer that we can accept which can however be somehow satisfactory to MR. Unga is; Maddisons Ltd can keep hold of the deposit, but give Mr Unga the agreed discount on rental of the agreed car, and we shall be able to excuse the payment for the ferry booking, insurance costs and clothing costs since in one way or another we could have incurred them despite the breach of the previous contract. (Worst acceptable outcome)
d) The WATNA that can occur out of this negotiation is for Maddisons Ltd to forfeit the deposit, refusing to pay all the losses suffered by Unga, and even worse claiming for the outstanding payment (£ 8100), and the mechanical costs (£200).
2. The second issue that we shall negotiate on is payment for non pecuniary losses, as to loss of time and annoyance. This issue has not been given much weight as the first one, because not only it is less significant, but the winning prospects are also minimal. However, the best negotiated outcome is for Maddisons to accept this. On the other-hand there appears not to be any WATNA, since as stressed above, this claim is hard to reach a compromise on, because the other party can hardly accept to do so.
Strengths:
Maddisons Ltd breached the contract.
Mr. Unga tried to mitigate losses by accepting a substitute vehicle at the same rates.
The loss that occurred was in contemplation of both parties by the time of formation of the contract
Weaknesses:
The signature binds Mr Unga i. e terms were incorporated
Recording of the negotiation
Once we have successfully conducted the negotiation, then we should record the agreed terms in a manner which epitomises ‘settlement outside the court’. This process can involve two stages;
a) First we can tape record all the agreed terms
b) We can put the agreement in writing which will be signed by both parties. We can address the written agreement as ‘Settlement and Compromise Agreement’, so as to show that, there was a common ground of understanding which was reached by both parties, for the benefits of both clients, under the expense of none.
Account of drafting.
Account of drafting
(As defined by Sime, statements of a case are formal documents used in litigations to express what each party say about the case. They include such things as claim forms, counter claims and sometimes particulars of claim where the document is not included in a claim form. With a need of starting a civil proceeding aiming at claiming for the loss suffered by our client Ungar as a consequence of the breach of contract by Maddisons Ltd, our group had to fill in an ‘’N1 claim form’’. The use of an N1 claim form was imperative due to the following reasons which are highly inclined on the purpose of such forms: First, the claim form acts as an informer to the other party on the allegations and claims against it. Secondly, since it is targeted to both, the Defendant and the court, the claim form also provides the judge with a concise statement of all the issues and claims, so as to give him or her a good insight of the case which will facilitate good decision making and somewhat improving the efficiency of the judiciary.
Based on our research on legal drafting facilitated by directive readings, we decided to adopt a style which is formal for the above stressed purposes of the claim form. This was made possible by ensuring we had a good structure which will have a positive effect to our style. We organised our form into a coherent order, by putting issues into a logical sequence epitomised by the division of issues into appropriate categories. Apart from putting issues into separate categories, another style that we adopted so as to avoid poor drafting was, putting numbered paragraphs, and subsections, which will enable us to have a good coverage of our claims and allegation without missing any. We avoided using short sentences because they can be difficult to be understood by the Defendant and the judge, and consequently hindering the success of the above mentioned form’s objectives. On the other-hand we neither used paragraphs in an essay form because essays require linkages between paragraphs, and that could be irrelevant in our form since each paragraph was independent, stressing its own allegation and claim.
In the content of our form we gave preference to facts in raising different allegations and claims. We predominantly relied on the relevant facts, rather than law, or arguments which could serve best in a trial because, as argued by Cunningham, p. 196, a claim form should not be treated as a substitute of oral arguments in court. In the light of content we also put ‘a statement of the nature of our claim as urged by Sime, p 187. This was done in BRIEF DETAILS OF CLAIM (BDC), where we highlighted the nature of our claim and damages sought. Moreover in Particulars of claim, we expanded the details of our claims by supporting them with factual evidences. One issue that we encountered was whether we should have included the allegations on the unfairness of clauses. We decided to omit them because O’Hare, p. 253 provides that, there is no need to include such details because by doing so, we would be anticipating a counterclaim or a defence, which will weaken our winning prospects. Invalidating the clauses, will be a task to be conducted when we receive the counter claim/defence from the Defendant.
With a strong motive of being precise, we decided to put only those allegations we could support with facts. This was done so as to avoid a bulky of unparticularised and unfocused allegation which could lead to striking out of our case as happened in Dunn v Glass Systems (UK) Ltd (2007) LTL 23/7/07. In addition, because the claim was for a breach of a written contract, by virtue of PD 16, para 7.3 our group decided to attach the ‘written contract’ dated 25/02/2009. Attaching the contract could also help the judge to refer on the relevant express obligations which are claimed to have been breached by the Defendant, as well as all the implied provisions. The solicitor signed the form by virtue of PD, para 2.1 and verified the statement of truth by virtue of CPR, r 22 1 (1) (a).
Dealing with figures and their representation in the form was our major point of concern. In the value section, our group decided to write all the damages we sought, in short sentences alongside the actual or approximate value we are claiming so as to enable the judge to know what we were claiming for. However we drew a cautious line between values for ‘pecuniary’ and none ‘pecuniary losses’ (loss of enjoyment) because, unlike pecuniary losses, the award for none pecuniary losses, is largely under court’s discretion, that is, court will generally offer the value it sees fit. Since we claimed for non-pecuniary losses, our group could not come up with a ‘specified value’, and consequently in claiming for interest we had to claim for it, pursuant to s.69 of the County Courts Act 1984, but on the rate and period the court sees fit.
Furthermore, much focus during the process of drafting was kept in the use of legal language. As future lawyers, we also believe that language is the only medium which stimulates the functioning of any legal system, or on the other- hand, accomplishment of any purpose of a legal document. With all this in mind, our group made sure that we used clear, correct and concise English. This Maughan & Webb’s three C’s model of legal language can be reflected in our work as follows; First, as urged by Maughan, p. 37, in our form we made sure that we used frequently used words (plain English). Moreover, we also used passive voice in making allegations so as to capture the judge’s attention. However, despite using plain English we avoided the use of short vague sentences and lay man’s language. We instead used comprehensible, doctrinal legal language with such legal words as ‘pursuant’.
We believe that we safeguarded our claim because we put much emphasis on meeting the paramount rules of good legal writing provided by Orwell: For example, our structure was good since it was in a coherent manner which followed logical sequence of events in chronological order. Secondly, we adopted a ‘measured tone’ in the light of passive voices, which in turn will capture judge’s attention and also clear his objections.
With the passage of time and more drafting practices, we believe we will develop the key tools for a god legal drafting, such as language, style, and structure.
NOTES
Claim form and defence/counterclaim
The relevant documents should:
1. Demonstrate a basic understanding of the administrative steps necessary to commence a claim or to defend and counterclaim in the English Civil courts
2. Demonstrate a basic level of competence at completing formal legal forms
3. Demonstrate an ability to identify the relevant factual basis of a claim or defence/counterclaim
4. Demonstrate a basic ability to draft particulars of claim/defence
5. Demonstrate a basic appreciation of the drafting considerations which relate to the claim for specified and unspecified sums of money
6. Demonstrate a basic understanding of the right to claim interest in English civil procedure
Account of drafting
Account of drafting should:
1. Reflect both academic/legal issues and issues relating to law in practice and lawyers and language you have come across
2. Demonstrate an appreciation of the role of specific legal documents in the broader process in the English civil justice system
3. Demonstrate an appreciation of the significance of good legal drafting when commencing or defending proceedings
4. Demonstrate an appreciation of some arguments relating to language and the structure and style of written documents
5. Demonstrate an understanding of broader debates surrounding legal communication and drafting
(As defined by Sime, statements of a case are formal documents used in litigations to express what each party say about the case. They include such things as claim forms, counter claims and sometimes particulars of claim where the document is not included in a claim form. With a need of starting a civil proceeding aiming at claiming for the loss suffered by our client Ungar as a consequence of the breach of contract by Maddisons Ltd, our group had to fill in an ‘’N1 claim form’’. The use of an N1 claim form was imperative due to the following reasons which are highly inclined on the purpose of such forms: First, the claim form acts as an informer to the other party on the allegations and claims against it. Secondly, since it is targeted to both, the Defendant and the court, the claim form also provides the judge with a concise statement of all the issues and claims, so as to give him or her a good insight of the case which will facilitate good decision making and somewhat improving the efficiency of the judiciary.
Based on our research on legal drafting facilitated by directive readings, we decided to adopt a style which is formal for the above stressed purposes of the claim form. This was made possible by ensuring we had a good structure which will have a positive effect to our style. We organised our form into a coherent order, by putting issues into a logical sequence epitomised by the division of issues into appropriate categories. Apart from putting issues into separate categories, another style that we adopted so as to avoid poor drafting was, putting numbered paragraphs, and subsections, which will enable us to have a good coverage of our claims and allegation without missing any. We avoided using short sentences because they can be difficult to be understood by the Defendant and the judge, and consequently hindering the success of the above mentioned form’s objectives. On the other-hand we neither used paragraphs in an essay form because essays require linkages between paragraphs, and that could be irrelevant in our form since each paragraph was independent, stressing its own allegation and claim.
In the content of our form we gave preference to facts in raising different allegations and claims. We predominantly relied on the relevant facts, rather than law, or arguments which could serve best in a trial because, as argued by Cunningham, p. 196, a claim form should not be treated as a substitute of oral arguments in court. In the light of content we also put ‘a statement of the nature of our claim as urged by Sime, p 187. This was done in BRIEF DETAILS OF CLAIM (BDC), where we highlighted the nature of our claim and damages sought. Moreover in Particulars of claim, we expanded the details of our claims by supporting them with factual evidences. One issue that we encountered was whether we should have included the allegations on the unfairness of clauses. We decided to omit them because O’Hare, p. 253 provides that, there is no need to include such details because by doing so, we would be anticipating a counterclaim or a defence, which will weaken our winning prospects. Invalidating the clauses, will be a task to be conducted when we receive the counter claim/defence from the Defendant.
With a strong motive of being precise, we decided to put only those allegations we could support with facts. This was done so as to avoid a bulky of unparticularised and unfocused allegation which could lead to striking out of our case as happened in Dunn v Glass Systems (UK) Ltd (2007) LTL 23/7/07. In addition, because the claim was for a breach of a written contract, by virtue of PD 16, para 7.3 our group decided to attach the ‘written contract’ dated 25/02/2009. Attaching the contract could also help the judge to refer on the relevant express obligations which are claimed to have been breached by the Defendant, as well as all the implied provisions. The solicitor signed the form by virtue of PD, para 2.1 and verified the statement of truth by virtue of CPR, r 22 1 (1) (a).
