Offer as One of the Essentials of a Valid Contract - Research Paper Example

Task: For a contract to be rendered as binding by a court of law, it must first satisfy all the essential elements of a contract. Offer is one of the essentials of a valid contract and it exists when a party makes another party a proposition that may be accepted by that other party to create an agreement. Stone1 succinctly captures the meaning of the term ‘offer’ in contract law when he defines it as the indication of one party (offerer) to the other party (offeree) of his willingness to do or cease doing something upon obtaining the assent of that other party to act or refrain from acting. A valid offer may thus be made orally, in writing or by conduct. In the scenario, a question arises on when a valid offer was made by either party. Was it made by the brochure advertising the vehicle and its price? Or was it made by peter when he wrote to the sales company reserving a new Vectra 2.0i, Corsican Blue, for the price of ?15,749? An offer must be distinguished from an invitation to treat. An invitation to treat is generally a negotiation on in which a seller of a commodity gives the price of the commodity, not as offer that is capable of acceptance by the buyer, but rather as an invitation to conduct further negotiations on the price of the commodity. This means that if a seller of a commodity posts the price of a given commodity on the commodity itself, newspaper, brochure, or on a shelf, this amounts to an invitation to treat rather than a valid offer capable of acceptance by the buyer when he/she presents the item to the seller2. In the case of Pharmaceutical Society of Great Britain v. Boots Cash Chemists3 the court considered the question whether the price of the goods displayed in a chemist amounted to an offer made to the buyer upon which he accepts when he picks the goods from the shelves and put them in a shopping basket. The court held that if that was the case, a customer who picks the goods from the shelves cannot be able to return them. Instead the goods on the shelves were merely invitation to treat, and the sale agreement was complete upon the cashier accepting payment for the goods. The same rule applies in regard to advertisements, which are generally interpreted by the courts to be merely invitations to treat. In the case of Partridge v. Crittenden4 the defendant had placed advertisements on the classified section of magazines advertising the sale of bramble finches, whose sale had been prohibited by Section 6 of the Protection of Birds Act. He was found guilty under the Act and so he appealed the decision of the trial court. The Appellate court, in quashing the appellant’s sentence, held that the advertisements were merely invitations to treat as opposed to an offer. This view was upheld by the court in Fisher v. Bell5 where the court held that the display of a flick knife in the display of a shop was merely an advertisement of the good, and thus an invitation to treat. From the foregoing, the brochure obtained by peter containing the car’s description and price was merely a form of advertisement for the car. It did not amount to an offer in any way, but was merely an invitation to treat for the company’s customers. However, there was a valid offer from Peter to the company’s sales department through his written letter to the company indicating his willingness to purchase a Corsican blue Vectra 2.0i vehicle. It is a universally accepted principle of law that acceptance must coincide fully with the terms of an offer. This means that if new terms are introduced to the contract, or rather if new terms are purported to be introduced, acceptance of such new terms will be considered as a counter offer which results in the rejection of the offer. In the case of Hyde v Wrench6 the plaintiff offered the respondent to him his land for $1000 and he refused. In his reply, he stated that he would pay $950 and the respondent refused. The plaintiff later wrote to the respondent accepting to pay the initial sum but the respondent refused to sell to him. The plaintiff thus filed for specific performance of the contract. The court held that the plaintiff had offered the respondent a counter offer thereby resulting in a rejection of the initial offer. There was thus no enforceable contract between the parties unless the respondent had accepted the counter offer. Using this precedent, it is arguable that the sales manager’s communication to Peter amounted to a counter offer, which would have the effect of nullifying Peter’s initial offer to the company. The company on its defense may argue that it was quite evident that manager did not intend to make Peter a counter offer, but rather sought to seek whether Peter was flexible with the arrangement of receiving his car the following week. In the case of Stevenson Jacques & Co. v. McLean7 the court found that such statements seeking whether the other party was willing to modify their stand did not amount to counter offers. In light of this therefore, the manager’s inquiry to Peter whether he would pick his car the following week did not amount to a counter offer on the company’s part. However, from the first precedent it is quite convincing that the manager’s communication amounted to a counter offer, which was accepted by Peter on the subsequent communication to the company by post. Acceptance by way of post takes effect immediately the letter of acceptance is sent to the offerer. This is because the parties to a contract are not sure the precise time when the acceptance is communicated. This rule was laid out in the case of Adams v. Lindsell8where the court was tasked with deciding when a contract was formed by post. In laying down what is now common referred to as the postal rule, the court held that as long as the letter was properly stamped and posted, acceptance would be effective from the day of posting it. In this case therefore, Peter accepted the company’s offer the moment he sent the acceptance letter and it was immaterial that the manager did not see it. The rationale behind this rule is to prevent mischief that may arise if the rule is such as to require the other party to receive the communication for the contract to be complete. However, communication for revocation of such an offer takes effect where the communication is through an instantaneous means of communication such as telegraphs, telephone and email. In the case of Byrne v. Van Tienhoven9 the court held that where the communication of acceptance is done by an instantaneous mode of communication, the acceptance of the offer takes effect immediately. In this case, acceptance of an offer by telegram was considered to have taken effect immediately the telegram was sent and thus the defendants’ offer could not be revoked by post. In the scenario, peter’s revocation of his acceptance was done through the telephone, which is a speedier mode of communication than by post, and thus the revocation of his acceptance was valid irrespective of the fact that the manager had already left the office. His recorded voice message was thus enough to revoke his acceptance, and therefore the company cannot succeed in an action for specific performance against Peter. References Adams v. Lindsell (1818) 1 B & Ald 681 Byrne v Van Tienhoven [1880] 5 CPD 344 Fisher v. Bell [1961] 1 QB 394 Hyde v Wrench (1840) 49 ER 132 Partridge v Crittenden (1968) 2 All ER 421 Pharmaceutical Society of Great Britain v. Boots Cash Chemists [1953] 1 QB 401 p.406 Stevenson Jacques & Co. v. McLean (1880) 5 QBD 346 Stone, R. Modern Law of Contract (8th. Ed) New York: Routledge-Cavendish Publishers. (2009). 43 Read More