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Statutory Interpretation II - The Purposive Approach

With the inclusion of the United Kingdom into the European Union and with the rising number of cases that involved members of other European nations, especially in areas of trade and commerce, a new mode of interpretation was adopted and an approach that was more common in neighboring European countries was used. It is called the purposive approach and when using the approach the courts will first look at the intention of parliament.
Under normal circumstances or in most instances, the function of the courts is to ascertain the meaning of what parliament had said by giving the words their ordinary and natural meaning but this approach requires extreme clarity from draftsmen and it may be to a degree, that in all probability, is difficult to satisfy. It is an inescapable fact that despite all the care that is given to drafting documents, that there would be certain terms or clauses that turn out ambiguous.
It is a lot to ask of draftsmen to be precise in drafting documents especially whe…

Statutory Interpretation I

When interpreting laws, there are three rules that the courts generally use. They are as follows: -
i) the Literal Rule ii) the Golden Rule and iii) the Mischief Rule or Heydon’s Rule
When the literal rule is applied, the courts will give the words their ordinary and natural meaning. Let’s look at a few examples. In Fisher v Bell (1961) – the respondent was the owner of a shop and had displayed in his shop window knives with tags attached that read “ejector knife”.
A policeman entered the shop to examine the weapon and took it back to the station for further investigation. The chief inspector of police, convinced that it was indeed a flick knife charged the owner of the shop.
Under s1.1 of the Restriction of Offensive Weapons Act 1959 it is an offence for anyone to manufacture, sell or hire or offer for sale or hire, a flick knife.
Most people looking at the display would come to the conclusion that the knifes were on sale or were offered for sale but under the ordinary law of contract the d…

Elements in a Contract – Frustration

If for some reason, once a contract has come into existence, the parties in the contract are unable to fulfill their obligations then the contract comes to an end as a result of frustration. It is impossible to compile an exhaustive list of circumstances that will result in a contract coming to an end because of frustration and nothing illustrates the matter more eloquently than case law.
In Taylor v Caldwell (1863), the plaintiffs (claimants) went to great lengths to organize a concert and spent quite a large sum of money in getting the concert hall organized. A week prior to the concert, there was a fire and the concert hall was burnt to the ground. The plaintiffs sued the owners of the hall for a breach of contract. It was held that the contract came to an end due to the fault of neither party i.e. frustration.
In Knight v Ashton Edridge & Co (1901), a contact was entered into for the sale and purchase of cotton seeds. The ship carrying the consignment left from Alexandria but sa…

Elements in a Contract XXXII – Capacity

When a dispute arising from a breach of contract is brought before the court, the court when deciding on the appropriate type of remedy to award will look into various factors including the capacity of the parties to contract.
Minors
Contracts entered into by minors are normally regarded as voidable contracts i.e. the terms of the contract continue to exist but the innocent party or the aggrieved party has a choice of whether to continue with the contract or otherwise. It may also depend on factors like if the minor has received something in return for the consideration that he or she has provided under the contract.
In Corpe v Overton (1833) a minor paid a certain amount of money towards a partnership that was to be formed in the future. He subsequently repudiated the contract and the court held that he was entitled to get his money back i.e. he was under no obligation to continue with the contract.
In Steinberg v Scala (Leeds) Ltd (1923) however, a minor paid some money towards acquirin…

Elements in a Contract XXXI – Void

A contract is void when it is no longer possible to comply with the terms of the contract. Property belonging to mentally disable persons for example are brought under the jurisdiction of the courts and contracts entered into by anyone suffering from a mental disability is normally rendered void. The law seeks to protect their rights and interests by making any contract that they may have entered into without fully understanding or comprehending the nature and the terms of the contract by declaring such contracts void (Mental Health Act 1983).
A contract may also be declared void if the contract is beyond or exceeds the authority of a company or is made ultra vires (beyond the scope of one’s legal authority). In Ashbury Railway Carriage and Iron Company Ltd v Riche (1875) the company gave the plaintiff a loan to build a railway in Belgium. Subsequently the company refused the loan and the plaintiff sued. The company, in its defense pleaded that it was beyond its powers to grant the loan…

