Business Law - The 4 Step Process - Essay Example

Four Step Process Four Step Process Part A: Question STEP ONE The principle of law that is concerned is communication of acceptance of contract, intention to be legally bound and need for consideration of contracts. The legal issue in this case is regarding the communication of acceptance of the contract. As per the request for the email to reach by the next COB day, she had done so and her email reached peter’s system by 4:45 pm, and by the route chosen. Another important legal issue in this case is the intention to get legally bound and consideration. Intention is the objective of both parties to get legally bound and is often determine by the courts objective. Consideration is anything that is given in exchange for the promise that is received. STEP TWO There are three main requirements for the formation of a legally enforceable contract including intention to enter into a legally binding agreement, agreement (offer and acceptance) and consideration (without giving note to the value of consideration). Firstly, regarding communication, as a general rule, the acceptance would take effect only after it has received by the offeror in this case Peter. Here since the system of sending and receiving messages is instantaneous, as soon as the message is received by the offeror, acceptance takes place. However, it should be received by Peter in his email system. This was a rule proposed by the case Brinkibon Ltd v Sthalwharenhandelsgesellschaft [1983] 2 AC 34; [1982] 1 All ER 293 (Beatrix 2005). The acceptance cannot be considered to be accepted unless it is properly communicated and in this case, once the message is in the inbox of the offeror’s email, the acceptance would be activated. Further in this case, the acceptance had to ensure by the conduct of Sally, mainly by posting the bike immediately, as requested by Peter. The acceptance was received before the proposed due time suggested by Peter. Regarding the intention to enter into the contract, the same is usually decided objectively by the courts. Here it would be important to see if a reasonable person placed in Peter’s shoes would regard the agreement as binding. Two factors that would ensure that the contract is legally binding is that since it should occur between non-related persons where greater importance is given to ensuring a formal nature of the agreement, and secondly since all the discussions are in writing, there are better chances of getting the contract legally enforced. Another legal issue is regarding consideration, which is also an important factor after offer/agreement and intention. Only if there is an offer, which is agreed and intention of the parties to enter into a legally binding agreement along with a consideration, would it be considered a valid contract. Consideration is anything that has value and is given as an exchange for fulfilling the promise and courts would not look at the value of the consideration. To ensure that the contract is legally binding, a valid consideration should be present. This was demonstrated in the case Thomas v Thomas (1842) QB 851 (Lawnix 2012), where the court decided not to go into looking at the adequacy of the consideration. STEP THREE As proposed in the case Brinkibon Ltd v Sthalwharenhandelsgesellschaft [1983] 2 AC 34; [1982] 1 All ER 293 (Beatrix 2005), once the message of acceptance has been communicated to Peter and the message reaches Peter’s system within the time the offer would be available, the same is considered as accepted. Hence, since the message reaches Peter’s system by 4:45 pm before the close of business day, the contract is active and is legally binding on Peter, who has to accept it. He has certain liabilities and has to pay the consideration. According to the legal systems, email communication is considered as an instantaneous mean of communication and the rules are not clear, but would be similar to the laws that exist for fax communication, since both are sending and received instantaneously. However, the message has to be received by the receiver and in this case; it was received in Peter’s email box by the due time. The receipt of the acceptance occurs when it hits the receiver’s email box. Regarding intention, the same is decided objectively by the courts. In this case, Sally and peter are not related to each other and without knowing each other they are proposing to enter into a contract, which goes on to show the intention of both the parties. Further, Peter showed that he would no longer bargain if the price of the bike was $4000 as he requested Sally to send the bike immediately. As per the case Esso Petroleum Ltd v Commissioners of Customs and Excise [1976], the advertisement should clearly mention whether it intends to bind legally. In this case, Sally’s advertisement (invitation to treat), it can be seen that she intends to sale the bike and enter into a legally binding agreement. Peter demonstrates his intention and fulfils all the requirements to enter into a legally binding agreement (including offer, acceptance of the offer, intention and consideration). Most of the communication between Sally and Peter was in writing thus placing greater onus on both the parties’ intention to enter into the contract. Regarding the consideration, as long as a consideration is present in the transaction, would it be a legally binding agreement. Here the proposed consideration is $4000 dollars to be paid on delivery of the bike. Since a transaction is present and the other criteria for meeting a valid agreement are present, Peter would have to pay the consideration. Peter cannot argue that the consideration paid is too much considering that the bike is of a poor quality. As in the case Thomas v Thomas (1842) QB 851, the court will not go into the adequacy or the value of the consideration, but would look at the presence of a consideration (Lawnix 2012). STEP FOUR In conclusion, it can be seen that in this case the three elements of meeting a valid agreement was actually met. The three elements include offer and its acceptance (including communication) which fulfils the agreement, intention of both the parties to enter into a legally binding agreement and the presence of a consideration. The communication was send by Sally and received by Peter before the due time. Both parties had objectively established that they intended to do the transaction and since all matter were in writing; greater onus was placed on them. Thirdly, there was a valid consideration, though the court would not look into the value of the consideration, and hence Peter cannot say that the value of the consideration was very high and not commit to meeting the contract. A small note on the transaction between Sally and Burt has to be mentioned. Burt had placed an offer to buy the bike at $5000. However, Sally puts down that offer, and instead places a counter-offer to sell the bike at $5500. Now Burt has the