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P & O and contract law

We have been asked to review a brochure before it goes to print on providing advice to the Advertising Agency on the legal effect of the representations in the brochure. To be able to provide accurate advice I will produce a document explaining contract law to the advertising agency and any related material that I think is important that must not be forgotten. I will be categorizing statements of the contracts into terms and wether they are conditions or warranties, which is essential to identify as it can lead to serious legal complications concerning the Agency and their client. I have been provided with a brochure for P&O Cruises; P&O Cruises has a long history of bringing cruise deals and cruise packages to the world. Since 1932, they have been taking people on their dream cruise vacations and today over 100,000 cruisers a year book with P&O to destinations throughout the South Pacific. First ill explain the contract and exactly what it means in terms of agreement with potential buyers and the offer-maker. A contract is a legally binding agreement. There are four essential elements to a contract to make it legally binding; an offer first must be established which is basically a proposal or promise by one party (offer-maker) to the other party (buyer). The offer may be in writing, orally or be implied in by conduct. The acceptance of the offer is then established once the buyer agrees to the proposal or the promise made by the offer-maker, once acceptance has been established the consideration of the contract is then scrutinized; finalising the details on who is the offermaker and buyer; establishing that both parties need have brought a promise to the contract; Lord Justice Bowen, who was one of three judges that herd in the case of Carlill v Carbolic Smoke Ball Co 1893, established consideration as 'Any act of the plaintiff from which the defendant derives a benefit or advantage, or any labour, detriment or inconvenience sustained by the plaintiff, provided such act is performed or such inconvenience suffered by the plaintiff with the consent, either express or implied, of the defendant. Contract law, in dealing with advertisements, doesnt hold these elements. This issue that needs to be addressed in that statement is if the actual advertisement is an offer or an invitation to treat from one party to the other; this area of the law was held in the case of Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd 1953. This raises the question of what distinguishes an offer, which is clearly outlined in the case of Balfour v Balfour 1919, from an invitation to treat, which is outlined in the case of Blackpool & Flyde Aero Club v Blackpool Borough Council 1990. Offer is distinguished by the intent to create legal relations. Offer is made when the party that is making the offer is prepared to be bound without further negotiation on terms. A person to whom an offer is made accepts it if, in response to the offer, they unconditionally promise to do what the terms of the offer require, and communicate this acceptance to the offer-maker. A communication of acceptance must be verbal or documented, this section of the law is evident in the case of Bressan v Squires 1974.

The universal rule about advertisements is that they are not actually offers but they are in fact an invitation to treat which shows that the seller is willing to consider offers to purchase the goods of the advertised price, the case of Crown v Clarke 1927 demonstrates this area of the law . The contract then is not formed when the consumer offers the advertised price, but when the seller accepts the money, meaning that the seller can refuse to accept the buyers money without being in breach of contract. Breach of contract is evident in the infamous case of Jacob & Youngs v. Kent 1921, the breach of the contract is exemplified in the following guidelines; the price has gone up since the advertisement, the goods are no longer in stock, the price was wrongly stated which is categorized as misleading or deceptive which was established in the case of Demagogue Pty Ltd v Ramensky 1992 and the seller simply no longer wants to sell the goods to intended parties; this area of law was held in the case of Dickinson v Dodds 1876. Although a consumer has no remedy against the advertiser in contract law, other remedies were available under the old consumer protection laws of the Trade Practices Act 1974. The main consumer protection legislation is the federal Trade Practices Act 1974 and the NSW Fair Trading Act 1987, under both these Acts a court may grant various forms of relief if it concludes that a traders conduct has been unconscionable or misleading. As of January 1st 2011, Australia has introduced the new national law for Fair Trading and Consumer Protection entitled the Australian Consumer Law; under the Australian Consumer Law a consumer is identified as a person who acquires goods or services of less than $40,000; acquires goods and services of a kind ordinarily acquired for personal, domestic or household use, acquires a commercial road vehicle (of any value) or acquires goods not for resupply, or for use or transformation in trade or commerce. Under this legislation the law remains the same but applies to all states including Australian Capital Territory. A contract basically consists of various promises made by the parties. These promises are known as the terms of the contract. Statements implied in the contract or invitation to treat is categorized as a term. Terms can be either expressed or implied; implied terms were illustrated in the case of Astley v Austrust Limited 2000. Express terms are those that the parties have actually agreed to, either orally or in writing. To distinguish between a term and a representation in an oral contract the courts look at the surrounding circumstances; this area of law was herd in the case of Oscar Chess Ltd v Williams 1957.

