4. Cathy leaves home the day after her 17th birthday and travels to London.

She finds herself a

room In which to live and a job in a bookshop. Having been in London for three months, she is now
very unhappy.
Although the room is cheap to rent, it is very small and in a poor state of repair. She has signed a
three-year lease for it, but she would like to find somewhere else to live as soon as possible.
Additionally, although she is being given training by her employer, she dislikes the work and is
desperate to leave the job. The employment contract requires her to give four weeks’ notice.
Advise Cathy of her legal liability for the two contracts that she has made. [25]

A contract is a legally binding agreement between two or more parties which contain elements of a valid
legal agreement which is enforceable by law. An agreement is said to be reached when an offer offered by
the offeree has been accept by the acceptor as an acceptance. These parties must have the capacity to be
bound to the contract and the contract must not be insignificant, vague, unfeasible, or against the law. In
daily life, most contracts can be and are made orally, such as purchasing a can drink or stationeries. Any
oral agreement between two parties can form a legal binding contract as long as the good or service
provided is legal.

In order to establish whether the two contracts are valid, capacity must be analyzed. The age of majority
to achieve full capacity to contract was 21 by the Infant Relief Act 1874, but was subsequently reduced to
18 by the Family Reform Act 1969. In these terms Cathy would be considered a minor.
The only contracts which are binding on a minor are contracts for the supply of necessaries. Under the
Sale of Goods Act 1979, s. 3(2) ‘necessaries’ means ‘goods suitable to the condition in life of the minor
or other person concerned and to his actual requirements at the time of sale and delivery’. It therefore
includes more than just such essentials as food, shelter and clothing, and in deciding the issue the courts
can take into account the social status of the particular minor. When deciding if a contract is one for
necessaries, the court decides whether those goods or services are considered necessary in terms of the
general law, and then it is decided whether it was necessary for the minor.
In Nash v. Inman [1908] 2 KB 1, a tailor sold 11 fancy waistcoats to a minor, who was a Cambridge
undergraduate. The minor refused to pay for them. The tailor's action for payment failed because he could
not establish that the “defendant was not already amply supplied with clothing; the waistcoats were not
therefore necessaries”. Although a minor is bound by an executed contract for necessaries, it remains
unclear whether a minor is bound by an executory contract for necessaries.
A contract is not binding on a minor merely because it is proved to be for the minor's benefit; but a
contract which would otherwise be binding as a contract for necessaries is not so if it contains harsh and
onerous terms as seen in the case of Fawcett v. Smethurst (1914) 84 LJKB 473 where a minor was held
not to be bound by a contract for the hire of a car, even though it was a necessary service in this case,
because the contract included a term making him liable for damage to the car ‘in any event’ – that is,
whether or not the damage was his fault.

Secondly, a minor is bound by a contract of employment if that contract is generally for his benefit. In the
case of Denmark Productions v Boscobel Productions (1967) it was held that a contract under which a
minor appoints a manager or agent to look after his business affairs is in modern conditions a necessity if
he is to earn a living and achieve fame and if it is for his benefit it will be upheld. However, in De
Francesco v Barnum (1890), the court looked into such a contract which was prima facie binding on a
minor, it discovered that the contract contained onerous terms unduly restrictive of the minors in question.
It was therefore held that the contract was an unreasonable one in the circumstances and that it would be
treated as unenforceable against the minors.
In Roberts v Gray [1913] KB 520, CA, a minor was held liable for his failure to perform a contract for a
tour with the plaintiff, a noted billiards player. It was a contract for the instruction of the minor. The
contract was wholly executory and but it was held that the contract was binding on him from its
formation. It may be thought that there is a distinction between necessary goods and necessary services
but this is difficult to justify logically or historically

So in terms of her employment contract, she is bound by it due to it benefitting her in terms of the training
providing. She would then have to go in accordance with the contract of employment. The only way she
gets out of the agreement if the other party did not provide a benefit for her such as no training in her
chosen career.

In the other contract with the lease of 3 years, that will go past her 18 th birthday so she must terminate that
contract before she reaches the age of 18. The common law renders such contract voidable at the option
of the minor, but the laws bind the other party.
In Corpe v Overton (1833) a minor agreed to enter into a partnership, which was to be formed in the
future. He paid a £100 deposit, knowing that he would lose it if he did not in the end go through with the
partnership. Before the partnership was put into operation, the minor repudiated the agreement. The
courts held that he was entitled to have his deposit back, because there was a total failure of consideration
– at the time he terminated the contract, he had received nothing in return for it.

