Legal Application and Action - Assignment Example

Part A An offer is a definite expression of willingness, made by an offeror to an offeree, to contract on a proposed set of terms, indicating the offeror’s “commitment to be bound” upon the offeree’s acceptance (Chen-Wishart 2005, pp.67, 69). However, since contracts are binding agreements, both parties must first indicate their assent to ensure enforceability. In this respect, while the communication of an offer indicates the offeror’s assent to be bound by obligations to the offeree, the offeror, insofar as acceptance has not been communicated, has no legal commitment to the offeree, allowing the possibility of revocation. According to the rules of revocation, an offeror’s withdrawal of his offer is “possible and effective”, provided that revocation is given before acceptance (Payne v Cave [1979] 3 T.R. 148). For the revocation to be valid, however, it must be communicated to the offeree before acceptance takes effect as expressed in the case of Byrne v Van Tienhoven (1880) 5 CPD 344. A further implication of this case is the effect of the postal rule, such that unlike the postal rule of acceptance (Adams v. Lindsell [1818] B & ALD 681), revocations sent via post are not considered to have been communicated to the offeree until after it has been “brought to the mind” of the offeree (Henthorn v. Fraser [1892] 2 Ch. 32, 37), indicating a stricter application in the need for the offeree to actually have knowledge of the act. Conversely, a revocation can be communicated to the offeree via reliable third parties. In Dickinson v Dodds (1876) 2 ChD 475, it was held that “once the person to whom the offer was made knows that the property has been sold to someone else, it is too late for him to accept the offer”. While the aforementioned rules apply to the revocation of offers for bilateral contracts, it is necessary to acknowledge that revocation is also possible for unilateral contracts. However, since unilateral contracts do not require acceptance from the offeree but performance in order to be enforceable, an offeror’s revocation, to be valid must be given before the offeree commences performance (Errington v Errington [1952] 1 All ER 149). Part B A contract is an enforceable agreement, which gives rise to a set of obligations between two parties duly recognised by the law (Treitel 2003, p. 1). As an important safety net to protect parties’ interests, avoid conflict, or at the very least, ensure that conflicts can be resolved properly; contracts serve an important purpose in guiding the conduct of business between individuals. In order to be enforceable however, both parties of the contract must indicate assent to be bound by its terms. In this respect, while a valid acceptance is required to indicate the assent from the party whom the contract is offered to; a valid offer is also necessary to indicate the assent of the party initiating the contract. However, whereas a contract once accepted is considered binding, situations may arise where an acceptance is directed to an offer, which despite having existed at some point, has already ceased to exist, such that it has been terminated by a revocation at the time the acceptance was communicated. Such is the case between Jack and Cameron where Jack after offering to sell his Sony mobile phone to the latter on October 2nd revoked his offer by selling it to Chad on October 4th, formally informing Cameron of the revocation only after receiving Cameron’s letter of acceptance on October 5th, despite telling Cameron on October 2nd that he will keep the offer open for one week. The case is further complicated by the fact that Cameron’s brother had informed Jack that Cameron “would like to accept” Jack’s offer on October 3rd, indicating a possible acceptance earlier than Cameron’s official letter of acceptance; and the fact that Jack’s flatmate, present when the mobile phone was sold to Chad, informed Cameron of the sale on October 4th, indicating an earlier revocation, as well. Given the aforementioned statements, and the fact that contracts are not enforceable without a valid assent from both parties, is Jack therefore in breach of a contract with Cameron for selling his mobile phone to Chad, such that his revocation is invalid and ineffectual? To determine whether or not Jack was in breach of contract, one must determine whether a contract exists, in the first place, which binds Jack in a contractual relationship obliging him to sell the mobile phone to Cameron. Assuming that Jack’s offer is valid, it is necessary to understand that this offer may still be revoked by the offeror such that revocation is “possible and effective” if given before acceptance (Payne v Cave [1979] 3 T.R. 148). A complication arises, however when Jack gave Cameron a time limit indicating a possible guarantee that the offer will be available for the duration of the week. It should be noted, however, that unless such time guarantee is embodied within a separate and enforceable contract delineating the duration of the offer’s existence, the offeror is not bound by the offeree to keep the offer open, thereby having no effect on revocation. As illustrated in the case of Routledge v Grant (1828) 4 Bing 653, for