STU87445 LLB (Hons) Qualifying Law Degree Contract Law Assignment

This assignment solution addresses two key questions in contract law. The first question examines the validity of the statement that acceptance must be communicated to the offeror, analyzing the postal rule and its exceptions, referencing cases like Adams v Lindsell, Entores v Miles Far East Corp...Read More

STU87445
LLB (Hons) Qualifying Law Degree
Law of Contract
Time- Constrained Assignment
STU87445
Poloko Hiri
2968

Answer to the Question No. 1
I do not agree with the statement because according to section 7(a) of the Contract Act, 1872;
acceptance must be absolute and qualified and in the case of a postal rule when the acceptance is
posted, it will be considered as effective. A contract cannot be done without actual
communication to the offeror.
An offer is given first to anyone and wished for accepting the offer which is given by the offeror.
If the offeree accepts the offer made by the offeror, then it will be considered as a contract
according to law.
Acceptance is done by the offeree after agreeing on the terms which are made by the offeror in
the contract. For this, there is needed consideration like money or other valuable things, etc.
Acceptance can be done by expressing in words (oral) or by written or by conducts. Bur without
reaching the contract to the offeror, it will not be counted as effective. According to the law, the
acceptance is considered valid when the contract is made expressly.
The acceptance must be communicated and there are so many rules regarding this.
Acceptance is unconditional. If an offer is accepted by any condition, then it will be considered
null.
The offer which is made by the offeror is only accepted by that person toward whom the offeror
made the contract. But on behalf of the offeree, any person who is authorized can accept the
offer. Any agent of the offeree can accept the offer.
Silence is not counted as acceptance according to the law. There is a case regarding this,
"Felthouse v Bindley"1, a letter was given to a nephew by his uncle offering to buy a horse and if
his nephew did not answer within two weeks then the offer would be terminated. The court held
that there was no contract between them because the nephew did not give any answer.
The communication of acceptance is very important for every contract because acceptance is
considered effective when it is actually and properly communicated to the offeror or any agent
who is authorized by him. This rule is made for given protection to the offeror as he can know
that his offer has been accepted.
There is an exception of acceptance which is known as the 'postal rule'. It means when the offer
is given, it does not accept immediately rather it is posted. The acceptance is done before it's
reaching to the offeror and it will also be considered as a valid one. But this rule is not applicable
for all situations rather in some specified cases. This rule is only applicable for those contracts
which have been offered are made through letters. There is a case relating to this rule, "Adams v
Lindsell"
The proper postal rule methods must be used. In the case of Re London & Norther Bank2
Evidence of proper posting can be seen in this case. In this case, the letter was correctly stamped
and addressed. If the conditions of a postal rule are not fully fulfilled then the postal rule is not
applicable.
But if any offer is done by face-to-face conversation and the acceptance is posted at that time,
then it will not be applicable. There is some case also where the postal rule did not apply. In the
case of Entores v Miles Far East Corporation3 case, the court held that if any person gave oral
acceptance and if it was drowned out an overflying aircraft such acceptance may not be heard by
the offeror that’s why when the aircraft has passed over the acceptor need to repeats his
1 Felthouse v Bindley (1862) 11 CB (NS) 869
2 Re London and Norther Bank (1900)
3 Entores v Miles Far East Corporation [1955] 2 QB 327

