Module 3: Law of Obligations 1 and 2
Student’s Name
Institutional Affiliation
Date
Module 3: Law of Obligations 1 and 2
Question 1
Issues
- Whether there was an enforceable contract between Amanda and the Store,
- Did the store breach the contract between itself and Amanda?
- If so, what are the remedies that Amanda is entitled to?
Rule(s) of Law Applicable
Contracts are voluntary agreements made between two or more parties which can be enforced by law. Contracts create obligations between the involved parties, and in case of non-performance, the affected party can seek legal remedies for the non-performance of contractual obligations. Parties to a contract are at will to negotiate the contractual terms that govern performance of contracts, and in the absence of vitiating factors such as mistake, misrepresentation, or duress, courts cannot intervene or re-write the contract (Hall, 2017). For any contract to be binding and enforceable at law the following essential elements must be present: offer, acceptance, consideration, capacity, legality, and intention (Fisher & Greenwood, 2007).
An enforceable contract must have a legal agreement that consists of an offer and acceptance. For a contract to start, an offer needs to be extended by one person which must include the details of the agreement and the terms of the contract. The offer can be made to one specific individual, a group or groups of people, or the entire world. In the landmark case of Carlill v Carbolic Smoke Balls Company (1892), the court held that unilateral offers made to the entire world are binding to the involved parties. There is a difference between offers and invitations to treat in the law of contract. While offers establish legal obligations among the parties, invitations to treat does not create any obligations.
Hall (2017) defines acceptance as a statement made by one person to another accepting a proposed offer made to them. Acceptance may be written, oral, or implied by conduct. In Crown v Clarke (1927), it was unanimously agreed upon that there is no specified form which should betaken by acceptance. Courts use the reasonable bystander test and if they think acceptance was made to the offer. The offeror has the discretion to withdraw an offer at any time before acceptance is made. However, the law requires him to communicate the withdrawal to the offeree within a reasonable time.
Consideration refers to the price paid by the offeree in exchange for a promise. For there to be an enforceable contract between parties, the consideration made must be sufficient but need not to be adequate (Hall, 2017). The fourth element of contracts is capacity, which refers to the legal age to enter into a binding contract as per the national laws of Hong Kong. The Hong Kong laws requires that both parties entering into a contract must be 18 years and above. Moreover, there must be intention to create legl and binding relationships between the contracting parties. In Rose and Frank company v Crompton(1923), it was held that commercial transactions denote an intention to create legal obligations between the involved parties. The last requisite element of contracts is legality. Contracts entered into to perpetrate fraud or any other illegal act or omission are void ab initio.
The remedies which an aggrieved person can seek in case of a breach of contract are damages, injunction, specific performance, recession, and rectification.
Analysis
Being a common law country, Hong Kong’s contract law still follows the contract law of England subject to state legislation and modifications. This means that the general rules on contracts, such as the validity of contracts and remedies, apply in Hong Kong. In the case of Geys v Societe Generale, London Branch (2012), it was stated by Lord Wilson that all contracts should adhere to all the legal requirements and provisions of the Common Law.
From the facts in the question, Wong Electronics Limited’s main store (the Store) is the offeror while Amanda is the offeree. The store made a unilateral offer via commercial radio, broadcast, and advertisement during the hourly evening news bulletins. The offer stated that the first customer through the door at 9 am could have the special 40-inch flat-screen TV for just $88. The actions of the store amounted to a unilateral offer since it was made to the whole world at large. Applying the holding in Carlill v Carbolic Smoke Balls Company (1892) to the facts in the question, the store was bound by the unilateral offer it made to the entire world via its advertisement.
Amanda intended to accept the offer since after hearing the advertisement, she immediately went to the store to ensure that she was the first customer in line the next day. She went there with a sleeping bag prepared to spend the whole evening outside the store until it opened in the morning. An offeror has the right to cancel or withdraw an offer at any time before its acceptance. However, the offeror is required to inform the offeree(s) about the withdrawal of the offer. The store did this by making a public advertisement withdrawing the offer to sell the TV. The fact that Amanda did not hear the news after the withdrawal of the offer is immaterial.
From the facts, there was no enforceable contract between the Store and Amanda because the offer was withdrawn before Amanda accepted it. Moreover, for there to be an enforceable contract, the offeree must give sufficient consideration in exchange for the promise made. In this case, Amanda did not give any consideration for the TV. The absence of consideration shows that there was no binding contract between Amanda and the Store. Therefore, the store did not breach any contract between itself and Amanda. Consequently, Amanda is not entitled to any remedies under the law.
Conclusion
Applying the law to the facts in question, it is evident that there was no enforceable contract between the Store and Amanda since the offer was withdrawn before acceptance. Moreover, Amanda did not pay any consideration for the TV. Thus, the store did not breach any contract since none existed, and Amanda is not entitled to any legal remedies for breach of contract.
