Contract Law
Introduction
The law of contract has undergone remarkable growth as evidenced by the development of different rules and regulations governing the formation and implementation of contracts. Contracts are based on an agreement between the contracting parties. The resultant effect is that contractual obligations are created[1]. Amongst the elements that must be present for a contract to exist include offer and acceptance. Offer refers to the expression of willingness to abide by specified terms while acceptance refers to accent to the specified terms of an offer. By agreeing to the terms of the contract, the parties to the contract are required to observe the contractual obligations created. Breach of the contractual obligations may cause lead to the incurrence of legal costs if one of the parties to the contract Contracts are not limited to relationships between individuals but are established with the purpose of governing business transactions. One of the unique characteristics of contracts involving business transactions relates to the prevalence of standard form contacts, which are based on standardised and non-negotiated provisions. Standardised form contracts are usually presented in pre-printed forms[2]. This paper entails an analysis of legal issues inherent in a scenario involving a contractual relationship between two business parties as illustrated in the scenario below.
decides to seek legal redress.
Scenario
Declan, who owns a Harley Davidson motorcycle dealership, ‘Declan’s Dealership’ sells four Harley Davidson motorcycles to Simon on the basis of a contractual agreement that stipulated that Simon was to pay a total price of £100,000 prior to the goods are delivered. Simon agreed to these terms and paid the said amount. Before leaving Declan’s shop, Simon is tripped by a pile of exhausts pipes hence falling to the floor. As a result, his arm breaks and his Rolex watch was smashed. In line with the contractual agreement entered, Declan delivers the four motorcycles to Simon. Upon a close inspection, Simon notes that two of the motorcycles had faulty gearbox and engine. Simon threatens to sue Declan for damages but is referred to a clause that cautions Declan from costs arising from injuries, damages, or loss experienced while a client is at Declan’s property.
Analysis
The scenario presented indicates existence of a contractual relationship between Declan and Simon that govern the sale of Harley Davidson motorcycle. Despite the fact that standard form contracts are legal in cautioning businesses from certain costs, there a number of issues that the contracts must take into consideration. One of the fundamental issues it that standard form contract must be transparent and accessible. On the basis of this aspect, it is imperative for businesses intending to use standard form contracts to ensure that both parties understand the terms. This aspect will aid the parties entering into a contract to make informed consent. The terms of a standard contract must be expressly stated. This means that disclosure of the terms of a standard form contract should be clear and simple. Collins asserts that ‘disclosures of standard form contracts should be clear and simple, not pages upon pages of illegible and incomprehensible fine print’[3]. In spite of the fact that Simon had the duty to read before entering into the contract, Declan had a duty to ensure that the clause is easily accessible. Bagley and Dauchy assert that ‘people sometimes may claim that they should not be bound by the promises they made in a contract because they were not aware of what they signed’[4]. One of the issues that might lead to credence of this claim entails if the terms in the standard form contract was presented in crowded or small format. In this case, the clause was on page seven of the contract. On the basis of this aspect, Simon’s lawyer, Esther can argue that the standard contract was crowded and count not give his client, Simon ample time to read at the point of sale. In arguing his case, Simon may argue that Declan required payment of total price of the motorcycles prior to the goods being delivered. Thus, the clause puts the client at a disadvantage.
On the basis of the concept of disclosure, Simon has legal basis to seek for damages in relation to injuries incurred while at Declan’s property. In seeking legal redress on this issue, Simon may argue that the sign cautioning the dealer from any injury, loss or damage caused to any business purchaser while at the property was not effectively displayed. Therefore, Esther is right in advising Simon to sue Declan for damages.
The two exclusion clauses stipulated by Declan are comprised of unfair terms. This arises from the fact that they provide Declan unfair bargaining terms. On the basis of the two clauses stipulated under the standard contract, Declan is in a position to circumvent his contractual obligation. Simon agreed to purchase the motorcycles on the basis of the information provided by Declan. Thus, by selling faulty motorcycles, Declan engaged in negligent misrepresentation, which is illegal. Under common law, an individual who signs a contract on containing an exclusion clause is bound by terms of the contract. Thus, it is assumed that the party has read and understood the contract. However, the signature should not be based on misrepresentation[5]. If the contract entered is based on misrepresentation, then the exclusion does not bind the signatory as illustrated in the case of Curtis v Chemical Cleaning and Dyeing Co. [1951] 1 KB 805. According to Chandler, the exclusion clause should be obscured. On the contrary, notice of exclusion should be presented on the face of the contractual document[6]. This aspect is underlined in the case of Henderson v Steven (1875) LR 2 HL (Sc) 470 in which the judge argued that the exclusion clause should not be situated on the reverse of the contractual document.
Conclusion
On the basis of the above issues, Simon may argue that Declan did not provide reasonable notice regarding the exclusion clauses. Thus, Esther is right in advising Simon that the clause stipulated by Declan cannot be relied upon. Thus, Simon can sue Declan citing the issues articulated in the analysis above.
References
Mulcahy Linda, Contract law in perspective (New York: Routledge 2008).
Bagley Constance and Craig Dauchy, Entrepreneur’s guide to business law (London:
Cengage Learning 2011).
Chandler Andrian, Questions and answers law of contract (Oxford: Ox ford University Press
2013).
Collins Hugh, The law of contract (London: Cambridge University Press 2003).
Trebilcock Michael, The limits of freedom of contract (Cambridge, MA: Harvard University
Press 1993).
[1] Mulcahy Linda, Contract law in perspective (New York: Routledge 2008) 49.
[2] Bagley Constance and Craig Dauchy, Entrepreneur’s guide to business law (London:
Cengage Learning 2011) 292.
[3] Collins Hugh, The law of contract (London: Cambridge University Press 2003) 119.
[4] Bagley Constance and Craig Dauchy, Entrepreneur’s guide to business law (London:
Cengage Learning 2011) 292.
[5] Trebilcock Michael, The limits of freedom of contract (Cambridge, MA: Harvard University
Press 1993)104.
[6] Chandler Andrian, Questions and answers law of contract (Oxford: Ox ford University
Press 2013) 74.