P & O and contract law

Implied terms are those set out by the courts to complete the contract where circumstances show that this is what the parties intended. Implied terms are those that have derived from custom or trade usage as demonstrated in the case of Pelly v Royal Exchange Assurance 1757, statute, the courts and from prior dealings which is represented in the case of Hillas & Co Ltd v Arcos Ltd 1932/ The most important implied terms for consumers are those in the Trade Practices Act 1974. The Act implies conditions about quality, fitness for purpose and the exercise of due care and skill into various types of consumer contracts. Those terms were under the old Trade Practices Act 1974. The new Australian Consumer Law 2011 no longer implies terms into consumer contracts but instead provides statutory guarantees that are very similar to the terms; as an example it may imply a term requiring parties to do what is necessary to enable the contract to be performed; both parties are obligated to fulfil their promise where the law is concerned obligation is manifested in the case of Carlill v Carbolic Smoke Ball Co 1893. Because they are no longer terms implied into a contract they do not give rise to contractual remedies; instead, remedies are incorporated in the Australian Consumer Law. When we look at the terms of a contract they can be categorized into either a condition; conditions are clearly outlined in the case that was held between Associated Newspapers Ltd v Bancks 1951; or a warranty; this are of the law was demonstrated in the case of Poussard v Spiers & Bond 1876. A condition is a term without which there would be no contract. A warranty is a term dealing with a less important aspect of the contract. Once legally bound by a contract, conditions become extremely important; entering a contract without a condition is unacceptable, which was proven and herd in the case of Beaton v McDivitt 1987. To establish a condition falsely or breach a condition is extremely deplorable; the law states that it is acceptable of the wronged party to treat the contract as voidable. Where the term is a warranty, the wronged party will be able to sue for loss and damages that have been suffered; suing for loss and damages under a warranty in contract law was held in the case of Hadley v Baxendale 1854. The contract it self will remain legally binding to both parties. The court looks at each case on its own merits. In making a decision as to whether a term is a condition or a warranty, the court will consider all the surrounding circumstances, including the seriousness of the consequences if the contract is held to be non-binding and the intentions of the parties at the time they made the contract. Although a term is outlined in the contract by both parties as a condition or warranty it does not necessarily mean it will be regarded as such by the court.

Once an invitation to treat has been accepted by the buyer it then becomes an offer. For an offer to be legally binding there are a couple of rules that must be considered; the offer must be communicated from one party to the other, it is essential that the offered knows of the offer; the importance is exemplified in the case held with R v Clarke 1927; the offer maybe to one person, to a number of specified persons or to the whole world; the importance of not being to clear on to who the offer was intended and the legality to actually go through with the contract is held in the case of Carlill v Carbolic Smoke Ball Company 1893. The terms and conditions that are represented on the P&O website are those that are valid after a trade of monetary value has been exchanged between offer-maker and buyer. Upon first entering the section of terms and conditions(1) the website exhibits to the buyer exactly who the contract is being signed with and what laws are in place to protect the rights of the buyer. The website states that a passengers agreement with Carnival plc is that monetary value being exchanged from buyer to offer-maker is the acceptance of the offer thus making the contract legally binding; the payee represents all the passengers in their booking and has the authority to accept the terms and conditions on their behalf. Parents/Legal Guardians accept the terms and conditions on behalf of their children, including those who travel in a separate cabin; once the payment has been received for the booking an agreement on these terms and conditions becomes effective between all passengers listed in the booking and Carnival plc. The terms and conditions outlined on the website(1) are no representation of warranties, but merely representations of terms set out by Carnival plc. The warranties that are admissible in this particular situation would be found in section 71(2) of the Trade Practices Act 1974 and the Travel Agents Act 1986 which states that travel agents are prohibited from misleading or deceiving buyers about travel arrangements that they make through them. If a travel agent promises a service or standard of service that is not met during their journey or holiday, they may be entitled to seek compensation from the travel agent. Exclusion causes are more commonly found in standard form contracts; the purpose of an exclusion clause is to exclude or limit liability of the party inserting them; which applies directly to P&O as a form of protection against their assets. Their effectiveness is a matter of construction of the contract as a whole taking into account the bargaining positions of both parties involved. The contra proferentum rule states that the courts construe an exclusion clause strictly against the party relying on the clause.

