Obligations in the European Contract Act - Essay Example

Obligations: Case Studies Involving European Contract Act Case Study The relevant law with regard to this case is the Contract Act with reference to Offer and Acceptance of agreements, verbal or written. An Offer could be said to be an expression of willingness to contract on certain terms, made with the intention that it shall become binding, as soon as it is accepted by the person to who it is addressed, the offeree. (Offer). Further, it could be said that an offer, consisting of a promise to pay someone if the offeree performs certain works, which the offerree, would not otherwise be doing, may be accepted when the offerree performs the stipulated act, instead of the mere promise by the offeree, to do the act. The specific performance of the task by the offerree is the objective indicating that the offerree has agreed to the terms of offer and acceptance. Therefore, it flows that there are three aspects to it, firstly, there is a valid offer flowing from the offeror to the offerree, secondly, the offeree accepts the offer by promise or conduct and thirdly, the object of consideration is fulfilled by the offerree. Therefore it could be logically analysed that the offer is an expression of willingness to contract on certain terms and the intention of the offerree, upon specific performance, becomes binding as soon as it is accepted by the person to whom it is intended. (Offer). In the above case, Aishah fulfilled the terms of the offer made by her father, Hasan, by attending all her seminars and also by graduating with a first class degree. By conduct she has accepted and fulfilled all the terms of the agreement. Thus her father is bound to pay her £1000 and also give her a car as promised to her through a valid offer. This could be enforced by Aishah on her father, Hasan. There are several rules which govern offer and acceptance. In the first place, the communication of acceptance has to be communicated to the offeror by the offeree, or by any other person. Again, in case of non-acceptance, the fact should also be communicated to the offeror. In the leading case, Felthouse v.Bindley (1862) 142 ER 1037, it was held that silence was not tantamount to acceptance. The details of this case were that an uncle wrote to his nephew expressing his intentions to buy one of his horses. He wrote if he did not hear from the nephew, he would consider the horse as his (uncle) own. The nephew did not reply. The uncle though he had established ownership over the horse by implicit acceptance. However, later, the horse was sold through auction. The uncle sued the auctioneers, on the grounds that the horse belonged to him. Held, since there no acceptance on the part of the offeree, the uncle’s claim was invalidated by the Court. (Moles). An offer could be made to a specific or group of persons or the world, at large. If addressed to a specific person or group, it could be accepted by them, if directed to the world at large, it is binding if any person accepts it by conduct or consent. In the leading case, Carlill v.Carbolic Smoke Ball Company, the smoke ball company, through a public advertisement, offered a reward of £100 to anyone who would contract influenza after using their smoke balls. The plaintiff used their smoke ball and yet contracted influenza. In action to claim, the company claimed that no valid contract had been created between the plaintiff, and the defendant Company, since there was no specific acceptance or communication of acceptance by the plaintiff, However, the Courts held that the act of buying and using the smoke balls constituted a valid contract, and the terms of the offer, made to the world at large, by the Defendant, was enough ground for seeking compensation as per the advertisement. Held the Company was bound to pay the reward to the plaintiff as per terms of contractual obligations flowing from the offer and its acceptance. (Carlill v. Carbonic Smoke Ball Co Court of Appeal. 1893). However this verdict was disregarded in the case of Leonard v.Pepsico Inc., 88 F.Supp.2d 116 (S.D.N.Y. 1996, in which the court held that Plaintiffs understanding of the commercial as an offer must also be rejected because the Court finds that no objective person could reasonably have concluded that the commercial actually offered consumers a Harrier Jet. (Wood 2006). Case study 2 An acceptance is a final and unqualified expression of assent to the terms of an offer . (Acceptance). It is no defense to an action based on a contract for the defendant to claim that he never intended to be bound by the agreement if under all the circumstances it is shown at trial that his conduct was such that it communicated to the other party, or parties that the defendant had in fact agreed. Further, the conduct of the parties shows that there would be a valid offer and a valid acceptance of this offer. In contracts involving specific performance the rule to be applied is one of objective view and the conduct which signifies assent. In certain cases, it may appear as though, one of the parties may not have really intended to be bound, by the terms of the contract, but has unwittingly given an offer of agreement. In such cases, it is seen that the view of objective is important, since the other party would have no inkling or beforehand knowledge, that there would be a breach of contract taking advantage of the position of the other contracting party. In such cases, the Test that needs to be applied, is what a man of ordinary prudence, would be deciding in such circumstances. In cases of specific performance, it is necessary that the annulment of offer needs to be made well before the specific performance has actually begun, and not during, or after the specific performance by the other contracting party. Moreover, it is seen that the intentions of the parties was to create an agreement of specific performance, which was subsequently annulled. Although one party had annulled the contract, the performing party had still carried on with it. This implies fulfillment of a unilateral contract under the terms of agreement. In this case, it is seen that through performance, Fred had accepted and fulfilled the terms of the agreement, although Eric had, halfway annulled the agreement. The annulment of the offer had been made only after the contract had begun, i.e. the marathon had begun, in this case. Under Article 2.202 (ex. Art.5.202 – revocation of an Offer), an offer may be revoked if the revocation reaches the offeree before it has dispatched its acceptance or, in cases of acceptance by conduct, before the contract had concluded under Article 2.205 (2) or (3). (The Principles of European Contract Law 1998. 