Law England Wales
Task One
In looking to advise Bob on this area of law regarding his rights, it should be recognised that, where Airgron Stores were offering 19-inch screen monitors for £16 each online, this may be considered to be an ‘invitation to treat' because it is generally understood that advertising goods for sale is not a specific offer and does not bind Airgron Stores to sell the monitors for £16 each or even at all. This is because the display ‘online' could be argued to mean that it is for the customer to offer to buy the goods and the store to either accept or refuse the offer from Bob. Therefore, Bob needs to be advised that this is because otherwise Airgron Stores would be obliged to sell to everyone who accepted such an ‘offer' - even where the supply ran out - because, generally, a shop is not meant for compulsory sales.
However, if it can be shown that the goods displayed online were to be sold to anyone who paid the required price, then that could be deemed to be an offer that Bob was entitled to look to accept. This is further supported by the fact that where the transaction (i.e. the offer and then Bob's acceptance reflected in his receipt) is effected through a machine, then the display on Bob's computer, over the Internet, is likely to be an offer that he was entitled to accept. Such a view arises because any acceptance of an offer must be communicated to the ‘offeror', by words or conduct that are unqualified, in accordance with the indicated terms. But Bob also needs to be advised it may be argued any contractual intention may be ‘negatived' by evidence that the offer was “made without any intention of creating legal relations” because Airgron Stores may argue that the drop - from the actual price of £160 - to £16 was not to be accepted. However, in view of the fact that Bob also received an e-mail in support of the lower price, and Airgron Stores did not notify Bob that the offer was terminated before he accepted it, then it could be argued that Bob is entitled to expect the contract to be honoured and is otherwise entitled to damages. This is supported by the fact that, whilst an offer may be revoked anytime before it is accepted, an offer is made irrevocable by the acceptance of an ‘offeree' like Bob and he is entitled to claim the goods.
Task Two
When considering whether Lewis should be held liable under the principle of negligent misstatement in tort, in determining whether Kevin's conduct amounts to this, this is defined as a statement carelessly made in circumstances where there is a duty to be careful and honest, leading to a loss to someone to whom that duty is owed and has acted on that statement in tort, effectively illustrated by the decisions in Hedley Byrne & Co Ltd v. Heller & Partners and Esso Petroleum Co Ltd v. Mardon. Moreover, it should also be recognised where the misstatement is considered, in more extreme cases, to be ‘fraudulent', then the statement in question may be in keeping with the ‘tort of deceit'. But, in view of the fact dishonesty was recognised as an essential element of this offence, in the decision of Derry v. Peek, it could be argued Lewis was merely careless because he “made a fundamental mistake when developing a bespoke database for a client, Newich Financial Investments” - although this would seem unlikely.
This is because this area is somewhat complicated by the fact issues of negligent misstatement are associated with ‘pure economic loss' because, as in this case, the loss suffered by Newich Financial Investments was economic. But, in the House of Lords decision in the case of Hedley Byrne & Co Ltd v. Heller & Partners, it was generally accepted that someone who gives inaccurate information, where it is likely to be acted on, could be liable for losses suffered as a result of that reliance, as in this case where “the programme should have allowed for the collection of information relating to Newich clients which would allow Newich employees to make informed recommendations regarding the best potential investments”. Nevertheless, the claimant's in Hedley Byrne & Co Ltd v. Heller & Partners failed, not because their losses were unrecoverable in law, but because they had not shown their reliance on the defendant's misstatement was reasonable. This is because a key factor is as to whether the defendant has ‘assumed responsibility' for their statements, since it seems largely dependent on whether the statement was made for the benefit of the claimant.
But, in the decision of Henderson v. Merrett, in determining as to whether it was ‘fair, just, and reasonable' to impose liability for negligent advice was not a separate test from whether the defendant assumed responsibility. Therefore, where responsibility was assumed, it was reasonably foreseeable the claimant would rely on the defendant's advice so as to be able to assume a duty of care was present. As a result, the decision in Henderson v. Merrett would seem to suggest liability for ‘pure economic loss' not only flows from a negligent misstatement, but also from negligent advice, so it is then only a small step to impose liability for negligence in the performance of services. Such a view arises because success is dependent upon proof the parties have a ‘special relationship' in a purely commercial situation where the ‘representor' purports to have some special skill or knowledge and it is reasonable to assume the ‘representee' will rely on this because “the programme should have allowed for the collection of information relating to Newich clients which would allow Newich employees to make informed recommendations regarding the best potential investments”. This view is effectively supported by the decision in White v. Jones where a solicitor was asked by his client to modify their will, but the solicitor failed to organise this before the client died and the beneficiaries sued the solicitor to recover the money they would have obtained had the will been completed.
