Scenario - Case Study Example

Case Scenario One of the first requirements in order to a valid contract to exists is that there must be an offer and an acceptance of that offer An invitation to treat, as in an advertisement1a, is different from an offer in the sense that it does not bind the one making the offer. Otherwise 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. According to I.M. Wormser, the justification for fixing acceptance to a unilateral contract upon completed performance of the stipulated terms is based upon symmetry.1a Contract law is governed by the Statute of Frauds and the Law of Obligations. A contract for sale of goods is regulated by the Sale of Goods 1979. Rights of third parties are covered under the Contracts (Rights of third parties) 1999 and unfairness in contracts is actionable under the Unfair Contract terms Act 1977. In the case of Gibson v Manchester City Council2 Lord Denning held that the Court should look into all correspondence between the parties and their conduct in order to determine whether a valid contract exists. Therefore the following points must be satisfied: (a) it must be made in words or by conduct (b) it may be made to a specific person or to the world at large, i.e, for example through an advertisement3 and (c) the offer must be communicated. On this basis, it may be accepted that Jo has made a valid offer, because she has left her telephone number and contact information and also informed the shop assistant what price she wishes to pay. However as McKendrick states, for a contract to be valid, “there must be a definite offer mirrored by a definite acceptance.”4 The time factor is part of the offer and if Raj fails to accept the offer within the specified time, it will automatically expire5. This is in the nature of an exclusion clause, so that Raj’s failure to adhere to the terms of the clause would automatically make her not liable for breach of contract. However, exclusion clauses must be clearly communicated, if they are printed on the back of a ticket or communicated indistinctly, they will not be valid5a. Before a valid contract can exist, Raj’s acceptance must come before the specified time limit and be conveyed in such a manner that it is unconditional, final and unqualified. Therefore, 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 Moreover, the acceptance must be motivated by the offeree’s knowledge of the offer, since it is only then it will be valid6a. If the offeree has some queries or tries to change the terms in any way, the original offer, therefore it will be rejected and a counter offer will take its place7. Therefore, since Raj has agreed to the price that Jo offered, it may be said to constitute an acceptance rather than a counter offer. An acceptance of an offer must also be communicated to the offeror, which means that Raj’s acceptance of the offer must be received by Jo. According to Lord Denning no contract will come into existence unless and until the acceptance has been communicated to the offerer7a. If Raj’s acceptance had been sent by post then it would have been deemed to constitute an acceptance as soon as he posted his letter.8 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.9 Although the Courts have held that acceptance is complete when posted10 this will still be subject to the general rule regarding acceptance, which is the requirement of actual communication.11 The postal rule will not hold good when the letter has not been properly posted or to instantaneous modes of communication such as the telephone11a. Raj’s acceptance of Jo’s offer can be deemed to be valid only if Jo accepts his offer over the telephone. But because she was out, a message on her recording machine will not constitute an acceptance according to the requirement of communication. Jo will have to clearly communicate her acceptance of Raj’s offer before a contract between them can be deemed to be valid. No legal commitment will be deemed to exist until the acceptance of the offer is communicated to the offerer and up to that point, either party is free to change their minds.12 Therefore, since Jo has neither been made aware of not communicated her acceptance of Raj’s terms, no valid contract can be deemed to exist and she is free to changer her mind and go for some other product. It has been held that a contract cannot be imposed on an offerree by deeming that silence constitutes acceptance.12a There must also be an intention to enter into legal intentions. Therefore, 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.13 It may be noted that in this case, there is no doubt about the intent to create legal relations, however no “intelligent bystander” is likely to hold Jo liable to an offer for which the acceptance has never been communicated to her so that she has a chance to enter into a contract. Therefore in conclusion the question of whether a contract exists in this case lends itself to the conclusion that there is no valid contract in place. Contract law is based upon the equality of persons of similar minds before the law and therefore it differs from public law in that the Crown is viewed as a person13a. However, although a contract is based upon the principle of consensus ad idem or a meeting of minds, a contract does not exist without valid acceptances and communication of that acceptance. While both Raj and Jo may agree on the necklace price, Raj’s acceptance has not been communicated, so a valid contract has not yet come into existence. For example, in the case of Tinn v Hoffman14 the question that was raised was if one party sends a letter to the other offering to purchase his product for a fixed sum while the other sends a letter at the same time offering to sell it for the same price, will a valid agreement exist? The Court held that it would not, because the respective offers from either side had not been received by the parties and the acceptance communicated therein. Therefore on this basis, it may be seen that although Raj has communicated his acceptance of Jo’s offer through his telephone call, but the fact such acceptance of offer has not been communicated to Jo indicates that the agreement between Raj and Jo will not constitute a valid contract. Therefore Jo does not have a legally binding contract with Raj, and she is free to change her mind and buy another necklace at the exhibition since a valid contract has not yet come into existence between Jo and Raj. Bibliography Books: * Halson R, Contract Law. Longman, 2001 * McKendrick, Ewan, 2000. “Contract Law” (4th edn) Basingstoke: Macmillan * McLean, Janet, 2004. “The Crown in Contract and administrative law.” Oxford Journal of Legal Studies, 24(1): 129 * Wormser, I.M., The true conception of unilateral contracts. (1916) 26 Yale Law Journal 136 Cases: * Adams v Lindsell (1818) 1 B&Ald 681 * Carlill v Carbolic Smoke Ball Co (1892) 2 QB 484 * 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 * Hyde v Wrench (1840) 3 Beau 334 * Household Fire Insurance v Grant (1879) 4 Sc.D. 216 * Holwell Securities v Hughes (1974) 1 All ER 16 * Offord v Davies (1862) 12 C. B. N. S. 748 * Oscar Chess v Williams (1957) 1 WLR 370 * Ramsgate Victoria Hotel v Montefiore (1866) LR 1 Exch 109. * Re London & Northern Bank [1900] 1 Ch 220 * R v Clarke (1927) 40 CLR 227 * Tinn v Hoffman (1873) 29 LT 271 * Thornton v Shoe Lane Parking (1971) 1 All ER 686 Table of Statutes: * Statute of Frauds, Law of Obligations, Unfair Contract terms 1977, Sale of Goods 1979 and Contracts (Rights of Third Parties (1999) Read More