The Concept of Global Sales and Contract Law - Essay Example

? Process of formation of a contract via offer and acceptance Introduction The formation of a contract takes place when all the requirements of the contract are met. This will be evident when the parties present a clear objective of their intention to form the contract. The terms of agreement between the parties must be assented to by the parties’ engaging in the contract themselves. A contract formation will therefore involve the making of an offer by one party to be bound upon certain terms and on the other hand, the parties accept the terms of agreement on the same terms and conditions. Either the acceptance of an offer may be a statement of agreement, or, if the offer invites acceptance in this way, a performance of an act requested in the terms of the offer. It is important to note that acceptance is the final and unqualified acceptance and it must be according to the types and the requirements of the offer hence acceptance must exactly match the offer. Other forms of acceptance of an offer may be spoken, written, by action and an acceptance is never acceptance when there is silence and assumption. For example, if one tells a neighbor kid that if the kid mows the offeror’s lawn, the offeror will pay $50.00, and the kid does actually mow the lawn. The act of mowing constitutes the manifestation of the kid’s assent hence constituting an acceptance given the offer presented and the terms upon which it is presented. For a contract based on offer and acceptance to be binding and enforceable by law, the terms must be capable of determination in the same courts of law in a way that it is clear that the parties assent was given to the same terms of agreement. The terms must be in the position of being able to manifest themselves or be determined determined objectively. They may be written, or sometimes oral, although some kinds of contracts require writing as evidence of the agreement to be enforced in the courts of law. What is an offer? In an offer the offerer decides to make an offer and goes further vto communicate the offer. The offeree is then left with the responsibility of either accepting or rejecting the offer of which they have to communicate the acceptance in the case they decide to accept the offer with the terms around it Fisher v Bell [1961] 1 QB 394. The offerer then decides to receive the acceptance and the contract remains binding. An offer therefore can be defined as definite promise to be bound upon some specific terms, making it be a proposition by one party to another party on fixed terms that are fixed or in a position of being fixed. This is with the intention that it will be binding when accepted by the offeree in either of the forms prescribed for acceptance. In fact, a definite offer does not need to be made to a specific person, this is because it can be made to a particular class of persons or the world in general and it would remain binding if all the requirements were adhered. An offer is actually an expression of willingness to contract on certain terms, made with the intention that it shall become binding as soon as the person to whom it is addressed, the “offeree” [G.H. Tretel, The Law of Contract, 10th edn, p.8], accepts it. The “expression” referred to in the definition of an offer may take different forms, such as a letter, newspaper, fax, email and even conduct, as long as it communicates the basis on which the offeror is prepared to contract. The “intention” referred to in the definition is objectively judged and only determinable by courts. The English case of Smith v. Hughes (1871) LR 6 QB 597 emphasizes that the important thing is not the party’s real intentions but; how a reasonable person would view the situation making. This makes an offer not to be so specific to an individual. This is mainly due to common sense as each party would not wish to breach his side of the contract, if it would make him or her culpable to damages, it would especially be contrary to the principle of certainty and clarity in commercial contract and the topic of mistake and how it affect the contract together with its terms (Carlill v Carbolic Smokeball). An offer and invitation to treat/ an invitation to make an offer cannot always mean the same thing hence must be distinguished from the other. The clear distinction between and offer and invitation to treat is that an offer exists only in one from while an invitation to treat may exists in forms such as auctions where goods are presented publicly for the people who can afford them (Payne v cave [1789]. The other from is the display of goods which do not constitute an offer [Fisher v Bell [1960]. Advertisements also do not expressly constitute an offer and should never be misinterpreted expressly [Partridge v Crittenden [1968]. Others are mere statement of a price by a seller and tenders offered by companies. This are ways of passing information to the target customers and do not constitute any form of a contract whatsoever (Pharmaceutical Society of Great Britain v Boots Cash Chemists Ltd [1953] 1 QB 401, Court of Appeal). Acceptance For the process of a contractual relationship to be binding, the offer must be accepted as briefly pointed out above. This is because an offeror may revoke an offer before it has been accepted, though the revocation must be communicated to the offeree. Although not necessarily by the offeror, it is wise if it were by them. If the offer was made to the entire world, such as in Carlill’s case, the revocation must take a form that is similar to the offer. However, an offer may not be revoked if it has been encapsulated in an option contract. Acceptance is therefore a final and unqualified expression of assent to the terms of an offer [G.H. Treitel, The Law of Contract, 10th