Common Law: The Law of Contract and Unilateral Contract - Assignment Example

COMMON LAW: “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) Hence, 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. UNILATERAL CONTRACT: “Unilateral contract” according to legal-dictionary.thefreedictionary.com, “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 Scrumptious Ltd. had made an express promise without first securing a reciprocal agreement from the public and masses. TASK I Q1: In the case above-mentioned, both the parties to the contract take after 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) Q 2: In the case, under discussion, Nylander/Alexander are the offeree, who can accept the offer by fulfilling the conditions prescribed in the offer made by Scrumptious Ltd. and performing the conditions prescribed by the court of law. The court has already decreed 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. 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. Hence, Alexander could not get the prize on finding out the badge after the withdrawal of the offer. In addition, the advertisement of the offer made by Scrumptious Ltd. was not adequate, where it writes: Simply buy 6 Scrumptious Candy Twirls and post us you wrappers and we will send you a free book of clues which will help in the fun Summer search for the badges! Good Luck! 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.” On the contrary, in the case of Nylander/Alexander v. Scrumptious Ltd., the offer was made and communicated in a proper mode, where the advertisement in the newspaper was published for the attention of the readers. The court also announced the verdict that since the advertisement in which a general offer has been made, was not mere a statement of an intention to give reward, but a definite promise, and although the offer was not made to any particular person, but to the whole world, it was capable of being accepted by one or more persons who accepted by conduct or performance of conditions. The same is the situation of the case under study, where the court’s decree issued in the case of Carllil v. Carbolic Smoke Ball Co. is applied as the precedent in the case of Nylander v. Scrumptious Ltd. and Alexander v. Scrumptious Ltd on the following grounds: Scrumptious Ltd. had announced 15 Scrumptious Badges in various parts of the United Kingdom, finding out of each of these 15 badges was announced of winning £10,000 in cash. Scrumptious Ltd. Also advertised the wrappers of 6 Scrumptious Candy Twirls to be posted to the Company, which would reward the sender a free book of clues, which would help in the fun summer search for the badges. The offered was surrendered by the Company from July 15th through an advertisement published by the Company in the newspapers. The offer was made by Scrumptious Ltd. as the general offer. The person performing it first of all, could be held responsible for winning the reward, promised by the Company. There was the status of offer and offeree in the case. The consideration was lawful. The offer had properly been advertised. The Company also advertisement the revocation of the offer from 15th July. Hence the communication was made in a proper and in an adequate manner. Since the offer was made and communicated as a general offer to the people living in the UK, it maintained the status of a bilateral offer, in which both offerer and offeree existed. Thus, Nylander and Alexander were competent to enter into this contract. A person, named Nylander, retrieves a discarded copy of the book of clues from a dustbin on 26 June and finds a badge on 16 July. Since the Company has not mentioned the source of finding the book of clues, so finding of the discarded copy of the book of clues by Nylander does not revoke his right of accepting the general offer made by the Company and thus the contract between the Company and Nylander remains valid till the expiry of the date of the contract. Nylander finds the badge on 16th of July, while the Company has properly communicated the cancellation of the offer in a proper mode. Here arises the question of communication. Q 3: According to the Section 4 of Law of Contract: “The communication of an offer is complete when it comes to the knowledge of the person to whom it is made. The communication of an acceptance is complete as against the proposer when it is put in a course of transmission to him, so as to be out of the power of the acceptor.” The same is the case with the revocation of an offer as well as the acceptance. Since Scrumptious Ltd. Had advertised its offer regarding cash prize and book of clues, it gave the people suitable time to perform according to the conditions mentioned in the advertisement issued by the Company. It had every right, according to Section 4 of the Law of Contract, to revoke its offer after one month of so, where the Company announced and communicated the revocation in a prescribed mode as well as in the same manner, as it had announced its offer. Similarly, Section 5 of the Law of Contract maintains revocation of an offer on the grounds: Revocation could be made before it has been communicated to the offeree Revocation takes place when it actually communicated to the offeree If offer has agreed to keep the offer open for a certain period, he can revoke it before the expiration of time period only: 1. The offer has not been accepted in the meantime 2. There is no consideration for keeping the offer open. In the