Dealing with figures and their representation in the form was our major point of concern. In the value section, our group decided to write all the damages we sought, in short sentences alongside the actual or approximate value we are claiming so as to enable the judge to know what we were claiming for. However we drew a cautious line between values for ‘pecuniary’ and none ‘pecuniary losses’ (loss of enjoyment) because, unlike pecuniary losses, the award for none pecuniary losses, is largely under court’s discretion, that is, court will generally offer the value it sees fit. Since we claimed for non-pecuniary losses, our group could not come up with a ‘specified value’, and consequently in claiming for interest we had to claim for it, pursuant to s.69 of the County Courts Act 1984, but on the rate and period the court sees fit.
Furthermore, much focus during the process of drafting was kept in the use of legal language. As future lawyers, we also believe that language is the only medium which stimulates the functioning of any legal system, or on the other- hand, accomplishment of any purpose of a legal document. With all this in mind, our group made sure that we used clear, correct and concise English. This Maughan & Webb’s three C’s model of legal language can be reflected in our work as follows; First, as urged by Maughan, p. 37, in our form we made sure that we used frequently used words (plain English). Moreover, we also used passive voice in making allegations so as to capture the judge’s attention. However, despite using plain English we avoided the use of short vague sentences and lay man’s language. We instead used comprehensible, doctrinal legal language with such legal words as ‘pursuant’.
We believe that we safeguarded our claim because we put much emphasis on meeting the paramount rules of good legal writing provided by Orwell: For example, our structure was good since it was in a coherent manner which followed logical sequence of events in chronological order. Secondly, we adopted a ‘measured tone’ in the light of passive voices, which in turn will capture judge’s attention and also clear his objections.
With the passage of time and more drafting practices, we believe we will develop the key tools for a god legal drafting, such as language, style, and structure.
NOTES
Claim form and defence/counterclaim
The relevant documents should:
1. Demonstrate a basic understanding of the administrative steps necessary to commence a claim or to defend and counterclaim in the English Civil courts
2. Demonstrate a basic level of competence at completing formal legal forms
3. Demonstrate an ability to identify the relevant factual basis of a claim or defence/counterclaim
4. Demonstrate a basic ability to draft particulars of claim/defence
5. Demonstrate a basic appreciation of the drafting considerations which relate to the claim for specified and unspecified sums of money
6. Demonstrate a basic understanding of the right to claim interest in English civil procedure
Account of drafting
Account of drafting should:
1. Reflect both academic/legal issues and issues relating to law in practice and lawyers and language you have come across
2. Demonstrate an appreciation of the role of specific legal documents in the broader process in the English civil justice system
3. Demonstrate an appreciation of the significance of good legal drafting when commencing or defending proceedings
4. Demonstrate an appreciation of some arguments relating to language and the structure and style of written documents
5. Demonstrate an understanding of broader debates surrounding legal communication and drafting
Advocacy-Portfolio 1
Portfolio task question
Imagine that you receive the following instructions from your supervising solicitor:
“Our client has asked us for initial advice about a dispute in relation to the hire of a touring vehicle. Make yourself familiar with the client file. Once you have done this I want you to conduct the necessary research to allow you to make a recommendation about the strength of their case. It’s clear that this case revolves around a potential breach of contract but it appears that it might turn on the limitation and substitution clauses in the contract. For now I want you to concentrate on this legal aspect of the case and on any other pre-action or practical issues you think are relevant.
For clarity I want you to
1. Find out what you can about the law in relation to those substitution and limitation clauses in the contract
2. Provide me with all the relevant authority on this in an intelligible way so I can follow up your research and of course bill the client appropriately. Provide me with a full research log.
3. Look at what we might get out of this for our client in terms of redress
4. I value your input on any relevant “extra legal” matters or procedural issues which you come across.
I would like your input by 4:00pm Friday 12th February 2009”
Research log
There is no precise word limit for this part of portfolio item 1. See the examples from the recommended texts as a geode to how a log might look. All material referenced in you research summary should have a place in you research log.
Add your research log entry here:
Key to research identification
[O] Unread research but possibly relevant (needs further exploration)
[A] Read research and relevant
[?] Read research but unsure of relevance
[X] Read research but unlikely relevant
Re. Mr & Mrs Ungar (claimant) v Maddisons Vehicle Hire Ltd (defendant)
The main issue revolving around this case, is the question whether, Ungars are entitled to damages and refund of their deposit. However, this issue will explicitly and predominantly rely on whether there was a breach of a contract by Maddison Vehicle Hire Ltd. On the other hand, even if there will be a proof of breach, the claim will not be forthcoming, if there are any clauses in the contract which excludes or limits Maddison Ltd’s liability and Ungars’ rights.
In that sense, in order to know the strength of Ungars’ case, it is therefore very important to check whether there was breach, and if there is, the usage of common law and statutory instruments which limits unfair exemption clauses should be adopted in case there are any clauses which limits or excluded liability.
The issue of damages and refund will also entirely depend on other factors such as the availability of any restraints such as causation and so forth.
However, other important issues which will play a significant role on the prospects of the case will also be considered in the course of this research in order to bring about a desirable outcome to our client (Mr & Mrs Ungar).
1) Pre action and Procedural issues
Classification of the case in hand: Civil litigation for a breach of contract
Parties and legal capacities: It is important to know whether Ungars are legally able to sue, and whether the defendant (Maddison ltd) can be sued. It is provided that any person who is above 18 years of age and who is not classified as mental patient under the provisions of the Mental Health Act 1983 has the legal capacity to sue. Apply: In that reasoning, Ungars have the legal capacity to sue because they are not mentally ill, and also they have exceeded 18 years old as provided in the facts that they have reached the age of retirement.
Can Maddisons Ltd be sued? Companies are also classified as legal persons, and therefore can be sued. It is stressed that, a company is the one which has been registered under the Companies 1985. As such Maddisons Vehicle Hire Ltd can be sued. Table of contents
Section 1
Research on procedural issues
Section 2
Research for cause of action
A) Limitation clauses
B) Substitution clauses
C) Unfair Contractual Terms Act 1977
D) Sales of Goods Act 1982 and its relations to the Unfair Contractual Terms Act
E) Test of reasonableness
F) Damages
G) Contract of adhesion
1) Research on procedural issues
Procedural Initialisation [A]- S. Sime, A practical approach to civil procedure, (12th edn Oxford University Press, 2009, pp)
Generally it is for the claimant to select a cause of action and it is also important to note that multiple claims can be treated separately but this will however result in multiple fees.
According to the CPR r7.3 which takes directives from the Civil Procedure Act 2005;
“The claimant may use a single claim form to start all claims which can be conveniently disposed of in the same proceedings,”
“Any number of claimants or defendants may be joined as parties to a claim,"
“Joint claimants must not have conflicting interest in litigation and must be represented by the same counsel,”
Closely connected claims may be ordered to be consolidated and treated as a single claim. Another important note is that we must be accurate in our pleadings to cover the entirety of the case. For example in the Esso Petroleum Co Ltd v Southport Corporation [1956] A.C 218 the doctrine of Res Ipsa Loquitur was rejected because a claim in negligence had not been a part of the initial pleadings.
Apply
This information will be critical in its application to Mr Unger because if the case fails due to our negligence in giving advice to Mr Unger and having the case dropped on a procedural issue then we are likely to be sued ourselves. The points raised in the CPR r7.3 are also highly relevant because it may allow for us to join both Mr and Mrs Unger as claimants in this circumstance as they can both jointly claim as a single party against the defendants as both claimants have a non-conflicting interest against the defendants. We must also be accurate with our pleadings as explained below we have many different causes of action so we must take care as to not exclude an important claim.
Validation of research
Civil Procedure Act 2005
S. Sime, A practical approach to civil procedure, (12th edn Oxford University Press, 2009)
Esso Petroleum Co Ltd v Southport Corporation [1956] A.C 218 (validated as standing via Westlaw)
Joinder claimants and defendants and conflicts with identity of parties [A]
As explained above it is possible for claimants and defendants to be grouped together for the purpose of court. However it is important to note the identity of the parties when making a claim as bringing an action against the wrong party not only wastes courts time but can result in disciplinary action and/or rejection of the case.
Application of research to the case
This would be of particular importance to the current case as Madison in the contract makes references that all legal disputes are to be taken up with a third party. This may mean that in order for Mr Unger to correctly file for a claim he must name them as the defendant. However, if this is proved wrong or incorrect then it is possible for the case to be dismissed. Therefore in order to avoid such a problem it may be wise if the process of ‘Joinding’ is applied and make both the third party and Mr Madison co-defendants.
Validation of research
S. Sime, A practical approach to civil procedure, (12th edn Oxford University Press, 2009)
Vexatious litigants [A]
Vexatious Litigants are those that misuse the freedom of the court and Launch large numbers of un-meritous actions against defendants. The punishment for being a vexatious litigant can be suspension from the bar and work in law by the high courts.
Apply
Due to the amount of issues we can attempt to raise against Madissons Hire Vehicle Ltd as described below we must be careful to avoid penalization from the courts on the grounds that we are vexatious. It may be in our best interest to raise one strong claim and then in the course of proceedings raise the sub-issues to strengthen our own case.
Validation of research
S. Sime, A practical approach to civil procedure, (12th edn Oxford University Press, 2009)
Jurisdiction and governing law (S. Cunningham-Hill and K. Elder, Civil Litigation Handbook 2009-10 (OUP, Oxford 2009), chapter 1-7. (pp 1- 99)
The question of jurisdiction o jurisdiction will not require significant consideration since both the client and the opponent are situated within UK and the course of action occurred within the UK jurisdiction. Thus this case will not need considering the Civil and Judgement Acts 1982 1991 which covers the proceedings outside the UK jurisdiction.
The kind of dispute (Contractual dispute) & mechanism for dispute resolution
Apart from the above consideration, another important issue to be considered is the classification of the dispute. The classification of which is important because it gives a bearing on the kind of action to be taken. In breach of contract and consequently a claim for damages by innocent party, actions will normally depend on whether there is any clause which provides a mechanism for dispute resolution. If there is any clause which provides for adoption of Alternative Dispute Resolutions such as arbitration or mediation, then parties are bound by that clause. Thus, civil litigation cannot be adopted as a mechanism for solving the contractual dispute. However, these clauses are also subjected to common law controls such as the rules of incorporation and construction, as well as the statutory controls inclined on different acts which aim at ensuring fairness.
Application: Therefore because clause 21 of the contract provides for an alternative dispute resolution (mediation under The Society for Recreational Vehicle Distributors) other than litigation, technically both parties are bound by this clause and therefore cannot litigate. However, ADR procedures agreed before the dispute arose tend to be inappropriate for resolving the specific dispute that has risen. In addition, this method can sometimes limit the rights of the parties with a strong case in the eyes of the law. In that sense, as stressed above that these clauses are also subjected to controls under common law, it will therefore be important to term it void so as to ensure that Ungars’ claims are well settled in the Court of law through Civil Litigation. On other-hand it is also worth noting that ADR can sometimes appear to be advantageous to the parties. Such advantages are provided by Duncan are flexibility, speed, also they are less expensive than trials in court.
