Essential Element of Contract System †Free Samples to Students

Question: Discuss about the Essential Element of Contract System. Answer: Introduction: In the case of Esso Petroleum Co Ltd v Mardon [1976] Q.B. 801 the plaintiff had suffered losses because of the misinformation provided by the claimant. In this case the misinformation was not provided deliberately but reasonable steps could have been taken by the defendant to avoid the misinformation being provided. The court held that the actions of the defendant accounts to negligent misrepresentation. The court further ruled that in situation of a negligent misrepresentation the aggrieved party may claim any consequential damages and also has the right to recession. A consideration is an essential element of a contract. There are certain rules which are provide by precedent case laws to determine that a consideration is lawful or not. One of such rules had been used in the case of Foakes v Beer (1884) 9 App Cas 605. In this case Mr Foakes has been provided an order to get payments from Mrs Beer. She told Mr Foakes that she will accept 500 now and rest later and would not take any interest. However the court held that Mrs Beer is entitled to the interest as no additional consideration has been provided by the defendant to forgive the interest. However where a promise changes the position of the party not may be enforced though the equitable promissory estoppels doctrine even without a consideration as per the case of Alan v El Nasr [1972] 2 WLR 800 . The doctrine forces the person making a promise to comply with it if it would be inequitable otherwise. In the landmark case of Hyde v Wrench [1840] EWHC Ch J90 the issue of counter offers and their effects on the first initial offer had been discussed by the court. It had been ruled by Lord Langdale in the cases that the initial offer is cancelled by a counter offer. Wrench had made an offer to Hyde to sell his farm at 1000. Hyde stated that he will purchase the farm at a price of 950. However Wrench did not accept the offer. Hyde then decided to purchase the farm at 1000 which was the original offer. However Wrench did not agree and Hyde claimed a contract. The court held that there was no contract as the counter offer of 950 canceled the initial offer. In contract law, general a past consideration is not considered to be valid and thus does not have any legal significance. In the case of Roscorla v Thomas [1842] EWHC J74 it had been ruled by the court that past consideration cannot be considered for the purpose of claiming damages under the provisions of contract law. However in the case of Pao On v Lau Yiu Long [1979] UKPC 17 it had been ruled by the court that where the action has been done on the requires of the promisor and there was an understanding that the act is to be compensated then past consideration is valid. Richard has approached with Shocks Are Us to purchase new shock observers for his jeep. He has been informed by their agent that the most suitable shock observers which could function on rough ground are that of D200. However D200 were not suitable for rough ground and as a result the Jeep crashed and suffered damages of $2000. The representation provided by the agent was therefore false. She has provided the wrong information negligently which was used by Richard to get into the contract. Thus there is negligent misrepresentation and Richard can rescind the contract and claim consequential damages as per Esso Petroleum Co Ltd v Mardon. There was an already existing contractual obligation which Richard owed to George according to which the rent of the lease was to be increased every year at a rate of 10%. However the George agreed with Richard that he will forgive the additional rent for the present year. Based on the promise of George, Richard invested the money he had to purchase extra tools for his business. Although if the Foakes v Beer case is applied there will be no way in which Richard can avoid paying the additional rent to George as past consideration is not valid consideration. However as there has been an actual change in position of Richard because of the promise of George, as per the case of Alan v El Nasr the promise will be enforceable. The initial offer made by Tom to purchase the car which had been valued at $20000 by Richard was at a price of $18500. The offer was not accepted by Richard as a counter offer has been made by him to sell the car at a price of $19000. This means that as per the principles provided by Lord Langdale in the case of Hyde v Wrench the offer of $18500 made by Tom has been cancelled by the counter offer of $19000 by Richard Thus Richard cannot make accept the initial offer of Tom.It has been discussed as per the above case of Roscorla v Thomas that past consideration is not a valid consideration. Past consideration means an act which has been done prior to an offer being made. Martin used to take care of Richards garage without any consideration or promise of payment. Richard promise Martin that he would provide him with his car which he gives for rent at $50 to be used for free as he had been taking care of his garage. However this is a past consideration and does not fall within the exception of the Pao On v Lau Yiu Long case. Thus no contract is formed. Conclusion Negligent misrepresentation has been made by agent of Shocks Are Us and Richard can thus get damages and rescind the contract Richard is not liable to pay George for the rent he had forgiven No contract exists between Tom and Richard Past consideration was not valid thus agreement is not enforceable between Martin and Richard. References Alan v El Nasr [1972] 2 WLR 800 Esso Petroleum Co Ltd v Mardon [1976] Q.B. 801 Foakes v Beer (1884) 9 App Cas 605 Hyde v Wrench [1840] EWHC Ch J90 Pao On v Lau Yiu Long [1979] UKPC 17 Roscorla v Thomas [1842] EWHC J74