Basic Rules of Offer, Acceptance, and Invitation to Treat - Assignment Example

1. The brief facts of the given case are that on October 1st Peter visited the motor show at the NEC and obtained a sales brochure from the Vauxhall Motors’s stand. The brochure gave detailed specifications of the company's latest model, the Vauxhall Vectra 2.0i, and stated: "on the road price £15,749, for immediate delivery”. On October 4th Peter posted a letter to the "Vauxhall Car Sales Division" stating: "I have read your sales brochure and would like to reserve a new Vectra 2.0i, Corsican Blue, for the specified price of £15,749. Can I pick it up tomorrow?" Owing to a massive order from the British School of Motoring, Vauxhall Motors had exhausted its supply of Vectras. Nevertheless, the Sales Manager e-mailed Peter on October 8th in the following terms: "I am delighted to accept your order. You can collect your Vectra, as specified, in the week commencing November 6th. Please go to your nearest Vauxhall showroom. Is this arrangement acceptable to you?” Peter immediately posted a letter to the Sales Manager which stated: “Great. I look forward to taking delivery in the very near future”. However, later that afternoon, Peter decided that he must have a new car immediately. He therefore telephoned the Sales Manager in order to cancel his order. The Sales Manager had already gone home so Peter left a recorded message on an answer machine which the Manager listened to the following morning. By this time Peter’s acceptance letter had arrived but remained unopened on the Sales Manager’s desk. The question to be decided in the light of the facts of the case and the principles of contract law is that Is there a binding agreement between the two parties? This question pertains to the basic tenets of the contract law i.e. Offer, Acceptance and the acceptance of offer, revocation of offer and the modes of acceptance etc. In simple terms “An agreement enforceable by law is a contract” and “Every promise and every set of promises forming the consideration for each other is an agreement” In an agreement there is promise from both the sides and if we talk about ‘Promise’, it can be defined as “When the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted. A proposal, when accepted, becomes a promise” Thus, when there is a proposal from one side and the acceptance of that proposal by the other side, it results in a promise. This promise from the two parties to one another is known as an agreement. Also all agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object and are not hereby expressly declared to be void. In nut shell the essentials needed for a valid contract, therefore, are as under : An agreement between the two parties. An agreement is the result of a proposal or an offer by one party followed by its acceptance by the other. Agreement should be between the parties who are competent to contract. There should be a lawful consideration and lawful object in respect of that agreement. There should be free consent of the parties, when they enter in to the agreement. The agreement must not be one, which has been expressly declared to be void. A proposal, when accepted, results in an agreement. It is only after the acceptance of the proposal that a contract between the two parties can arise. After the offer has been accepted, it becomes a promise which, if other conditions of a valid contract are satisfied, binds both the parties to the promise. These basic rules of offer, acceptance and invitation to treat etc are amply illustrated in the cases ‘Pharmaceutical Society of Great Britain v. Boots Cash Chemicals Ltd.(1952)2 Q.B.795)’ , ‘Felthouse v. Bindley(1862)6L.T.157)’ and also in ‘Fisher v. Bell (1961) 1Q.B. 394)’. The intention to create a legal relationship is demonstrated by ‘Rose and Frank Co. v. Crompton & Bros. Ltd.(1925)A.C.445)’, Balfour v. Balfour(1919)2K.B.571)’, By ‘Jones v. Padavatton(1969)All E.R. 616)’, and also through ‘Merrit v. Merrit(1970)2All E.R.760)’ The sales brochure of the Vauxhall Motors’s that gave detailed specifications of the company's latest model, the Vauxhall Vectra 2.0i, and stated: "on the road price £15,749, for immediate delivery” amounts to just Invitation to treat(‘Pharmaceutical Society of Great Britain v. Boots Cash Chemicals Ltd.