Advise: It is better for Ungars to opt for civil litigation from ADR because, first the body which has been chose by the defendant (Maddisons Vehicle Hire Ltd) is a body which does not aim at ensuring consumers welfare. In that sense Ungars rights might not be well saved by such a body. On the contrary, judicial attitude towards consumers such as Ungars, has always been positive, thereby it is better to take the matter to court.
Selection of court
The selection of court is also an important factor to consider. Both High Court and the county courts tend to hear an enormous number of claims. However, Civil Procedure Rules (CPR practice Direction (PD)) restricts parties selection as to the selection of courts since it provides that, only claims which exceeds £25,000 should be taken to the High Court.
Apply: Since Ungars’ claim do not exceed £25,000, the issue should therefore be taken to any of the county courts.
However, does time allow the claim to be taken to court (Limitation periods)
Limitation periods are mostly covered by Limitation Act 1980. In order to be able to take the claim to court the claimant has to be sure that time is not jeopardy. Figure 7. 1 (p 99 in S. Cunningham-Hill and K. Elder, Civil Litigation Handbook 2009-10) provides that limitation period for contractual claims is 6 years as provided by Limitation Act 1980, s. 5.
Apply: The case can therefore be taken to court because the claim will be filed within 6 years
2) The main issue (strength of Ungars’ case)
a) The first issue to be determined is ‘whether there was any legal binding relationship between the parties’. (Elliot & Quinn ‘Contract Law’ 4th edn. PEL 2003, chapter 1, pp 9-12,).
For a legal binding relationship to exist there has to be a binding contract which has been reached through all the necessary stages such as offer and acceptance. The law provides that any advertisement, brochures and price lists amount to invitation to treat (Patridge v Crittendon [1968] 1 WLR 1204). Invitation to treat is an initial stage before any offer has been. After an invitation to treat, there has to be an offer, which as defined by Jill Poole p, 41, simply means an expression of willingness to contract on the given terms without inclusion of further negotiations, so that ‘’acceptance’’ could be made by the offeree so as to form a contract.
Apply: Maddissons Vehicle Hire Ltd invited Ungars to treat through an advertisement posted in Daily Moon magazine. As such, Ungars offered Maddison Ltd £ 900 pcm to hire a vehicle (sightseer), and eventually Maddisons Ltd agreed to form a legal binding relationship with Ungars by accepting their offer, by signing a 12 months contract with them. In that sense, it can be established that, the parties had a legally binding contract.
b) Another important issue to consider is the availability of duties.
i) Express obligation
It is important to assess whether there were any express duties, since this will be important in establishing whether or not there was a breach, which is an important question in relation to claiming damages (Jill Poole, p 328). This argument finds support in the law as follow. In Photo Production Ltd v Securicor Transport Ltd [1980] AC 827, the law provides that, there is an automatic right to claim for damages in case of a breach of those duties.
The law: In order, to ascertain the duties in the contract, the law has provided a mechanism to do so through the ‘parol evidence rule’. In Henderson v Arthur [1907] 1 KB 10, it was held that, in any written contract all the obligations set in that contract can be ascertained by using the ‘parol evidence rule’.
Apply: Since all the terms which sets out the obligations of both parties are clearly listed in the contract, the parol evidence rule can be used to highlight those obligations and establish that, both parties are legally bound by those obligations. There are two obligations which serves as the base of the contract, and these are; Ungars are obliged to make payments and ensure safety of the car, while on the other hand, Maddisons Vehicle Hire Ltd is obliged to provide the Ungars with a product which he wishes for. A breach of any of these terms entitles the innocent party with damages (as per, Photo Production Ltd).
ii) Implied obligations (implied terms)
The law: s. 13-15 of Sale of Goods Act 1979, impliedly induce a obligations to sellers, and suppliers as to me the description, quality, fitness and sample of the product contracted for with the consumer.
Apply: In that sense if the car hired by Ungars, does not meet the quality, or description, this can be classified as a breach of an implied term under the SGA. In that sense, Maddisons Vehicle Hire Ltd, are under a statutory obligation of ensuring all the provisions provided under s. 13- 15 SGA are met.
c) The third issue to be considered so as to know the strength of the case in hand is whether or not Maddissons Vehicle Hire Ltd ‘breached the contract’. (Jill Poole, chapter 8, pp, 348-330).
A breach of contract will occur where, one party fails or refuses to perform his contractual duties without a lawful excuse. On the other hand, even if a party may perform its contractual duties, but if the performance fails to meet the standard of performance, that can also constitute a breach. (Jill Poole, Textbook on Contract Law, 9th edn, Oxford University Press, 2008, p. 324).
Note: The standard of performance can vary in accordance to the type of contract.
• For strict contractual obligation, the general rule s that ‘when the performance of contractual obligations is strict, the contractual obligations must be completely as well as precisely performed. (Jill Poole p, 324)
Apply: Since the contract in hand could be classified as a strict one as many contracts are, all set of obligations are supposed to be performed in a precise and a complete manner. As held in Arcos Ltd v Bonasson [1933] AC 470, any trivial failure to do the oligations can be regarded to be a breach. In that sense, since Maddisons Ltd are under an obligation of ensuring that they provide their customers with the product they paid for, it can be argued that, the fact that they failed to give the Ungars, the car they contracted for, in a required time, this can be regarded as a breach.
Another ground to look for a breach is by basing on statutory provision.
The law: As provided by s.13- 15 SGA, any failure to met the description, quality, fitness, and sample amounts to a breach of an implied term under the SGA.
Apply: In that sense, since Maddisons Ltd failed to provide Ungars with a car which conforms with the original description (class A), and sample as seen in the Daily Moon magazine or the one seen during the signing of the contract, it can be established that, Maddisons Vehicle Hire Ltd has breached a contract under s. 13 and 15 SGA.
d) However, even though it has established that, Maddisons Vehicle Hire Ltd breached a contract, Ungars rights as to damages will depend on the validity of the exemption clause.
Jill Poole, Textbook on Contract Law, 9th edn, Oxford University Press, 2008, chapter 7, pp 266- 320 [A]
Therefore, it is important to consider whether or not the exemption clauses are valid enough to exclude or limit liability. The enforceability of clauses will depend on three legal questions;
• Have the clauses been incorporated in the contract?
• Do they cover the loss which has occurred?
• Are they rendered unenforceable under the Unfair Contract Terms Act 1977 and/ or Unfair Terms in Consumers Contracts Regulations 1999
Limitation and substitution clauses
Limitation clauses
Looked at with caution by the courts, as by being included within exemption clauses they can prove to be a benefit to commercial retailers, but prove a disadvantage to consumers.
Retailers or service providers may protect themselves of the amount they would be willing to give in damages/compensation were a contract is breached, for them it may prevent excessive claims.
The incorporation into the contract of these terms must be done correctly, for example can the party be fully aware of the clause, and its effects upon the party themselves. Also whether there are contradictions with the document containing the clauses.
The contra preferentem rule also exists, as to whether there is lack of clarity of the term, in this case and is construed against the party seeking to rely on it.
Application of research to Mr Unger
At clause 22 in the event of the Lessor being deemed in breach of this agreement, the parties agree that the Lessor’s liability in the event of complete failure to deliver an appropriate vehicle will be set at a value equivalent to 5% of the Contract dues. This particular clause in itself is a contradiction of the events of the scenario as Madison refused to accept that he had breached his contract when clearly here, due to his inability to deliver the appropriate vehicle.
This clause may cause uncertainty but in these circumstances the court will usually interpret the clause for the benefit of the consumer. They are managed under the Unfair Contract Terms Act 1977, and the Unfair terms in consumer contracts regulations 1993.
Substitution clauses [A]
A clause that allows for goods to be offered in exchange for others. I.E a contract may offer a gardener two bouquets of roses per week but a substitution clause may be in effect that allows the gardener to request for two different bouquets subject to whether their supplied has them in stock.
Application of research to Mr Unger
It is the service provided by Mr Madison that they will provide the vehicle requested, however within his terms and conditions, blame seems to shift to the consumer for not accepting a substitute and they lose out on their deposit for not accepting it even though the substitution was not ideal and would have greatly disadvantaged Mr Unger.
In our case Madison did not take ‘reasonable care’ to provide the correct vehicle and maintain the vehicle in good condition for Mr Unger. However Madison may argue that this was not under the control of the business and he could not provide a full guarantee that the vehicle would be safe at the moment it was needed. This could be a difficult but equally critical sub issue for us to deal with in our proceedings. If we can prove that Madison had been negligent in his duty of care towards Mr Unger then we have the ability to strengthen our case and make a more successful claim to damages.
The law:
• Common law techniques on controlling the exemption clause
Incorporation
In order to question on the enforceability of the clauses, the law requires the question to be based on two facts: Whether the clause has been incorporated, and if yes whether or not does it cover the actual breach (J. Poole ‘Textbook on Contract Law’ 9th edn. OUP. 2008, p 267)
- Law: In order to address the question of incorporation, it was established that, a signature can act as a proof of incorporation of a clause in the contract (L’ Estrange v Groucob [1934} 2 KB 394).
Apply: In that sense, if this principle is taken, it will be a disadvantage to Ungars, because all the clauses aiming at limiting liability will then be enforceable due to the proof of signature. However,
- Law: In the case Olley v Marlborough Court Hotel [1949] 1 KB 532, the law stressed for a need of incorporation by notice. ‘It was held that, the exclusion clause must be introduced ‘before’ or ‘at the time of the contract’.
Apply: In the case in hand, this criteria was not met since Mr Ungar signed the contract first and then the clause were afterwards introduced. An evidence of this can be seen in the document which acts as a contract between the two parties. (SIGNATURE IS AT THE FRONT PAGE). In that sense, all the clauses from section 18- 22 of the contract which aims at excluding and limiting liability as well as limiting Ungars rights, they can all be termed as VOID since they were not incorporated well.
- Law: In any contract which has onerous or unusual terms, the offeror has to draw attention of the offeree by using a red font, or red hand pointing at such clause (As per Lord Denning in Thornton v Shoe Lane Parking Ltd [1971] 2 QB 163) and followed in Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd [1988] QB 433
Apply: In that sense, all those onerous clauses which put Ungar in such a disadvantage position that he could not anticipate, such as clause 18 -22 which limits Maddissons’ liability whilst deliberately limiting Ungars rights, all these clauses were supposed to be highlighted in order to draw Ungars attention. Since that was not the case, then it can be concluded that, all those onerous clauses, cannot be enforceable.
- Law: ‘Obiter’. In Ocean chemical Transport Inc v Exnor Craggs Ltd [2000] 1 All ER, the Court of Appeal suggested that whenever a contract has been signed under pressure, and it includes onerous terms, the offeror has to make sure he draws offeree’s attention by using the directions given in Thorton’s case.