2007). In this case it is also seen that the offer had begun when Eric promised Fred $100 if the latter ran the marathon, the contract concluded and became enforceable when the marathon began. Therefore, by application of this interpretation of law, Eric is contractually bound to pay £ 100 to Fred as the consideration for the fulfillment of contract, since at the time of finalizing the contract, the parties wished to enter contractual relations and also there was consideration on both sides, from the point of view of the offeror, it was the running of the marathon, and from point of view of the offeree, it was the promise of £100. However, in the Gibson v Manchester City Council case (1979) 1 WLR 294 during the regime of the Conservatives led Government, the plaintiff was led to believe that he could be allotted a council house, through the request for application letter of the City Council dt. 16/2/1971. He replied and assumed that he would be allotted the council house. However, the Government changed hands, and the later Govt. revoked the orders, except in the cases of contracted deals. Gibson sued on the ground that his acceptance of the application letter constituted a valid acceptance. However, the Courts held that the actions of both parties did not culminated into contractual obligations, and was, therefore, invalid under process of law. (Gibson v Manchester City Council [1979] 1 WLR 294. 2005). Case study 3 Under Article 2.206 (ex art.5.206) which relates to time of acceptance, in order for an offer to be effective, acceptance of an offer must reach the offeror within the time stipulated for it, or, if no time has been allotted, within reasonable time, which differs from situation to situation. Further, in the event of acceptance by an act of performance under Art.2.205 (3) the Act must have been performed within the time stipulated by the offeror, or if no time is stipulated within reasonable time. (The Principles of European Contract Law 1998. 2007). Again, the provisions of Article 2.207 (ex.art.5.208) which relates to the late acceptance, the law states that a late acceptances could be validated , provided, immediately upon the receipt of acceptance by the offeror, he communicates to the offerree that he has ratified the acceptance, or if the circumstances show, that had the transmission been normal, it would have received the offeror in due time., the acceptance would have been effective unless, immediately, the offeror informs the offeree that the offer has been invalidated. (The Principles of European Contract Law 1998. 2007). In this Case Study, it is seen that there are, primarily, three aspects to the case. In the first place, Harveen had promised that the offer to Greg would be valid till 5.00 PM Jake was promised the car at 4.00 PM in clear violation of agreement with Greg. Although Greg’s acceptance was transmitted to Harveen, it was available to Harveen only at 6.00 PM The interpretation of the law confirms that Greg has true entitlement to the car. He had communicated his acceptance in time and it was transmitted to reach Harveen well before the stipulated time. Under normal circumstances, Harveen would have been informed about Greg’s acceptance well within due time. Jake has no entitlement to the car since the agreement with Harveen is in breach of contract by Harveen with Greg. Thus Jake has no entitlements under the law and now as per the existing agreement between Greg and Harveen, Greg is entitled to pay £2,500 to the seller, Harveen, being the purchase consideration for the car. “A reply which gives a definite assent to an offer operates as an acceptance even if it states or implies additional or different terms, provided these do not materially alter the terms of the offer. The additional or different terms then become part of the contract.” (The Principles of European Contract Law 1998. 2007). Works cited Acceptance. Test of acceptance. [online]. 4lawschool .com. last accessed 19 November 2007 at: http://www.4lawschool.com/contracts101/offer.htm Carlill v. Carbonic Smoke Ball Co. (1893). Court of Appeal. 1 Q.B. 256. Carbolic smoke ball. Last accessed 19 November 2007 at: http://www.west.net/~smith/Carlill_v_Carbolic.htm Gibson v Manchester City Council [1979] 1 WLR 294. (2005). MSN Internet Software. [online]. Msn.groups. Last accessed 19 November 2007 at: http://groups.msn.com/thelawsite/invitationtotreat.msnw MOLES, N Robert. Felthouse v Bindley (1862). 142 ER 1037256. [online]. Networked knowledge. Last accessed 19 November 2007 at: http://netk.net.au/Contract/Felthouse.asp Offer. Advertisement to unilateral contact. [online]. Last accessed 19 November 2007 at: http://faculty.law.ubc.ca/biukovic/Contracts%20law/OFFER-Handout.pdf The Principles of European Contract Law 1998. (2007). Parts I and II. General provision. [online]. Lex Mercatoria. Last accessed 19 November 2007 at: http://www.jus.uio.no/lm/eu.contract.principles.1998/doc.html WOOD, M Kimba (2006). John D R Leonard v.Pepsico, Inc. United States District Court. Southern District of New York. Last accessed 19 November 2007 at: http://www.law.pitt.edu/madison/contracts/supplement/leonard_v_pepsico.htm Read More