Offer and Acceptance - Case Study Example

of the of the of the Offer and Acceptance Spike offers his branded golf clubs to Tom for £1000. Tom replies, after two days that he would purchase these golf clubs, if sold for £800. Spike, immediately sells them to Jerry for £1100. Subsequently, after a week, Tom agrees to purchase the clubs for the originally stated price. In order to advise Tom, the important issue to be considered is whether any binding contract had been formed between Spike and Tom. A contract arises, when there is an offeror who makes an offer and there is an offeree who accepts it. The offer specifies the terms of the contract (Kelly, Holmes and Hayward, p. 109). As such, an offer is an expression of willingness to form a contract, by the offeror with the offeree, subject to certain terms and conditions. A valid offer is followed by a valid acceptance, and their combination results in a valid contract. The court in Peter Lind Limited v Mersey Docks & Harbour Boar had developed the mirror image rule. Under this rule, the acceptance must be unambiguous and unconditional, and it should reflect the offer (Peter Lind Limited v Mersey Docks & Harbour Boar). Thus, a valid acceptance is a final and unqualified expression of consent to the terms and conditions of the offer. As such, the offer in a contract must be unambiguous, if it is to be considered a proper offer. A proper offer should not omit important features, such as price. The parties to a contract should have the intention to form a legally binding contract, and they should perform their contractual obligations without fail (Salzedy, Brunner and Ottley, p.1) Hence, Spike had made a valid offer for the sale of his branded golf clubs to Tom for £1000. Acceptance can be either express or implied. If the offeree fulfils the requirements of the offer, it will be construed that he has accepted the offer. The outcome of these events will be the formation of a legally binding contract between the offeror and the offeree (Carlill v Carbolic Smoke Ball Co). In addition, when the conduct or words of the offeree, make it possible to infer on an objective basis that the offeree agrees to the terms stipulated by the offeror, then acceptance is said to transpire. As had been established in Hyde v Wrench, if the offeree attempts to change the terms of the offer, then a counter offer is deemed to have been made by the offeree, which extinguishes the original offer (Stephens 18). In Hyde v Wrench, Hyde made a counter offer, while rejecting the offer of sale made by Wrench. This counter offer brought about the extinguishment of the original offer. Thus, the original offer had never been accepted, and as a consequence, it could not be revived subsequently (Hyde v Wrench). Thus, there was no binding contract betwixt Hyde and Wrench. By introducing new terms to the offer made by Spike, Tom’s response can be categorised as qualified acceptance or a counter offer. In order to render a contract binding, acceptance should be unqualified. Thus Tom’s counter offer served to extinguish Spikes original offer, and this is in accordance with the decision in Hyde v Wrench. Furthermore, acceptance of the offer by the offeree has to be communicated to the offeror. In Byrne & Co v Leon Van Tienhoven & Co, the court held that the agreement was incomplete, until and unless communication of acceptance of the offer was received by the offeror. The communication of acceptance by the offeree is important in contracts. Similarly, revocation of an offer by the offeree has to be communicated to the offeree (Byrne & Co. v Leon Van Tienhoven & Co ). As such, a contract becomes effective when the offeree communicates acceptance of the offer made by the offeror. Such acceptance can be in any form, and acceptance by post is one of the accepted modes of communication. In acceptance by post, it is not necessary that the offeror must receive the acceptance communicated by the offeree. Under the provisions of the law concerning acceptance by post, the acceptance will be effective from the moment the offeree posts the letter of acceptance to the offeror (Salzedy, Brunner and Ottley, p.1). Hence, in cases of acceptance by post, the posting of the letter of acceptance by the offeree is sufficient to render the acceptance effective (Household Fire and Carriage Insurance Co v Grant). This is the postal acceptance rule. Moreover, in Entores Ltd v Myles Far East Corporation, it was held by the court that in instances of instantaneous communication, the offeror must receive communication of acceptance from the offeree, for the acceptance to become effective (Entores Ltd v Miles Far East Corporation). In this case, the court developed the receipt rule, according