Apply: Since this obiter is from the Court of Appeal, which is the second highest court in the land, it therefore be a very persuasive authority. In that sense, because Ungar signed his contract under pressure since he was told to sign the contract at the very moment when Maddison Ltd lowered the price to £ 900, the clauses which aim at limiting Maddisson’s liability in an unfair and unusual way can all be termed invalid, since the company did not draw Ungars attention.
• The current law in relation to incorporation is the one based on Interfoto, which requires a high standard of incorporation for onerous clauses.
Construction (Jill Poole, pp 273-74) [X]
Once it is established that the clauses were incorporated, it becomes necessary to show that the clauses do not cover the actual breach. Note: This will not be important since the clauses were not incorporated in the contract due to above reasons.
The law: However, in order to be on the safe side, the contra proferentum rule provides that, if the clause was constructed in an ambiguous way, the courts will construe that clause on the benefit of the consumer (Evidently in case law in Houghton v Trafalgar Co Ltd [1953] 2 All 1409) [X]
Fundamental breach: Even when tha clause covers the breach the law provides that in circumstances where there is a fundamental breach, exemption clauses cannot limit or exclude liability (Fafinski p, 97)
Law: The above legal principle was reached by the Court of Appeal in Photo Production Ltd v Securicor Transport Ltd [1980] AC 829, where the CA reversed its own previous decision in the same case. However, because of the supremacy of the House of Lords the decision of the CA was reversed by the HL when the case was taken to the HL.
Current law: THE DOCTRINE OF FUNDAMENTAL BREACH WAS REMOVED BY THE HL.
Apply: [X]
• Statutory control of exemption clauses (Fafinski,& Finch ‘Contract Law’ 2nd edn Pearson,2010 p 98-112)
Unfair Contractual Terms Act 1977 [A]
The unfair contract terms Act 1977 applies to business liability, things done or to be done in the course of a business and also deals with consumer-business relations.
Liability for negligence: S.2 of the Act negligence is defined by the 1977 Act as breach of an obligation to take reasonable care or to exercise reasonable skill arising out of the express or implied terms of a contract – the use of an exemption clause to allow the business to not be liable for damages when they fail to maintain a clause of the contract due to negligence is a breach [X]
[X] Negligence under UCTA. Fafinski 99, is described as;
S 2 (1) UCTA provides that liability for death or personal injury resulting form negligence cannot be excluded by any clause. [X]
Scope [A]
UCTA applies to business liability. This is defined in s. 1 (3) as liability for breach of obligations or duties arising from ;
a) The things done by a person in the course of business. (Apply)The scope covers the case in hand since Maddissons Ltd was operating in the course of business.
b) From the occupation of premises used for business purpose of the occupier [X]
The act does not cover certain types of contracts; [X]
- Contracts of insurance [X]
- Contracts relating to creation, transfer or termination of an interest in land.[X]
- Contracts relating to creation, transfer or termination of an interest in any patent, copyright or trademark [X]
Breach of Contract under UCTA [A]
S 3 (2) (a) of the UCTA provides that where one party ''deals as consumers'' or deals on the other's written standard terms of business, the other party cannot exclude or restrict liability for a breach of contract, unless the term satisfies the reasonable test.
Apply: Since it was established that, Maddisons Vehicle Hire limited breached a contract under s. 13 and 15 SGA, and also because Ungars were acting as consumers, this implies that, all the clauses limiting liability for a breach will be termed as void under s. 3 UCTA.
Dealing as a consumer??? [A]
S. 12 (4) UCTA provides that, in order to deal as a consumer;
- One party must not make the contract in the course of business.
Apply. In that sense, Ungar can be classified as a consumer because he was not operating under the course of business, since his primary objective for conducting the trip was to fullfill their long living ambition of touring the UK
- The other party must make the contract in the course of business.
Apply: Maddisons Ltd made the contract in the course of business because it is a company, which hire cars with a motive of getting profit.
Sales of Goods Act 1982 and its relations to the Unfair Contractual Terms Act [A]
Law: Section 6 (2) of the UCTA can be of crucial importance. It stresses that, provided that the claimant is dealing as a consumer the other party cannot exclude liability for breaches of implied conditions as to: Sections 13-15 of the Sales of Goods Act [A]
a) Conformity with description (S. 13)
b) Quality fitness (S. 14)
c) Conformity with sample (S. 15)
Apply: Therefore all the sections which aimed at limiting Maddisons’ liability in case of a breach are void.
The provisions under section 7 UCTA are the one which relates to the terms implied to the contract for the Supply of Goods and Services Act 1982 (SGA 1982). Those provisions apply to all clauses which limit or exclude liability for a breach of an implied obligation under the contracts of which deal with transfer of possession and ownership of goods but not the sale of them (Fafinski, p 100) [A]
Section 2 provides that ''provided that the injured party is classified as a consumer,” (as per section 12 (4) UCTA ), liability for breaches of implied terms as to:
a)Transfer by description (SGSA 1982, section 3)
b)Quality of fitness (SGSA 1982, section 4)
c)Transfer by sample (SGSA 1982, section 5)
These cannot be excluded.
Apply: The car did not meet the description, since the original contracted car was class A, whilst the substitute was class C. Also it did not meet the sample as viewed in the first place before signing the contract and during the signing of the contract. In that reasoning, Madison holds no right to exclude liability as to the breach of the implied conditions covered by section 13 and 15 SGSA.
The test of reasonableness- Ungar is classified as a consumer, therefore [X]
It is covered by section 11 UCTA. It is irrelevant to us because the task of proving reasonableness (as covered in section 11 (1) UCTA) of an attacked clause, is for the party which wants to rely on that clause as in Warren v Truprint Ltd [1986] BTLC 344.
Application to Mr Unger
In that sense, Madison Ltd will have to prove that all the clauses were reasonable. However, the chances of them succeeding are very minimal since Unger’s are classified as consumers, therefore section 7 (3) which exempts limitation of liability in circumstances where the other party is not a consumer, whilst on the other hand the clauses satisfy the reasonable test, will be inapplicable as an immunity to them. This section is therefore irrelevant to Unger’s side.
The Unfair terms in Consumer Contracts regulations 1999
Taylor, Remedies (OUP, Oxford 2009) pp 27-35 [A]
Damages (Taylor, chapter 5, p 27)
Were a contract has been breached; damages should be available as a matter of right. The principle of the damage reward is to compensate the claimant for his losses, rather than measure the award by the amount of gain derived by the defendant.
Classification of damages
Expectation [X]
Law: Expectation (or loss of bargain) basis – Are forward looking (Robinson v Harman (1848) 1 Ex 850). They aim at putting the claimant in his original position which he would have been without the breach of the contract. This includes both the loss of the promised performance and the loss of profit due to the failure of performance
Apply: Largely inapplicable because, the trip was not a business one. Classification regards Ungar as a consumer. Thus this is irrelevant
Reliance [A]
Reliance (or wasted expenditure) basis - Reliance loss arises where the claimant has spent money which is then wasted in preparation for the contract or in partial performance of the contract. Aims at putting the claimant in a good position he was in before the contract was made.
Law: In case of uncertainty as to expectation loss, reliance loss can then be claimed. (McRae v Commonwealth Disposals Commission (1950) 84 CLR 377) In Anglia Television Ltd v Reed, it was established that, pre contractual expenses are recoverable as part of reliance loss, so long as ‘ it was such as would reasonably be in the contemplation of the parties as likely to be wasted if the contract was broken’ (per Lord Denning MR at p 64) as cited by Taylor at page 29
Enrichment [A]
Enrichment (unjust enrichment) - This considers, where the claimant in performing his obligations under the contract, has conferred a benefit on the defendant and wishes to claim it back for example, where the claimant has paid money in advance for a product which is not delivered, in which case he is entitled to the return of the money the claimant paid. Apply: In the case in hand, Ungar can base on this principle to seek for his deposit.
When damages can be obtained for distress and disappointment (Non- pecuniary loss) [A]
The general rule is that damages for distress are not available in an action for breach of contract.
The current law: However, contracts entered into for purposes of enjoyment, damages will be available for the loss of enjoyment (Jervis v Swans Tours [1973] 1 All ER 71 Apply: In relation to the case, Reliance, due to the fact that in preparation of the trip in which goods were bought and subsequently wasted due to the trip not taking place
Law: In contracts which aim at bringing pleasure, damages can also be available for the mental distress and disappointments caused by the breach (Diesen v Sampson 1971 SLT 49) Apply: In that sense, based on the above law, Ungars can claim damages for the disappointments they suffered because of the breach which made them fail to reach their long living dream of touring the UK
Specific performance [X] - Time has already lapsed, the contract cannot be re-enforced. There is no point for it. However, it is judges’ discretion.
Limitations on the availability of damages (Fafinski, p 177)
-Causation- The claimant can only recover damages if the breach of contract caused his loss. As such, if the breach does not cause the losses as found in County Ltd v Girozentrale Securities [1996] 3 All ER 834, the claimant will not receive damages.
Apply: In relation to the case it could be established that, Ungars’ will be compensated with damages because, the breach was the cause of their insurance payments, and other bookings, as well as loss of enjoyment.
-Remoteness- After proving that the loss was caused by the breach it is then important to prove that the loss was not too remote from the breach. (Hadley v Baxendale (1854) 9 Ex 341) [ O]
-Mitigation of loss- The innocent party has the duty under law to take reasonable steps to minimise the extent of their loss arising from the breach. This principle was applied in Brace v Calder [1895] 2 QB 253.
Apply:
Ungar tried his level best to minimise the losses and come into understanding with Maddisons Ltd by even accepting a car which he did not go for in the first place. However, Maddisson appeared to be unreasonable by being reluctant to lower the price of the substitute.
Exemplary or punitive damages (Taylor p, 31) [X]
-They are not applicable in contract law.
Application of research to Unger
This particular piece of research will be vital in order to assess the damages that can be awarded to Mr Unger. Importantly are the damages of Expectation, centring on the loss of earnings which resulted in the trip being unable to take place and negating the deal with the newspaper and Enrichment, which should enable our client to reclaim the deposit he made as this represented a benefit to Mr Unger in securing the specific vehicle.
Contract of Adhesion [?]
The process by which a contract is un-negotiated with the contracting parties and as such represents an unfair contract.
Application in the case of Unger
It is noted in the memo that Unger was offered a cheaper deal from £950 to £900 if he would sign the contract then and there. Taking this information into account it is possible to suggest that there was a chance that Unger was not aware of the contractual undertakings especially clauses 18, 19, and 20. The specific placing of the signature at the top of the contract preceding the terms logically suggests that Unger may have signed the contract before being alerted to such terms.
Research route- This section shows how sources (primary sources) were found and how we insured that they are up to date.