(1952)2 Q.B.795)’ from the car company. Peter allured by the car made an offer to the car company through its manager and sent his offer through a letter. The manager after receiving Peter’s offer was willing to accept it with one single condition that the car could only be delivered in the month of November that was acceptable to Peter. The Manager in fact gave a reciprocal offer to Peter over the Telephone that was accepted by Peter and he dispatched his letter of acceptance immediately. But later Peter wanted to revoke his acceptance, as he wanted the car immediately. Peter called the manager and left a recorded message of the revocation of his acceptance. The manager listened to it the next day but by then the letter of acceptance sent by Peter has also arrived on the Manager’s table. According to the Principles of Contract law Peter’s revocation of acceptance is valid as it came to the knowledge of the Manager much before the knowledge of Peter’s acceptance came to his knowledge. According to the principles of contract law the communication of an acceptance is complete as against the proposer, when it is put in a course of transmission to him, so as to be out of the power of the acceptor. This implies that where communication of an acceptance is made and it is put in a course of transmission to the proposer the acceptance is complete as against the proposer : as against the acceptor, it becomes completes when it comes to the knowledge of the proposer. In the matter of communication of revocation it is provided that as against the person who makes the revocation it becomes complete when it is put into a course of transmission to the person to whom it is made, so as to be out of the power of the person who makes it and as against the person to whom it is made when it is made when it comes to the proposer at one place and the acceptor at another place. The contract becomes as soon as the acceptance is made by the acceptor and unless otherwise agreed expressly or by necessary implication by the adoption of a special method of intimation, when the acceptance of offer is intimated to the offeror. So in the light of the above discussion it can be said that there is no valid agreement between the parties as the revocation of the offer sent by Peter comes in to play much before his acceptance is complete as against the Manager of the Car Company. If the Sales Manager had opened his post before listening to any recorded messages then there would have been a valid contract, as against the offer by the Manager of the Car Company Peter’s acceptance came to his knowledge before the revocation later sent by Peter came to his knowledge. 2) (i) For Alice (A’s) original 1931 BSA bicycle, Bertram (B) offers £550. On April 1st, B tells A that unless he hears from her within the next seven days he will assume that he has bought the bicycle. Later that day A e-mails B: “I suppose so, but I expect payment in cash within 24hrs of any sale going through”. On April 8th, A receives the following letter from B who claims that he now owns the bicycle - enclosing a cheque for the right amount. There is no valid contract between A and B as first of all silence of a party cannot be construed as acceptance. ‘Felthouse v. Bindley(1862)6L.T.157)’ This position however was rethought in Brogden v. Metropolitan Railway Company . In Brogden’s case it was laid down that the person making the offer expressely or impliedly intimates in his offer that it will be sufficient to act on the proposal without communicating the acceptance of it to himself, perfomance of these conditions is a sufficient acceptance without notification. But According to the facts of the case there was no meeting of minds between A and B on this point. In fact A agreed to the proposition of B but wanted payment in cash within 24 hours of any sale going through. After seven days A receives a letter from B who claims to own the bicycle since he didn’t hear from A for last seven days and encloses a cheque of the right amount. The sending of cheque by B nullified the agreement as A had made it clear before hand that he wanted payment through cash. (ii) On April 2nd, A places an advertisement in the local press: "1931 BSA bicycle for sale, £600; please contact me on 0117 9989090 after 6.00 pm, any weekday evening”. The next day, A receives a letter from Clare (C) offering £625 for the bicycle and providing an e-mail address for any reply. A e-mails C with an acceptance but the e-mail is returned as C’s mailbox is full. On April 8th, A receives the following letter from C who states: " I have now discovered that you tried to accept my offer by e-mail – I assume the bicycle is therefore mine at £625. In this case it can be contended that there is a valid contract between A and C as first A made a invitation to offer through an advertisement‘Pharmaceutical Society of Great Britain v. Boots Cash Chemicals Ltd.(1952)2 Q.B.795)’ Although C doesn’t make the offer on telephone as directed by the advertisment, nevertheless A accepts C’s offer and sends his acceptance through e-mail. According to the rules of acceptance after the acceptance against offeree is complete when it is out of his control and sent and against the offeror when it comes to his knowledge. In this case A sent his acceptance to C. He could have revoked his acceptance before it came to the knowledge of C but he didn’t do it and when A’s acceptance came to the knowledge of C there was a valid and binding contract between them. (iii) On April 7th Derek (D) leaves a message on A’s answering machine saying: “I will pay £800 for the bicycle provided it is roadworthy - please contact me by the end of the day". A faxes D at his business address with the words: "I rode it yesterday to the shops. Happy to accept your offer at £800. Please call at my