Elements in a Contract XXX - Promissory Estoppel

Promissory estoppel (equitable estoppel) is an equitable doctrine and operates in accordance with equitable principles. According to the doctrine, when one party makes a promise to another party and the second party relies on the promise and acts to his or her detriment than that promise is a valid promise and is a promise that is enforceable at law.
In Hughes v Metropolitan Railway (1877) the tenant under a lease was obligated to keep the property in a good state of repair and the landlord having inspected the premises and found that the tenant hadn’t complied with the obligation gave the tenant 6 months to complete the repairs failing which the tenant would have to vacate.
Subsequently the tenant and the landlord entered into an agreement for the sale and purchase of the property and the tenant who was under the impression that the property was going to shift hands or that he was going to acquire the property failed to make the stipulated repairs because the repairs were not something…

Elements in a Contract XXIX - Voidable Contracts

A contract is voidable when the terms of the contract continue to exist but the innocent party or the aggrieved party has a choice of either following through with the contract or otherwise. As a general rule contracts involving minors are voidable.
In Corpe v Overton (1833) a minor paid a certain amount of money towards a partnership that was to be formed in the future. He subsequently repudiated the contract and the court held that he was entitled to get his money back i.e. he was under no obligation to continue with the contract.
In Steinberg v Scala (Leeds) Ltd (1923) however, a minor paid some money towards acquiring some shares. She later made another payment and then decided to withdraw the payment and requested for the subsequent payment to be returned. The court rejected her request on the grounds that she received something in return for the sum that she had paid i.e. the shares.
Both the plaintiffs in Corpe v Overton (1833) and Steinberg v Scala (Leeds) Ltd (1923) at the time …

Elements in a Contract XXVIII - Privity of contract

The privity rule applies to third parties in a contract. Third parties in a contract are defined as persons who have not provided any consideration but stand to derive some benefit from the contract. In Beswick v Beswick (1968) the plaintiff’s husband sold a business to his nephew with the stipulation that an annual income be made to him and upon his death to his wife. The nephew failed to make the stipulated payments, following his uncle’s death, as agreed, and the plaintiff sued. Under normal circumstances the plaintiff would not be able to sue because she was not a privy to the contract but because she was also the executor of the deceased’s estate, she was able to bring the matter before the courts.
The Law Commission Report 1996 – Privity of Contract, highlighted some of the difficulties caused by the rule especially in insurance contracts and other contracts that sought to confer rights on third parties like construction contracts and in such instances the aggrieved party had to …

Elements in a Contract XXVII – Rescission

Rescission is an equitable remedy that is available for misrepresentation. The effect of misrepresentation is that the contract becomes voidable i.e. the contract continues to exist until the innocent or aggrieved party chooses to set it aside as opposed to a contract that is void where it is no longer possible to comply with the terms of the contract.
It is available for all three categories of misrepresentation and its intent is to put the parties back in the same position they were in before the contract was made.
In Car and Universal Finance Co Ltd v Caldwell (1965) the defendant sold a car to a buyer who purchased it with a nominal sum, a cheque and left behind his own car as security. Once the buyer had taken possession of the car, the defendant attempted to cash the cheque and the cheque bounced. The defendant immediately notified the police and the other relevant authorities but by that time the buyer had disappeared with the car. The buyer later sold the car to a car dealer who…

Elements in a Contract - XXVI – Injunctions

The second type of equitable remedy that the courts will award is an injunction and it is basically an order to stop a person or a company from doing something. While the earlier remedy of specify performance compels a party to act, injunctions do the exact opposite.
Let’s say for example that Jack and Jill are neighbors. Jack happens to be a bit of a handyman and his favorite hobby or pastime is to make improvements to his house. So, whenever he has a day off, especially Sundays, he drills holes in his walls. The sound drives Jill, his next-door neighbor, who works six days a week at the local hospital, insane. Unable to tolerate the noise any longer, she approaches the court for an order to stop Jack from drilling holes in his walls on Sundays. Such an order is called an injunction.
Likewise let’s say that Lakeside Mining Corporation has acquired a certain property and based on geological studies the property it has acquired is rich in minerals. Lakeside then makes it public that it i…