The Law of Contract - Case Study Example

LAW OF CONTRACT “The Law of Contract”, Sir William Anson submits, “is intended to ensure that what a man has been led to expect shall come to pass and that what has been promised to him shall be performed.” (2002: p 3) In simple words, the Law of Contract determines the rights and obligations to be made and executed, which have legally bound them to perform an act or abstain from an act. Before giving Helena a piece of legal advice, it would be appropriate to define some legal terms related to the case under study: Offer: [Section 2(a)] “When one person signifies to another his willingness to do or to abstain from doing anything with a view to obtaining the assent of that other to such act or abstinence, he is said to make a proposal.” Acceptance: [Section 2(b)] “When the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted.” Agreement: [Section 2(e)] “Every promise or every set of promises forming the consideration for each other.” Consideration: [Section 2(d)] “When at the desire of the promisor, the promise or any other person has done or abstained from doing, or does or abstains from doing, or promises to do or abstain from doing something, such an act or abstinence or promise is called a consideration for the promise.” Consideration is also one of the essential elements in a contract. And it should be lawful, and should be according to the principle of morality. The Law of Contract defines contract in these words: Contract: [Sec 2(h)] “An agreement enforceable at law is a contract.” Sir William Anson has defined the term contract in these words: “A contract is an agreement enforceable at law made between two or more persons, by which rights are acquired by one or more to acts or forbearance on the part of the other or others.” (Quoted in ReportBD.com) Hence, a legal contract contains the following elements: Two or more persons or parties The persons or parties must be competent to entering into a contract There must be some agreement The agreement must be enforceable at Law. There should be some lawful consideration. The proposal and acceptance must be made in a proper mode The acceptance must be made within appropriate period of time from the making of a proposal Both the proposal and acceptance must be communicated in a prescribed way In the case under study, the contract between Helena and the London Theatre is unilateral one in nature, where though there is a consensus ad idem i.e. both the offerer i.e. London Theatre agrees to sell its product, and the offeree i.e. Helena agrees to pay £500 as a consideration against the tickets offered by the theatre, yet as the theatre has offered its product to a large number of people, the contract between Helena and the theatre is unilateral one in nature. Unilateral Contract: “Unilateral contract” according to legal-dictionary, “is a contract in which only one party makes an express promise, or undertakes a performance without first securing a reciprocal agreement from the other party.” (Quoted in http://legal-dictionary.thefreedictionary.com/unilateral+contract) The same is applied in the case under study, where the London Theatre has made an express promise without first securing a reciprocal agreement from the public and masses. Helena has tried to enter into the contract with the theatre according to the terms and conditions described in the advertisement made by the theatre. In addition, Helena has made her performance in a prescribed mode as well as within the time period determined by the theatre. Moreover, the offer has been made to the world at large; so it is a general offer. Hence, in the case above-mentioned, both the parties to the contract observe the situation as the court verdict announced by the court of law in the case of Callil v. Carbolic Smoke Ball Co., where it arises the question of specific and general offer. There are two types of the offers made by an offerer i.e. specific and general. Specific offer: Specific offer is the offer which is made by the offerer to a particular person, firm or company, and no other person has any concern with it, nor any person other than the offeree, can accept that offer. “In Boulton v. Jones (1857) 2 H & N 564”, Sachdeva & Gupta state, “A bought a business to B; C to whom B owned some money ordered to supply him certain goods. Instead of B, A supplied the goods. C refused to pay, because he intended to contract with B only. Held, offer was made to B only and he alone could accept it.” (2002: p 15) General Offer: General offer is the offer which is made to the world at large, and in which the contract is not made to one person only. But the prize and reward, offered by an individual or company, cannot be given to the entire world. Rather, the first person who performs first all the terms and conditions of the proposal is considered as the person having right of getting the prize or reward announced, determined or advertised. The most prominent case on the subject of general offer includes Carllil v. Carbolic Smoke Ball Co. (1893) 