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Question 1

Issues

Whether Richard could claim the damage from workers if their conducts cause the loss of bananas.

If Richard raises the money for the dock workers, whether he could claim the money back after unload the cargo.

Rules

According to Cutter v Powell [1795] EWHC KB J13, the other party may have a claim for damages, if one party does not fully perform the contract which amounts to a breach of contract.

A valid contract is created with agreement, consideration, intention to be legal binding and the affection factors like duress.

According to Glasbrook Bros v Glamorgan County Council [1925] AC 270, if there is already an existing duty to complete the contract, especially a legal duty, then a party cannot sue on a promise to reward the other party.

According to Barton v Armstrong [1976] AC 104 that the duress means there is no consensus in the contract, and therefore no contract. For a voidable contract, the innocent party may rescind the contract and claim damages.

According to Universe Tankships of Monrovia v International Transport Workers’ Federation [1983] 1 AC 366, the stevedores or longshoremen refused to unload a perishable cargo unless they were paid more money and the owners of the ship paid up in order to save the cargo and their profit; latter the owner sued the men’s union. They won on the grounds of economic duress, as the owners of the ship had no choice.

Application

If Richard rejects to raise the salary then basically those workers would not unload the cargo which leads to the damage of bananas. The workers reject to unload the cargo, which could be considered as a breach of contract because they fail to meet their duties established in the contract. So the worker's breach of contract leads to the damages of bananas and therefore, Richard could claim the damage from them.

In this case if Richard raises the money for the dock workers, the agreement, and intention to be legal binding could be established easily; the workers send the offer to Ready Import plc to raise the money and obviously Richard needs to accept that offer to avoid the serious damage for those bananas. But actually there is no valid consideration in this case because the consideration from the workers is unloading the cargo but actually according to their pervious contract with Ready Import plc, they have already obtained the duty to unload the cargos. They cannot set the consideration again on an existed duty. So there is no valid consideration in this contract, but both of them have the intention to be legal binding, because Richard hopes to enter into this contract to avoid the damage for bananas.

The situation in this case is similar to the issues in Universe Tankships of Monrovia v International Transport Workers’ Federation, in which, the worker also rejects to unload the cargo unless more salary is paid. This could be considered as an economic duress; similar in this case, the dock workers are refusing to unload the cargo unless more money is paid. It's necessary to notice the banana in the cargo which would be ripen within the next 48 hours. It means Ready Import plc would suffer from serious loss foe those bananas if Richard rejects to raise the money and the cargo cannot be unload on time.

So basically, Richard has no choice but to raise the money which means there is no consensus in the contract, but Richard has to do so. Therefore, if Richard raises the money for the workers - establishes a contract with those workers, because of the lack of consideration and duress; this contract is a voidable contract, which means he could claim the money back for that lack of consensus.

So there could be two solutions in this case, firstly, Richard rejects to raise the salary and the workers would not unload the cargo and the loss of bananas would happen, then Richard could claim the damage of bananas from the workers. Secondly, Richard raises the salary for the workers and they would continue their job to unload the cargo, which would not lead to the loss of bananas and the salary is increased for workers. But Richard could claim the salary back after unloading the cargo because of duress.  

Conclusion

It's not a good decision to reject the workers' requests at this time because it would bring the damage to those bananas directly, even he could claim the damage from those workers' latter. It's better for Richard to raises the salary for the workers at first and claim the money back latter, because with this method, the value of bananas would not be affected; then Richard could consider the request of salary carefully after unload the cargo, then he could make the decision latter to really raise the salary or claim the money back with the duress.

References

Cutter v Powell [1795] EWHC KB J13

Glasbrook Bros v Glamorgan County Council [1925] AC 270

Barton v Armstrong [1976] AC 104 

Universe Tankships of Monrovia v International Transport Workers’ Federation [1983] 1 AC 366

Question 2

Issues

Whether it's valid for Richard if he buys his (the Chairman’s) interest in the company because of the threatening from his boss.

Rules

There are two kinds of undue influence including actual undue influence and presumed undue influence.

According to CIBC Mortgages v Pitt [1994] 1 AC 200,for a the actual undue influence, the claimant needs to prove the acts which they assert amounted to undue influence, which consists of threats to end a relationship, etc.