case described-above, neither Nylander nor Alexander nor any other person could get the badges, so the Company had any right to withdraw its offer. Q 4 The question arises since Nylander had collected the discarded copy of the book of clues from a dustbin, whether or not he has right to claim a prize from the Company or not. Scrumptious Ltd. had explicitly declared buying of 6 Scrumptious Candy as the essential matter for winning the price. Since Nylander just found out the discarded copy from a dustbin, he is not competent to enter into the contract against the offer advertised by the company. Hence, though Nylander’s picking of discarded copy supports his willingness to accept the offer, and it appears that he has accepted the offer as soon as he got the discarded book from the dustbin, but he failed to fulfil the conditions on the ground that the finding out a discarded copy from the dustbin does not show his intention to accept the conditions mentioned in the offer. Hence, Nylander has no right to claim the amount without acting upon the terms of the offer made by the company. Q 5 Third Party Revocation: In Dickinson v Dodds, the legal issue raised on the points that whether the time limit acts solely as an express offer to purchase, or whether Df is free to sell to another in lieu of a formal acceptance? “On the10th of June Def Dodds signed and delivered a memorandum to Dickinson.  Said memo contained language, agree to sell; for the sum; and a description of real property.  It also contained specific date, time of acceptance. PL discovered Df was eliciting the sale elsewhere and submitted a letter of acceptance to Df’s mother-in-law at 7:30 p.m. prior to the evening of the deadline.  Df never received the letter.  A duplicate was delivered to Df the next morning, but Df refused to accept it.  Df had sold the property the previous day. Court’s Holding: Df was free to a sell the property to another in absence of acceptance. The same rule is applied in the absence of an acceptance in Nylander and Alexander. “Law or Rule(s): There is no requirement that an express or actual withdrawal of the offer is mandated.  To constitute a K, the two minds were at one, at the same moment in time, there was an offer continuing up to the time of acceptance.  If there was no such continuing offer, then the acceptance comes to nothing.” (Quoted in www.4lawschool.com) Court Rationale: Pl knew that Df was no longer minded to sell the property to him as plainly and clearly as Df had told him I withdraw my offer. Pl stated he heard that Df was seeking the purchase from another, and thinking that the Df could not withdraw his offer, Pl sought to fix him to it.  Pl went to m-i-law’s with a letter of acceptance knowing that the Df had changed his mind. Although the offer was expressly left open to PL until 9 a.m. it did not bind Df until accepted.  Pl did not accept and therefor no binding contract existed between the parties.  Two minds were not in agreement at one time, the time of acceptance. Plaintiff’s Argument: The memo contained explicit language binding the parties to a promise to contract until 9 a.m. Defendant’s Argument: Until the Pl accepted the offer Df was free to dispose of the property as he saw fit. CONCLUSION: Here appear the following points in this case: Scrumptious Ltd. had made the offer so it is the offerer. Nylander had performed i.e. found out the badge according to the provisions of the offer. But he failed to communicate with Scrumptious Ltd. before the withdrawal of the offer. Hence, he has no right to receive the cash prize of £10,000 from Scrumptious Ltd. Scrumptious Ltd. has no legal obligation to fulfill for the same. Thus, Scrumptious Ltd. has no legal remedy for the same, as the conditions of the contract had not been fulfilled within the prescribed time between the two. Almost same is the case with Alexander. In the case Alexander v. Scrumptious Badges, where: Alexander had bought 6 Candy Twirls and received the book of clues on the basis of 6 Candy Twirls. He located the badge at the top of a flagpole and before climbing the pole, Alexander is informed by a passer-by of Scrumptious Ltd’s revocation. He nevertheless starts to climb the pole but before reaching the top he falls and breaks both legs. Consequently, he has to cancel his annual summer holiday and loses £3,000 in expected earnings whilst he is away from work. Illustration: In the case where a company has announced a scheme for some specific individuals, the prescribed offeree has the right to make acceptance. In Luxor (Eastbourne) Ltd v Cooper [1941] AC 108, the vendor company had instructed agents to sell properties on its behalf and had agreed to pay commission on completion of the sale. The sale was agreed with a prospective purchaser introduced by the agents. Before the sale was completed, the vendor company withdrew from the sale because of an objection by one of its directors. The vendor company later sold to someone who had not been introduced by the agents. The agents claimed their commission. Held: A property owner was under no implied obligation not to deal with his property in such a way that the estate agent was deprived of the opportunity of earning the agreed commission. The House considered the use of implied terms. (Quoted in www.swarb.co.uk) TASK II: It is a famous maxim that the court of law is the custodian of the rights of the people. It is fact beyond doubt that though the court itself is neither an offerer