Section
The Bidding
Charterparty invited tenders for the construction of a new cruise-liner, to be called the Ocean Carpathia. Donelly was invited to tender. However, the person responsible for receiving tenders left work early.
ISSUE: WON Donelly Brothers can compel recognition of its bid? HELD: Yes
DISCUSSION: Similar to the case of Blackpool v Blackpool, it is the duty of the entity requesting for bids to inspect all those which have been submitted. In the case at bar, MC Donelly was actually able to submit its bid on time. It is not the fault of the bidder that their documents were not received in time, as it was the responsibility of the company, through its employees to ensure that all bids shall be checked. In this case, the employee which left earlier was the primary cause for its bid being late. As a remedy, it can compel Charterparty specific performance requiring that the bidding process be reopened.
The Sauna
Six months after the agreement, in a conversation over the telephone, Charterparty asked McPherson to include a sauna in the swimming pool area. The cost of the adjustment to the design was not significant and agreed to it as a gesture of goodwill.
ISSUE; WON the promise to construct a sauna is binding? HELD: YES
DISCUSSION; The promise to construct a sauna is not without consideration. The primary reason for its inclusion is that of goodwill. Thus, McPherson cannot be said to not have benefitted from such deal in constructing it free of cost. Morevoer, McPherson is estopped. It did a promissory estoppel, wherein it made a unilateral promise, by virtue of which, Charterparty will not be encouraged to delegate the sauna building to any one else.
Previous Union Dealings and McPherson's Labour Relations
The strikes hit McPherson hard and it agreed with SWWU, after the most recent action, to "come to the table" and negotiate a new collective agreement for the work on the Ocean Carpathia. It was agreed that McPherson would make ex gratia payments of £100 per day to all union employees on the Ocean Carpathia project for each week of work completed provided that no overtime was recorded by SWWU workers.
ISSUE: What type of contracts is included? HELD: Promissory Estoppel
DISCUSSION: McPherson is bound to offer the agreement. It entered into a promise by virtue of which it prevented another party from performing an act or a deed. By promising to pay a sum certain of money, it prohibited the workers to register overtime pay. As such, the contract is enforceable as against Charterparty
The Delay
McPherson encountered difficulty with one its suppliers. Talbot Turbines Ltd had agreed to supply the engines for the Ocean Carpathia on 1 September 2014 at cost agreed with McPherson of £5,000,000. However, a month before delivery, it contacted McPherson to say that the cost would now be £5,250,000.
Issue: WON McPherson can retrieve the excess of the agreed amount previously Held: NO.
Discussion:To enforce a contract, there should have been mutual agreement. In this case, it has been agreed upon that Talbot Turbines would supply McPherson with engines at a particular cost. It cannot therefore rescind its agreed price and offer a higher one.
With McPherson’s payment, such is prima facie evidence that he agreed to the new price, albeit reluctantly. McPherson and Talbot Turbines have given each other consideration, or payment for the new contract. As has been said in Curie v Misa, Currie v Misa: “ A valuable consideration, in the sense of the law, may consist either in some right, interest, profit, or benefit accruing to one party, or some forbearance, detriment, loss or responsibility given suffered or undertaken by the other.”
The Increase in Cost
The cost of oil and steel increased significantly, which, in turn, meant that the cost of materials rose. Charterparty suggested to McPherson that it would pay an additional £2,500,000 immediately for the Ocean Carpathia provided the ship was in August.
ISSUE: WON the original contract has been superseded? HELD: YES
DISCUSSION: In the case at bar, there has been an anticipatory breach , performed by McPherson. Well aware that it is unable to complete the contract on the date stipulated, it informed Charterparty of such situation prior to the date agreed upon in the contract. Anticipatory breach occurs when a party informs the counterparty of its refusal or inability to perform its portion of the contract. However, Charterparty fully acknowledged and accepted the breach. Its act of offering an additional amount for the project to be completed in August is proof that indeed it has accepted the non performance of Charterparty. In its stead, it made a new contract, with a new delivery date and a price as agreed. Thus, Charterparty with its acceptance is likewise estopped from contesting the breach.
