STUDENT HOMEWORK HANDOUT 1



DOCUMENT 2 PHARPHRASING / SUMMARISING

As preparation for your assignment, you need practise at paraphrasing and or summarising what the judges say in their case decisions.

Granger v. Gough [invitation to treat v. offer]

Written by: J Murdoch

|Justice Murdoch |Paraphrased or summarised version |

|"The transmission of such a price-list does not amount to an offer to supply |Try to paraphrase Lord Herschell: |

|an unlimited quantity of the wine described at the price named, so that as | |

|soon as an order is given there is a binding contract to supply that | |

|quantity. If it were so, the merchant might find himself involved in any | |

|number of contractual obligations to supply wine of a particular description | |

|which he would be quite unable to carry out, his stock of wine of that | |

|description being necessarily limited. I entertain, I confess, a very clear | |

|opinion that the Solicitor-General was quite right in arguing the case on the| |

|assumption that no sales were made in this country." Lord Herschell (Justice| |

|Murdoch is quoting Lord Herschell) | |

|Just over one hundred years ago the above ratio-descendi was given in what |What was the legal issue? |

|was at the time a case concerned with alleged back taxes owed by Grainger & | |

|Son. | |

|Grainger & Son (henceforth referred to as G&S) were British wine merchants |What are the facts of the case? |

|who as a side venture passed on the price lists of a French wine producer to | |

|their customers. G&S received a commission on any orders placed with said | |

|producer and paid tax on this commission. | |

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|Gough claimed that tax was payable on the whole value of these sales not just|What legal argument did Gogh put forward? |

|the commission element. Monsieur Roederer (henceforth Mr R) was a wine | |

|producer located in France. He decided whether to accept the orders gathered | |

|by G&S or not. ……… The wine was shipped directly to the customer in the UK | |

|from France. Most customers settled their accounts directly with Mr R. | |

|G&S maintained that they entered no contracts regarding Mr R’s wine. Gough |What were the opposing legal positions taken by the plaintiff and defendants? |

|held the converse view that G&S entered contracts themselves and thus sold Mr| |

|R’s wine. | |

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|Our starting point must be to define what a contract under English law is. |Summarise this information : |

|…To form a contract under English law the following elements are required (i)| |

|a valid offer has been proffered by the first party to another party or | |

|parties (ii) the offer has been accepted unchanged by the second party or | |

|parties and this has been communicated to the offerer . (iii) there is an | |

|intention by all parties to create legal relations when they entered into the| |

|contract and the parties have the capacity to contract (iv) the promises made| |

|within the contract are for valuable executive consideration and (v) the | |

|terms of the contract are certain. | |

|Did Mr R make an offer through the medium of his price list? Looking in |Outline the arguments in this paragraph and paragraph 8. Do these arguments |

|Mozley and Whiteley's Law dictionary an offer is "An expression of readiness |support G&S or Gough? |

|to do something (e.g. to purchase or sell)". Mr R is saying that he is | |

|willing to sell wine. Based on this definition initial opinion would say that| |

|the price list does constitute an offer. Continuing with this line of thought| |

|G&S acted in an agency capacity for Mr R making an offer to the customers | |

|they approached and receiving the acceptance of any order. | |

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|If the customers accepted G&S’s offer made via the medium of the price list | |

|then Mr R merely shipped directly from France. The bills for said wine were | |

|sent to G&S who would then forward them on to the British customer. These | |

|points all suggest that the sale was made in the UK by G&S. The listing of Mr| |

|R, in the Post Office London Directory, as trading from G&S’s establishment | |

|further hints at an agency type arrangement. | |

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|Much of the argument supporting the invitation to treat viewpoint is by |How do the arguments in this paragraph & paragraph 10 help G&S? |

|drawing analogies with cases involving auctions such as Payne v. Cave (1789) | |

|and Harris v. Nickerson (1873) in which both concluded that bidders make an | |

|offer which the auctioneer is free to accept or not. The bidder’s offer being| |

|retractable until accepted by the auctioneer. The pricelist could be seen as | |

|statement of the minimum price at which Mr R would be willing to sell wine | |

|drawing analogies with Harvey v Facey (1893). | |

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|Mr R’s supply of wine in any year is finite and demand could outstrip supply | |

