The Offer by A2Z Co.Ltd - Coursework Example

The Offer by A2Z Co.Ltd In the given case, A2Z Co. Ltd posted an offer to sell 1,000 pairs of shoes to Bling stores, a retail chain, for £20,000 on the 1st of August. The offer also states that it would remain open until 16th August. This is an offer and is not an invitation to treat. Invitation to treat is an attempt to make another person make an offer. For example, tender notices in newspapers are invitations to treat. In Spencer v Harding, the defendants offered to sell their stock by tender. The plaintiffs made the highest bid for the stock and demanded performance. The defendants refused to sell it to them. It was held that a tender was made just for the purpose of inviting offers and was not an offer itself. Therefore, acceptance of an invitation to offer is not legally binding and no contract is formed as a consequence. An offer requires that there must be an intention to come to an agreement, it must be communicated to the offeree and it must be certain and definitive. The offer by A2Z Co. Ltd fulfills these conditions and there is no ambiguity. Therefore, this is an offer and can become a contract on it's acceptance by Bling Stores within the due time. An important fact about this offer is that it is open for a limited time. A2Z Co. Ltd had offered to keep the offer open without any consideration. In Dickinson v Dodds, Dodds offered to sell some property to Dickinson for £800 on Wednesday and offered to keep the offer open till Friday at 9 A.M. But he sold the property to a third party on Thursday and Dickinson knew that Dodds had changed his mind well before the transaction was executed. It was held that Dodds had a right to sell the property because his offer to keep the offer open was not backed by any consideration. The offer by A2Z Co. Ltd is also not backed by any consideration. Therefore, they have a right to revoke the offer according to the law before its acceptance. On 12 August the manager of Bling Stores, Carol, phoned A2Z and asked whether she could have three months’ credit. A2Z’s manager, Archie, replied that payment would have to be made by cash on delivery. A counter offer is an offer made by an offeree to the proposer to make to come to an agreement by modifying some terms of the original offer. In Hyde v Wrench, it was held that an offer is revoked by way of a counter offer by the offeree. The defendant offered the plaintiff to sell his farm for £1200 which was declined. A few days later, the defendant made another offer to the plaintiff to sell the same farm for £1000. This offer was responded by a counter offer from the plaintiff, offering to buy the farm for £950 which was refused by the defendant. The plaintiff accepted the offer of £1000 but the defendant refused to sell. There was no contract between them because the offer of £1000 was rejected by the plaintiff when he made a counter offer. A counter offer should be separated from asking for more information. Asking for more information is just for the purpose of getting sure of some terms and does not amount to a counter offer. In Stevenson v McLean, the plaintiff asked the defendant for more information on his offer. The defendant did not reply and, upon acceptance by the plaintiff, claimed that the offer had been revoked by way of a counter offer by the plaintiff. It was held that the offer was not revoked and a contract was formed. This case applies here as Carol had just asked for further information. Therefore, it is not a counter offer and it keeps the offer open for acceptance. In this case, the question whether a contract is formed or not can be answered only by determining whether the offered was properly revoked or not. It depends entirely upon the postal rule. In Adams v Lindsell, the defendants wrote to the plaintiffs offering to sell them some wool and requiring an answer in the course of post. The letter of offer did not reach the plaintiffs in time. Before the letter actually reached the plaintiffs, the defendants wrote a letter of revocation of offer to them. The plaintiffs received the letter of offer before the letter of revocation and posted an acceptance letter. The revocation was not effective and a contract was formed as soon as the plaintiffs posted the letter of acceptance. It was held that the revocation is effective only if it is communicated before the acceptance of offer. In Household Fire Insurance Company v Grant, the defendant never received the letter of allotment of shares, letter of acceptance, but it was held that an acceptance is effective when it is posted. But in Byrne v Van Tienhoven, it was held that the postal rule does not apply in revocation. The defendants received the letter of offer before the letter of revocation just like in Adams v Lindsell. It is important to remember that the three cases pertain to ‘Postal Rule’. This should not be confused with Dickinson v Dodds. In that case, the plaintiff had the knowledge that the defendant had changed his mind about selling his property to him and the acceptance was made after the time when the plaintiff had sufficient reasons to believe that the offer has been revoked by the defendant. Therefore, now it is an established rule that revocation of offer is effective only when it is communicated before the acceptance of offer. In the given case, A2Z co. Ltd sold the pair of shoes to a third party on 14th August i.e. before the deadline of their offer to keep the offer open to Bling Stores. This is an implied revocation but it is not an effective revocation as it is communicated to Bling Stores on 17th August i.e. after the acceptance. Bling Stores, according to the facts, accepted the offer on 15th August by the application of Household Fire Insurance Company v Grant. As the revocation is not effective and the acceptance was made within due time, a contract is formed between A2z Co. Ltd and Bling Stores. Q 2 a. When a person signifies to another person, his intention to do something or refrain from doing something in return of a promise that the other person would do or refrain from doing something, the first person is said to have made an offer to the second person. The first person would be called an offeror or proposer and the second person would be called an offeree. When the offeree accepts the offer of the proposer, he makes a promise and the two parties are said to have come to an agreement. An agreement is a promise or a set of promises that form consideration for each other. Consideration is an important element of an agreement. If the parties decide that the agreement between them is enforceable by law then there agreement becomes a contract. A contract must be legally binding on both the parties and in case of a breach of contract by any party, the other party has a right to go to a court and enforce the promises made