1 Q. B. 256. “In this case”, Shukla notes, “the Company offered by advertisement a reward of £100 to anyone who contracted influenza after using their smoke ball for a fortnight according to printed directions. Mrs. Carllil, on the faith of the advertisement, bought a smoke ball and used it as directed, but was attacked by influenza. She sued for the advertisement reward. She was held entitled to recover the reward.” (2003: p17) In the case, under study, the offer made by the theatre through advertisement does not create any legal binding between the parties due to the very reality that the agreement is not made until the parties do not act according to the terms mentioned. Though Helena has selected one of the three options of entering into the contract by filling up the form and inserting the number of her credit card, yet she presses the return button of the web page, which has been forbidden to be pressed. It is therefore her page expired and she could not retain her seats against the tickets reserved. The case creates the following positions: The theatre announces buying of tickets of the Watson’s show through the Internet and phone. Specific phone line has been mentioned by the theatre for the booking of the tickets Specific rules and regulations have been indicated in the web page The day and time for the commencement of the sale of tickets and the reservation of the seats has been described by the theatre. Helena adopted the option of buying the ticket through internet, and entered her credit card number at the web page, but failed to perform according to the rules and regulations of the website. She cannot contact the management through the prescribed phone line; instead, she talked to them through another helpline of the theatre, which is not the mode elaborated by the theatre. Hence no contract has been entered into between the parties, because communication has not been made accordingly. Here it appears the concept of communication: Communication: According to Section 4 of the Law of Contract, “the communication of an offer is complete when it comes to the knowledge of the person to whom offer has been made.” Taking the precedent of the court in the case of Lalman Shkla v. Gauri Dutt, where A’s nephew absconded from home. He sent his servant in search of the boy. Subsequently, he published an advertisement offering to pay Rs. 500 to any body communicating the whereabouts of the boy. The servant came to know regarding the advertisement, after he discovered the boy, and demanded for the reward, which was failed due to the very fact that in order to constitute an offer, there must be its acceptance and there can be no acceptance unless there is knowledge of the offer.” (Quoted in ourkarnataka.com) The same rule is also applied in acceptance too, where the acceptance should not only be made in proper mode, but also it must be communicated within the prescribed time. An acceptance made or communicated after the offer has been withdrawn or expired, the performance made by the offeree would not be acceptable. “In Ramsgate v. Montefiore, P applied for certain shares in a company in the month of June, but the allotment was not made till November.” (Hare: p 309) Held, the offer stood withdrawal and could not be accepted as the reasonable period during which it could be accepted had elapsed. It is therefore Helena cannot claim a remedy because no binding contract has been made due to the incomplete communication made by Helena with the management of the theatre. In addition, since the offer is specific rather general, so the first persons performing the act are liable to make contract and seek tickets according to the instructions of the theatre. Regarding the second offer made by the London theatre regarding the sale of limited tickets on double amount, it is fact beyond suspicion that the re-sale of the tickets is against the Clause 6 of Appendix 1, which vehemently views that If tickets are resold or transferred for profit or commercial gain by anyone other than the Venue Management, Producer or one of their authorised agents, then they will become void and the holder may be refused entry or ejected from the venue. It also points out towards the fact that the sale of the tickets in black is not fair at all. But nevertheless Helena agrees to accept the offer of buying the ticket at double price. She also communicates it to the manager in a prescribed mode, which has not been replied properly. But the non-compliance of the management to Helena’s request is valid according to the provisions of the Appendix 2, where it says: “You will not hold eBay responsible for any loss you may incur as a result of eBay taking any of the actions described in the Abusing eBay section above nor for other users actions or inactions, including things they post. You acknowledge that we are not a traditional auctioneer.” Hence, Helena cannot make any claim against the losses she suffers. In the case, under discussion, Helena is the offeree, who can accept the offer by fulfilling the