|leaving an impossible backlog of orders all demanding specific performance. | |

|Mr R could possibly, though extremely doubtfully, claim the defence of | |

|frustration as the things contracted for no longer exist. Add to this Mr R’s | |

|option to reject any order makes it appear that his price list is an | |

|invitation to treat as otherwise it would be an offer that is subject to | |

|revocation without notice. Acceptance of an offer has to be communicated. At | |

|the time of this case, 1896, the only readily available methods of | |

|communication for distant parties were the postal system or telegram. The | |

|postal rule would apply to any customer’s acceptance sent via these mediums | |

|and hence any revocation of the offer would be impossible | |

|Granger v. Gough was one of the major cases in the creation of the principle |What was the outcome of Granger v Gough? |

|of invitation to treat. In order to explore this principle more fully the | |

|case will be re-examined as it occurred today. | |

|Once again the starting point is was the price list an offer or merely a |What sorts of things are invitations to treat? |

|willingness to deal. There are a number of variants on an invitation to treat| |

|these are: pre-contractional negotiations, shop displays and finally | |

|advertisements. G&S’s supply of the price list to potential customers is a | |

|form of direct marketing and falls under the last of these three categories. | |

|In a face to face situation such as a shop the customer offers to buy goods |What did Pharmaceutical Society of GB v Boots Cash Chemists establish? |

|by presenting them at the till and the shop either accepts or rejects this | |

|offer to buy. The goods on the shelves are merely invitations to treat in | |

|keeping with the findings of Pharmaceutical Society of GB v. Boots Cash | |

|Chemists | |

|A key point in the original Graniger v. Gough was where was the contract |What is the postal rule? |

|made. Today the location of the act of contracting can be different depending| |

|on the mode of acceptance. The postal rule puts acceptance at the place of | |

|posting. | |

|Where both parties use a telex or nowadays facsimile machine the Court of |What is the rule concerning telex/fax? |

|Appeal decided in the case of Entores Ltd v. Miles Far East Corporation | |

|(1955) that the contract was entered into when and where the acceptance was | |

|received. Lord Denning confirmed, obiter that the same principles also apply | |

|to acceptances by telephone. …… | |

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|16 The point in time at which an email acceptance will be effective is yet | What about email? |

|to be considered by the Australian courts. Several commentators have | |

|expressed the view that email should be treated as another form of | |

|instantaneous communication requiring acceptance to be communicated to be | |

|effective. | |

|17 If Mr R had a website that could receive customer orders would it be an |What about a non-interactive web site? What about an interactive web site? |

|invitation to treat or an electronic contracting agent? A non-interactive | |

|site just listing his wines would most certainly be classed as an advert. But| |

|what about an interactive site where customers place orders online? This | |

|question is under consideration by many of the worlds legal minds | |

Now answer the following questions:

1. The opening words written by Lord Herschell is the ratio decidendi of the case Grainger v Gough. (Paragraph 1)

(a) What is the legal definition for ratio descendi?

(b) What is the legal term for the other statements made by judges in their decisions?

(c) What comes from the ratio?

2. Gough wanted Grainger & Son to pay tax on the full sale of the wine because he argued that their wine list amounted to an offer and when the British customers placed an order with them the customers were accepting the offers found on the wine list. List the evidence argued by Gough to support this view? (Paragraphs 6-8)

3. Grainger & Son argued that their wine list was an invitation to treat, not an offer. What legal arguments were used to support this view? (Paragraphs 9&10)

4. In this precedent case, what did their Lordships decide? ( ie was the wine list an offer or an invitation to treat?) (Paragraph 11)

5. Read Lord Herschell’s ratio again.

a. What commonsense reason did he have for saying the list was an invitation to treat?

b. To what extent was this a good legal decision?

6. The article says there are 3 types of invitations to treat. What are they? (Paragraph 12)

a. What is the precedent case for finding that goods on a shelf are invitations to treat, not offers? (Paragraph 13)

7. What was key point in Grainger v Gough? (Paragraph 14)

8. In the time of Grainger V Gough, communication was limited to the postal service.

Explain the Postal rule.

As modern technology has changed the way acceptances can be made, what has the law said about when acceptance is made for:

a. Faxes, telex and telephone? (Paragraph 15)

b. What is the situation for email?(Paragraph 16)

c. What is the legal situation for web pages? (Paragraph 17)

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