Cathy is able to terminate the contract if she wishes can claim for the rent or deposits, but is likely to fail
if she receives nothing in return for it.

So, in conclusion, it can be said that Cathy is bound by the employment due to it being beneficial since it
provides training, however, she can terminate the lease.
5. Denzil drives his prized Cadillac convertible car on a shopping trip to the Astra grocery shop.
Whilst he is shopping, his car is stolen from the car park.
He places the following advertisement in the local newspaper:

£1500 REWARD
for information leading to the recovery of Cadillac convertible stolen from
Astra car park on 1 April.
Reward to be claimed by post by 1 May.
Claims to: 5 New Street, Newtown

Eddie, an off-duty policeman, sees the Cadillac convertible in a ditch by the side of the road along
which he runs every morning. He is unaware that a reward has been advertised until told about it
by his girlfriend, who read about the reward in the newspaper earlier in the day.
Eddie writes a letter to claim the reward. He posts it on 30 April and it arrives at Denzil’s address
on 2 May. Denzil refuses to honour the reward as promised.
Advise Eddie whether he has a contractual right to the reward from Denzil. [25]

An offer is an “expression of willingness to contract” on the exact terms with no other negotiation, so that
an obligatory contract can be formed with acceptance only. An offer can be made to the public at large as
seen in the case of Carlill v Carbolic Smoke Ball Co (1893) where a newspaper advert placed by the
defendant stated:-

£100 reward will be paid by the Carbolic Smoke Ball Company to any person who contracts the influenza
after having used the ball three times daily for two weeks according to the printed directions supplied
with each ball...
£1000 is deposited with the Alliance Bank, shewing our sincerity in the matter."

Mrs Carlill purchased some smoke balls and used them according to the directions and caught flu. She
sought to claim the stated £100 reward.

The defendant raised the following arguments to demonstrate the advertisement was a mere invitation to
treat rather than an offer: 

1. The advert was a sales puff and lacked intent to be an offer.

2. It is not possible to make an offer to the world.
3. There was no notification of acceptance.
4. The wording was too vague to constitute an offer since there was no stated time limit as to catching the
flu.
5. There was no consideration provided since the 'offer' did not specify that the user of the balls must have
purchased them.

The Court of Appeal held that Mrs Carlill was entitled to the reward as the advert constituted an offer of a
unilateral contract which she had accepted by performing the conditions stated in the offer.

An offer is distinguished from invitation to treat such as offers to negotiate, offers to receive offers and
offer to chaffer. In Fisher v Bell, The defendant had a flick knife displayed in his shop window with a
price tag on it. Statute made it a criminal offence to 'offer' such flick knives for sale. His conviction was
quashed as goods on display in shops are not 'offers' in the technical sense but an invitation to treat. The
court applied the literal rule of statutory interpretation.
A counter offer breaks the original offer and makes a new offer as seen in Hyde v Wrench (1840) where
the defendant offered to sell a farm to the claimant for £1,000. The claimant in reply offered £950 which
the defendant refused. The claimant then sought to accept the original offer of £1,000. The defendant
refused to sell to the claimant and the claimant brought an action for specific performance.

There was no contract. Where a counter offer is made this destroys the original offer so that it is no longer
open to the offeree to accept.

So this was a unilateral contract and it was an offer.

In terms of Denzel not seeing the advertisement at first and his girlfriend showing him, it should be noted
that he did see the advert before the offer expired.

Acceptance can be made in writing or in words. In order for there to exist a contract, the offer must be
accepted. Both parties should agree the terms and conditions. Silence is not acceptance of an offer. In
Felthouse v Bindley [1862] A nephew discussed buying a horse from his uncle. He offered to purchase
the horse and said if I don't hear from you by the weekend I will consider him mine. The horse was then
sold by mistake at auction. The auctioneer had been asked not to sell the horse but had forgotten. The
uncle commenced proceedings against the auctioneer for conversion. The action depended upon whether
a valid contract existed between the nephew and the uncle.
There was no contract as you cannot have silence as acceptance.