Sources
1) Hard copies:
- Law Reports series. (Appeal cases)- This is because they are more authoritative.
-Statute books available in Sydney Jones Law Library at the first floor, Abercomby wing.
-All the above cited books.
• Updating:
-Many books used were up to date (from 2004-2010), therefore the cases and statutes used are the ones which are up to date. No amendments or repeals have occurred in due time. This has also been clarified through online resources such as Justcite which directs us to Westlaw and LexisNexis for detailed information of the primary source.
- One of the case which was overruled by the House of Lords and the Court of Appeal was the Photo Production Ltd v Securicor Transport Ltd [1980] AC 829. At first, the Court of Appeal decided that exclusion clauses cannot cover fundamental breach. However, on an appeal the CA overruled its own previous decision to hold otherwise. Nonetheless, the HL concluded the matter, by reversing the second CA’s decision, to hold that ‘fundamental breach’ can also be limited or excluded by clauses.
• Validating:
-All the materials were validated as provided in the main body.
2) Online: Portal -LexisNexis: Cases and statutes
- Westlaw: Cases and statutes
Method- In both Westlaw and LexisNexis the search was done by using citations, subject or name in some circumstances.
Research rationale and explanation
(Target word limit 1000 words)
Add you research rationale and explanation here:
MR & Mrs Ungar (claimant) v Maddissons Vehicle Hire Ltd (defendant)
The issue revolving around this case is whether Ungars are entitled to damages for the breach of the contract, as well as the refund of their deposit.
• Ungars are in a good legal position of winning the case because of the following reasons:
There was a binding relationship, epitomised by the contract. Furthermore, parties were under duties as could be traced by using the parole evidence rule . However, Maddisons Ltd has an implied duty under s. 13-15 Sale of Goods Act 1979 where it has to make sure that, goods conform with the description, quality, fitness and sample.
There was breach of contract. In Arcos Ltd v Bonasson , it was held that, any failure to match the contractual obligations, regardless how trivial it is, will be regarded as a breach. Since the contract is covered by the SGA 1979, s. 13-15 of which, provide that obligations as to descriptions, fitness for the purpose, quality and correspondence with sample, these obligations are strict obligations, thus subjected to the rule set in Arcos Ltd v Bonasson. As such, since Maddisons Ltd failed to offer Ungar a car which he contracted for, and instead offered him a substitute which does not correspond with the description (class),and sample, Maddisons Ltd can be held liable or a breach of contract under s. 13 of the SGA.
Under common law controls, and statutory controls, all the onerous clauses which unfairly exclude and/or limit Ungar’s rights and Maddisons’ liabilities, are unenforceable. The law provides, for clause to be incorporated, the contract has to be signed . This criterion is met since Ungar signed the contract. However, in Olley v Marlborough Court Hotel it was established that exemption clauses must be introduced ‘before’ or at the time of the contract. This criteria is not met since parties signed the contract first (signature is at the front page), and then the clauses were introduced. In addition, the current law provides that, in contracts which include onerous terms, the offeror has to make efforts in drawing the offeree’s attention by using the red hand rule (red font and hand pointer) . In that sense, such onerous clause as clause 19 which imposes heavy burden on Ungar, and clause 20, 21, 22 which deliberately limit Ungars’ rights, can all be termed void since Maddison did not take any reasonable steps to draw Ungar’ s attention. This standard has also been emphasised in Interfoto Picture Library Ltd in cases which signature was obtained under pressure, as it is the case when Maddisson lowered the price to £900 and urged Ungar to sign the contract at the very moment. Since the clauses have not been incorporated, there is no point of proving their construction.
The clauses are also void due to statutory controls. S. 6 of Unfair Contract Terms Act 1977 provides that, if the claimant was a consumer, any exclusion clause which aims at limiting liability for a breach of s. 13-15 of SGA as to defects in descriptions, quality , fitness, sample is void. Since Ungar was dealing as a consumer as provided by s. 12 (1) UCTA, clauses 22 and 23 which aim at limiting Maddisons’ liability cannot be enforceable. In that sense, in relation to damages, Ungar will be entitled to full amount and not as limited in those clauses.
In addition, all the clauses which aimed at limiting Ungars rights as to damages (22) and (23), and the method of resolution in case of a dispute (21), they are also void. S. 13 (1) (b), (c), invalidates any clauses which aim at excluding or limiting any right in respect of liability, or which aim at excluding or limiting rules of evidence or procedure. In that sense, clause (22), (23) are void because they limit Ungar’s rights as to damages, as well as clause (21) which limits Ungars rights as to a method of dispute resolution, by making the enforcement of liability under onerous conditions.
Ungars are entitled to damages and refund of his deposit. Damages are available as right for the innocent party . Damages could be limited if the loss suffered was not a consequence of the breach .This is not the case since due to the breach, Ungar lost £ 2362 on insurance and ferry booking. If the loss was too remote which was not the case because the loss of money incurred was a natural outcome of a failure to conduct the trip as planned. Ungar is also entitled to damages because as the principle of mitigation of loss, he took reasonable steps such as accepting the substitute car if only the price was lowered, so as to reduce his losses. Reliance loss will be claimed for since there is a need to place Ungars in position which they could have been if the contract was not conducted. In such a way they will be able to get back £ 2362 which they lost in insurance and booking. They can also get their deposit back, because the law on deposit forfeiture clauses provides that the payer may recover the money when the receiver of the deposit breaches the contract.
They can also receive damages for distress , lack of enjoyment and loss of time . Since the main objective of the contract was to fulfil their dream and provide enjoyment, currently the law allows compensation of such losses.
Despite the strength of the case, it could be important if the parties could negotiate first before taking any further actions. However, if negotiations fail, I would advise Ungar to take the matter to court and not in any ADR body, because, by doing so they will be abandoning some of their rights since courts tend to preserve much the idea of consumer welfare.
Criteria to consider:
Research log should:
1. Demonstrate the ability to locate and reference individual primary and secondary sources
2. Demonstrate an understanding of the relationship between legal sources
3. Demonstrate an ability to evaluate the relevance of authority to the particular facts of the simulated case
4. Demonstrate an understanding of authority of legal sources generally, including but not exclusively precedent and the hierarchy of the courts
5. Demonstrate an understanding of rules of court which relate to the use of and the citation of authorities
6. Demonstrate an ability to record the research process in a manner which allows a third party to understand the events listed in the research log, and which facilitates the efficient search for materials by the researcher or by other team members.
The research rationale and explanation should:
1. Demonstrate an appreciation of the legal issues arising from the simulated case
2. Demonstrate an ability to apply the law to the facts with the appropriate level of certainty or caution
3. Demonstrate an ability to apply principles relating to remedies to the known facts in the case
4. Demonstrate an appreciation of significant practical, tactical and procedural issues which might arise in relation to a practical ‘real-life’ legal dispute.
Imagine that you receive the following instructions from your supervising solicitor:
“Our client has asked us for initial advice about a dispute in relation to the hire of a touring vehicle. Make yourself familiar with the client file. Once you have done this I want you to conduct the necessary research to allow you to make a recommendation about the strength of their case. It’s clear that this case revolves around a potential breach of contract but it appears that it might turn on the limitation and substitution clauses in the contract. For now I want you to concentrate on this legal aspect of the case and on any other pre-action or practical issues you think are relevant.
For clarity I want you to
1. Find out what you can about the law in relation to those substitution and limitation clauses in the contract
2. Provide me with all the relevant authority on this in an intelligible way so I can follow up your research and of course bill the client appropriately. Provide me with a full research log.
3. Look at what we might get out of this for our client in terms of redress
4. I value your input on any relevant “extra legal” matters or procedural issues which you come across.
I would like your input by 4:00pm Friday 12th February 2009”
Research log
There is no precise word limit for this part of portfolio item 1. See the examples from the recommended texts as a geode to how a log might look. All material referenced in you research summary should have a place in you research log.
Add your research log entry here:
Key to research identification
[O] Unread research but possibly relevant (needs further exploration)
[A] Read research and relevant
[?] Read research but unsure of relevance
[X] Read research but unlikely relevant
Re. Mr & Mrs Ungar (claimant) v Maddisons Vehicle Hire Ltd (defendant)
The main issue revolving around this case, is the question whether, Ungars are entitled to damages and refund of their deposit. However, this issue will explicitly and predominantly rely on whether there was a breach of a contract by Maddison Vehicle Hire Ltd. On the other hand, even if there will be a proof of breach, the claim will not be forthcoming, if there are any clauses in the contract which excludes or limits Maddison Ltd’s liability and Ungars’ rights.
In that sense, in order to know the strength of Ungars’ case, it is therefore very important to check whether there was breach, and if there is, the usage of common law and statutory instruments which limits unfair exemption clauses should be adopted in case there are any clauses which limits or excluded liability.
The issue of damages and refund will also entirely depend on other factors such as the availability of any restraints such as causation and so forth.
However, other important issues which will play a significant role on the prospects of the case will also be considered in the course of this research in order to bring about a desirable outcome to our client (Mr & Mrs Ungar).
1) Pre action and Procedural issues
Classification of the case in hand: Civil litigation for a breach of contract
Parties and legal capacities: It is important to know whether Ungars are legally able to sue, and whether the defendant (Maddison ltd) can be sued. It is provided that any person who is above 18 years of age and who is not classified as mental patient under the provisions of the Mental Health Act 1983 has the legal capacity to sue. Apply: In that reasoning, Ungars have the legal capacity to sue because they are not mentally ill, and also they have exceeded 18 years old as provided in the facts that they have reached the age of retirement.
Can Maddisons Ltd be sued? Companies are also classified as legal persons, and therefore can be sued. It is stressed that, a company is the one which has been registered under the Companies 1985. As such Maddisons Vehicle Hire Ltd can be sued. Table of contents
Section 1
Research on procedural issues
Section 2
Research for cause of action
A) Limitation clauses
B) Substitution clauses
C) Unfair Contractual Terms Act 1977
D) Sales of Goods Act 1982 and its relations to the Unfair Contractual Terms Act
E) Test of reasonableness
F) Damages
G) Contract of adhesion
1) Research on procedural issues
Procedural Initialisation [A]- S. Sime, A practical approach to civil procedure, (12th edn Oxford University Press, 2009, pp)
Generally it is for the claimant to select a cause of action and it is also important to note that multiple claims can be treated separately but this will however result in multiple fees.
According to the CPR r7.3 which takes directives from the Civil Procedure Act 2005;
“The claimant may use a single claim form to start all claims which can be conveniently disposed of in the same proceedings,”
“Any number of claimants or defendants may be joined as parties to a claim,"
“Joint claimants must not have conflicting interest in litigation and must be represented by the same counsel,”
Closely connected claims may be ordered to be consolidated and treated as a single claim. Another important note is that we must be accurate in our pleadings to cover the entirety of the case. For example in the Esso Petroleum Co Ltd v Southport Corporation [1956] A.C 218 the doctrine of Res Ipsa Loquitur was rejected because a claim in negligence had not been a part of the initial pleadings.
