Contract Law: Carlill v Carbolic Smoke Ball Co - Case Study Example

Contract Law In this case scenario, it appears that Kelly will have an enforceable contract only with Britney, while there are questionable aspects to the formation of a contract in the case of both John and Sarah. One of the first requirements in order to a valid contract to exist is that there must be an offer and an acceptance of that offer.1 An invitation to treat, as in an advertisement, is different from an offer in the sense that it does not bind the one making the offer. In the case of Fisher v Bell,2 the Court clearly stated that offering an article with a price displayed on it, as in an advertisement, does not constitute a contract of sale. The advertisement which Kelly has placed in the local newspaper is an offer that has been made to the world at large, such as for example in the case of Carlill v Carbolic Smoke Ball Co.3 A mere offer will only constitute a unilateral contract, which will also be deemed valid only if some party proffers an unconditional acceptance of the terms of the offer.4 John has seen the advertisement in the paper and has posted his acceptance to Kelly. However as McKendrick states, for a contract to be valid, “there must be a definite offer mirrored by a definite acceptance.”5 An acceptance will be said to occur when the offeree’s words or conduct can give rise to an objective reference that he/she has assented to the terms offered.6 On this basis, Kelly’s advertisement in the paper constitutes a definite offer and John’s reply constitutes an acceptance of the terms of the offer. In the case of Gibson v Manchester City Council, it was held that the acceptance of the offer must also be communicated before it can be valid on a contractual basis.7 According to Lord Denning no contract will come into existence unless and until the acceptance has been communicated to the offerer8. Therefore, if a contract is to exist between Kelly and John, then Kelly should have received John’s acceptance of her original offer, without any changes in its terms. John has indeed accepted the offer as per its original terms and since John’s acceptance of the offer has been sent by post then it will be held to be a valid acceptance as soon as he posted his letter.9 In fact, the courts have held that where a postal; acceptance is concerned, it will hold good even in those instances where the letter is delayed or lost in the post so that it never reaches the offerer.10 However, an offer cannot be accepted by the offeree unless and until the offer is communicated to him/her and silence cannot be construed to be acceptance.11 Although the Courts have held that acceptance is complete when posted12 this will still be subject to the general rule regarding acceptance, which is the requirement of actual communication.13 This means that the offeror should be aware of the acceptance and must be willing to enter into legal relations with the offeree. Therefore, up to the point where Kelly actually receives John’s letter, no legal commitment will be deemed to and up to that point, either party is free to change their minds.14 Another aspect that must also be taken into consideration is that a mere agreement alone will not make a contract and both parties must provide consideration if they wish to enforce a contract15. Taking all these factors into consideration, it must be noted that in John’s case, he has communicated his offer to Kelly and agreed to buy the limousines, but has not yet paid the consideration, i.e, the sum of 15,000 pounds. A contract is based upon the principle of consensus ad idem or a meeting of the minds. Kelly has posted the advertisement in the paper, but she is free to change her mind about the terms and a contract will be enforceable only after she has received John’s offer and the necessary consideration. The Courts have also held that an offeree cannot be forced to accept a contract against his/her wishes merely on the grounds that he/she was silent about the acceptance of the offer.16 This is also the case with Kelly, where her silence cannot necessarily be seen as a willingness to enter into contract with John. In John’s case, it may also be observed that Kelly has changed her mind about the price and contacted Sally and is also in touch with Britney. Kelly has been silent on John’s offer, but her silence cannot be held to be an acceptance17. Therefore it appears unlikely that John’s letter may be a valid acceptance because Kelly has remained silent on it. This appears to indicate that there is no intent on her part to enter into legal relations with John in reference to the sale of her limousines, and she cannot be forced into such a contract against her wishes. Where a dispute arises, the courts will try to determine what the intentions of the parties were. This may sometimes involve referring to how an “intelligent bystander” is likely to interpret the course of events in determining whether a valid contractual relationship exists.18 In this case, since Kelly has remained silent, it may be inferred that she does not wish to sell her cars to John. Therefore it cannot be established that there is a consensus among the parties and a valid contract does not exist between them. In the case of Sally also, a valid contract does not exist. While it can be established that Kelly has made a definite offer to Sally by contacting her via e mail, since an instantaneous mode of communication will ensure that the offer is communicated immediately,19 Sally has not accepted the offer as is, but has added some fresh conditions of her own, i.e, that the cars must be re-sprayed white. This is equal to a conditional acceptance rather than an unqualified acceptance of Kelly’s offer. In making a reply to an offer, when an offered introduces a new term or changes the terms of the original offer, then this amounts to a counter offer, which is equivalent to the rejection of the original offer.20 As a result, the offerer, i.e, Kelly, will be free to accept or reject the new terms and Sally’s email will not be construed to be a valid acceptance of Kelly’s offer, which will bring a contract into existence. A conditional acceptance is not binding upon the offerer. Therefore, no valid contract will exist between Kelly and Sally. In the case of Brenda, there has been a definite offer, acceptance as well as communication of that acceptance. Kelly’s advertisement is the offer and although a week has passed, Brenda has accepted the offer as per the original terms and conditions, without making any counter offers of her own. While it may be argued that both John and Brenda have communicated their acceptance of Kelly’s original offer, the difference in the case of Brenda is that her acceptance has been communicated to Kelly without Kelly responding with silence. She has spoken to Kelly directly; therefore there has been an instant communication of her acceptance of the terms of sale. She has also agreed to the consideration of 15,000 pounds which Kelly seeks, hence a valid agreement may said to exist between the parties. But it must also be noted that until Brenda has paid the consideration of 15,000 pounds, she will not be in a position to sue on the contract. In conclusion, all three parties appear to believe they have a valid contract with Kelly. However, taking into account, the circumstances and the precedent of the Courts in such cases, it appears unlikely that a valid contract will be held to exist between Kelly and either Sally or John. It is only Brenda who can legitimately claim that she has a contract with Kelly for the purchase of the limousines. Bibliography * Halson R, Contract Law. Longman, 2001 * McKendrick, Ewan, 2000. “Contract Law” (4th edn) Basingstoke: Macmillan * Wormser, I.M., The true conception of unilateral contracts. (1916) 26 Yale Law Journal 136 Cases cited: * Adams v Lindsell (1818) 1 B&Ald 681 * Carlill v Carbolic Smoke Ball Co (1892) 2 QB 484 * Currie v Misa (1875) LR 10 Exch 153 * Entores v Miles Far East Corporation [1955] 2 QB 327 * Felthouse v Bindley (1862) 11 CBNS 869 * Fisher v Bell [1961] 1 QB 394 * Gibson v Manchester City Council (1978) 2 All ER 972; (1979) 1 WLR 294 * Holwell Securities v Hughes (1974) 1 All ER 16 * Household Fire Insurance v Grant (1879) 4 Sc.D. 216 * Hyde v Wrench (1840) 3 Beav 334 * Re London & Northern Bank [1900] 1 Ch 220 * Offord v Davies (1862) 12 C. B. N. S. 748 * Oscar Chess v Williams (1957) 1 WLR 370 Read More