The Baltic Seafarer
Since the ship was not delivered, Chartparty commissioned the Baltic Seafarer, an older less modern vessel. Charterparty's brochure had advertised the cruise in glowing terms. Charterparty wrote to all those who had booked to explain the situation. However, Roger who had his cruise booked for the first week of June, was not satisfied with this offer.
ISSUE: WON Charterparty is liable for the undelivered promise HELD:Yes
The enforceability of contracts has been established in the case of Carlill v Carbolic Smoke Ball Company wherein a company which offered a smoke ball along with a promise to reimburse purchasers should the product not deliver the cure was adjudged to have been liable as such is considered as an offer.
In this case however, the above situation is more akin to an invitation to treat. An invitation to treat as defined in contract case law is an offer which is open for negotiation. IN the case of Fisher v Bell, the display of the goods in a shop, along with a tag price attached to it is merely an invitation by the seller, for potential buyers to make an offer. Such is not a firm offer that may be enforced on its own or presumed binding by the potential buyer.
Additionally, included in the booking contract is an exclusion clause, a phrase in the contract which intends to limit the party’s liability, wherein Charterparty reserved the rights to book the client to another holiday which will supposedly yield a comparable experience.
The validity of enforceability clauses shall depend largely on its reasonableness and its interpretation. The exclusion clause will be interpreted against the party who drafted such, having had the opportunity to examine and write the agreement. The terms should have been clear and unequivocal as not be ambiguous, as held in White v Warwick. However, such exclusion clauses cannot be used as a means to defeat the purpose of the contract. As in the case of Alisa Craig v Malvern Fishing, wherein the security company fundamentally breached the agreement when it failed to secure the goods that should have been protected.
Thus, Roger a client who refused such offer of Charterparty for a different cruise liner may seek a reimbursement of the amount paid as the main inducement for his action is to avail of the agreed service, and along with the pleasure he expects from it.
Ocean Carpathia: Teething Problems
First, the promise to include a sauna near the swimming-pool had simply been forgotten and this facility was not provided, the pool was The pool, was 5 feet deep instead of 7 and that the color scheme was not followed.
ISSUE: WON the original contract was enforceable? What are the remedies available to Charterparty?
DISCUSSION: The primary consideration given by Charterparty was of course, its payment for the construction and delivery of the ship. Notwithstanding, the promise, the sauna which was not included in the final delivery was not without consideration. In fact, as stated by McPherson, the sauna shall be free of charge, as a suggestion of their goodwill. In this case, the goodwill has been the consideration sought by McPherson. It refused to charge additionally to maintain its good relations with Charterparty. Note that as discussed above, consideration need not be primarily monetary, provided that the other party benefited from the transaction.
The best judicial remedy in this case is to compel specific performance. Specific performance is the mandatory order wherein the court shall require the parties or the party which is guilty of defective performance to deliver completely and wholly the conditions agreed upon. The contract in this case cannot simply be terminated because the breach cannot have been said to have been made on bad faith, and that the mistake cannot have been said to be gross, rendering the contract void.
ISSUE: WON On Board Sports is liable to Charterparty for the tiles which were not of the proper color? HELD: Yes
DISCUSSION: In this case, Charterparty contracted with McPherson. It was wholly unaware that McPherson outsourced the portion on the tiles. Developments in case law allowed for parties not privy to the original contract to be liable to the parties in the original contract. Such is called a collateral contract. In a collateral contract, a party becomes part of a subordinate contract, which in turn is part of the main contract.The subordinate contract in this case is the tiles installation which was performed by OnBoard. It was part of the main contract, that is, the construction of the cruise liner. In Shanklin Pier versus Detel Products, the court held the paint manufacturer, the product of which was used to refurbish the portions of a pier liable to the pier, for its low quality.
Similar to the above mentioned case, ONBoard can be made liable to Charterparty, for its failure to perform its duty of tiling according to the agreed conditions. Moreover, under the Rights of Third Parties Act of 1999, a party who has benefitted from a contract may enforce such terms, and are allowed certain legal remedies should breach occur.
Water Skiing Deal
The ship offered water-skiing lessons. Passengers had to sign a waiver. One of the passengers, Douglas, did not have his reading glasses with him so, although he signed the form, he did not read it. He suffered bruises due to steep turns. Misha lost her Fendi bag (her expensive purse) over-board with the violence of the boat's manoeuvres. It was discovered that Horatio had been in the bar drinking before taking the passengers out.