Apply
This information will be critical in its application to Mr Unger because if the case fails due to our negligence in giving advice to Mr Unger and having the case dropped on a procedural issue then we are likely to be sued ourselves. The points raised in the CPR r7.3 are also highly relevant because it may allow for us to join both Mr and Mrs Unger as claimants in this circumstance as they can both jointly claim as a single party against the defendants as both claimants have a non-conflicting interest against the defendants. We must also be accurate with our pleadings as explained below we have many different causes of action so we must take care as to not exclude an important claim.
Validation of research
Civil Procedure Act 2005
S. Sime, A practical approach to civil procedure, (12th edn Oxford University Press, 2009)
Esso Petroleum Co Ltd v Southport Corporation [1956] A.C 218 (validated as standing via Westlaw)
Joinder claimants and defendants and conflicts with identity of parties [A]
As explained above it is possible for claimants and defendants to be grouped together for the purpose of court. However it is important to note the identity of the parties when making a claim as bringing an action against the wrong party not only wastes courts time but can result in disciplinary action and/or rejection of the case.
Application of research to the case
This would be of particular importance to the current case as Madison in the contract makes references that all legal disputes are to be taken up with a third party. This may mean that in order for Mr Unger to correctly file for a claim he must name them as the defendant. However, if this is proved wrong or incorrect then it is possible for the case to be dismissed. Therefore in order to avoid such a problem it may be wise if the process of ‘Joinding’ is applied and make both the third party and Mr Madison co-defendants.
Validation of research
S. Sime, A practical approach to civil procedure, (12th edn Oxford University Press, 2009)
Vexatious litigants [A]
Vexatious Litigants are those that misuse the freedom of the court and Launch large numbers of un-meritous actions against defendants. The punishment for being a vexatious litigant can be suspension from the bar and work in law by the high courts.
Apply
Due to the amount of issues we can attempt to raise against Madissons Hire Vehicle Ltd as described below we must be careful to avoid penalization from the courts on the grounds that we are vexatious. It may be in our best interest to raise one strong claim and then in the course of proceedings raise the sub-issues to strengthen our own case.
Validation of research
S. Sime, A practical approach to civil procedure, (12th edn Oxford University Press, 2009)
Jurisdiction and governing law (S. Cunningham-Hill and K. Elder, Civil Litigation Handbook 2009-10 (OUP, Oxford 2009), chapter 1-7. (pp 1- 99)
The question of jurisdiction o jurisdiction will not require significant consideration since both the client and the opponent are situated within UK and the course of action occurred within the UK jurisdiction. Thus this case will not need considering the Civil and Judgement Acts 1982 1991 which covers the proceedings outside the UK jurisdiction.
The kind of dispute (Contractual dispute) & mechanism for dispute resolution
Apart from the above consideration, another important issue to be considered is the classification of the dispute. The classification of which is important because it gives a bearing on the kind of action to be taken. In breach of contract and consequently a claim for damages by innocent party, actions will normally depend on whether there is any clause which provides a mechanism for dispute resolution. If there is any clause which provides for adoption of Alternative Dispute Resolutions such as arbitration or mediation, then parties are bound by that clause. Thus, civil litigation cannot be adopted as a mechanism for solving the contractual dispute. However, these clauses are also subjected to common law controls such as the rules of incorporation and construction, as well as the statutory controls inclined on different acts which aim at ensuring fairness.
Application: Therefore because clause 21 of the contract provides for an alternative dispute resolution (mediation under The Society for Recreational Vehicle Distributors) other than litigation, technically both parties are bound by this clause and therefore cannot litigate. However, ADR procedures agreed before the dispute arose tend to be inappropriate for resolving the specific dispute that has risen. In addition, this method can sometimes limit the rights of the parties with a strong case in the eyes of the law. In that sense, as stressed above that these clauses are also subjected to controls under common law, it will therefore be important to term it void so as to ensure that Ungars’ claims are well settled in the Court of law through Civil Litigation. On other-hand it is also worth noting that ADR can sometimes appear to be advantageous to the parties. Such advantages are provided by Duncan are flexibility, speed, also they are less expensive than trials in court.
Advise: It is better for Ungars to opt for civil litigation from ADR because, first the body which has been chose by the defendant (Maddisons Vehicle Hire Ltd) is a body which does not aim at ensuring consumers welfare. In that sense Ungars rights might not be well saved by such a body. On the contrary, judicial attitude towards consumers such as Ungars, has always been positive, thereby it is better to take the matter to court.
Selection of court
The selection of court is also an important factor to consider. Both High Court and the county courts tend to hear an enormous number of claims. However, Civil Procedure Rules (CPR practice Direction (PD)) restricts parties selection as to the selection of courts since it provides that, only claims which exceeds £25,000 should be taken to the High Court.
Apply: Since Ungars’ claim do not exceed £25,000, the issue should therefore be taken to any of the county courts.
However, does time allow the claim to be taken to court (Limitation periods)
Limitation periods are mostly covered by Limitation Act 1980. In order to be able to take the claim to court the claimant has to be sure that time is not jeopardy. Figure 7. 1 (p 99 in S. Cunningham-Hill and K. Elder, Civil Litigation Handbook 2009-10) provides that limitation period for contractual claims is 6 years as provided by Limitation Act 1980, s. 5.
Apply: The case can therefore be taken to court because the claim will be filed within 6 years
2) The main issue (strength of Ungars’ case)
a) The first issue to be determined is ‘whether there was any legal binding relationship between the parties’. (Elliot & Quinn ‘Contract Law’ 4th edn. PEL 2003, chapter 1, pp 9-12,).
For a legal binding relationship to exist there has to be a binding contract which has been reached through all the necessary stages such as offer and acceptance. The law provides that any advertisement, brochures and price lists amount to invitation to treat (Patridge v Crittendon [1968] 1 WLR 1204). Invitation to treat is an initial stage before any offer has been. After an invitation to treat, there has to be an offer, which as defined by Jill Poole p, 41, simply means an expression of willingness to contract on the given terms without inclusion of further negotiations, so that ‘’acceptance’’ could be made by the offeree so as to form a contract.
Apply: Maddissons Vehicle Hire Ltd invited Ungars to treat through an advertisement posted in Daily Moon magazine. As such, Ungars offered Maddison Ltd £ 900 pcm to hire a vehicle (sightseer), and eventually Maddisons Ltd agreed to form a legal binding relationship with Ungars by accepting their offer, by signing a 12 months contract with them. In that sense, it can be established that, the parties had a legally binding contract.
b) Another important issue to consider is the availability of duties.
i) Express obligation
It is important to assess whether there were any express duties, since this will be important in establishing whether or not there was a breach, which is an important question in relation to claiming damages (Jill Poole, p 328). This argument finds support in the law as follow. In Photo Production Ltd v Securicor Transport Ltd [1980] AC 827, the law provides that, there is an automatic right to claim for damages in case of a breach of those duties.
The law: In order, to ascertain the duties in the contract, the law has provided a mechanism to do so through the ‘parol evidence rule’. In Henderson v Arthur [1907] 1 KB 10, it was held that, in any written contract all the obligations set in that contract can be ascertained by using the ‘parol evidence rule’.
Apply: Since all the terms which sets out the obligations of both parties are clearly listed in the contract, the parol evidence rule can be used to highlight those obligations and establish that, both parties are legally bound by those obligations. There are two obligations which serves as the base of the contract, and these are; Ungars are obliged to make payments and ensure safety of the car, while on the other hand, Maddisons Vehicle Hire Ltd is obliged to provide the Ungars with a product which he wishes for. A breach of any of these terms entitles the innocent party with damages (as per, Photo Production Ltd).
ii) Implied obligations (implied terms)
The law: s. 13-15 of Sale of Goods Act 1979, impliedly induce a obligations to sellers, and suppliers as to me the description, quality, fitness and sample of the product contracted for with the consumer.
Apply: In that sense if the car hired by Ungars, does not meet the quality, or description, this can be classified as a breach of an implied term under the SGA. In that sense, Maddisons Vehicle Hire Ltd, are under a statutory obligation of ensuring all the provisions provided under s. 13- 15 SGA are met.
c) The third issue to be considered so as to know the strength of the case in hand is whether or not Maddissons Vehicle Hire Ltd ‘breached the contract’. (Jill Poole, chapter 8, pp, 348-330).
A breach of contract will occur where, one party fails or refuses to perform his contractual duties without a lawful excuse. On the other hand, even if a party may perform its contractual duties, but if the performance fails to meet the standard of performance, that can also constitute a breach. (Jill Poole, Textbook on Contract Law, 9th edn, Oxford University Press, 2008, p. 324).
Note: The standard of performance can vary in accordance to the type of contract.
• For strict contractual obligation, the general rule s that ‘when the performance of contractual obligations is strict, the contractual obligations must be completely as well as precisely performed. (Jill Poole p, 324)
Apply: Since the contract in hand could be classified as a strict one as many contracts are, all set of obligations are supposed to be performed in a precise and a complete manner. As held in Arcos Ltd v Bonasson [1933] AC 470, any trivial failure to do the oligations can be regarded to be a breach. In that sense, since Maddisons Ltd are under an obligation of ensuring that they provide their customers with the product they paid for, it can be argued that, the fact that they failed to give the Ungars, the car they contracted for, in a required time, this can be regarded as a breach.
Another ground to look for a breach is by basing on statutory provision.
The law: As provided by s.13- 15 SGA, any failure to met the description, quality, fitness, and sample amounts to a breach of an implied term under the SGA.
Apply: In that sense, since Maddisons Ltd failed to provide Ungars with a car which conforms with the original description (class A), and sample as seen in the Daily Moon magazine or the one seen during the signing of the contract, it can be established that, Maddisons Vehicle Hire Ltd has breached a contract under s. 13 and 15 SGA.
d) However, even though it has established that, Maddisons Vehicle Hire Ltd breached a contract, Ungars rights as to damages will depend on the validity of the exemption clause.
Jill Poole, Textbook on Contract Law, 9th edn, Oxford University Press, 2008, chapter 7, pp 266- 320 [A]
Therefore, it is important to consider whether or not the exemption clauses are valid enough to exclude or limit liability. The enforceability of clauses will depend on three legal questions;
• Have the clauses been incorporated in the contract?
• Do they cover the loss which has occurred?
• Are they rendered unenforceable under the Unfair Contract Terms Act 1977 and/ or Unfair Terms in Consumers Contracts Regulations 1999
Limitation and substitution clauses
Limitation clauses
Looked at with caution by the courts, as by being included within exemption clauses they can prove to be a benefit to commercial retailers, but prove a disadvantage to consumers.
