General Principles of Contract Law - Essay Example

?General Principles of Contract Law In the present case, there are actually three scenarios presented as a consequence of the buyer’s offer to buy his antique coffee table. The first one involves Fred and Gary. The second one consists of Fred and Harriet. The third instance includes Fred and Ivy. Overall, Fred is the seller and the three others are the buyers. The ultimate issue of which is whether or not a legally binding contract was made in any of the situations. First Scene In the first scenario, electronic mail was primarily used to form an agreement. The seller (Fred) offered to sell the coffee table to his friend Gary for 450 pounds. This differs by 50 pounds as to the original offer of 500 pounds in the newspaper advertisement. Gary accepted the offer. However, Fred did not know of it as he always forgot to check his email everyday. To assure that Fred will know of his acceptance, Gary sent him a letter by post but Fred did not receive it on time. To analyze the circumstance, there could have been a valid contract if Fred only knew of Gary’s acceptance and confirmed it. It could also be stated that it was Fred’s fault why he was not informed of the buyer’s acceptance. With due praise to Gary, he even instituted another way just for Fred to be aware of his willingness to buy the table. As provided under article 2.205, paragraph 1 of The Principles of European Contract Law, a contract is concluded if the offeree’s acceptance of the offer reaches the offeror. This means that knowledge of the acceptance is a necessary requirement for an agreement to be legally binding. In the instant situation, Fred did not know of Gary’s acceptance. Thus, no contract has been formed. Fred could have checked his email for Gary’s reply as he used it in making the offer. In other words, he could have been logical in forming the contract with the buyer. Clearly, the buyer is of no fault. Nevertheless, Gary is not left without hope. He can still buy the table under the provision on late acceptance. In such section of the law, Gary needs to have Fred’s acknowledgement that he lately received the offer and that he still desires or intends to confirm it. As contained in Article 2.207, late acceptance is to be considered effective if the offeror or the seller informs the offeree (the buyer) that he or she deems it as such (“The Principles”). Moreover, it must be shown by Gary that he has sent his acceptance in such a way that if it was transmitted normally, the seller could have received it in due time (“The Principles”). He actually tried to send Fred a letter of his acceptance by post. However, due to a mistake at the post office sorting area, his letter was to arrive only after two weeks. Gary should emphasize this event to Fred. If that happens, a late acceptance will accrue. Fred should not worry of his transaction with Gary. There was no legally binding contract formed. The ultimate decision still depends on him. Second Scene In the second scenario, a buyer who has read the seller’s advertisement offered to buy the table but only for 470 pounds. Fred replied with a condition. He also promised the buyer (Harriet) that he will not be selling the table to anyone as soon as she could raise the desired amount. In doing this, Fred presumed that Gary was not interested to buy the table. Luckily, the buyer was able to raise the money and left a message on Fred’s answer machine. Fred did not hear the phone. Thus, he never bothered to operate the machine. As a result, he was not aware of Harriet’s compliance of the condition. With regard to this instance, an agreement could have been made if Fred knew of Harriet’s compliance of the condition and acknowledged it. It can be contended that the reason of such failure was not due to Fred’s fault. He inadvertently did not hear the phone while he was in the garden. Also, Fred doesn’t actually know how to operate the answer machine. Article 2.201 of the law states that a proposal shall result to an offer if (1) it is purposefully made to amount to a contract if the other contracting party assents to it and (2) it contains definite and unequivocal terms (“The Principles”). In other words, a valid offer is needed to form a contract. In connection, Harriet made a valid offer to Fred in buying the coffee table. However, instead of directly accepting the offer, Fred imposed a condition which was accepted by Harriet. There was meeting of minds about the new term. Essentially, the condition did not alter the terms of the offer. It shall be deemed as an additional term to the contract. Article 2.208 provides that a response which assents to the offer acts as an acceptance despite the fact that it implies different or additional terms (“The Principles”). Nonetheless, this is subject to the rule that such reply should not substantially alter the original terms of the offer (“The Principles”). The additional term then needs to be complied with by the buyer (Harriet) to effect the contract. Afterwards, the offeree should inform the offeror (Fred) about the compliance. In the aforementioned instance, Fred did not know of Harriet’s compliance. As a consequence, both are not legally bound of the contract. Stated otherwise, there was no valid contract formed between Fred and Harriet. Nonetheless, just like Gary, Harriet could utilize the provision on late acceptance for a contract to be created. Fred should not be bothered of what had transpired between him and Harriet. The decision to grant late acceptance depends upon him. He can choose to grant it to Gary or Harriet. Notably, Gary would only be buying the table for only 450 pounds while Harriet is willing to have it for 470 pounds. Third Scene In the third scenario, another buyer who saw the advertisement offered to buy the table for 470 pounds. Fred again assumed that Harriet did not want to push through with the sale. Thus, he entertained Ivy’s offer. Instead of accepting right away the buyer’s offer, Fred proposed a counter offer of 480 pounds for the price of the coffee table. Nonetheless, Ivy did not assent to it so Fred agreed with the first offer. Unluckily, upon accepting Ivy’s offer, Fred hanged up the phone without hearing Ivy’s comment. As such, he was not informed that Ivy did not want to buy the table anymore at any price. Obviously, in that situation, one can say that Fred could have listened to Ivy’s final words before hanging up the phone to finalize the agreement. Meeting of minds as to the offer is essential for a contract to be legally binding. In this context, no contract is formed if an offer made by the seller is rejected by the buyer. In case of a counteroffer by the buyer, the seller must accept it to be binding. A counter-offer actually terminates the original offer. In the third situation, there were a series of three different offers made. First, the buyer named Ivy offered to buy the antique coffee table for 470 pounds but Fred rejected it. Fred then offered to sell the table for 480 pounds but Ivy did not assent to it. For the last time, Fred agreed to follow the first offer. This particular instance is to be referred to as the third new offer. Accordingly, it needs Ivy’s approval. Fred could not just assume that since it has the same terms with the first offer, he does not need Ivy’s consent anymore. The fact that such transaction involves a new offer, it needs to be mutually accepted by the contracting parties. This is to say that Ivy’s approval should be communicated to Fred. Significantly, the intention of the parties with regard to the offer is also important. Article 2.101 of the European Contract Law says that the parties should have the intention to be legally bound in order for a contract to be concluded. Both parties should have the genuine intent to enter into the contract (“The Principles”). As to the scenario at hand, Ivy did not want to pursue with the sale. She has no more intention to proceed with the contract. In such case, there is no contract to speak of. It was not her fault that Fred did not know of her revocation. Fred could have waited for Ivy’s acceptance or rejection. Stated otherwise, Fred could not blame Ivy of the transaction’s outcome. Ultimately, Fred has no obligation to any of the three buyers. For a contract to be legally binding, all of the following requisites should be present: (1) valid offer (2) valid acceptance (3) mutual consent (4) legal capacity of the contracting parties (5) legal purpose of the contract and (6) consideration. The first three requirements are put to issue in the presented case. The last three are not questionable. Work Cited “The Principles Of European Contract Law 1998, Parts I and II - (Parts I and II completed and revised).” Lex Mercatoria. LexMercatoria, n.d. Web. 14 Jan. 2011. . Read More