Case of Mispricing between Sarah&PClayS based on contract in English Law (Case Study Sample)

CONTRACT LAW
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Question A
The case of mispricing between Sarah and PClayS revolves around misrepresentation in contract in English law. Based on the facts of the case, the English courts would seek to establish whether PClayS was liable for Sarah for negligent misrepresentation following its statements that the clay and other materials ordered by Sarah would require additional £800 to be delivered.
When negotiations lead to formation of a binding agreement, English legal systems have come up with various techniques aimed at dealing with the behavior of the parties during negotiation as behaviour containing the content and formation of the contract. This assertion insinuates that in the current legislation, the parties negotiating for a contract are highly likely to influence the validity and construction of an agreement. In this connection, it is rational to believe that defining agreement terms, whether misrepresentation or mistake presently affects the expression of the parties of their contractual intentions.[Hedley Byrne & Co. v. Heller & Partners Ltd., 1964 A.C. 465 (1964).]
The English courts have confirmed that using materials in pre-contractual negotiations are permissible in the creation of contractual terms, if not prioritized by the parties. This implies that any misstatement such as the mispricing in this context, which is made during a contractual negotiation, might lead to liability for any loss upon the formation of a contract. Conversely, if the parties have encouraged the contract, they can, under specific situations, transfer to the other party, the right to withdraw the whole agreement or a specific term. Such provision is given under the Misrepresentation Act 1967. If the agreement is of uberrimae fidei, conversely termed as one of utmost faith, then the parties engaging in a contractual negotiation have disclosure duties, which if breached, may give the other party the right to rescind from the contract. Besides, it is worth noting that the English law, under the Misrepresentation Act 1967, has a provision for introducing a special regime of fair dealing for consumer contracts.
The issue in Sarah v PClayS could be reviewed through the lens of Howard Marine v Ogden [1978] case, where the applicants sued the defendants for misrepresentation in quoting a wrong hire purchase price for hiring barges. The accused counterclaimed the damages. Based on the majority ruling delivered by Bridge LJ, the Appellate Court found the applicants liable under section 2 of the Misrepresentation Act 1967, citing that the evidence presented by the plaintiffs was insufficient to demonstrate that their representative had an objectively justifiable ground for discounting the figure of carrying capacity offered in the shipping document. Sarah’s case, therefore, can be distinguished from Howard Marine v Ogden [1978], where the defendant is expected to be liable for the duty of care under section 2 of the aforementioned act. On the other hand, PClayS’ liability for negligent misrepresentation could also be applied in Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964], where the House of Lords found that the relationship between the applicant and the defendant was sufficiently proximate to create a duty of care. The court ruled that while it was justifiable for Heller to know the financial information required to enter the contract, the accused was not liable for the duty of care.[Howard Marine v. Ogden, 1 Lloyd's Rep. 334 (1978).] [Hedley Byrne & Co. v. Heller & Partners Ltd., 1964 A.C. 465 (1964).]
The conduct of the parties during contractual negotiations is also considered when apportioning liability for an agreement that is voidable or void. Hence, it is important to understand the Misrepresentation Act 1967 spells out a statutory liability for negligent, intentional or even innocent misstatements. The party who contravenes the contractual term under the aforementioned legislation (PClayS in this context) should be held liable for the damages caused by the mispricing. On the other hand, Sarah should be cognisant that the Misrepresentation Act 1967 allows her to withdraw from the contractual negotiation grounded on the other party’s violation of the agreement. Irrespective of whether the initial agreement was made with innocent misstatement, changing the terms of the original negotiation constitutes to violation of the aforementioned legislation, thus transferring the liability to the PClayS. Besides, the common law provides for liability in Tort for Negligence. This type of liability might arise through judicious reliance of the parties on each other while negotiating a contract. Simultaneously, if there is evidence that a party took responsibility for the sentiments made during contractual negotiations that led to the contract, one could be liable for the damages caused. However, if one party rescinds the contract, any benefits offered during the initial agreement could be recovered. This action is provided for under the Law of Restitution. In this connection, it is also important for Sarah to understand that if she agreed to pay an additional £800 during their subsequent negotiation, then she might not succeed in getting it back since it is deemed to have been offered under reasonable reliance on the PClayS.[Vladislava Stoyanova, "Common law tort of negligence as a tool for deconstructing positive obligations under the European convention on human rights" (2020): 637.]
Conventionally, the English law does not have a provision or a special rule for pre-contractual liability when no contract results. It should also be clarified from the outset that contractual liability in English law is demystified by the importance of a contract to be established on exchange of detriments or benefits to be binding unless it is a sealed agreement. Arguably, this makes it challenging for any statements or acts during the pre-contractual stage to have a legally binding effect, if the parties do not make any agreement. In this respect, only tort liability or equitable remedies remain a possibility in the case of Sarah. Since the agreement was not legally sealed, it would be difficult for Sarah to regain the amount she paid for this institution.
Other than understanding Sarah’s predicament under Misrepresentation Act 1967, the additional payment of £800 that this party made to the company could be challenged under the duty of negotiating in good faith, which is also enshrined in the English law. Forecasts and statements of opinions could constitute to representation, especially if the parties relying on the sentiments judiciously conceive that the individual making the statement is capable to deliver. As much as there is no duty to disclose information in English law, the information given willingly must not be misleading to the other party. In this context, while Sarah does not hold the rights of knowing the real price of the items she wanted to buy from the PClayS, the company’s information must not mislead their clients. However, the English law provides for a duty to disclose information to the pre-contractual negotiators to uncover if subsequent facts compromise the truth in a statement before it has been affected.
Question B
The case regarding Fatima and ZSG Builders Ltd relates to a concern of whether a standard of negligence is an objective one in common law. Considering that any reasonable person would see that using a pneumatic drill could highly likely destroy a concrete pillar, the court seeks to establish whether the ZSG Builders Ltd was liable for duty of care for its employee’s foreseeable negligence.
The tort of negligence is one of the most reoccurring issues in English law but seems to be inadequately understood. One of the issues that remain contentious in tort of negligence is the distinct facets that plaintiffs have to prove to find the accused persons liable for negligence. Essentially, torts relate to the legal crimes that specified parties encounter because of the others’ mistakes. It is also important to understand that negligence is a kind of tort that evolved because certain types of damage or loss were experienced between parties that are not bound by contracts, thereby making it challenging to sue each other.
Conventionally, the lack of contractual agreement between parties is what has made most cases of negligence difficult to address. However, in the case of Fatima and ZSG Builders Ltd, the facts are slightly different, considering that there was a pre-contractual agreement before the parties made the deal. Without a doubt, this initial agreement makes it more challenging for complainants to sue their offenders since most liabilities are covered within the contractual terms.
The case of Donoghue v Stevenson is apparently one of the most influential lawsuits in common law that gives better understanding of issues regarding negligence in the tort of law. Despite being ruled in 1932, the case remains significant even to the present contract lawsuits. The revolutionary importance of this ruling sets precedence to the standardized duty of care in lawsuits relating to negligence. After setting precedent to similar cases regarding negligence, the courts have continuously moved from determining specific duties of care for all tort laws to a framework that presumes the presence of the overall duty of care as ascertained in Donoghue v Stevenson. In this lawsuit, the House of Lords ruled that an individual could sue a party who caused them damage or loss even if there was no contractual agreement.[Donoghue's Case, 1932 A.C. 562 (1932)...