conditions prescribed in the offer made by London theatre and performing the conditions prescribed by the court of law. The court’s decrees the suit, relevant to this one, on the ground that the person performing according to the terms and conditions of the advertisement, first of all, would have right to receive the award. Since the company cannot give everyone the award, the person, who came first and acts on the lines of the offer, and makes communication within the prescribed time, before the withdrawal of the offer, has the right to seek prize. The same is applied in an auction and buying of tickets too. Hence, Helena cannot get the ticket. In addition, the advertisement of the offer made by London Theatre is not limited to one person or individual only. In Partridge v Crittenden [1968] 1 WLR 1204, the court declared that “The Protection of Birds Act 1954 made it an offence to "offer for sale a wild live bird". The defendant had placed an advertisement in the journal Cage and Aviary Birds with the words "Bramble finch cocks and hens 25 shillings each". He did not use the words "offer for sale" - He was charged with offering for sale a wild bird, contrary to the 1954 Act. At first instance he was convicted but on appeal his conviction was quashed. The reason being that there had been no offer for sale as his advertisement was only an invitation to treat.” With and between two family members or friends; rather, it fulfils all the requirements of a valid contract. There are two types of agreements i.e. 1) Social agreements and 2) Legal agreements. Social agreements are the agreements which are just promises between two or more persons or parties, but do not enjoy the status of contract. For example one person invites another at his office to have dinner with him, but if he fails to host dinner, no legal remedy can be demanded, as it is social agreement in nature. Such promises do not bind the parties, to fulfil the promise, thus no legal rights between the parties are created, as in the case of Balfour and Balfour (1919) 2 KB 571: “When a husband failed to pay a promised allowance, the wife sued. The court announced the judgement in these words: "There are agreements between parties which do not result in contracts within the meaning of that term in our law. The ordinary example is where two parties agree to take a walk together (or) arrangements, which are made between husband and wife. They are not contracts because the parties did not intend that they should be attended by legal consequences. Each house is a domain into which the Kings writ does not seek to run.” (Quoted in Duhaimes Canadian Contract Law Centre) On the other hand, there are some contracts, which are legal in nature, and the parties are bound to execute the promise and agreements. In case of not complying with which, legal rights and obligations are created. The same is applied in the case of Merritt v Merritt [1970] 2 All ER 760, where the agreement was made between the husband and wife, and the husband signed an agreement to pay her wife a monthly sum, and eventually to transfer the house to her if she kept up the monthly mortgage payments. When the mortgage was paid off, the husband refused to transfer the house. The wife asked the court to enforce the agreement. Held: the husband’s appeal failed, and specific performance granted. The usual presumption against an agreement within a marriage being legally enforceable did not apply in this case since the parties were separated. This was more than a domestic arrangement. Hence, when the parties are not bound into a marital knot, so it was not a social agreement, and parties to the contract had any intention to enter into legal relations. So, the court declared that the husband was bound to fulfil the requirements promised in the agreement between the two. (Retrieved from swarb.co.uk) BIBLIOGRAPHY: http://www.reportbd.com/articles/38/1/Contracts/Page1.html Anson, Sir William. (2002) Law of Contract 28th Edition Oxford University Press ISBN 0199256039 p 3 (Retrieved from http://www.reportbd.com/articles/38/1/Contracts/Page1.html) Biers, Sam (Ct. of App. 1876) Dickinson v Dodds (Retrieved from http://www.4lawschool.com/contracts/dodds.htm) Hare, J. I. Clark. (2003) The Law of Contracts Published by The Law Book Exchange, Ltd., ISBN 1584773111, 9781584773115 p 309 Federal Trade Commission—Facts for Business Sachdeva & Gupta. (2002) Mercantile and Industrial Law Ajanta Prakashan Publishers, Delhi pp 8-38 Singh, Avtar (2005) Law of Contract Sixth Edition Mansoor Book Publishers Urdu Bazaar Delhi pp 19-31 The Lectric Law Librarys Lexicon Understanding the Magnuson-Moss  Warranty Act www pkykwong.com Lave, J. (1988) Cognition in Practice, Cambridge: Cambridge University Press. Noonan, Rinke. (2005) Law for Laymen (Retrieved from http://www.rnoon.com/index.html) Know your law: Offer and its essentials (Retrieved from http://www.ourkarnataka.com/Articles/law/offer.htm) http://www.swarb.co.uk/lisc/Agenc19301959.php http://www.swarb.co.uk/lisc/Famly19701979.php Read More