under the contract. There is one very important thing to know that all contracts are agreements but all agreements are not necessarily contracts. Agreements are also of a social nature and not contracts if they are not legally binding. In Jones v Padavatton a mother promised to support her daughter for her studies, it was an agreement. In Simpkins v Pays, a landlady and her tenant had intended to be legally bound by jointly entering a competition and share any prize won, it was a contract. b. An offer is the communication from a proposer of willingness to do or abstain from doing something for a consideration to an offeree. An offer once accepted becomes a promise and, if it is legally binding on the parties, their agreement becomes a contract. Invitation to treat, on the other hand is a process of ‘inviting’ offers. It is the communication of one’s willingness to negotiate once an offer is made by any person. The acceptance of this offer does not become a promise. If the party, which invited the offers, refuses to come to an agreement to a party which has made an offer, is not liable to the offeror. Therefore, no contract is formed as a result of acceptance of such offer. A tender is a form of an invitation to treat. In Spencer v Harding, the defendants gave a tender notice in a newspaper to invite offers for sale of some stock. The defendants refused to sell the stock to the claimants who were also the highest bidders. It was held that the notice in the newspaper was not an offer but an initiation to treat. No contract was formed between the parties. However, a tender can become an offer sometimes due to some conditions. A tender that says that a particular stock or any other thing of value would be sold to the highest bidder, is an offer. Its acceptance results in the formation of contract as seen in Harvela Investments Ltd v Royal Trust of Canada (CI) Ltd where a tender to accept the highest bid was declared as an offer. c. An auction is a process of buying and selling goods by collecting bids from various customers and then selling the goods to the highest bidder. First, an advertisement is placed in any convenient medium of communication which is only an invitation to treat. The auction begins when the auctioneer announces the minimum price on which the goods would be sold. The seller has a right not to accept a price which is lower than the minimum price. The auction moves forward and bids are made. Each new bid is higher than the last bid. After every bid, the auctioneer says three words e.g. going, going, gone. If he finishes saying these words after a particular bid, the bid becomes the highest bid and no more bids can be made. Every bid made at an auction is an offer which is not binding on the seller to accept unless the bid is the highest one. As an auction is meant to sell the goods to the highest bidder, the highest bid becomes the offer and when the auctioneer says the three words or strikes his hammer thrice, it is accepted. This offer and acceptance becomes a promise between the buyer and the seller and is legally binding on both the parties. The buyer must pay the seller according to his bid and the seller must supply the goods to the buyer. However, if the seller has used a person to make fake bids at the auction to raise the price, the offer and acceptance are not valid and the buyer is not legally bound to pay in this case. d. Tenders are a form of invitation to treat made to collect the bids to enter a contract in a certain period of time. Tenders are communicated mostly through advertisements. The nature of tenders can be of buying and selling or of entering in service contracts. Tenders usually give qualification criteria to bar the bidders who do not have the ability to execute the resulting contract. A tender that says that the highest bid would be accepted is not an invitation to treat. It amounts to an offer and the seller is legally bound to accept the highest bid as a contract is formed. Other tenders are invitations to treat and the seller is not bound to accept the highest bid. In that case, the bids made by various people are offers and the seller has a right to negotiate with them. When he accepts a particular bid, he is said to have accepted an offer which is legally binding and a contract is entered into. Tenders made to enter in service agreements are mostly made by the governments. These tenders are also invitations to treat and the person who has released a tender is not bound to accept the bid that is the lowest. This person has also got a right to negotiate and see whether the bidder has got the potential and ability to execute the resulting contract. Once a bid is accepted, it becomes a promise and a contract is formed. It is legally binding on both the parties. e. The need for an intention to create legal relations is of a paramount importance in formation of a contract. A contract is an agreement which is enforceable by law. When an offer is not backed by an intention to create legal relations, its acceptance would not amount to a formation of contract. It would be a social or a domestic agreement not enforceable by law. In Jones v Padavatton, the offer from a mother to her daughter to support her financially for her studies was made without any intention to create legal relations. Therefore, its acceptance did not result in formation of a contract. It was a domestic agreement which is not enforceable by a court of law. In, Simpkins v Pays, the offer by the landlady to her tenant was backed by an intention to create legal relations as she put it in writing. It was a legally binding contract. There are some cases in which it is not vivid expressed that there is an intention to create legal relations but it is implied due to the nature of dealings between the parties that such intention exists. A unilateral promise is also legally binding if is made in such a manner which shows the other party an intent to create legal relations. In Carlill v Carbolic Smoke Ball Co, the promise made by the company in a newspaper advert to pay £100 to any person who contracted influenza after purchasing and correctly using a smoke ball showed intent to create legal relations. The company was legally obligated to perform their promise. Bibliography 1. Adams v Lindsell [1818] EWHC KB J59. 2. Byrne v Van Tienhoven [1880] 5 CPD 344. 3. Carlill v Carbolic Smoke Ball Co. [1893] 1 QB 256. 4. Dickinson v Dodds [1876] 2 Ch D 463 (C.A.). 5. Harvela Investments Ltd v. Royal Trust of Canada (CI) Ltd [1986] AC 207. 6. Hyde v Wrench. [1840] Beav 334. 7. Jones v Padavatton [1969] 1 WLR 328. 8. Simpkins v Pays [1955] 1 WLR 975. 9. Spencer v Harding [1870] LR 5 CP 561. 10. Stevenson, Jacques & Co v. McLean [1880] 5 QBD 346. 11. The Household Fire and Carriage Accident Insurance Company (Limited) v Grant [1879] LR 4 Ex D 216 (C.A.). Read More