example, the court held that the defendant’s revocation was valid and effective despite taking place before the time limit lapsed because the defendant withdrew the offer prior to the plaintiff’s acceptance. Hence, insofar as Jack and Cameron are concerned, Cameron cannot bind Jack to keep his offer simply on the basis of a supposed time limit. Since the validity of revocation rests on whether or not it took place before the acceptance, it is necessary to determine whether a valid acceptance took effect. There are two possible instances of acceptance, the first of which is the moment when Cameron’s brother informed Jack that Cameron “would like to accept” the offer on October 3rd. Under Common Law an acceptance, to be valid, must come from the offeree himself, or a person authorised by the offeree to accept the offer (Powell v. Lee [1908] 99 LT 284). Cameron’s brother could not have communicated a valid acceptance on October 3rd because as the situation illustrates, Cameron was not aware that his brother informed Jack he “would like to accept” the offer. Hence, Cameron’s brother is not an authorised person despite his close relationship as brother because he could not have authorised an acceptance that he had no knowledge of. Furthermore, as the phrase “would like to accept” connotes, Cameron’s brother could not have been certain that Cameron really intended to accept the offer. The supposed acceptance on October 3rd is therefore not a firm acceptance. In this respect, Cameron’s letter of acceptance, delivered to Jack on October 5th, is therefore the appropriate date of acceptance. At this point, the relevant question is therefore whether revocation of the offer was communicated prior to or after Cameron’s acceptance on the 5th. In this regard, there are also two possible dates of revocation: on October 4th when Jack’s flatmate informed Cameron that Jack has already sold the mobile phone to Chad, or on October 5th when Jack called Cameron and informed him the mobile phone had already been sold. In this respect, it should be established that since the second circumstance – Jack’s phone call to Cameron on October 5th – took place later during the day after Cameron delivered his letter of acceptance, such revocation is not valid since Cameron had already accepted the offer at that time. However, with respect to first circumstance, Jack’s flatmate in informing Cameron that the mobile phone has been sold to Chad has given the effect of a revocation for Jack’s offer. As illustrated in the case of Dickinson v Dodds (1876) 2 ChD 475, Dodds who offered to sell Dickinson a property, but decided to sell it to a third party instead, even without formally retracting his offer to Dickinson was found to have effectively given the effect of a revocation because a reliable third party, Berry has informed Dickinson of the sale prior to Dickinson’s purported acceptance. Hence, as the court held, the fact that Dickinson “knew that Dodds was no longer minded to sell the property to him as plainly and clearly as if Dodds had told him in so many words” is sufficient to terminate the offer. Applying the same principles to Jack and Cameron, it is therefore sufficient that Cameron was informed by Jack’s flatmate on October 4th that the mobile phone was already sold earlier that day. The question, however, is whether Jack’s flatmate is a reliable source. In this respect he could be considered as such because apart from the fact that he lives in the same flat as Jack, he was also present when the sale took place. He therefore has first hand information, as opposed to hearsay, upon which Cameron has no reason to doubt. This third party communication between Jack’s flatmate and Cameron, however, should be differentiated with the communication between Cameron’s brother and Jack because whereas the rules of acceptance require an authorised source to relay acceptance in favour of the offeree, the rules of revocation only require a “reliable source” to communicate revocation, rendering whether or not Jack was aware of the communication irrelevant insofar. Given the succession of events, Jack was therefore not in breach of a contract because no enforceable contract was formed between Jack and Cameron to begin with. As illustrated, Cameron accepted the offer on October 5th, a day after he became aware of the fact that Jack had already sold the mobile phone to someone else and had given the effect of a revocation. In this respect, Cameron could not have accepted the offer because his acceptance came after the offer had already ceased to exist. Hence, Cameron cannot oblige Jack to sell him the mobile phone despite the lack of a formal revocation because Jack’s flatmate’s communication with Cameron already had the effect of withdrawal. References Treitel, Sir Guenter H 2003, Treitel on the law of contract, Sweet & Maxwell 2003, London. Chen-Wishart, Mindy 2005, Contract law, Oxford University Press, Oxford. List of Authorities Adams v. Lindsell [1818] B & ALD 681 Byrne v Van Tienhoven (1880) 5 CPD 344 Dickinson v Dodds (1876) 2 ChD 475 Errington v Errington [1952] 1 All ER 149 Henthorn v. Fraser [1892] 2 Ch. 32, 37 Payne v Cave [1979] 3 T.R. 148 Powell v. Lee (1908) 99 LT 284 Routledge v Grant (1828) 4 Bing 653 Read More