Is Andrew Obliged to Supply a 1,500 Computer to Betty, Colin and Edith - Coursework Example

Business Law By Due The essential elements of a legally binding contract are offer, acceptance, consideration and an intention to create legal relations. A valid offer needs to be a clear statement that explains the terms on which a party is prepared to do business with another party. An offer is meant to clearly signify the intent of a party. Sometimes, statements made during negotiations or made just to invite an offer are mistaken as valid offers. Invitation to offer includes advertisements and tenders. These are not offers in the context of contract law and their acceptance does not lead to a formation of a contract. Offers can be general or specific. General offers are meant for general public and anyone who can fulfill the conditions of the offer can accept it. Specific offers are made to specific parties and can be accepted only by them. An offer can be revoked at any time before it is accepted. In the given case, Andrew circulated a flyer to local businesses which means that he made a general offer to all of them. Andrew made his offer in the beginning of the month of January. His advertisement stated that “any orders notified by the end of January will be met at the special discount price of £1,500”. Andrew found this offer to be too generous and decided to revoke it. He posted a letter of revocation to the same businesses on 20th of January. However, a revocation cannot be effective unless the offeree knows of it. In Dickenson v Dodds1, the defendant offered to sell property to the plaintiff. Before the plaintiff could reply, the defendant sold the property to a third party. A friend of the plaintiff told him that the house was sold. It was held that the offer was effectively revoked and was no longer open for acceptance because the plaintiff’s friend’s intimation was adequate notice and a reasonable person would have easily deemed the offer to have been revoked. In the given case, it is important to consider whether the acceptance was completed before the offer was revoked. Andrew communicated his revocation of offer through post on the 20th of January as against himself but the letter was not delivered before the 2nd of February. In Adams v Lindsell2, a famous rule called “Postal Rule” was established according to which the acceptance of an offer is complete when a letter of acceptance has been posted. However, this rule is not applicable on the communication of revocation of offer by post. In Stevenson, Jacques & Co v McLean3, the plaintiff was an iron merchant who purchased iron and sold it to third parties. The defendant, holder of warrants (titles) for quantities of iron, offered to sell iron to the plaintiff by telegram also stating that the offer would be open till Monday. The plaintiff asked the defendant for some additional information but the defendant did not respond and sold the warrants to another party on Monday. He sent a telegram to the plaintiff on the same day which said that the warrants were sold to another party. Before the telegram could reach the plaintiff, he sent a telegram to the plaintiff in which he accepted the defendant’s offer. Later, the plaintiff sued the defendant for non-delivery. It was held that the defendant was at liberty to revoke his offer at any time before its acceptance but it could not have been effective until it had actually reached the plaintiff. Since the plaintiff had accepted the offer before the notice of revocation of offer had reached him, the revocation was ineffective. In the given case, Andrew’s revocation of offer could not reach Betty, Colin and Edith before the 2nd of February. Also, his offer pertained only to the orders placed before the end of January. Therefore, by the application of Stevenson, Jacques & Co v McLean, Andrew’s revocation of offer is ineffective. The other important aspect of this case is whether the acceptance is effective. The acceptance of an offer needs to be a mirror image of the offer. It must reciprocate all the terms of the offer. If an offer requires some conditions to be fulfilled, the fulfillment of those conditions is necessary so that there is a valid acceptance. In Hyde v Wrench4, the defendant offered to sell his farm to the plaintiff for £1000. The plaintiff replied that he was willing to pay £950 for the same. The defendant refused to sell the farm at £950. Then the plaintiff asked to purchase the farm at £1000 but the defendant refused to sell. It was held that the subsequent acceptance by the plaintiff was ineffective and there was no contract because the counter-offer of purchasing the farm at £950 by the plaintiff had destroyed the original offer. Acceptance of an offer also needs to be communicated to the offeror. In Powell v Lee5, the plaintiff applied for a job as headmaster and the defendants, the school managers decided to appoint him. One of the managers acted out of his authority and told the plaintiff that he was appointed. The managers later decided to appoint somebody else. The plaintiff sued the defendants on the grounds that there was a breach of a contract to employ him and he had suffered damages in loss of salary. It was held that there was no contract between the parties involved because the communication of acceptance was not valid. In the given case, the offer by Andrew specifically requires that the orders are needed to be placed by the end of January. This means that if an order is placed in February, it would not be met at the special discount price of £1500. It has already been determined that Andrew’s revocation of offer is ineffective. The remaining question is whether the orders were placed in time by Betty, Colin and Edith. Betty According to the given case, Betty placed the order for a computer on the 30th of January. Andrew did not see Betty’s letter until the 1st of February. Betty communicated her acceptance of Andrew’s offer through a letter which is why Postal Rule would be applied in this case. Therefore, the acceptance of offer was complete at the time when Betty posted her letter to Andrew i.e. on 30th of January. As Betty has complied with the conditions of Andrew’s offer by placing her order by the end of January and Andrew’s revocation is nullified, Andrew is obliged to supply a £1500 computer to Betty. Colin According to the facts, Colin called Andrew in the afternoon of 31st January to place an order but no one answered the phone because Andrew observes half-day on Wednesdays. Colin sent an order by fax that was received subsequently on Andrew’s fax machine at 4pm. In Entores Ltd v Miles Far East Corporation6, a London-based trading company sent an offer by telex for the purchase of copper cathodes from a company based in Amsterdam which accepted the offer in the same mode. The contract was not fulfilled. It was held that the Postal Rule is not applicable in cases where Telex is used as the mode of communication. The acceptance is completed only when it is actually received by the offeror. Similar judgement can be seen in Brinkibon Ltd v Stahag Stahl7. In the given case, Colin’s acceptance of Andrew’s offer is completed on the 1st of February i.e. when Andrew actually saw Colin’s fax. This means that Colin did not place his order by the end of January and is not entitled to a computer at a discounted price. Therefore, Andrew is not obliged to send a £1500 computer to Colin. Edith Edith sent an e-mail order on the 31st January, at 20.14, which was only received by Andrew’s computer at 02:23am the following day. In the judgement of Entores Ltd v Miles Far East Corporation, Denning LJ stated that “the rule about instantaneous communications between the parties is different from the rule about the post. The contract is only complete when the acceptance is received by the offeror: and the contract is made at the place where the acceptance is received”8. Like Telex, email is also a mode of instantaneous communication which means that acceptance is complete only when it is actually received by the offeror. Andrew’s computer received the email when the date on the calendar was 1st of February. But importantly, Andrew himself saw the email in the morning of the 1st of February. Therefore, Edith’s acceptance of offer was not completed by the end of January. By the application of Entores Ltd v Miles Far East Corporation and Brinkibon Ltd v Stahag Stahl, Andrew is not obliged to send £1500 computer to Edith. References Adams v Lindsell [1818] EWHC KB J59 Brinkibon Ltd v Stahag Stahl [1983] 2 AC 34 Dickinson v Dodds [1876] 2 Ch D 463 Entores Ltd v Miles Far East Corporation [1955] EWCA Civ 3 Hyde v Wrench [1840] EWHC Ch J90 Powell v Lee [1908] 99 LT 284 Stevenson, Jaques & CO v McLean [1880] 5 QBD 346 Read More