Question 2
Issues
- Was Charlie Chueng an employee or an independent contractor for David Ding?
- Whether Eve can sue any of the parties in the tort of negligence
Rule(s) of Law Applicable
The principal-agent relationship is a unique relationship between an employer and an employee. In such a relationship, the employee is permitted by the employer to act on their employer’s behalf with the employer setting out the scope of the employee’s duty and the limit of their authority to act (Miller & Jentz, 2007). The principles of Respondeat Superior or vicarious liability apply to the relationship between an employer and an employee. That is, the employer is held liable for the actions or ommissions committed by the employee while the employee is legally performing duties in line with their employment. The proviso of vicarious liability is that an employer is only liable if one is an employee, acting within their authority, and the tort is performed while the employee is performing their duties.
An employee is a person who works for an employer on a full-time basis, and the employer exercises control over the actions of the employee. Conversely, an independent contractor is a person who works for an employer on a need basis, and the employer has no substantial control over the actions of the independent contractor (Mau, 2013). Employers are not liable for the actions or omissions of independent contractors. Thus, an injured party can only seek damages from the employer for harm suffered if the perpetrator of the tortuous act is an employee of the employer.
In the case of Bryant v Delmarva Power & Light Company (1995), it was held that courts look at the level and amount of autonomy exercised by the working party to distinguish between independent contractors and employees. The court reasoned that in case the employer excercises reasonable control over the work of the employee in terms of how and when the work should be performed then that person is an employee and not an independent. Thus, where companies hire what they believe to be independent contractors, the right position is that if the employer directs and controls the tasks of such people, the law no longer views them as independent contractors. Rather, they are deemed to be employees of the companies that seek their services.
The tort of negligence is the right to offer protection to one’s self and their property from damage caused by the unreasonable conduct of another. Negligence involves a lack of proper care and attention in performing some act (Mau, 2013). For the plaintiff to assert that negligence occurred, he must prove that: a duty of care existed, there was a breach of the duty of care, the plaintiff suffered harm because of the breach, the defendant’s action was the proximate cause of injury, and that the plaintiff is entitled to damages (Mau, 2013). The defendant can plead the defense of contributory negligence.
Analysis
Based on the decision of the court in Bryant v Delmarva Power & Light Company (1995), Charlie Cheung is an employee of David Ding. Even though the parties had signed a written contract, which stated that Charlie was an independent contractor and would be paid on an hourly rate, Charlie was an employee. This is because David, the employer, exercised substantial control over Charlie. First, Charlie was provided with a uniform by David, and he was required to wear it whenever he was driving any of David’s cars. Secondly, Charlie was required to be on standby from 7 am to 6 pm each day. This implies that he had to be at work full-time on all days of the week, thereby making him an employee of David.
Eve should sue both Charlie and David in the tort of negligence. The principle of vicarious liability applies to the relationship between Charlie and David because Charlie was an employee of David’s company. In proving that the employer, David, is liable for the acts of the employee, Charlie, Eve will rely on the principle of Respondeat Superior. This doctrine asserts that employers are vicariously liable, irrespective of fault, for negligent driving by its employees in the scope of employment (Miller & Jentz, 2007). Moreover, Eve will also have to prove that the accident occurred when Charlie was in the course of performing his duties. From the facts, the accident occurred when Charlie used one of David’s cars to go for lunch while at work. Besides, it will be easier for Eve to claim substantial damages by suing both David and Charlie since Charlie had no means of paying for the injuries Eve sustained.
In her negligence lawsuit, Eve will have to prove that a duty of care was owed to her by Charlie and that Charlie breached this duty of care by causing the accident through negligent driving. Moreover, Eve will have to prove before the court that she suffered damage due to Charlie’s negligent driving, and as a result, she is entitled to damages. In this course of action, Eve will also have to prove that the accident caused by Charlie was the proximate cause of the injuries that she sustained. In his defense, Charlie can plead contributory negligence since Eve ran out from behind a parked car without paying any attention to the passing traffic.
Conclusion
From the foregoing, it is vividly clear that Charlie was an employee of David and not an independent contractor. This because the employer exercised control over him by requiring him to wear a uniform while driving, and he was also required to be at work from 7 am to 6 pm daily. Therefore, Eve should sue both Charlie and David because the principle of vicarious liability applies to the relationship between David and Charlie. Lastly, Eve is entitled to damages because all the elements of negligence are present from the facts.
References
Fisher, M., & Greenwood, D. (2007). Contract law in Hong Kong. Kowloon: Hong Kong University Press.
Hall, S. (2017). Law of contract in Hong Kong: Cases and Commentary (5th ed.). Victoria: LexisNexis Hong Kong
Mau, S. D. (2013). Hong Kong legal principles: Important topics for students and professionals. Hong Kong: Hong Kong University Press
Miller, R., & Jentz, G. (2007). Business law today: The essentials. New York: Cengage Learning Publishers
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