acceptance to the offeror. So with this case, we can conclude that if there is any instantaneous
communication like telephone and telex and if two people make a contract by one of it and the
line goes ‘dead’ so that the acceptance is incomplete, then the offeror must communicate with
the acceptor and confirm that was he accept the offer or not. There is a certain condition that
needs to be satisfied before it falls under the postal rule. In Byrne v leon Van Tien Hoven4 case,
the defendant sent an offer to the claimant and the claimant received the offer on 11th October.
After receiving the letter claimant sent an immediate acceptance letter. Later on, the defendant
sent another letter of revocation of the contract and it was received by the claimant on 20th
October. The court held that the revocation was not effective until the letter was received by the
claimant on 20th October. Although the letter was published on 8 October the revocation was
only valid until the letter was received by the claimant. This case is a good example of the
objective approach. In Holwell Securities Ltd v Hughes5 case, the general rule exception was
recognized in this case. Here court suggested that in some situations postal rule ought not to
apply according to the court if the postal rule would lead to any trouble and absurdity then the
postal rule would not be applied. This rule is an exception to the normal rule on the
communication of acceptance which means it only applies when it is consistent with the offer.
The rule that acceptance must be communicated to the offeror is not absolute. In the case of
Carlill v Carbolic Smoke Ball Co6, in this case, we see that the court said that the conduct done
by carbolic smoke co. was an offer of invitational to treat for the whole world that means that
The terms of the contract may assert that the offeror does not insist that the acceptance has to be
expressed to him. But acceptances sent via the post are the big and most contentious exception.
The general rule for this matter set on the case of Adams v Lindsell 7that the acceptance shall
take place upon receipt of the letter of acceptance by the offeree. The acceptance shall take place
upon receipt of the letter of acceptance by the offeree. In Henthorn v Fraser 8case, the court said
that the postal rule only applied when the post is fair. It is therefore not necessarily accurate to
assume that the offeror has acknowledged the risk of delay in post. Now the main question is
whether the general rule is to create an injustice or not. After the case of Byrne v Van Tienhoven
we can say that the justifications of the general rule seem to be weak and it can give rise to the
manifest injury. Later on, we see that an exception of the general rule was recognized in Holwell
Securities Ltd v Hughes case.
Now, if I analyze the rule that acceptance must be communicated to the offeror is not absolute
then we see that in the normal rule of the acceptance mention that acceptance takes place when it
received by the offeror that means that when the offeror receives that the offer was accepted by
the offeree only then the contract is valid. But in the general rule of a postal rule, we see that it
mentions that the offeror cannot revoke the offer which he will send if the offeree posted
acceptance on it. But now there are quicker methods of communication and if we rely on the
general rule of acceptance then it can give rise to manifest injustice for that reason in Holwell
Securities Ltd v Hughes case we that an exception of the general rule was established. If we see
Article 16(1) and 18(2) of the Vienna Convention Act for the International Sales of Goods9
mention that at the moment the confirmation of approval reaches the offeror, an acceptance of
the offer becomes effective. An acceptance is not valid unless the approval of the agreement is
4 Byrne v leon Van Tien Hoven (1880) 5 CPD 344
5 Holwell Securities Ltd v Hughes [1974] 1 WLR 155
6 Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256
7 Adams v Lindsell (1818) 1 B & Ald 681
8 Henthorn v Fraser [1892] Ch 27
9 Sale of Goods (Vienna Convention) Act 1986