freedom not to accept the new offer and since Sally has not accepted to sell the bike for $5000, she cannot claim that she has a valid agreement to sell the bike to Burt at $5000 as she did not accept the offer. Hence, with Burt, Sally does not have any legally enforceable agreement. Both parties can accept or reject offer until final acceptance to the selected route is made. Part A: Question 2 STEP ONE The principle of law that is concerned is whether the terms, warranties and conditions presented constitute a term of the contract. STEP TWO In formation of a contract, conditions and warranties should be identified and clearly differentiated. A condition is something that is material to the contract and if it cannot be met the performance of the contract would not be met. A warranty is a term of lesser importance and if it is not performed only a claim of damages can be met. In this case there is a need to determine if there is a breach of conditions or warranty. A condition is material to the performance of the contract, whereas a warranty is not material, but can still affect the performance to some extent. In case a breach of condition is noticed, the contract can be terminated in total or partial or a claim of damages can arise, from the affected party. On the other hand, if the violation of warranty is noticed, then it can be a giving rise to a claim of damages. However, there is also a need to make a differential of the puffs, representations and terms or conditions mentioned in the invitation to treat or advertisement of Sally on her website. Any statement that are clearly understood not be realistic are puffs, whereas those are a matter of opinion or suggestions are more of representations. However, terms are something that are material to the contract and can be sued for breach of contract if not met. On the other hand puffs cannot be sued and misrepresentations cannot be sued under breach of contract law. However, fraudulent misrepresentation can be sued under civil law. Any statement made to exclude the liabilities of any parties and to impose the liability on the buyer should be made known at the time of deciding the contract. This was proposed in the case Olley v Marlborough Court Ltd [1949] 1 All ER 304. STEP THREE In this case, the basis of the statement presented to Peter whilst delivery of the product may actually be applicable as a general term, implied, operational by a general or special statute (such as Sale of Goods Act), and hence there may be a basis or justification for getting the same signed from Peter, even though it was not mentioned in the earlier part of the contract. However, the content of the statement is more important that the overall statement. The first part of the statement is a disclaimer excluding Sally’s liability from any defect. Such a statement needs to be made known to the buyer at the time of discussing the agreement. Since it was not known to Peter, and was material to the performance of the contract, the first statement holds no basis. However, since the second statement is reasonable and may hold a legal basis, the presence of the second statement is justified. Secondly, it is important to determine if there was any breach of the contract for non-fulfilment of the terms and conditions. Peter mentioned that several components of the bike including the tyres, colour of the bike, gears, etc, which are very important for the functioning of the bike, did not meet the conditions that were promised by Sally. Hence, there was a major breach of the terms and conditions due to which fulfilment of the contract was in doubt. The option was left to Peter to other terminate the contract or seek damages. On the other hand, for certain warranties with the product, Peter cannot seek damages as he has already signed the warranty statement. The seller has given 1 month time which is reasonable. STEP FOUR In conclusion, it can be seen that in case the conditions of the contract are not fulfilled, Peter has the option of seeking termination of the contract or damages. The first statement of the disclaimer presented at the time of delivery is not applicable as it should have been decided at the time of contract discussion. The second statement regarding warranty would be applicable through general laws or a different statue (such as the applicable sales laws). Hence, if there is any warranty to be claimed, Peter has to seek it within 30 days. Part B: Interpretation of Legislation In interpreting any law, judges may look outside the Act of Parliament or legislations for interpreting the law. This may also include interpretation a particular word or words. There are 3 approaches that the judge may chose including the literal approach, golden rule and purpose approach. For the literal approach, the judge would refer to the dictionary for the ordinary meaning of the words. The golden rule would be used if the literal meaning gives rise to an inconsistent result and hence would modify the literal meaning to the extent that is deemed necessary in order to avoid any inconsistencies. The Purposive approach is used in a situation when the literal meaning or the golden rule does not give relief and here a two step approach would be utilized, wherein the purpose is determined, and the meaning that best chooses the purpose would be used. Under Section 15AA of the Acts Interpretation Act a purposive approach would be preferred to and hence judges should identify the circumstances under which they would need to look outside the Acts. In general, when the judges search outside the Act of the Parliament, it would be considered as an extrinsic approach. There may be various situations in which extrinsic material may be used including uncovering grey areas, looking at situations where 2 legislations may oppose each other, determining any human right abuses, determining the presence of any unconstitutional provisions, determining any conflicts with international laws, etc. Some of the specific material that may used in interpretation include resources mentioned in the Act, commission & inquiry reports, law reforms, international treaties, parliamentary text debates, Constitution, memorandum, maxims, international agreements, journals and books (ALPN 2009). Total word count (Excluding references, headings, headers, in-text citations, etc): 2100 Works Cited: Australian Consumer Law. Consumer Guarantees: A guide for businesses and legal practitioners. 2010. 23 April 2012. < http://www.consumerlaw.gov.au/content/the_acl/downloads/consumer_guarantees_guide.pdf> Australian Law Postgraduate Network. Statutory interpretation. 2009. 23 April 2012. < http://www.alpn.edu.au/node/72> Beatrix. Chapter 7: Internet Regulation. 2005. 23 April 2012. < http://akgul.bilkent.edu.tr/telekom/07din.pdf> Lawnix. Thomas v. Thomas – Case Brief. 2012. 23 April 2012. < http://www.lawnix.com/cases/thomas-thomas.html> Your Notes: Lecture 3, 4, 5 – PDF’s and PPT’s Read More