nor an offeree, nor it entered into any contract with anyone, yet it makes it sure the execution of the contracts between the parties, competent to the contract, and made by free consent of both the parties, with a lawful consideration. “A contract may be viewed”, Noonan submits, “as an exchange of enforceable promises. In a contract, each party makes a promise in exchange for the promise of the other.” (2005: 9) According to the provisions of the Law of Contract, an offer when accepted becomes a promise and every promise or every set of promise forming the consideration for each other is an agreement. [Section 2 (e)] In most cases, without reciprocal promises, there is no contract. The court makes the execution of the terms of a valid contract and binds both the parties to fulfil their obligations described in the valid and legal contract. It is therefore, the rule that a contract must have certainty of terms is always kept in view by the court of law. A contract, where the offer or acceptance has not been made according to the prescribed rules and regulations, described in the statutes of the Law of Contract, is declared either void or voidable or nullified due to the lack of conditions necessary for a valid contract. A valid contract maintains the following characteristics: There must be an offer from the offerer Offer must be made to one or more persons The offerer and offeree must be competent to enter into an agreement There must be an intention of entering into legal relationship i.e. non compliance of the terms of the contract from either of the parties may lead them towards legal prosecution There must be an appropriate consideration The consideration must be lawful Offer must be communicated to the offeree in an apposite manner The acceptance should also either be made by the same mode applied by the offerer or some other appropriate manner of communication Acceptance should be communicated within a suitable period of time or before the lapse or revocation of the offer Acceptance must be made unconditional; otherwise it would be a counter offer, which may create new relationship of offer and acceptance. In a case, where a person or company is of the view that Illustration: Stalmatelly Telaviv, a Law student of first year, decided to replace her old laptop computer for a new one. On reading the university’s periodic magazine, she found an advertisement placed by Yusuf, a second year student in criminology. The advert stated; “Fantastic Toshiba Laptop with Windows Vista on offer for £200. Call or email me if you want to grab a bargain”. Yusuf included his phone number and an email address. Telaviv thought this sounded like it really was a bargain and decided that she wanted to buy the laptop advertised by Yusuf. She quickly sent him an email saying: “I would like to buy your computer, but I am a poor law student and I can only afford £120.” A few hours later she received a reply from Yusuf saying; “£120 is not acceptable.” Telaviv replied: “OK, I agree to your original price of £200”. A day later she got an email from Yusuf reading: “A lot of people are interested, so the new price is £180, please reply before tomorrow at noon”. Telaviv saw the email the next day at 11 am and was furious, so she sent an email saying; 2i have already agreed to your original price so you cannot change it now. I want my computer”. When Yusuf received the message, he did not bother to reply because he had sold the laptop the evening before. In the case above described, Yusuf advertised regarding the sale of his laptop against £200, which serves as invitation to offer, not the offer itself. When a person advertises that he has stock of anything or material, which he intends to sell on some specific price, it is not an offer to be bound by any contract. “Such advertisements”, Singh views, “are offers to negotiate—offers to receive offers—offers to chafers.” (2005 p 15) Since an offer, is viewed to be completed when it is communicated to the offeree in a prescribed mode and within suitable period of time. An offer and an acceptance to be completed must be communicated. Without communication, there is no contract between the persons, and thus no legal relations are created. In the case under study, Telaviv communicated her offer via e-mail which is an authentic and valid mode of communicating an offer. Since the price communicated by the offerer was not an appropriate one for the offeree i.e. Yusuf, he refused to accept the offer made by Telaviv through e-mail. Hence, there is no contract made between the parties, because the acceptance is not made by the offeree at all. In Scammell (G) & Nephew Ltd v Ouston [1941] AC 251, the respondents agreed to purchase a motor-van from the appellants. The respondents sent an order to appellants thus "this order is given on the understanding that the balance of the purchase price can be had on hire-purchase terms over a period of two years." A dispute arose and the appellants defence was that there was no contract until "hire-purchase terms" had been ascertained. It is held that no precise meaning could be given to the clause as to "hire purchase terms". They were too vague, and as there was no previous trade practice between the parties to guide the court on what was meant, the contract failed. TASK III: 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 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. 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 Read More