not reached within the period set by the offeror. We can also see Article 2:202(1) and 2:205(1) of
the Principles of European Contract law10. In previous times the general rule of the postal rule
was followed because at that time there was a lack of communication system but in present time
we have a lot of communication system like email, telegram, fax that’s why an exception is made
of the general rule by Huges case. For this reason, we can see that The English Court also wanted
to choose a better approach by abolishing the general rule and replacing it with the normal rule.
So, I do not agree with the statement because there is the only exception of this rule which is
known as a postal rule but day by day this rule is losing and creating manifest injury.
Answer to the Question No. 2
As Megan was very interested in interior design, she purchased tickets to DHS via the website
without reading its terms and conditions because it was too long. Megan went to the exhibition
and sat in the chairs which collapsed and for this, her wrist was fractured and her new mobile
was smashed. She was unable to go to work for two weeks. So that she complained against DHS
for its negligence but DHS referred her the terms and conditions on which she was agreed. Here,
in this question, I will mention whether the exclusion clause is incorporated with the contract. I
will also mention the Unfair Contract Terms Act, 1977. In this passage, I need to advise Megan
that how can her claim damages by Design Home Show by referring to the section of UCTA and
some other cases of incorporation of contract.
Issue: Whether Design Home Show will be held liable for injury or not?
Whether Megan can claim damages for his new Phone or not?
Whether she will get any compensation when she could not go to work or not?
Relevant Law: These issues go under The Unfair Contract Terms Act, 1977 section 2. In section
2 defines when a person cannot exclude his or her liability of damages, loss, death, and injury if
there is any negligence occurred on his or her part. We can also mention Section 1, section 11 of
The Unfair Contract Terms Act, 1977. We can also mention Section 62, 62(1), 62(5) of the
Consumer Rights Act, 2015.
We can also refer to some cases regarding the Sign document and Exclusion clause.
1. Chapleton v Barry
2. Olley v Marlborough Court Ltd
3. L’Estrange v F Graucob Ltd
4. Alderslade v Hendon Laundary Ltd
5. Chaplin v Hicks
Analyze: First of all we need to know that whether the contract between Megan and Design
Home show is a proper sign document or not. Yes, it is a proper sign document because there is
no misrepresentation done by the company. Whether Megan read the terms is not necessary to
give consent in a contract. If she signed the document then she is bound with the terms of a
contract. In L’Estrange V F Graucob Ltd11 court said that if the contract is signed then the party
10 Principles of European Contract Law - PECL
11 L’Estrange V F Graucob Ltd [1934] 2KB 394

is bound by the terms of the contract. So, we can say that Megan is also bound by the terms of
the contract but there are some law where mention that although a party is bound by the terms of
a contract if there is any negligence occurred by the person who wants to exclude his liability
cannot do so. Now we need to know whether the clause is incorporated with the contract. In the
case of Olley V Marlborough ltd12. Case, the claimant booked a hotel after signing the paper he
forgets to take the key at reception. A third party took the key and stole the claimant's fur coat.
The receptionist then argued that they are not taking any responsibility for it because of an
exclusion clause on a notice in the claimant's room stating that the hotel will not take any
liability if anything is lost or damaged. The court held that the clause is not incorporated with the
contract. The term must be communicated before or at the time the contract is made. In another
case, the Chapleton v Barry13 case, at the beach the plaintiff rented deckchairs from the
defendant. The beach attendant gave him a ticket on paying the cost which consists of some
conditions including an exclusion clause. He was injured after sitting in the chair. The defendant
relied on the exclusion clause that he was already mentioned in the ticket that the council will not
be liable for any damage or accident. The court held that the clause is not incorporated with the
contract. Here, the written term must form part of a contractual document. In this passage, we see
that Design Home show 108 no terms says that if there is any death, injury, loss, or damage they
are not liable for it but they didn’t mention that if there is any negligence on their part and for
that reason if any death, injury, loss or damage happen then what did they do. This means that
the term is not incorporated with the contract because we see that the negligence of DHS’s
operative Megan caused injury and damaged her phone. Now if I consider that the clause is
corporate with the contract but even the clause is corporate with the contract still Megan had
other options too. If damages can occur only as a result of negligence but not otherwise, then
such a clause will be given effect as to negligence even if it does not mention negligence. Here,
in Megan's case, we see that the 108 no term of Design home show doesn’t mention negligence
but as the injury occurred only for negligence that’s why the clause will be given effect as to
negligence. In Alderslade V Hendon Laundary Ltd14. Case, the issue is that whether the
exclusion clause could apply to cases of negligence if they were not specifically mentioned in the
clause. The court held that, if there is any negligence in performing the duty of care of goods
then the clause can also apply to the cases of negligence. So, we see that DHS’s operative does
not perform their duty in care of goods there is negligence on their part if they operate the chair
carefully then the accident may not happen.
Now if we discuss Section 2(1) of The Unfair Contract Terms Act, 1977 mention some points
where a person cannot get defense by the exclusion clause. According to this section, no person
cannot exclude his liability for death or other injuries that occur by negligence. This means that
if any company or person gives any notice that they are not liable for any personal injury or
death by their negligence then the notice will void under the UCTA. In section 1(1) (a) of the
UCTA defines negligence it mentions that if any obligation arises by the terms of the contract to
take reasonable care and if they are failed to perform it then it is negligence. Now, if we connect
this law with the Megan case we see that although Megan is bound with the terms of the contract
as there is negligence occurred by the DHS’s operative for that reason they cannot exclude their
liability by referring to the terms of the contract. On the other hand in section 2(2) of the UCTA
defines that a person cannot exclude his liability in case of other loss or damage which occurred
12 Olley v Marlborough Court Ltd [1949] 1 All ER 127
13 Chapleton v Barry UDC [1940] 1 KB 532
14 Alderslade V Hendon Laundary Ltd [1945] KB 189 at 192

