The Underlying Difference between an Invitation to Treat and an Offer - Essay Example

?Contract Law Contract Law Introduction Traditionally, offer and acceptance have been the means through which courts have determined the existence of a valid contract between parties whenever any party to a contract feels that their contractual partner has breached the terms of the contract. However, underlying difference between an invitation to treat and an offer leaves some uncertainty as to which and when a contract is legally binding. One must be in a position to determine whether an offer or invitation to treat exists. According to Helewitz (2010), a contract is considered to be valid and legally binding when it has the elements of offer, acceptance, consideration as well as the manifestation of the parties to create a relationship which is legal and binding. However, advertisements are not always perceived to be offers that can legally bind the advertiser of a product. Advertisements are usually considered as invitation to treat. Miller and Jentz (2008), argue that advertisements are invitations for tenders or business deals and do not in anyway constitute a contract. Nonetheless, there are instances when an advertisement can constitute an offer. An advertisement becomes an offer when its terms are definite and the advertisement portrays the intent of entering into a legal relationship by the advertiser (Furmston, Tolhurst & Mik 2010; Miller & Jentz 2008). In such a case, the offeree has the power to transform the advertisement into a valid and binding contract through acceptance of the offer (Jennings 2013). The offer can however be terminated by the subsequent action of either the offeror or the offeree via rejection, revocation or even issuing a counteroffer (Miller & Jentz 2008; Evans 1995). As such, advising William necessitates deep understanding of the elements that constitute to a legal and binding contract. There is also the need to comprehend when an advertisement can be considered an offer, which makes it a legally binding contract with a customer. Case analysis Nigel v William Nigel visited William in his house on Sunday and inquired about the price that William would accept for the antique Royal Lincoln Vase to which William responded by saying he would not accept payment less than ?1200 for the vase. William decided to advertise the vase on Monday offering it for sale for ?1500 or nearest offer. On Wednesday, Nigel, who did not contact William since their meeting on Sunday, posted a letter to William stating his acceptance of William’s offer of ?1200. Does a valid and legally binding contract exist between William and Nigel? In this case, there exist no legal contract between William and Nigel. As such, William is not in anyway liable to pay any form of damage to Nigel should Nigel decide to take the matter to a court. The advertisement put by William is merely an invitation to the public for a deal. It does not bind William to anyone who might be interested in buying the vase. If it were to be legally binding, it would mean that William is liable and legally bounded by the advertisement to all people with interest in the vase. This advice is based on the decision in the case of Partridge v Crittenden (1968). In this case, the defendant advertised in a section of a magazine the sale of some bramble finches. Based on the provisions of Section 6 of the Protection of Birds Act 1954, the defendant was incarcerated for selling the birds for it was contravening the Act. However, he appealed his conviction. It was held that the defendant conviction was overturned arguing that the advertisement was an invitation to treat rather than an offer. Also, in the case of Harvey v Facey (1893), Privy Council, it was held that a mere statement of price does not amount to a contract. The court held that by stating the price, the defendant was merely providing information and that no valid and legally binding contract existed (Ibrahim, Ababneh & Tahat 2007; Moles n.d). Further, William’s advertisement is not definite in its terms, which would bind him to Nigel. This is in line with the decision in Carlill v Carbolic Smoke Ball Co [1893] in which the court of appeal held that Mrs. Carlill was entitled to receive the reward as was indicated in the advertisement. The advertisement constituted an offer because of its definite terms, which lacks in William’s advertisement. Moreover, Nigel went silent after visiting William’s house. As such, the general rule is that silence does not indicate acceptance by the offeree as was held in the case of Felthouse v Bindley [1862]. William’s publication did not indicate any means through which a person can forward his or her offer for the vase. William’s advertisement does not amount to an offer because it has not definite terms apart from mentioning the acceptable rage of price for the vase. According to Jennings (2013), an offer is deemed valid when it is definite in its terms as communicated to the offeree. As such, by sending to William a letter of acceptance, which arrives after the vase had been sold, Nigel has no claim against William because no contract existed between them and the letter is merely a response to invitation to treat by the advertisement. Therefore, my advice to William is that he has nothing to worry about as Nigel has no legal case against him for selling the vase to someone else. Joan v William In Joan’s case, she visits William’s house a day after William advertised the intent to sell the antique Royal Lincoln vase. Joan offered William ?1000 for the vase, but William rejected the offer by giving a counter offer of not willing to accept any amount below ?1200 for the vase. However, William promises Joan that he will not sell the vase to anyone