Retailers or service providers may protect themselves of the amount they would be willing to give in damages/compensation were a contract is breached, for them it may prevent excessive claims.
The incorporation into the contract of these terms must be done correctly, for example can the party be fully aware of the clause, and its effects upon the party themselves. Also whether there are contradictions with the document containing the clauses.
The contra preferentem rule also exists, as to whether there is lack of clarity of the term, in this case and is construed against the party seeking to rely on it.
Application of research to Mr Unger
At clause 22 in the event of the Lessor being deemed in breach of this agreement, the parties agree that the Lessor’s liability in the event of complete failure to deliver an appropriate vehicle will be set at a value equivalent to 5% of the Contract dues. This particular clause in itself is a contradiction of the events of the scenario as Madison refused to accept that he had breached his contract when clearly here, due to his inability to deliver the appropriate vehicle.
This clause may cause uncertainty but in these circumstances the court will usually interpret the clause for the benefit of the consumer. They are managed under the Unfair Contract Terms Act 1977, and the Unfair terms in consumer contracts regulations 1993.
Substitution clauses [A]
A clause that allows for goods to be offered in exchange for others. I.E a contract may offer a gardener two bouquets of roses per week but a substitution clause may be in effect that allows the gardener to request for two different bouquets subject to whether their supplied has them in stock.
Application of research to Mr Unger
It is the service provided by Mr Madison that they will provide the vehicle requested, however within his terms and conditions, blame seems to shift to the consumer for not accepting a substitute and they lose out on their deposit for not accepting it even though the substitution was not ideal and would have greatly disadvantaged Mr Unger.
In our case Madison did not take ‘reasonable care’ to provide the correct vehicle and maintain the vehicle in good condition for Mr Unger. However Madison may argue that this was not under the control of the business and he could not provide a full guarantee that the vehicle would be safe at the moment it was needed. This could be a difficult but equally critical sub issue for us to deal with in our proceedings. If we can prove that Madison had been negligent in his duty of care towards Mr Unger then we have the ability to strengthen our case and make a more successful claim to damages.
The law:
• Common law techniques on controlling the exemption clause
Incorporation
In order to question on the enforceability of the clauses, the law requires the question to be based on two facts: Whether the clause has been incorporated, and if yes whether or not does it cover the actual breach (J. Poole ‘Textbook on Contract Law’ 9th edn. OUP. 2008, p 267)
- Law: In order to address the question of incorporation, it was established that, a signature can act as a proof of incorporation of a clause in the contract (L’ Estrange v Groucob [1934} 2 KB 394).
Apply: In that sense, if this principle is taken, it will be a disadvantage to Ungars, because all the clauses aiming at limiting liability will then be enforceable due to the proof of signature. However,
- Law: In the case Olley v Marlborough Court Hotel [1949] 1 KB 532, the law stressed for a need of incorporation by notice. ‘It was held that, the exclusion clause must be introduced ‘before’ or ‘at the time of the contract’.
Apply: In the case in hand, this criteria was not met since Mr Ungar signed the contract first and then the clause were afterwards introduced. An evidence of this can be seen in the document which acts as a contract between the two parties. (SIGNATURE IS AT THE FRONT PAGE). In that sense, all the clauses from section 18- 22 of the contract which aims at excluding and limiting liability as well as limiting Ungars rights, they can all be termed as VOID since they were not incorporated well.
- Law: In any contract which has onerous or unusual terms, the offeror has to draw attention of the offeree by using a red font, or red hand pointing at such clause (As per Lord Denning in Thornton v Shoe Lane Parking Ltd [1971] 2 QB 163) and followed in Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd [1988] QB 433
Apply: In that sense, all those onerous clauses which put Ungar in such a disadvantage position that he could not anticipate, such as clause 18 -22 which limits Maddissons’ liability whilst deliberately limiting Ungars rights, all these clauses were supposed to be highlighted in order to draw Ungars attention. Since that was not the case, then it can be concluded that, all those onerous clauses, cannot be enforceable.
- Law: ‘Obiter’. In Ocean chemical Transport Inc v Exnor Craggs Ltd [2000] 1 All ER, the Court of Appeal suggested that whenever a contract has been signed under pressure, and it includes onerous terms, the offeror has to make sure he draws offeree’s attention by using the directions given in Thorton’s case.
Apply: Since this obiter is from the Court of Appeal, which is the second highest court in the land, it therefore be a very persuasive authority. In that sense, because Ungar signed his contract under pressure since he was told to sign the contract at the very moment when Maddison Ltd lowered the price to £ 900, the clauses which aim at limiting Maddisson’s liability in an unfair and unusual way can all be termed invalid, since the company did not draw Ungars attention.
• The current law in relation to incorporation is the one based on Interfoto, which requires a high standard of incorporation for onerous clauses.
Construction (Jill Poole, pp 273-74) [X]
Once it is established that the clauses were incorporated, it becomes necessary to show that the clauses do not cover the actual breach. Note: This will not be important since the clauses were not incorporated in the contract due to above reasons.
The law: However, in order to be on the safe side, the contra proferentum rule provides that, if the clause was constructed in an ambiguous way, the courts will construe that clause on the benefit of the consumer (Evidently in case law in Houghton v Trafalgar Co Ltd [1953] 2 All 1409) [X]
Fundamental breach: Even when tha clause covers the breach the law provides that in circumstances where there is a fundamental breach, exemption clauses cannot limit or exclude liability (Fafinski p, 97)
Law: The above legal principle was reached by the Court of Appeal in Photo Production Ltd v Securicor Transport Ltd [1980] AC 829, where the CA reversed its own previous decision in the same case. However, because of the supremacy of the House of Lords the decision of the CA was reversed by the HL when the case was taken to the HL.
Current law: THE DOCTRINE OF FUNDAMENTAL BREACH WAS REMOVED BY THE HL.
Apply: [X]
• Statutory control of exemption clauses (Fafinski,& Finch ‘Contract Law’ 2nd edn Pearson,2010 p 98-112)
Unfair Contractual Terms Act 1977 [A]
The unfair contract terms Act 1977 applies to business liability, things done or to be done in the course of a business and also deals with consumer-business relations.
Liability for negligence: S.2 of the Act negligence is defined by the 1977 Act as breach of an obligation to take reasonable care or to exercise reasonable skill arising out of the express or implied terms of a contract – the use of an exemption clause to allow the business to not be liable for damages when they fail to maintain a clause of the contract due to negligence is a breach [X]
[X] Negligence under UCTA. Fafinski 99, is described as;
S 2 (1) UCTA provides that liability for death or personal injury resulting form negligence cannot be excluded by any clause. [X]
Scope [A]
UCTA applies to business liability. This is defined in s. 1 (3) as liability for breach of obligations or duties arising from ;
a) The things done by a person in the course of business. (Apply)The scope covers the case in hand since Maddissons Ltd was operating in the course of business.
b) From the occupation of premises used for business purpose of the occupier [X]
The act does not cover certain types of contracts; [X]
- Contracts of insurance [X]
- Contracts relating to creation, transfer or termination of an interest in land.[X]
- Contracts relating to creation, transfer or termination of an interest in any patent, copyright or trademark [X]
Breach of Contract under UCTA [A]
S 3 (2) (a) of the UCTA provides that where one party ''deals as consumers'' or deals on the other's written standard terms of business, the other party cannot exclude or restrict liability for a breach of contract, unless the term satisfies the reasonable test.
Apply: Since it was established that, Maddisons Vehicle Hire limited breached a contract under s. 13 and 15 SGA, and also because Ungars were acting as consumers, this implies that, all the clauses limiting liability for a breach will be termed as void under s. 3 UCTA.
Dealing as a consumer??? [A]
S. 12 (4) UCTA provides that, in order to deal as a consumer;
- One party must not make the contract in the course of business.
Apply. In that sense, Ungar can be classified as a consumer because he was not operating under the course of business, since his primary objective for conducting the trip was to fullfill their long living ambition of touring the UK
- The other party must make the contract in the course of business.
Apply: Maddisons Ltd made the contract in the course of business because it is a company, which hire cars with a motive of getting profit.
Sales of Goods Act 1982 and its relations to the Unfair Contractual Terms Act [A]
Law: Section 6 (2) of the UCTA can be of crucial importance. It stresses that, provided that the claimant is dealing as a consumer the other party cannot exclude liability for breaches of implied conditions as to: Sections 13-15 of the Sales of Goods Act [A]
a) Conformity with description (S. 13)
b) Quality fitness (S. 14)
c) Conformity with sample (S. 15)
Apply: Therefore all the sections which aimed at limiting Maddisons’ liability in case of a breach are void.
The provisions under section 7 UCTA are the one which relates to the terms implied to the contract for the Supply of Goods and Services Act 1982 (SGA 1982). Those provisions apply to all clauses which limit or exclude liability for a breach of an implied obligation under the contracts of which deal with transfer of possession and ownership of goods but not the sale of them (Fafinski, p 100) [A]
Section 2 provides that ''provided that the injured party is classified as a consumer,” (as per section 12 (4) UCTA ), liability for breaches of implied terms as to:
a)Transfer by description (SGSA 1982, section 3)
b)Quality of fitness (SGSA 1982, section 4)
c)Transfer by sample (SGSA 1982, section 5)
These cannot be excluded.
Apply: The car did not meet the description, since the original contracted car was class A, whilst the substitute was class C. Also it did not meet the sample as viewed in the first place before signing the contract and during the signing of the contract. In that reasoning, Madison holds no right to exclude liability as to the breach of the implied conditions covered by section 13 and 15 SGSA.
The test of reasonableness- Ungar is classified as a consumer, therefore [X]
It is covered by section 11 UCTA. It is irrelevant to us because the task of proving reasonableness (as covered in section 11 (1) UCTA) of an attacked clause, is for the party which wants to rely on that clause as in Warren v Truprint Ltd [1986] BTLC 344.
Application to Mr Unger
In that sense, Madison Ltd will have to prove that all the clauses were reasonable. However, the chances of them succeeding are very minimal since Unger’s are classified as consumers, therefore section 7 (3) which exempts limitation of liability in circumstances where the other party is not a consumer, whilst on the other hand the clauses satisfy the reasonable test, will be inapplicable as an immunity to them. This section is therefore irrelevant to Unger’s side.
The Unfair terms in Consumer Contracts regulations 1999
Taylor, Remedies (OUP, Oxford 2009) pp 27-35 [A]
Damages (Taylor, chapter 5, p 27)
Were a contract has been breached; damages should be available as a matter of right. The principle of the damage reward is to compensate the claimant for his losses, rather than measure the award by the amount of gain derived by the defendant.