to which the receipt of the acceptance, where such acceptance is to be conveyed by some instantaneous mode of communication, results in a legally binding contract. However, Tom’s letter to Spike, after two days, agreeing to pay £800 for the branded golf clubs does not constitute valid acceptance. Acceptance should be unconditional and should conform to the terms of the offer. A valid contract is formed, when there is a simple acceptance of the terms stipulated in the offer without any variation. In Household Fire Insurance Company v Grant, the defendant made an offer, which the plaintiff company accepted. The latter’s letter of acceptance was posted to the defendant, which the latter did not receive. It was held by the Court of Appeal that the contract was formed, when the acceptance letter was posted (Household Fire and Carriage Insurance Co v Grant). However, in our problem, if a legally enforceable contract is to be formed, Spike would have to accept the counter offer made by Tom. Moreover, Tom’s belated acceptance by post crossed the letter of revocation of Spike’s offer. There was no binding contract between Spike and Tom, since the letter of acceptance was posted by Tom after the branded golf clubs had been sold to Jerry. Consequently, Tom cannot revive the original offer, subsequent to his making the counter offer. Revocation of an offer becomes effective, as soon as it comes to the knowledge of the offeree, and this is independent of the source of information. Thus, it is possible to revoke an offer, at any time, prior to acceptance, the only exception being when the offer is conjoined to an option. An offer cannot be withdrawn, if the offeree provides consideration to the offeror, in order to prevent the closure of the offer. In such cases the offer will remain open for some specified period. In Routledge v Grant, the court ruled that in the absence of consideration, the offer can be revoked (Routledge v Grant ). In our present problem, consideration was not provided by Tom to Spike to keep the offer open for a specific period. Hence Spike can revoke the offer at any time, in accordance with the ruling in Routledge v Grant. Thus, his offer was revoked when he sold the golf clubs to Jerry. Tom’s agreement with his brother in law is invalid. Since he had no legal title over the branded gold clubs, he cannot sell them to some other person. The principle of Nemo potest juris ad alium transferre quam ipse habet states that no person can transfer to another person, a right that is greater than what he possesses (Burton 526). Tom had not obtained title of the branded golf clubs; hence, he cannot sell them to his brother – in – law. As such, only a person with a valid legal title in the goods can sell them to others. Tom’s agreement with his brother –in- law is therefore an invalid agreement. Spike has made a valid offer to sell his golf clubs, and Tom’s response to this offer does not constitute an acceptance. It is merely a counter-offer, since it was qualified by changing its terms, in respect of price. Spike did not accept this counter-offer. For an acceptance, to be valid there should be unqualified acceptance and the acceptance should be a reflection of the terms specified in the offer. Moreover, Spike did not accept the counter offer made by Tom. Tom’s purported acceptance letter crossed the revocation letter from Spike. Since no consideration was provided to keep the offer open by Spike, he can revoke the offer at any time before the receipt of acceptance. His offer was revoked when he sold the golf clubs to Jerry. Hence, Spike has entered into a legally binding contract with Jerry. There is no valid contract between Spike and Tom, as per the provisions of Contract law. Thus, Tom cannot make any valid agreement for the sale of the golf clubs, with his brother- in law, since he does not possess any legal title in them. Works Cited Carlill v Carbolic Smoke Ball Company. No. 1 QB 256. Queens Bench. 1893 . Burton , William C. Burtons legal thesaurus. McGraw-Hill Professional, 2006. Byrne & Co. v Leon Van Tienhoven & Co . No. LR 5 CPD 344. Common Pleas Division. 1880. Entores Ltd v Miles Far East Corporation. No. (1955) 2 QB 327 . n.d. Household Fire and Carriage Insurance Co v Grant. No. 4 ExD 219. 1879. Hyde v Wrench. No. 3 Beav 334. Rolls Court. 8 December 1840. Kelly , D, A E Holmes and Ruth Hayward. Business law. Routledge , 2005. Peter Lind Limited v Mersey Docks & Harbour Boar. No. 2 Lloyds Rep 234. 1972. Routledge v Grant . No. 130 ER 920. 1828. "Sale of Goods Act 1979." n.d. Salzedy, Peter Brunner and Michael Ottley. Briefcase on Contract Law. Routledge, 2004. Stephens, D J. Introduction to the common law. 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