An Offer to Treat - Case Study Example

Contract Law I (a) Ans. An offer to treat is one that, if the other party accepts, will result in a contract whilst an invitation to treat is a representation by one party signifying that he is open to an offer. An example of the latter is when shop owners display their goods.1 In the case of Fisher v. Bell,2 the Court distinguished offer and invitation to treat. Bell was the owner of a shop and displayed on its window a flick knife - one which opens automatically when a button or lever is pressed. The knife was accompanied with a tag which said, ”ejector knife – 4s” He was charged of violation of Restriction of Offensive Weapons Act 1959 which prohibits, inter alia, selling and offering to sell flick knives. The Court held that mere display of an item in a shop is not an offer to sell but a mere invitation to treat. Under the rules on statutory construction, viz., inclusio unius est exclusio alterius (the inclusion of one is the exclusion of others), the fact that the law did not expressly include the term “invitation to treat” while including others implies that it did not contemplate to punish such excluded act. In another case, Partidge v. Crittenden, 3 the appellant advertised in the a newspaper the words “Quality British ABCR Bramblefinch Cocks, Bramblefinch hens 25 s.” A reader of the periodical responded by ordering a hen. Thereafter, he received a hen in a box with a closed-ring on one of its legs which he removed without injuring the bird. The seller was charged of violating the Protection of Birds Act 1954 and was found guilty. On appeal, the High Court ruled that the act of advertising in a periodical was merely an invitation to treat and not an offer to sell which therefore means that there was no violation of the law. The issue as to the nature of the bird had become moot and academic. (b) There was no contract between Alan and Bimal because acceptance was not communicated in accordance with the condition set by Alan in his offer. There are three schools of thought in acceptance by mail: acceptance is deemed given at the time of posting (English law); acceptance is given only upon receipt of mail, and; the circumstances of the case and the intent of the parties are to be taken into account. In the case of Household Fire Insurance v. Grant,4 the defendant applied in writing to the Insurance Company for shares. The Company wrote back and accepted his offer. The defendant was charged for violating the company terms. He alleged that he never received the letter. The Court held that the defendant was bound to the terms of the contract notwithstanding that he did not receive the letter. The act of posting the letter of acceptance was sufficient to establish acceptance. In the case of Holwell Securities Ltd v. Hughes,5 the defendant granted the appellant the option to purchase a property. The agreement provided, among others, that the appellant must give a notice in writing of acceptance within the next six months. The plaintiffs eventually accepted in writing by post. He later on charged the defendant with specific performance. The Court held that the rule on postal acceptance cannot be judiciously applied in the present case. The terms of the offer explicitly stated that the defendant must be notified in writing of the acceptance which implies that the defendant must have actual knowledge of such acceptance The case of Alan falls squarely with the Holwell case. First, the offer explicitly provided that Alan must be apprised of the acceptance which must be delivered to him on May 8. The letter was delivered only on May 9, a day late. Bimal’s acceptance on May 8 was not valid because it was not heard or understood by Alan. There was no contract in both instances. II (a) A defendant can use promissory estoppel as a defense under the following circumstances: first, the parties must be bound by a legal relationship; second, the doctrine can only be used as “a shield not as a sword” which means that it cannot create new rights; third, it is applicable only to cases where allowing a party to renege on his promise would result in inequity, and; rights are only suspended and not totally extinguished.6 The leading case for promissory estoppel is Central London Property Trust Ltd. v High Trees House Ltd.7 which introduced the doctrine in the first place. In this case, the defendants negotiated with the plaintiffs for a 50% reduction of annual leases of a block of flats it was leasing from them. The war marked a decrease in flat occupation. This was granted by the plaintiff company. In 1945 however, flat occupation returned to normal. The plaintiff company sued to compel defendant to pay the original rental amount. The Court sustained the plaintiffs’ position but in an obiter dictum, it stated that were the application retroacted to the years before 1945, the court would have denied it on the ground that “a promise intended to be binding, intended to be acted upon, and in fact acted upon, is binding in so far as its terms apply.”8 (b) At common law, Dina can rely on the doctrine of promissory estoppel. The circumstances are ripe for the application of the doctrine. First, there was a promise to accept payment lower than that originally agreed upon; second, the parties are previously bound by a contract of loan; third, no new rights are created. This is in consonance with the principle laid down in the Central London case. However, such a judgment would not be equitable to Sam because Dina is profiting from his loss of £200 that he condoned as a favor to her. While Sam lost £200, Dina, on the other hand, gets to travel. III (a) & (b) The doctrine of privity of contract is a rule in the English common law that only the parties to a contract can have rights under the contract. The implication is that the contract cannot confer contractual rights on third parties. This was the law which governed contracts prior to 1999. In 1999, however, Parliament enacted a law that resulted in the modification of this long held doctrine in the English jurisdiction. The law is called the Contracts (Rights of Third Parties) Act of 1999. 9 The said law which was enacted on November 11, 1999, introduced the concept of a party having rights under a contract of which he is not a party to. Section 1 of the said law expressly allows a third party to enforce his rights under a contract if the contract expressly so states or if by the term of the contract a benefit is conferred to him unless otherwise expressly declared.10 The first case that was brought up in the English court applying the new law is the case of Nisshin Shipping Co Ltd v. Cleaves & Company Ltd.11 It was in this case that Justice Colman stated “Parliament dealt a long overdue body blow to the doctrine of privity of contract.” Read More