edn, p.16]. It does not attract part of any defence if a party goes claiming the damages by a given form of a contract when it is quite clear that the last time they were to be in the contract they did not indicate any sign of acceptance of the offer and its terms. An offer consisting of a promise does not entail any form of contract until the act promised is actually done and this is called acceptance by conduct (Schwenzer & Hachem, 2012). Generally, a complete contract through offer and acceptance requires that an evidence of the parties of offer and acceptance is visible. In addition, it has to be assented to for the parties to be in the position of manifesting their conduct. Rules of any form of acceptance will entail the communication of the acceptance, the correspondence of the acceptance with the offer, battle of forms in the case of companies. As a vital rule, there has to exist the knowledge of the offer and rejection, death or the lapse of time Fisher v Bell [1961] 1 QB 394. Advise on whether Di has concluded a binding contract with either Whizzo, EasyWidget Di has been newly contracted as a new managing director and has noted that the company needs a new equipment to maintain its records. The director looks for offers available and finds an advertisement by Whizzo Widget and when he contacts the sales director of the company, the director quotes fraudulent price of 3000 pounds to cover installation and staff training with an exclamation that the price cannot be held for more than a week. Di the following day communicates to Whizzo accepting the offer a communication that they later cancel through a telephone call. From the time that Di saw the advert by Whizzo they have not been able to communicate and given that an acceptance needs to be communicated, the two parties up to the time Whizzo is considering revoking the contract had not engaged in any form of contract. This is also because we are not aware whether Whizzo would have accepted the given that there was no communication made (Barnett, Hoares, & Co v The South London Tramways Company 18 QBD: Court of Appeal 10 May 1887). The acceptance must be communicated and the communication must be timely: Depending on the construction of the contract, the acceptance may not have to come until the notification of the performance of the conditions in the offer as in Carlill’s case, but nonetheless the acceptance must be communicated. Prior to acceptance, an offer may be withdrawn therefore in the case there is no possibility of a withdrawal. The offeree, that is, the person to whom the offer is made, can only accept an offer expressly or through implication. An offer is not bound if another person accepts the offer on his behalf without his authorization: see agent (law). It may be implied from the construction of the contract that the offeror has dispensed with the requirement of communication of acceptance. If the offer specifies a method of acceptance (such as by post or fax), you must accept it using a method that is no less effective than the method specified. Silence cannot be construed as acceptance: see Felt house v. Bindley (1862) 142 ER 1037. Whizzo had not communicated back hence; we cannot assume they had agreed to proceed with the transactions (Friedman, B. K. (1993, December 1). Later the same day Di communicated to Whizzo, Di receives an e-mail advertisement from the company Easy Widget, which states; “We can offer “state-of-the-art” production software for small businesses at a price guaranteed not to exceed ?2,500”. There is some form of misinformation as Di later realizes that the actual costs of the installation would come to 4000 pounds, Di had been into the contract already but withdraws according to the principles of revocation before he goes back to telephone Whizzo who he considered affordable. The law stipulates that an offeree may revoke an acceptance before it has been conducted through performance by the offeree. The revocation must be communicated to the offeror, although not necessarily by the offeree. This is in the case that the offer was made to the entire world and not specifically to the offeror, such as in Carlill’s case, and the revocation must take a form that is similar to the offer. However, the revocation of an acceptance may be quite difficult if the contract is in the form of an option contract (Barnett, Hoares, & Co v The South London Tramways Company 18 QBD: Court of Appeal 10 May 1887). . If the acceptance is a unilateral acceptance, unless there was an ancillary contract entered into that guaranteed that the main contract would not be withdrawn, the contract may be revoked at any time there is a misunderstanding among the parties. see Mobil Oil Australia Ltd v. Welcome International Pty Ltd (1998) 81 FCR 475 case where the accepting party was not able to withdraw even in the clear situation that they could not receive any value of their money (Decker, R. (1989, July 20). An offer and acceptance are therefore vital components of a contract law and must always be considered carefully by parties wishing to engage into such contracts, as there would be dire consequences if not considered carefully Fisher v Bell [1961] 1 QB 394 . References Barnett, Hoares, & Co v The South London Tramways Company 18 QBD: Court of Appeal 10 May 1887 Decker, R, (1989, July 20), Acceptance of an offer can occur in many ways. (Buyer-supplier contracts). Purchasing, 1, 12-25. Friedman, BK, (1993, December 1), An intent-based approach to the acceptance of benefits doctrine in the federal courts.. Michigan Law Review, 1, 23-60. Fisher v Bell [1961] 1 QB 394 Schwenzer, IH, & Hachem, P, (2012), Global sales and contract law. Oxford: Oxford University Press. Pharmaceutical Society of Great Britain v Boots Cash Chemists Ltd [1953] 1 QB 401, Court of Appeal Read More