by his negligence. But if the term satisfies the requirement of reasonableness then he or she can
exclude his liability. In section 11(5) of the UCTA mention that the party which relies on the
exclusion clause needs to prove that the exclusion clause is reasonable. The court has also taken
into account several factors to decide whether the clause is reasonable or not. The court sees that
if there is any availability of insurance, whether the exclusion clause was freely negotiated. The
party who relies on the exclusion also proved to the court the effect of the exclusion clause on
the party. In Megan case we can say that the term is not reasonable because Design Home show
did not give any insurance, the exclusion clause cannot freely be negotiated because Megan did
not know about it, and giving these kinds of exclusion clause it did not give any kind of favor to
the innocent party. The Consumer Rights Act 2015 section 62 defines that if the terms of the
contract are unfair then it is not binding on the consumer. In 62(5) define how it will determine
that whether the term is fair or not. It determines the subject matter of the contract. In the
passage, we see that as Megan's arm was fracture for that reason she is unable to go to work for
two weeks. In the Chaplin v Hicks 15case, for the negligence of the party, the claimant did not
perform the final round of the beauty contest. The court held that there is a breach of contract
and it awarded £100 to the claimant. Now if we consider the case with Megan's situation we can
say that for the negligence of the DHS Megan caused injury and she is unable to go to work so
they are also responsible to compensate her.
Conclusion: So, Design Home show will be held liable for the injury of Megan under the Unfair
Contract Terms Act because there is negligence on their parts that’s why they do not rely on the
clause. Yes, Megan can also claim for her damaged phone because UCTA section 2(2) mentions
that if there is any other loss by the negligence of the party then they cannot rely on the terms of
the contract. Yes, she will get compensation for those days which she was not unable to go to
work.
Bibliography:
Statues: The Contract Act, 1872
Unfair Contract Terms Act, 1977
Consumer Rights Act, 2015
Vienna Convention Act for International Sales and Goods, 1986
Principles of European Contract Law- PECL
Cases:
Adams v Lindsell (1818) 1 B & Ald 681
Alderslade V Hendon Laundary Ltd [1945] KB 189 at 192
Byrne v leon Van Tien Hoven (1880) 5 CPD 344
Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256
15 Chaplin v Hicks [1911] 2 KB 786

Chapleton v Barry UDC [1940] 1 KB 532
Chaplin v Hicks [1911] 2 KB 786
Entores v Miles Far East Corporation [1955] 2 QB 327
Felthouse v Bindley (1862) 11 CB (NS) 869
Holwell Securities Ltd v Hughes [1974] 1 WLR 155
Henthorn v Fraser [1892] Ch 27
L’Estrange V F Graucob Ltd [1934] 2KB 394
Olley v Marlborough Court Ltd [1949] 1 All ER 127
Re London and Norther Bank (1900
Text Book
Ewan McKendric, Contract Law (11th edition, Macmillan Publishers Limited 2013)