Acceptance takes place once the offeror knows that his offer has been accepted, with the exception of
acceptance by post. Offer and acceptance is the most fundamental part in contract law which determined
the existence and operation of contract among parties. Postal rules were created as an exception to the
general offer and acceptance rules. In general offer and acceptance rules, an offer could be withdrawn or
revoked anytime before its acceptance.

The postal rule was first created in the Adam v Lindsell [1818] where the defendant wrote to the claimant
offering to sell them some wool and asking for a reply 'in the course of post'. The letter was delayed in the
post. On receiving the letter the claimant posted a letter of acceptance the same day. However, due to the
delay the defendant's had assumed the claimant was not interested in the wool and sold it on to a third
party. The claimant sued for breach of contract.

There was a valid contract which came in to existence the moment the letter of acceptance was placed in
the post box.
This case established the postal rule. This applies where post is the agreed form of communication
between the parties and the letter of acceptance is correctly addressed and carries the right postage stamp.
The acceptance then becomes effective when the letter is posted.

Eddie does have a contractual right to reward Denzel since he sent the letter before the deadline, and that
he was off-duty from his policing work.

Also, he went beyond his duties as seen in Glasbrook Bros v Glamorgan County Council [1925] as a
policeman since there was no report to the police mentioned.
6. Houseproud Products (HP) places an order with Imperial Cleaning Supplies (ICS) for 500 cases
of furniture polish. The order acknowledgement received from ICS states that the supplier accepts
no liability for breach of any contractual term whether express or implied. ICS ships the order to
HP and the order is accepted into stock at HP’s warehouse. Ultimately it is delivered to HP’s shops
for sale to members of the public.
Jasmine visits an HP shop and buys some of the polish supplied by ICS. As she pays for the polish,
the shopkeeper tells her that the shop cannot be held responsible for the product if customers do
not wear household gloves when using it. Jasmine suffers severe skin irritation from using the
product without wearing gloves. HP denies responsibility.
Cleaners working for HP use the same product when cleaning the company’s offices. After several
weeks, the surfaces of all the desks in the offices have become severely damaged and HP believes
the damage has been caused by the polish. HP complains to ICS but the company denies
responsibility on the basis of its exclusion clause.
Advise HP and ICS of their respective contractual liabilities for the quality of the furniture polish
supplied in these situations. [25]

Terms of contract set out duties of each party under that agreement. The terms will be of two kinds:

1) Express terms: these are laid down by the parties themselves;

A contract may be (i) purely written, (ii) purely oral (iii) partly written and partly oral. Generally, no
formality is required for a term, whether oral or in writing (or partly orally or partly in writing), to form
part of a contract.

2) Implied terms: these are read into the contract by the court on the basis of the nature of the agreement
and the parties’ apparent intentions, or on the basis of law on certain types of contract. This is implied
either (i) by statute, or (ii) by custom, or (iii) by the court.

An exemption clause in a contract is a term which either limits or excludes a party’s liability for a breach
of contract. In order for an exclusion clause to be binding and operable upon the parties, the clause must:

1. The clause must be incorporated into the contract as a term.

2. The clause must pass the test of construction.

3. The clause must not be rendered unenforceable by the statutory provisions in the Unfair Contract
Terms Act 1977 or the Consumer Rights Act 2015

There are three ways in which written exemption clauses (or in fact any other type of clause) may be
incorporated into a contract: by signature; by reasonable notice; and by a previous course of dealing.

In incorporation by signature, regardless of whether the party did not read the terms of the contract and
proceeded to sign the document, then they will be liable if they breach the terms. By signature, both
parties in the scenario agreed to the stipulated terms.

In previous course of dealings, the party must have done dealings before such as at least 10 times. In these
dealings, the parties are expected to read the terms of the contract at least once so if they fail to carry out a
specific duty in the contract, then they would be held liable.
Incorporation by reasonable notice states a party seeking to rely on an unfair term must demonstrate that
they gave reasonable notice i.e. they took reasonable steps to bring the term to the attention of a
reasonable person.

