Contract Law has gain its importance through the incresingly complex business world. It facilitates the allocation of risk and regulate trading prctices , providing a favourable environment for business transactions. There are several legal principles which form the underlying basis of Contract Law and in this case between Carrara Marble and Better Batherooms, which is a typical case under the heading of Contract Law, those relevant legal principles include, namely, agreement, offer and acceptance and consideration.
Before giving proper advice to Carrara, we could first approach the case from these fundemental legal principles and then go through the analysis with the assist of a few similar past legal cases. First of all, the essential question is ‘Has an agreement been reached between the parties? ‘ And by agreement, I mean consent by both parties to the contract without vitiating factor of duress, undue influence and fraud. And to decide whether an agreement exist, we could go through the procedures of finding a distinct offer and aacceptance.
In the question case, Better Batherooms did negotiate a cut price deal with Carrara Marble for marble tiles delivery. Although no formal document was signed, Carrara had made deliveries of the tiles and Better Batherooms has paid for them at the reduced rate. It is clear that an offer and acceptance could be found in the case. Written document of such kind is only needed historically to proof the enforceability an agreement. In the judgement of Smith v Hughes, the objective test of contsent was referred to which focus on the examination of what the parties actually said and did.
The concept of acceptance by conduct could be further illustrated in Brogden v Metropolitan Railway. Brogden had negotiated with Metropolitan Railway to supply coal at certain amount at a fixed price. Brogden’s manager signed and approved the agreement and returned it to Metropolitan Railway’s manager, who left it in his desk and forgot about it. Due to some delays in delivery, Brodgen declined to supply further coal.
The House of Lord held that a contract was found and Lord Blackburn said that: ‘… hen an offer is made to another party, and in that offer there is a request express or implied that he must signify his acceptance by doing some particular thing, then as soon as he does that thing, he is bound. ‘ This case is actually very simliar to our question case only in that the position of offeror and offerer is exchanged. Carrara has made an offer by sending a written contract and delivering tiles to Better Bathrooms and Better Batherooms has in turn accepted it by making payment at the new reduced price.
One might argue that there was no acceptance since it was not commuicated to the offeror and therefore no binded contract. However, this line of reasoning was rather weak since tiles had already been exchanged. Re-negotiation took place when Carrara ran into financial difficulties. In the new agreement with the newly negotiated price, Barry, the manager of Better Bathrooms made an oral offer to pay 50% more for the tiles if Carrara would continue the deliveries and was accepted by Carrara’s manager, Carlo, who then made tiles delivery for three months.
In the newly constituted agreement, a clear offer and acceptance is made and communicated. Therefore, the question of whether a new agreement exist does not lie in the heart of the arguement. It is the issue of enforcability that is relevant in the new agreement. One of the legal principles that test the enforcability of agreements is the doctrine of consideration. The reason this doctrine has been developed is largely due to the infexibility created by the traditional formal requirements. It is this doctrine of consideration that play the principal role of selecting those agreements to be given the ‘badge of enforceability’.
Indeed, consideration is probably one of the most controversial issues in Contract Law. The orthodox interpretation of the doctrine is based upon the idea of ‘reciprocity’ which suggests that a promisee could enforce a promise only when he has promised to give something in exchange or the promisor has obtained something in return. However, another school of thought lead by Atiyah argued that there are other ‘good reasons’ for the enforceability of a promise. Finding of consideration also reflect the true intention of the parties which may help resolving court cases.
In this case, there is no doubt on the existence of consideration in the original agreement. In order to get paid by Better Bathrooms, Carrara has to deliver tiles to them. The concept of mutual requests is clearly showed here. However, this same arguement might not be suitable to the newly made agreement. The key issue is Carrara was already under obligation to perform the duty of the original contract and were asked to do no more than that. On the other hand, Better Bathrooms had to pay 50% more for the tiles he originally asked for.
Until recently the rule which English law adopted was that performance of an existing contractual duty owed to a promisor was no consideration for a fresh promise given by the promisor and it can be illustrated in the case of Stilk v Myrick. Stilk was a seaman who agreed to sail to Baltic in Myrick’s boat. During the journey, two men deserted and Myrick asked Stilk and the crew to sail back to London, in return, the crew could share the wages of the two. When the crew returned to Lodon, Myrick refused to pay. Stilk sued for the balance and was unsuccessful in the claim.
It follows that there was no consideration in the agreement as the crew had only performed no more than what was asked in their original contract. The case with Carrara is only similar to Stilk v Myrick in that he was asked to perform a pre-existing duty owed to Better Bathrooms in the new agreement, however, the situation and backgorund between the two is largely different. Another case, Williams v Roffey Bros & Nicholls, is probably more relevant and similar to Carrara’s. The defendant was the contractor to refurbish a block of flats.
Williams was the subcontractor of the carpentry work. Due to the financial difficulty of Williams which was partly attributable to the under-pricing of the job, he was not able to complete the project. The defendant called a meeting and agred to pay an extra in order to have the work completed. Williams subsequently finished eight further flats but received only part of the agred extra payment. The Court of Appeal ruled in favour of the claimant, despite the Stilk’s conclusion, on the ground that practical benefit was obtained by the defendant.
The first was that the claimant continued the work and did not breach the contract. The second was that the defendant had saved the expense of engaging other people to complete the carpentry work and they could avoided incurring a penalty under the main contract for the delay in completion of work. The situation of Carrara is in fact very similar to Williams v Roffey Bros & Nicholls and almost the same reasoning of practical benefit could be fitted into Carrara’s case.
Better Batherooms would suffer financial penalties for any delay in fitting out the batherooms and all the troubles and expenses of finding new tile suppliers could be saved. However, there are also shortcomings in the ruling of Williams v Roffey. People could delibrately under price in the beginning of a contract and extort whatever amount in the process, and this destroys the function of a contract completely. The court would therefore be reluctant to resolve cases through practical benefit unless sufficient proves