ISSUE: WON Charterparty is liable? HELD: Yes.
Discussion: The above concerns the issue of an exclusion clause. However an exclusion clause cannot exclude a party which provides a service and exempts itself from any liability for death or injury. The client could not have been said to assume additional risks. In this case, the client cannot be made aware that the employee, Horatio who was in charge of the ski was drunk and thus, making him culpable for the accident. Even if he signed the waiver, the fact that the employee in charge was drunk, the company is still liable. T
This is the peril that the Unfair Contract Terms Act of 1977 protects against—agreements in which the parties have unequal bargaining power. Since it was written by, the company in this case, then it was largely a one sided contract signed blindly by the passengers lest they not be allowed to avail the cruise. Giving the waiver legal value is equivalent to allowing the company at fault to get away with the duty of care it owed to its clients.
Shellfish Poisoning
Another problem arose when a small number of guests were struck down with food poisoning. It originated from shellfish served during dinner. Sukie, aged 72, who had to be flown off the ship to a hospital at home.
ISSUE: WON is liable to Sukie and his husband? HELD: Yes.
DISCUSSION: In this case, the Carpathia is liable to the passengers who have been ill, and not just to Sukie. As the provider of the service, the cruiseliner is expected to uphold standards of care, in the performance of its duties. The fact that a small number of passengers became sick, and not just one would mean that such is not an isolated case.
However, should it be proven that the passengers are suffering from a shellfish sensitivity which has not been disclosed, then the passenger can be considered to have been at fault. It is but the duty of the passenger to inform the ship and its employees of any allergens it has.
Shopping on-board the Ocean Carpathia
. Charterparty entered rental contracts with each of the shops for a period of three months. However, due to frequent losses of power, customers were being missed by Wondrous Waves. The contract between Charterparty and the shop includes a waiver on the losses.
ISSUE: WON Charterparty is liable to Wondrous Waves? HELD: Yes
DISCUSSION: This case falls under the concept of implied terms. In the contract, terms which can be reasonably concluded or induced from the agreement are deemed included, without need for an express statement. In this case, the renting out of the space by Charterparty to Wondrous Waves includes an implied agreement that it would act as a reasonable lessor. A reasonable lessor in this case is one which is expected to provide constant electricity, the lack of which can be reasonably be blamed for the poor business.
It cannot be said that Wondrous Waves has contracted away its right with the waiver. As has been earlier discussed, the Unfair Contract Terms Act protects Wondrous Waves in this case. Wondrous waves signed the agreement without having the chance to bargain the stipulations contained therein, thus the unequal bargaining power.
Moreover, under the Supply of Goods and Services Act of 1982, the supplier owes a duty to the consumer to provide services or goods of reasonable quality, such that the good to be delivered is not shoddy, nor that the completion date if not specifically agreed upon, is one which the parties have intended.
Terrestrial Electricals
A separate issue arose in connection with another shop, Terrestrial Electricals, which sold electrical entertainment equipment. Sandeep purchased a pair of head-phones from the shop, but within an hour of wearing them, he had suffered a serious electric shock to his head. ISSUE: WON Sandeep has a cause of action against Terrestrial Electronics. HELD: NO
DISCUSSION: Although Sandeep bought the earphones under the said store, the said store is not the manufacturer of the earphones. Relevant in this case is the concept on privity of contracts. The manufacturer in this case is under a subordinate contract under the retailer. The main contract is the contract of sale by which the original parties is Sandeep and terrestrial Electricals. The manufacturer, having had benefitted from the collateral contract, by virtue of additional income as a result of the sale transaction, he can be sued by Sandeep under such legal concept.
The Auction
` An auction was held on board ship, Although the auctioneer correctly described the picture as a copy during the auction proceedings, Pablo misheard the auctioneer's description and, relying on the brochure stating it was an original he bid a huge amount for the copy.