According to Allcard v Skinner (1887) 36 Ch D 145, there could be a presumed undue influence when the relationship is giving rise to an automatic presumption of undue influence, including Parent & Child, Solicitor & Client, Doctor & Patient, Guardian & Ward, Trustee & Beneficiary, and Religious Adviser & Disciple. In those relationships, the relationship is not equal and it may therefore operate to the disadvantage of the party who is influenced. The contract is the voidable, when it's established with undue influence.

Application

Basically there is no clear comments from the Chairman because he doesn't notice something like 'if you are not purchase my interest, I would end your employment'. Richard only feels like it's a threaten from the boss because the boss tries to sell his interest to Richard, pressuring him with his position in the company; without clear threaten comments, there is no actual undue influence from the Chairman.

The threatening and pressurizing to buy the Chairman’s interest in the company is not a duress because the boss doesn't use the economic or physical issues to threat Richard. But because of their relationship, his boss shows the undue influence if Richard really decides to purchases the Chairman’s interest. The reason is their relationship, that compared with the Chairman, Richard stays in a relatively weak position so he must consider the relationship when making decisions. For example, because of their relationship, Richard must think about his following works, his future and salary in the company if he rejects the suggestion from his boss. It's obvious that the relationship between his boss makes it difficult to reject the suggestion. So it's a presumed undue influence because the undue influence is still existed between Richard and his boss, even the boss says nothing clearly to threat Richard to buy his interests.

In addition, purchasing the Chairman’s interest would bring disadvantage for Richard in current position, because the company is currently involved in the problems of those workers. So for a reasonable person it's not a good time to purchase the Chairman’s interest. But if Richard rejects to purchase the interests from the Chairman, it may affect Richard's position or job in the company. So the suitable solution should be that Richard accepts the Chairman's request to buy his interests but after they really sign the contract, Richard could claim the voidable contract with the undue influence, then it's unnecessary for Richard to really buy the interests.

Conclusion

It's not a good decision to reject his boss' offer directly because it would affect his following jobs and future in the company. So Richard could buy his (the Chairman’s) interest in the company but after this contract, he could claim to set this contract aside with the undue influence, that he doesn't really need to act a contract under undue influence.

References

Allcard v Skinner (1887) 36 Ch D 145

CIBC Mortgages v Pitt [1994] 1 AC 200

Question 3

Issue

Whether Richard's wife has the power to mortgage their house to the bank without the notification of Richard.

What Richard should do for that mortgage contract.

Rules

In a contract each party needs to suffer a detriment and receive a benefit, which refers the consideration. The consideration is valid with some issues including it must not be past (Re McArdle (1951) Ch 669); it must be sufficient but need not be adequate (Chappell v Nestle [1960] AC 87); it must move from the promisee; an existing public duty or contractual duty will not amount to valid consideration.

According to Tweddle v Atkinson [1861] EWHC QB J57, the promisee can not enforce the agreement if the consideration is provided by another person who is not the promisee.

Application

Generally the house is owned by Richard and his wife jointly which is the consideration in this case. The consideration could be not valid when it's lack of some issues, including firstly, the consideration must not be past, which means the consideration must not be something in the past, but in the present or the future, in this case, their house is existed when entering into the contract with bank. Secondly, the consideration should have some value has been given, it does not have to correspond exactly to the other value given; in this case the house has its value to exchange the long outstanding debts to the bank; thirdly, the case doesn't notice whether they use the house to obtain the long outstanding debts, so there should be no existing public duty or contractual duty on that house. So it's valid consideration and the only problem is that as the owner of house, Richard knows nothing about mortgaging their house to the bank.

In this case the promise is given by the bank for those long outstanding debts and Richard's wife mortgaged their house in return. It's necessary to notice that the consideration could be only given by the promisee instead of someone else. Because of the privity of contract, only Richard's wife is the promisee for the bank, so the mortgage contract is established with Richard's wife and the bank, which has no relationship with Richard. It means Richard has no relationship to the mortgage contract but he is involved into the consideration of his house. Richard can do nothing to that mortgage contract but he could notice his wife that he has no relationship to the contract, so if the house is lost because of that contract, he has the power to claim the damage from his wife.

Conclusion

Richard's wife has the power to mortgage their house to the bank and Richard has no power to stop or edit this contract; but he could claim the damage from his wife if the house is lost because of that mortgage.

References

Re McArdle (1951) Ch 669

Chappell v Nestle [1960] AC 87

Tweddle v Atkinson [1861] EWHC QB J57