home today with the cash and pick up the bicycle". Unfortunately D has gone home and does not read the fax until the next day. Later, D writes: “As you did not fax me today (7th) I assume the bike is not for sale. If wrong, I’ll pay £900”. It can also be construed as a valid contract as A made his acceptance according to the condition laid by D for making the acceptance. Though the acceptance came to D’s knowledge the next day but since it was made well within time and if the fact can be brought to D’s knowledge then it will be a binding contract between them. 3) (i) Gina’s cannot claim the £15,000 promised by her Aunt lrene comes under the doctrine of promissory estoppel of the English Law. On the strength of her aunt’s promise Gina ordered £10,000 of new fitness equipment from Jaymark Fitness, and £1,500 of aromatherapy oils from Kolumbie Ltd. Promissory estoppel requires an unequivocal promise by words or conduct, evidence that there is a change in position of the promisee as a result of the promise and inequity if the promisor were to go back on the promise. Hughes v. Metropolitan Railway Co. (1877) 2 AC 439 and the Central London Property Trust Ltd v. High Trees House Ltd [1947] KB 130 are the leading cases on doctrine of promissory estoppel. (ii) According to ‘Penny v. Cole’ (1602) 5 Co Rep 117a and Foakes v. Beer (1884) 9 App Cas 605. she would not be liable for the remaining £500 balance on her debt. (iii) Gina informed Jaymark that she could not pay the £10,000 owed but could manage £6,000 and that if Jaymark tried to sue her for more, she would declare herself bankrupt and Jaymark would get nothing at all. Jaymark reluctantly agreed to accept the £6,000 in full and final satisfaction of the debt. In this case Gina would be liable for the £4,000 balance on her debt as the agreement between her and Jaymark is made under Duress and Jaymark were not willing to make this arrangement under free will. The leading cases that elaborates this point are Barton v Armstrong [1976] AC 104 and Skeate v Beale (1840) 11 Ad&El 983. (iv) Yes Gina is liable to pay Longshots the £5,000 "bonus" on the basis of her promise that she made to Longshot that if the work is completed on time then she will pay them £5,000 "bonus" and the work was in fact completed on time. (v) In early June Harcourt Investments learnt that Gina was experiencing some financial difficulties and offered to reduce her rent on the studio and salon to £700 per week until Gina was "in a position to generate a profit on the business" but Gina is liable to Harcourt Investments for the full rent from 1st July as from that date her business has proved to be a great success and is profitable. 4) The Brief facts of the case are . Blake, an accountant, owns a number of Apropex X18 computers. At the start of this year Blake was concerned that he required higher specification computers but could not afford the outlay involved in purchasing an entirely new set of computers. He was advised that it would be possible to have his existing machines upgraded so that they could perform more complicated programmes and decided to go ahead with this. In March Blake received a circular from Watt A. Racket plc, a company specialising in computer maintenance and upgrading of a variety of different computers including his Apropex X18s. This circular contained details of the cost of upgrading and at the bottom of the first page there was a picture of a small red hand together with the words “see last page” in feint black print. On the final page of this six page circular, in a central position, there was a box containing the following words: “The Company undertakes no responsibility of any kind for any loss damage, injury or depreciation in value arising (regardless of cause) during maintenance or upgrading operations. Customers are advised to take out independent insurance”. Blake was impressed at the reasonable charges quoted and failed to notice this clause. He immediately telephoned Racket plc and engaged their services to upgrade three computers. He was told that a confirmation of his order would be sent immediately. The confirmation, which Blake read, arrived the following day and stated that “All work is subject to conditions set out in the company’s circular”. When Racket plc came to collect the computers, one of them was dropped onto Blake’s foot by a Racket employee. The second computer was destroyed by a fire at the warehouse, which was started inadvertently by another Racket employee, and the third computer was returned with an irreparable defect and cannot be used by Blake. According to Thompson v. London, Midland and Scottish Ry. Co. [1930] 1 K. B. 41 Blake is bound by the conditions set out in the company’s circular as he had had sufficient notice of the special contract printed on the circular. There were special marks created to call attention of the prospective customers so that they can be made aware of the special conditions and not kept in dark. Bibliography: J.Beatson. Anson’s Law of Contract (28th ed.) Oxford University Press Read More