P & O and contract law

To determine whether the exclusion clauses are effective we must first look at the following rules; does the writing constitute a contractual document and not merely a receipt, this question was answered in the case of Chapelton v Barry Urban District Council 1940; whether there is fraud or misrepresentation underlining the terms of the contract where the case of Curtis v Chemical Cleaning & Dyeing Co 1951 demonstrates that particular area of the law; The documented contract is binding wether it has been read or not which has occurred in the case of LEstrange v Graucob Ltd 1934. Where a clause has been appropriately integrated into the contract the four corners rule will apply so the exclusion clause only operates to cover a loss which occurs within the operation envisaged by the contract; this clause is supported by the facts that were held in the case of The Council of the City of Sydney v West 1965. Every Contract produced by Carnival plc to purchaser should cover and be clear on every single term and whether it be a condition or a warranty; which is identified in the case of Darlington Futures Ltd v Delco Australia Pty Ltd 1986 and to be specific on the small details; the importance of this statement is shown in the case of Photo Production Ltd v Securicor Transport Ltd 1980.As a rule of construction based on the previous statement is based on the intention that is presumed by both parties which was held in the case of Darlington Futures Ltd v Delco Australia Pty Ltd 1986.; Another concerning issue for me is the lack of knowledge on the terms and conditions of the passengers set out by Carnival plc. Not enough notice had been given to the intended purchaser in the invitation to treat, as I have stated above it is of utmost importance to outline every detail where it seems fit; this statement that I have weighed a lot of significance on is evident in the case of Thompson v L M & S Railway Co 1930. Upon consideration of the exclusion clauses rule and the present brochure I have here of P&O Cruises it is determined that the brochure should, and I emphasise should heavily, be in a more clear format, easily accessible to ALL interested purchasers as the mere fact that terms and conditions are available on the website is not enough the probability that older, less technology savvy patrons will not have access to these resources. I recommend that the information and knowledge I have illustrated throughout be regarded and considered as it can lead to the avoidance of severe legal issues.

REFERENCES:
WEBSITES
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P&0 cruise terms and conditions once monetary value has been exchanged: http://www.pocruises.com.au/alreadybooked/pages/bookingpassagetermscon ditions.aspx Audio books online in the area of Law: http://www.thehills.nsw.gov.au/Weblinks.html#Law Shows all relevant cases to contract law www.australiancontractlaw.com/cases.html Consumer Law PDF file: http://www.consumerlaw.gov.au/content/the_acl/downloads/consumer_guaran tees_guide.pdf

Contract Formation - Offer And Acceptance http://law.anu.edu.au/colin/Layout/Off_Ac_h.htm BOOKS: Australian Business Law: principles and applications ROGER VICKERY AND WAYNE PENDLETON 4TH EDITION Youre practical Guide to the law in New South Wales The law handbook 11th Edition Thomson Reuters Hot Topics, Legal Issues in Plain Language State library of New South Wales Published by the Legal Information Access Centre (LIAC)

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