until Saturday in condition that Joan sends him a written notice of her acceptance. On returning home, Joan decided to phone William and left a message accepting his offer, which William never got due to malfunctioning of the phone. William sells the vase on the same day. On Wednesday, Joan sent an acceptance letter to William. Unfortunately, she incorrectly addressed the letter. Is there a binding contract between William and Joan and does the postal rule apply? Again in Joan’s case she has no case against William. Although there could be a valid contract between Joan and William because she had posted the acceptance letter on Wednesday, which is within William’s deadline before selling the vase to anyone, she addresses the letter incorrectly. Based on the Mail Box Rule, a contract begins at the moment when an offeree posts his or her letter of acceptance (Miller & Jentz 2008). It does not matter whether the offeror receives the letter or not. Late receipt of the letter of acceptance does not invalidate the contract in accordance with the Postal Rule (Cross & Miller 2009). In the case of Adams v Lindsell (1818), the plaintiff responded to the letter sent to them by the defendant to sell them some wool. Unfortunately, the letter delayed in the post. Upon receiving the letter, the claimant posted his acceptance letter on the very day he received the offer letter. However, the defendant had assumed that the plaintiff was not interest in the wool following the delay of his offer letter in the post. Therefore, the defendant sold the wool to someone else. Adams sued the defendant for breach of contract. It was held that a valid contract existed from the moment that the plaintiffs posted their letter of acceptance (Ibrahim, Ababneh & Tahat 2007). However, the offeree must clearly establish beyond any reasonable doubt that the acceptance letter was correctly addressed, affixed with appropriate postage stamp, and delivered to the mailbox on the correct date (Tepper 2011). In Re London & Northern Bank, ex p. Jones [1900] 1 Ch 220, Dr. Jones made an offer to the bank. An acceptance letter addressed to Dr. Jones was given to a postman at 07:00. However, the postman had no power to receive letters, but only to deliver letters. At 09:30, Dr. Jones delivered a letter to the bank revoking the offer he had made. Later at 19:30, the letter of acceptance from the bank was delivered to Dr. Jones. It was held that the Postal Rule was inapplicable because the acceptance letter from the bank was incorrectly addressed. This case is perfectly applicable in the case of William and Joan, in which Joan incorrectly addressed her letter of acceptance of William’s offer. Regarding communication of acceptance by the offeree through telephone, acceptance is deemed to have occurred when acceptance is spoken (Beale, Bishop & Furmston 2008). In the case of Linn v. Employers Reinsurance Corp (1958), it was held that acceptance of an offer by telephones creates a legal and binding contract if the acceptance is spoken (Alghamdi 2011; Poole 2012; Lando & Beale 2000). However, William clearly stated that Joan should send him a written response if she accepted the offer. As such, there is not enforceable contract that was created between Joan and William through telephone calling and messaging. This is in line with the decision held in the case of Yates Building Co. v Pulleyn Ltd (1975) where it was held that Yates had not followed the requirement when responding to the offer (Slapper & Kelly 2009). This case is perfectly similar to the case of William in which he required that the response be a written one. Joan did not follow the requirement and thus not legal contract exists between her and William. She has no case against William. Critically analyzing the case of Joan, despite the fact that the posting of the letter would make the contract valid and legally binding, she addressed the letter inappropriately, which rescinds the possibility of existence of the contract. Further, Joan did not following requirement when she used telephone contrary to William’s demand for a written response. As such, no valid contract exists between him and Joan. Bibliography Alghamdi, AM 2011, ‘Law of e-commerce: e-contracts, e-business’, Authorhouse, Bloomington, IN. Beale, HG, Bishop, WD & Furmston, MP 2008, 'Contract: cases and materials', Oxford University Press, New York. Cross, FB & Miller, RL 2009, ‘The legal environment of business: text and cases: ethical, regulatory, global, and e-commerce issues, 7th Ed’, South-Western Cengage Learning, Mason, OH. Evans, DA 1995, 'Texas business law, 3rd Ed', Pelican Pub. Co., Gretna. Felthouse v Bindley [1862] EWHC CP J35 Furmston, MP, Tolhurst, G & Mik, E 2010, 'Contract formation: law and practice', Oxford University Press, Oxford. Helewitz, JA 2010, ‘Basic contract law for paralegals (6th Ed)’, Aspen Publishers, New York. Ibrahim, MA, Ababneh, A & Tahat, H 2007, ‘The Postal Acceptance Rule in the Digital Age’, Journal of International Commercial Law and Technology,vol.2 no. 1, pp. 47-53. Jennings, M 2013, ‘Real estate law’, South-Western Cengage Learning, Mason, Ohio. Lando, O & Beale, HG 2000, 'The principles of European contract law', Kluwer Law International, Netherlands. Miller, RL & Jentz, GA 2008, ‘Business Law Today: The Essentials’, Cengage Learning, Mason, OH. Moles, RN n.d, Contract Law Lecture - Formation of Contract - Offer and Acceptance, Viewed on November 30, 2013 from Partridge v Crittenden (1968) 2 All ER 421 Poole, J 2012, 'Textbook on contract law', Oxford University Press, Oxford. Slapper, G & Kelly, D 2009, 'English Law, 3rd Ed', Routledge, New York. Tepper, PR 2011, 'The law of contracts and the Uniform commercial code', Delmar Cengage Learning, Clifton Park, NY. Read More