Task Three
In looking to critically analyse the position relating to the electronic formation of contracts in England and Wales, with a view to determining how the law in this area can be improved, it is important to recognise electronic contracts are largely founded upon the archaic, yet traditional, ‘postal rule' that considered an epistolary acceptance of an offer becomes binding during the course of the postal service, as the fairest means for allocating risk and avoiding any offer being revoked until it is received. Therefore, this effectively meant that a complete contractual agreement was said to exist when the properly stamped and addressed ‘letter' was put in the post so that it was then immaterial whether it reached the ‘offeror' or not.
However, this rule has not gone without criticism. This is because it has been deemed somewhat ‘artificial' because it was held to apply to the postal service, but nothing ‘instantaneous' - in view of the fact that the ‘receipt rule' has been held to apply in such cases - so that contracts are only said to come into existence where acceptance is received. Accordingly, the rationale behind this rule has been that the ‘offeree' will always know whether their acceptance has been received and can react immediately to any faults, according to the decision of the House of Lords in Brinkibon Ltd. v. Stahag Stahl & Stahl warenhandelgesellschaftmbh. But this is not necessarily a universal rule because regard shall also be had for the parties' intentions, business practice and a judgment regarding where the risks should lie.
As a result, no authority, either express or implied, is needed for use of the postal service for acceptance because the legal implication of the act is deemed to be sufficient evidence; in view of the fact that the ‘letter' may be said to have an existence independent of its sender and its destination. On this basis, whilst an offer and its acceptance may be exchanged by e-mail, this kind of electronic communication does not pass directly from the ‘offeror' to the ‘offeree' and is not ‘instantaneous' because there is a strong element of ‘store and forward' so that it is regarded as out of the ‘offeree's' possession when they connected to the Internet and pressed ‘send'. Therefore, it is important for the ‘offeree' to be aware that the required recipient will be unaware of the message until they check their inbox; which is possible only some unknown time after delivery. This means it is not generally possible for the sender to know whether and when a particular e-mail was received in its original form because even ‘read' or ‘received' receipts do not ensure this. Accordingly, it could be argued that these attributes of e-mail communication bring it closer to a non-instantaneous means of communication so e-mails could be considered to be a good contemporary illustration of the application of the traditional ‘postal rule'.
Therefore, with this in mind, it must be recognised that, whilst an acceptance can generally be revoked at any time prior to its arrival, this is not the case with an ‘electronic contract' formed under the ‘postal rule', so acceptance of an offer is complete as soon it is ‘posted' even if the revocation is received before the acceptance itself. But this understanding could be considered to be somewhat controversial in view of the fact that it could be argued that such a revocation would not generally be considered to have unfairly prejudiced the ‘offeror' if they were to have received their revocation, by the ‘offeree', before the acceptance itself.
However, the only really directly relevant authority is provided by the somewhat troubling decision in Countess of Dunmore v. Alexander so that, on this basis, it is considered best to argue that an acceptance, in this context, is generally irrevocable. But the law in this area still remains somewhat unclear in view of the fact that statutory provisions, in the form of the Consumer Credit Act 1974, have served to provide for a ‘cooling off' period further supported by the Consumer Protection (Distance Selling) Regulations 2000, so that an ‘offeree' may cancel their order from the moment their cancellation is sent. Nevertheless, where this cancellation of the order in question occurs after an acceptance has been received, it could be argued that this still makes the ‘offeree's' position somewhat difficult to reconcile because of how their contract was formed.
In conclusion, it is clear that the law in this area needs to be made much clearer because of the fact that it is somewhat complex and appears to lack certainty. This is because this discussion has recognised that the law in relation to electronic contracts is founded upon the age-old ‘postal rule' - established in the decision of Adams v. Lindsell - since electronic communication are not ‘instantaneous' because it involves several mail servers in various locations. Therefore, whilst electronic communications could be considered to be a good contemporary illustration of the application of the traditional ‘postal rule', an acceptance cannot be revoked prior to its arrival - even though it would not generally be considered to have unfairly prejudiced the ‘offeror' - and this does not sit well with the fact statutory provisions have served to provide that an ‘offeree' may cancel their order from the moment their cancellation is sent. Accordingly, the law needs to be amended so as to remove this uncertainty because it is inappropriate for the judiciary to be sticking resolutely to the ‘postal rule' when statutory enactments (like the Consumer Credit Act 1974) act to the contrary because, in contemporary society, in looking to meet the needs of business regard should also be had for the parties' intentions, business practice and a judgment regarding where the risks should lie in any contract.