Classification of damages
Expectation [X]
Law: Expectation (or loss of bargain) basis – Are forward looking (Robinson v Harman (1848) 1 Ex 850). They aim at putting the claimant in his original position which he would have been without the breach of the contract. This includes both the loss of the promised performance and the loss of profit due to the failure of performance
Apply: Largely inapplicable because, the trip was not a business one. Classification regards Ungar as a consumer. Thus this is irrelevant
Reliance [A]
Reliance (or wasted expenditure) basis - Reliance loss arises where the claimant has spent money which is then wasted in preparation for the contract or in partial performance of the contract. Aims at putting the claimant in a good position he was in before the contract was made.
Law: In case of uncertainty as to expectation loss, reliance loss can then be claimed. (McRae v Commonwealth Disposals Commission (1950) 84 CLR 377) In Anglia Television Ltd v Reed, it was established that, pre contractual expenses are recoverable as part of reliance loss, so long as ‘ it was such as would reasonably be in the contemplation of the parties as likely to be wasted if the contract was broken’ (per Lord Denning MR at p 64) as cited by Taylor at page 29
Enrichment [A]
Enrichment (unjust enrichment) - This considers, where the claimant in performing his obligations under the contract, has conferred a benefit on the defendant and wishes to claim it back for example, where the claimant has paid money in advance for a product which is not delivered, in which case he is entitled to the return of the money the claimant paid. Apply: In the case in hand, Ungar can base on this principle to seek for his deposit.
When damages can be obtained for distress and disappointment (Non- pecuniary loss) [A]
The general rule is that damages for distress are not available in an action for breach of contract.
The current law: However, contracts entered into for purposes of enjoyment, damages will be available for the loss of enjoyment (Jervis v Swans Tours [1973] 1 All ER 71 Apply: In relation to the case, Reliance, due to the fact that in preparation of the trip in which goods were bought and subsequently wasted due to the trip not taking place
Law: In contracts which aim at bringing pleasure, damages can also be available for the mental distress and disappointments caused by the breach (Diesen v Sampson 1971 SLT 49) Apply: In that sense, based on the above law, Ungars can claim damages for the disappointments they suffered because of the breach which made them fail to reach their long living dream of touring the UK
Specific performance [X] - Time has already lapsed, the contract cannot be re-enforced. There is no point for it. However, it is judges’ discretion.
Limitations on the availability of damages (Fafinski, p 177)
-Causation- The claimant can only recover damages if the breach of contract caused his loss. As such, if the breach does not cause the losses as found in County Ltd v Girozentrale Securities [1996] 3 All ER 834, the claimant will not receive damages.
Apply: In relation to the case it could be established that, Ungars’ will be compensated with damages because, the breach was the cause of their insurance payments, and other bookings, as well as loss of enjoyment.
-Remoteness- After proving that the loss was caused by the breach it is then important to prove that the loss was not too remote from the breach. (Hadley v Baxendale (1854) 9 Ex 341) [ O]
-Mitigation of loss- The innocent party has the duty under law to take reasonable steps to minimise the extent of their loss arising from the breach. This principle was applied in Brace v Calder [1895] 2 QB 253.
Apply:
Ungar tried his level best to minimise the losses and come into understanding with Maddisons Ltd by even accepting a car which he did not go for in the first place. However, Maddisson appeared to be unreasonable by being reluctant to lower the price of the substitute.
Exemplary or punitive damages (Taylor p, 31) [X]
-They are not applicable in contract law.
Application of research to Unger
This particular piece of research will be vital in order to assess the damages that can be awarded to Mr Unger. Importantly are the damages of Expectation, centring on the loss of earnings which resulted in the trip being unable to take place and negating the deal with the newspaper and Enrichment, which should enable our client to reclaim the deposit he made as this represented a benefit to Mr Unger in securing the specific vehicle.
Contract of Adhesion [?]
The process by which a contract is un-negotiated with the contracting parties and as such represents an unfair contract.
Application in the case of Unger
It is noted in the memo that Unger was offered a cheaper deal from £950 to £900 if he would sign the contract then and there. Taking this information into account it is possible to suggest that there was a chance that Unger was not aware of the contractual undertakings especially clauses 18, 19, and 20. The specific placing of the signature at the top of the contract preceding the terms logically suggests that Unger may have signed the contract before being alerted to such terms.
Research route- This section shows how sources (primary sources) were found and how we insured that they are up to date.
Sources
1) Hard copies:
- Law Reports series. (Appeal cases)- This is because they are more authoritative.
-Statute books available in Sydney Jones Law Library at the first floor, Abercomby wing.
-All the above cited books.
• Updating:
-Many books used were up to date (from 2004-2010), therefore the cases and statutes used are the ones which are up to date. No amendments or repeals have occurred in due time. This has also been clarified through online resources such as Justcite which directs us to Westlaw and LexisNexis for detailed information of the primary source.
- One of the case which was overruled by the House of Lords and the Court of Appeal was the Photo Production Ltd v Securicor Transport Ltd [1980] AC 829. At first, the Court of Appeal decided that exclusion clauses cannot cover fundamental breach. However, on an appeal the CA overruled its own previous decision to hold otherwise. Nonetheless, the HL concluded the matter, by reversing the second CA’s decision, to hold that ‘fundamental breach’ can also be limited or excluded by clauses.
• Validating:
-All the materials were validated as provided in the main body.
2) Online: Portal -LexisNexis: Cases and statutes
- Westlaw: Cases and statutes
Method- In both Westlaw and LexisNexis the search was done by using citations, subject or name in some circumstances.
Research rationale and explanation
(Target word limit 1000 words)
Add you research rationale and explanation here:
MR & Mrs Ungar (claimant) v Maddissons Vehicle Hire Ltd (defendant)
The issue revolving around this case is whether Ungars are entitled to damages for the breach of the contract, as well as the refund of their deposit.
• Ungars are in a good legal position of winning the case because of the following reasons:
There was a binding relationship, epitomised by the contract. Furthermore, parties were under duties as could be traced by using the parole evidence rule . However, Maddisons Ltd has an implied duty under s. 13-15 Sale of Goods Act 1979 where it has to make sure that, goods conform with the description, quality, fitness and sample.
There was breach of contract. In Arcos Ltd v Bonasson , it was held that, any failure to match the contractual obligations, regardless how trivial it is, will be regarded as a breach. Since the contract is covered by the SGA 1979, s. 13-15 of which, provide that obligations as to descriptions, fitness for the purpose, quality and correspondence with sample, these obligations are strict obligations, thus subjected to the rule set in Arcos Ltd v Bonasson. As such, since Maddisons Ltd failed to offer Ungar a car which he contracted for, and instead offered him a substitute which does not correspond with the description (class),and sample, Maddisons Ltd can be held liable or a breach of contract under s. 13 of the SGA.
Under common law controls, and statutory controls, all the onerous clauses which unfairly exclude and/or limit Ungar’s rights and Maddisons’ liabilities, are unenforceable. The law provides, for clause to be incorporated, the contract has to be signed . This criterion is met since Ungar signed the contract. However, in Olley v Marlborough Court Hotel it was established that exemption clauses must be introduced ‘before’ or at the time of the contract. This criteria is not met since parties signed the contract first (signature is at the front page), and then the clauses were introduced. In addition, the current law provides that, in contracts which include onerous terms, the offeror has to make efforts in drawing the offeree’s attention by using the red hand rule (red font and hand pointer) . In that sense, such onerous clause as clause 19 which imposes heavy burden on Ungar, and clause 20, 21, 22 which deliberately limit Ungars’ rights, can all be termed void since Maddison did not take any reasonable steps to draw Ungar’ s attention. This standard has also been emphasised in Interfoto Picture Library Ltd in cases which signature was obtained under pressure, as it is the case when Maddisson lowered the price to £900 and urged Ungar to sign the contract at the very moment. Since the clauses have not been incorporated, there is no point of proving their construction.
The clauses are also void due to statutory controls. S. 6 of Unfair Contract Terms Act 1977 provides that, if the claimant was a consumer, any exclusion clause which aims at limiting liability for a breach of s. 13-15 of SGA as to defects in descriptions, quality , fitness, sample is void. Since Ungar was dealing as a consumer as provided by s. 12 (1) UCTA, clauses 22 and 23 which aim at limiting Maddisons’ liability cannot be enforceable. In that sense, in relation to damages, Ungar will be entitled to full amount and not as limited in those clauses.
In addition, all the clauses which aimed at limiting Ungars rights as to damages (22) and (23), and the method of resolution in case of a dispute (21), they are also void. S. 13 (1) (b), (c), invalidates any clauses which aim at excluding or limiting any right in respect of liability, or which aim at excluding or limiting rules of evidence or procedure. In that sense, clause (22), (23) are void because they limit Ungar’s rights as to damages, as well as clause (21) which limits Ungars rights as to a method of dispute resolution, by making the enforcement of liability under onerous conditions.
Ungars are entitled to damages and refund of his deposit. Damages are available as right for the innocent party . Damages could be limited if the loss suffered was not a consequence of the breach .This is not the case since due to the breach, Ungar lost £ 2362 on insurance and ferry booking. If the loss was too remote which was not the case because the loss of money incurred was a natural outcome of a failure to conduct the trip as planned. Ungar is also entitled to damages because as the principle of mitigation of loss, he took reasonable steps such as accepting the substitute car if only the price was lowered, so as to reduce his losses. Reliance loss will be claimed for since there is a need to place Ungars in position which they could have been if the contract was not conducted. In such a way they will be able to get back £ 2362 which they lost in insurance and booking. They can also get their deposit back, because the law on deposit forfeiture clauses provides that the payer may recover the money when the receiver of the deposit breaches the contract.
They can also receive damages for distress , lack of enjoyment and loss of time . Since the main objective of the contract was to fulfil their dream and provide enjoyment, currently the law allows compensation of such losses.
Despite the strength of the case, it could be important if the parties could negotiate first before taking any further actions. However, if negotiations fail, I would advise Ungar to take the matter to court and not in any ADR body, because, by doing so they will be abandoning some of their rights since courts tend to preserve much the idea of consumer welfare.
Criteria to consider:
Research log should:
1. Demonstrate the ability to locate and reference individual primary and secondary sources
2. Demonstrate an understanding of the relationship between legal sources
3. Demonstrate an ability to evaluate the relevance of authority to the particular facts of the simulated case
4. Demonstrate an understanding of authority of legal sources generally, including but not exclusively precedent and the hierarchy of the courts
5. Demonstrate an understanding of rules of court which relate to the use of and the citation of authorities
6. Demonstrate an ability to record the research process in a manner which allows a third party to understand the events listed in the research log, and which facilitates the efficient search for materials by the researcher or by other team members.
The research rationale and explanation should:
1. Demonstrate an appreciation of the legal issues arising from the simulated case
2. Demonstrate an ability to apply the law to the facts with the appropriate level of certainty or caution
3. Demonstrate an ability to apply principles relating to remedies to the known facts in the case
4. Demonstrate an appreciation of significant practical, tactical and procedural issues which might arise in relation to a practical ‘real-life’ legal dispute.
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