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Supply of Goods Q&A: Ireland

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Supply of Goods Q&A: Ireland Supply of goods Q&A: Ireland by Adam Finlay and Catherine Walsh, McCann FitzGerald This document is published by Practical Law and can be found at: uk.practicallaw.com/w-022-1436 To learn more about legal solutions from Thomson Reuters, go to legal-solutions.co.uk This Q&A provides country-specific commentary on Standard document, Supply of goods agreement RESOURCE INFORMATION (with contract details cover sheet): Cross-border and Practice note, Supply of goods: Cross-border overview. RESOURCE ID This Q&A forms part of Cross-border commercial transactions. w-022-1436 RESOURCE TYPE Country Q&A General contract law framework • Intention to create legal relations. Intention may be implied from the subject matter or it may be STATUS expressed by the parties (see Rogers v Smith (16 July 1. What are the requirements under national law for Law stated as at 31-Aug-2019 1970), SC). a valid contract to exist? When does an agreement JURISDICTION take effect? 2. Are there any limitations on the legal capacity of Ireland a company to enter into a supply of goods contract? For a valid contract to exist, five elements must be satisfied: The most common type of company in Ireland, a private • Capacity to enter into a contract. A person company limited by shares (LTD), has full and unlimited must have a certain level of understanding and capacity to: judgement. Categories party that can give rise to lack of contractual capacity include: • Carry on and undertake any business activity. – minors; • Do any act. – prisoners; • Enter into any transactions. – persons suffering from mental incapacity; and (Section 38, Companies Act 2014.) – intoxicated persons. • Offer. It is necessary to have a clear and Consequently, there are no legal limitations on the unambiguous statement of the terms upon which legal capacity of a LTD to enter into a supply of goods the offeror is willing to contract, should the person contract. or persons to whom the offer is addressed decide to accept (Clark, Contract Law in Ireland (8th edn, 2016); Allied Irish Banks Plc [2014] IEHC 221). The objects clause of their constitutional documentation may constrain the capacity of certain other forms of • Acceptance. A final and unequivocal expression of companies, such as: agreement to the terms of the offer is required. The general rule is that there is no acceptance without • Designated Activity Companies (DACs). the intention to accept the offer (Parkgrange v • Companies Limited by Guarantee (CLGs). Shandon (2 May 1991), HC (Carroll J)). • Public Limited Companies (PLCs). • Consideration. An act or forbearance of the one party, or the promise of it, is the price for which the promise of the other is bought, and the promise However, a third party dealing with a DAC, CLG or thus given for value is enforceable (see Pollock on PLC will not be prejudiced if the company exceeds the Contracts (13th edn), p 133; cited in Dunlop v Selfridge capacity set out in its objects clause (sections 973, 1183 [1915] AC 847 at 855 by Lord Dunedin). and 1012, Companies Act). Reproduced from Practical Law, with the permission of the publishers. For further information visit uk.practicallaw.tr.com or call +44 20 7542 6664. Copyright ©Thomson Reuters 2019. All Rights Reserved. Supply of goods Q&A: Ireland Statutory companies' capacity to enter into goods Moreover, references to "writing" in other Acts must contracts may be constrained by the statute by which be construed "as including electronic modes of they are created. representing or reproducing words in visible form" (section 2(2), E-Commerce Act 2000). As a result, any 3. Is it necessary for a contract for the sale of goods statutory requirement for a document or contract to to be in writing for it to be valid? Are any formalities be in writing can generally be met by an electronic necessary? document. 4. How does national law treat acceptance of an Subject to certain exceptions, such as contracts for the offer which attempts to impose new terms? transfer of land, the general rule in Ireland is that there is no requirement for a contract to be in writing. The acceptance to an offer must be clear and unambiguous. While it may be possible to request A contract for the sale of goods may be: further information while leaving the possibility of • In written or oral form. acceptance open, replying to an offer with new terms could be deemed as a counter-offer to the original offer, • In partly written and partly oral form. as opposed to an acceptance of the offer. • Implied from the conduct of the parties. 