Exemption clauses are simply examples of terms of contract and that whether or not they bind the parties
depends in the first instance, therefore, on them being incorporated as part of a contract. In both
circumstances, the shop keeper and Jasmine were notified orally whereas in Jasmine’s case she was
knowledgeable of the exclusion clause and still pursued to do the act.
In Chapelton v Barry UDC [1940] the claimant hired a deck chair from Barry UDC for use on the beach.
There was a notice on the beach next to the deck chairs stating that the deck chairs could be hired at 2d
for three hours and also 'respectfully requested' the public to obtain tickets issued by the chair attendants.
The claimant obtained a ticket and put it in his pocket without reading it. In fact there was an exclusion
clause printed on the ticket excluding the council's liability for personal injury caused in using the deck
chair. The claimant was injured when he sat on the chair. The fabric of the deck chair split away from the
frame. He brought an action against the council and they sought to rely on the exclusion clause contained
in the ticket.
The exclusion clause was not incorporated into the contract. A reasonable person would regard the ticket
as nothing more than a receipt and would not expect it to contain contractual terms. Furthermore, the
wording of the notice suggested that a person could obtain the deck chair and get a ticket later. The notice
constituted an offer and collecting the chair would amount to acceptance. It would not be open to the
council to introduce new terms after the contract had been formed.

The validity of the exclusion clause needs now to be discussed. The contra proferentem rule is then used
which checks to ensure the clause covers the breach meaning that where the words of an exemption
clause are ambiguous, they will be interpreted in the way least favourable to the party relying on them.

In Houghton v Trafalgar Insurance Co (1954). The case centred on a car accident, involving a five-seater
car which was carrying six people at the time. The policy under which the car was insured excluded the
insurer’s liability where an excessive ‘load’ was being carried, but it was held by the Court of Appeal that
the word ‘load’ should be given a narrow interpretation, referring to goods and not people; consequently
the clause did not exclude the insurer’s liability where the car was carrying too many people, rather than
too much weight.

Also, in the Unfair Contract Terms Act with regards to statute states that Section 12 explains that a party
is ‘dealing as a consumer’ where they are not making the contract in the course of a business, and do not
suggest that they are doing so, and the other party does act in the course of a business. Thus, in a contract
where both parties are consumers, neither would be regarded as dealing as a consumer for the purposes of
UCTA. Also goods supplied must be used for private use.

In Feldaroll Foundry plc v Hermes Leasing (London) Ltd (2004), a company had bought a Lamborghini
Diablo second-hand car for its company director at the price of £64,995. The managing director signed a
hire-purchase agreement stating that all express and implied terms as to description, merchantability,
quality and fitness for purpose were excluded. The contract also included a declaration that the car was to
be used for business purposes. The car was found to have a defect with the steering which made it
unpleasant to drive and potentially dangerous. The company sought to reject the car. The Court of Appeal
held that the company was contracting as a consumer and therefore the exclusion clause could not apply.
Under limitations of the UCTA, a good or service must be of good quality. HP would now be liable and
not excluded from liability. Also, we can see that HP was dealing not as a consumer, but as a business
since the polish was most likely used for the internal affairs of the company. ICS has the right to assume
that HP is not dealing as a consumer.
In the case of R&B Customs Brokers v United Dominions Trust, the Claimant were a company engaged
in activity as a shipping broker and freight forwarding agent. The company was however very small –
comprised of just two individuals. The Claimant company purchased a second hand car from the
Defendant. However, the car turned out to be in poor condition in that its roof leaked. This was argued to
violate s.14(3) of the Sale of Goods Act 1979 on fitness for purpose. However, the contract for the
purchase of the car included an exemption clause which sought to exclude liability under this requirement
of the Sale of Goods Act 1979. The Claimant cited the Unfair Contract Terms Act 1977, specifically
section 6 thereof, which stipulates that that requirement of the Sale of Goods Act 1979 cannot be
excluded by any contractual term. However, the Defendant argued that as the Claimant was a company,
they had entered into this contract in the course of business and not as consumer, meaning that they could
not rely on the Unfair Contract Terms Act 1977.

It was held that in this instance the Claimant had entered into the contract as consumer. In order for the
transaction to have been in the course of business for the purposes of s.12(1)(a) of the Unfair Contract
Terms Act 1977, the activity covered by the contract would have to be central to the business in question
which was not the case here (the Claimant’s business does not involve purchasing cars). Therefore, s.6 of
the Act applies and the relevant provisions of the Sale of Goods Act 1979 remain mandatory – they
cannot be excluded through the Defendant’s exclusion clause.

However, Jasmine was dealing as a consumer so she is entitled to damages with reference to section 6 of
UCTA.