ISSUE: WON the auctioneer is liable? HELD: Yes
DISCUSSION: Relevant to this case is that of an invitation to treat and a firm offer. As earlier stated, an invitation to treat consists of a display in a shop, complete with a price tag. It can also be made through a brochure, by which the good or service sought to be sold is advertised. The brochure cannot have been considered to be a firm offer, then any good or product which deviates from the one being shown on it can still be sold. However, in this situation, both parties are at fault. They are in pari delicto. Thus, there has been a frustration of the contract, in short no contract has been entered into. A remedy in this case is to allow the buyer to return the good, and the seller will reimburse such.
The Cheque
Mabel and Doreen joined Bingo. Tey won a brand new TV set. Jimmy pretending to be Jude law bought the tv. However, the cheque he had given Mabel and Doreen was dishonoured.
ISSUE; WON Jimmy was liable? HELD; Yes
DISCUSSION: Apparent in this case was that, no contract has been entered into. For a contract to be agreed upon, it has to be mutually consented to. The consent in this case was obtained through fraud. The fact that the cheque given was dishonoured is prima facie evidence of fraud. Being a negotiable instrument, the only remedy available to Jimmy is to give another cheque for the same amount, a cheque which will not be dishounoured.
Bridgetown, Barbados.
During part of a voyage, the Ocean Carpathia entered into a contract with the port authorities in Bridgetown, Barbados to moor for three nights. Whilst moored there, she suffered some slight damage to her hull because of a faulty instruction from the mooring authority.
ISSUE: WON Barbados Port Auhority is liable? HELD: Yes
DISCUSSION: It has been clearly stated in the facts that Charterparty through its captain entered into an agreement with Barbados Port Authority to moor for a certain number of days. Contained in the agreement are implied terms of the contract.
In docking or morring its ship, the company or the captain has all right to rely on the judgement of the port provider, being the expert in this instance. The fact that they had no knowledge of the suitability of the area for mooring contravenes a major aspect of the contract. In fact, it is equivalent to a failure of the contract. The unsuitable mooring ground disables the ship from docking. In this situation however, it did so, upon reliance on the port authority. Thus, with the non performance of its implied duty to provide a suitable mooring area, then the ship can sue the latter for damages.
The Tour
On the final day of the visit to Barbados, the Ocean Carpathia agreed with the Barbados Tourist Board for passengers to be taken on a day-trip around the island at a cost of £75 each, However, owing to slow traffic on the return journey through Bridgetown, the passengers were not returned to the ship until 18.15. As a result, the tour guide left without being paid. ISSUE: WON Charterparty is liable to The Tourism Authority? HELD: YES
DISCUSSION: The tourism authority has performed its duty- that of touring the passengers. It can be argued that the delay was due to a fortuituous event, a circumstance which was not foreseen nor predicted in the beginning. Thus, without bad faith and deliberate intent from the tourism authority, it should be compensated for its services.
The £2,500,000 - the Retention Clause
Dispute has also arisen between Charterparty and McPherson with respect to the retention clause. Charterparty have refused to pay the final sum of £2,500,000 retained under the original agreement.
ISSUE: WON Charterparty is entitled to the sum? HELD: YES
DISCUSSION: Obviously, by doctrine of estoppel, Charterparty is entitled to the sum promised. Such is the concept of promissory estoppel wherein one party will act in a certain way in view of the promise of another party. In doing so, Charterparty is liable for the said retention clause
References
Allisa Craig Fishing Company v Malvern Fishing and Securicor Scotland (1983) 1 A11 ER 101
Blackpool & Fylde Aero Club v Blackpool Borough Council [1990] EWCA Civ 13
Currie v Misa (1875) LR 10 Ex 153
Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd [1915] UKHL 1
Hartog v Colin & Shields [1939] 3 All ER 566
New Zealand Shipping Co. Ltd. v. A. M. Satterthwaite & Co. Ltd. [1974] UKPC 1
Shanklin Pier Ltd v Detel Products Ltd [1951] 2 KB 851
Smith and Snipes Hall Farm Ltd v River Douglas Catchment Board [1949] 2 KB 500
South Australia Asset Management Corpn v York Montague Ltd and Banque Bruxelles Lambert SA v Eagle Star Insurance Co Ltd [1996] UKHL 10
Transfield Shipping Inc v Mercator Shipping Inc [2008] UKHL 48
