Business Law - Angela and Boris - Case Study Example

a) In order to asses if there is a contract in the case of Angela and Boris, it is imperative to begin by explaining what a contract is. A contract is an agreement which is enforceable by law and which creates rights and duties between the parties involved. This can also be a promise between two parties that one or both of them has to do something. This is usually binding and legally enforceable but it also has to be noted that not all agreements between people are binding (Klein & Viljoen 2002). According to Harvey v Facey [1893] AC552, every contract consists of an offer made by one party and accepted by the other. Having posted a letter proposing to sell a caravan to Boris, Angela intends to get into a contract with him. By virtue of selling the caravan before receiving a letter from Boris, it can be said that there is no contract formed yet between them. According to Gibson (1988), an offer can be revoked at any time by an offeror. Whilst it is noble that in business world, agreements must be kept and to bring a contract into existence, the other party makes an offer which has to be accepted by the other party which makes both of them bound by the agreement. These people did not sign a contract which effectively means that they may not be bound by that agreement. Under normal circumstances, a contract becomes valid when the offeror delivers the product to the one who has accepted it upon payment. To keep a contract open is an option which can be revoked at any time since there is no payment made. Usually, parties have to reach an agreement on specific aspects before a contract is formed because the consequences vary for each. The caravan can only become Boris’ permanent property after delivery by Angela upon payment of the money agreed. In the given case, it may not be possible for Boris to sue Angela given that he has not lost anything. If the payment had been made, then he has a right to ownership of the caravan. The delay in receiving the letter by Angela may also have contributed to her changing the mind given that she is not bound to keep it forever when there is no payment made. An acceptance of an offer can exists but possessing the caravan can only be a right when Boris has paid the full amount which means that Angela is not obliged to wait for him to pay the amount. Indeed, Angela has offered to sell the caravan but the contract can only come into being when she has received an acceptance from Boris and payment as well. She sold the caravan before receiving this so there is no contract whatsoever. It is not her fault that the acceptance letter delays and is not legally bound to have kept the caravan for Boris. As noted already, the property becomes permanent when Boris has paid for it. b) In the second case, it can be noted that Boris accepts the offer but he is negotiating for the price to go down. It can be noted that an agreement has not yet been reached in this case. In principle, both parties who have agreed to enter into a contract should mutually agree and understand the terms of the contract. Boris has not yet agreed to pay the full amount and Angela cannot be liable of breaching any contract here. Legally, Angela is entitled to receive the payment or else they have to agree on the new price if possible which is not the case. According to Gibson (1988), the acceptance must be communicated to the offeror where the acceptor must in other words manifest in some way his intention to be bound. In some way, ‘silence does not give rise to consent unless there is a provision in law to speak.’ It must be clear in the beginning that no other conclusion can be made other than that an acceptance has been made where there is mutual agreement between the two parties involved. There is need for knowledge of offer which must be communicated to the acceptor R v Clarke 1927 40 [CLR 227]. When negotiation is still in progress, it must be clear between the two parties involved until when a contract can be made. In other words, the acceptance should not be vague but it must be clear. Under normal circumstances, a contract of purchase and sale is a legally enforceable agreement between the two parties involved when they reach a mutual agreement. The parties must agree on the intention to sell while the other party agrees to buy. Secondly, they must agree on the purchase price before a full contract can be reached. The acceptor must be in the same mind with regards to the subject matter of the contract with the offeror. There must be a meeting of minds where mutual agreement is reached. Therefore, when the parties involved have not yet reached an agreement, there is no contract formed which can be legally enforceable. Boris cannot take Angela to task because he has not yet paid the money proposed by her but he is actually negotiating for the price to be lowered. If these parties agree on the new price, then a contract has been made which can bind both of them to meet the terms. Acceptance itself without agreement does not form a valid contract which can be enforceable by the law. Should Angela and Boris agree on the new price, they would have reached a valid contract which is enforceable by the law. When negotiation is still in progress, the contract is still far from getting into existence. If and only a mutual agreement has been reached, the two parties have a duty to fulfil which should not be taken for granted as this may lead to a lawsuit being filed for breach of a contract. Both Angela and Boris should reach an agreement which forms the basis of a valid contract. c) Though Boris receives the letter and accepts the offer, the letter however goes astray which cannot be Angela’s fault. Angela later changed her mind before receiving the acceptance letter from Boris which cannot be seen as a breach of a contract. In principle, the concept of a contract states that two people must reach an agreement which is based on mutual understanding of what is being sold as well as the exact price. In this case, Angela does not know that Boris has not accepted the offer since she does not receive the letter. It is not her fault and she cannot be held liable to breach of a contract. On the other hand, it can be noted that Boris may not be aware that his letter does not reach its intended destination though correctly addressed. It can also be noted that a revocation can be put into effect should the offeror decide to change her mind. This can be done through post which is the case where Angela sends a letter of intention to cancel the offer to Boris. Angela may not be forced to sell her caravan in the event that she has decided to change her mind. There is no law which compels another person to sell her property if she has changed her mind. In this case, it can be noted that Angela may have assumed that Boris is no longer interested in the offer by virtue of his silence. Indeed, it is because of circumstances beyond both of their control since the letter is not received by Angela. It is not her fault and she cannot be sued for that. The court of law can assess the situation and it can be noted that Angela is not at fault because she does not receive the acceptance letter and she has the right to change her mind and shelve the intention of selling the caravan. Communication forms the backbone of a valid contract. In this case, it can be noted that communication is one sided though Boris reciprocates by posting a letter which never reaches to Angela. Through communication, the parties involved can reach a mutual understanding which forms the basis of a contract. Where there is no agreement, there is no contract reached since this cannot be legally enforced in the courts of law. Communication is mainly concerned with exchange of information between the parties intending to enter into an agreement. Whilst Angela has a right to change her mind before reaching an agreement, she is also not aware if Boris is still interested in buying the caravan since she does not receive any correspondence from him. Basically, a valid contract is comprised of offer and acceptance where there is mutual agreement. In as far as Angela has not received any correspondence from Boris, she is not liable to breach of any contract. References Duplessis L. (1999). An introduction to law. 3rd Edition. Juta Gibson G.T.R. (1988). South African mercantile and company law. Cape Town. JUTA & Co LTD. Koffman L & McDonald E. (2007), The Law of Contract, 6th Edition, Oxford University Press. E-BOOK. Available at: http://books.google.co.za/books?id=8JtwkQrAC_kC [Accessed on 8 October 2010]. Kleyn D. & Viljoen F. (2002). Beginner’s guide for law students. 3rd Edition. CT. JUTA Read More