5. Does national law require that special notice (Section 3, Sale of Goods Act 1893(SGA).) be given of any contract terms for them to be incorporated in a contract? From an evidential perspective, it can be useful to have a written copy of a contract, as a contract for the sale The general rule is that the terms of a contract must be of goods with a value of EUR12.70 or more cannot be provided before the contract is agreed, or at the point it enforced by legal action unless one of the following is agreed. applies: • The buyer accepts and actually receives part of the Special notice of terms must be given if a party is goods sold. seeking to rely on an unusual or onerous exemption • The buyer gives something in earnest to bind the clause. In those circumstances, the party seeking the contract. exemption will have to show that they took special measures to bring it to the attention of the other side • The buyer has made part payment. (Carroll v An Post National Lottery Co [1996] 1 IR 443). In • There is a note or memorandum in writing of the determining whether the clause is onerous, the courts contract and signed by the party to be charged. may look at how common the clause is in the sector. 6. Is the concept of a party acting in “good faith” (Section 4(1), SGA.) recognised in your jurisdiction (see Standard document, Supply of goods agreement (with contract The Minister for Business Enterprise and Innovation may details cover sheet): Cross-border: clause 4.2)? by order provide, in relation to goods or services of a class described in the order, that a contract must be in writing where the buyer, hirer or recipient of the service It has been held by the Court of Appeal that there is deals as a consumer (section 54, Sale of Goods and no general principle of "good faith" in Irish contract Supply of Services Act 1980 (SGSSA)). law (Flynn v Breccia [2017] IECA 74). As a consequence, a term that parties will act in good faith generally will not be implied into contracts, beyond recognised Where such an order has been issued, any consumer circumstances where good faith can be implied, such as contract that is not in writing will not be enforceable. To partnerships and insurance law. date, however, no such order has been made. However, parties to contracts can expressly agree The Electronic Commerce Act 2000 provides that an that they will act in good faith, as is done in Standard electronic contract, subject to certain exceptions, will not document, Supply of goods agreement: Cross-border: be denied legal effect, validity or enforceability solely on clause 4.2. the grounds that it is wholly or partly in electronic form, or has been concluded wholly or partly by way of an electronic communication. 2 Practical Law Reproduced from Practical Law, with the permission of the publishers. For further information visit uk.practicallaw.tr.com or call +44 20 7542 6664. Copyright ©Thomson Reuters 2019. All Rights Reserved. Supply of goods Q&A: Ireland Best practice would be to define "material breach" 7. Is the concept of using “best endeavours” within the contract, to avoid any doubt. The definition recognised in your jurisdiction (see Standard as set out in Standard document, Supply of goods document, Supply of goods agreement (with contract agreement: Cross-border: clause 16.1(a) would be details cover sheet): Cross-border: clause 5.2)? permissible under Irish law. The concept of a contractual obligation to use "best Incorporation of standard terms of endeavours" has been recognised, although not business defined, by the Irish courts. Based on UK case law, best endeavours, while not an absolute obligation, is generally understood to include steps which would be 9. How can a seller or buyer incorporate its standard taken by a prudent, determined and reasonable obligee, terms of business in its contracts? acting in their own interests and desiring to achieve that result. However, the steps that are actually required will be context-driven and specific to the particular contract. Standard terms can be incorporated by • Signature. In terms of the hierarchy between the steps required to • Reasonable notice. be taken by a party subject to an "endeavours" clause, the Irish courts have recognised that the concept of • Course of dealing. "best endeavours" requires a higher standard than a "reasonable endeavours" obligation, accepting Terms can be incorporated by reference and do not that "a ‘reasonable endeavours' obligation must necessarily have to be set out in full in the contractual be at least one step down from a ‘best endeavours' documents. However, there are limitations on the obligation" (Drocarne Ltd v Seamus Murphy Properties & parties' ability to incorporate terms by reference. For Developments Ltd [2008] IEHC 99). example, it has been held that a delivery docket stating that terms and conditions were available "on request" 8. Is the concept of “material breach” recognised in was insufficient to incorporate them into a contract by your jurisdiction (see Standard document, Supply of notice or course of dealing in circumstances where the goods agreement (with contract details cover sheet): counterparty had never received a copy of the terms Cross-border: clause 16.1(a))? and conditions, and where they were not identified in any shape or form by reference to any known industry- wide terms and conditions (Noreside Construction v Irish While the concept of "material breach" is recognised Asphalt [2014] IESC 68).
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