Business Law - The Law of Contract - Case Study Example

Business Law Grade (7th, March. Business Law The law of contract operates on the basis of various rules, which determine whether a contract really existed or it did not, and thus establishes its enforceability through a court of law. The foundation of a contract is that it is entered into by two willing parties, whose agreement intends to create a legal obligation (Koffman & Macdonald, 2007). Nevertheless, the fundamental elements of a contract are the offer and acceptance, which should be done by two sound individuals. In our case, Colin’s Computer (CC) is a computer garage offering repair services for computers belonging to other organizations, in return for a monthly payment. Colin’s Computers advertises its services through their website and through a local daily, which reaches the intended organizations that have the need for Computer repair, among them, Geoff’s Gym (GG). After receiving the information regarding CC’s services and the discount offer they are giving to their new customers, GG decides to go for the services and fulfill the necessary conditions that were attached by CC, so that it could benefit from the offering. However, as it turned out, GG never received the repair services for its computers from CC, which in essence did not receive the letter that was to be sent either through mail, text or post; to confirm the offer. The occurrences that follows after GG finds the services of CC and opts to purchase them are the subject of this discussion, with a focus on whether a contract occurred, who is liable for the breach of the contract, and whether the contract is enforceable through a court of law, if at all it occurred. The advertisement made by CC regarding its services and the discount offering to the new customers was an invitation to treat, since it was calling upon the general public, which entailed the organizations interested, to make an offer based on the invitation to treat (Koffman & Macdonald, 2007). Therefore, the response that GG gave was in response to the invitation to treat concept applied by CC. for a contract to occur, to main principles; the offer and the acceptance must be fulfilled, and not in any vivid manner. When CC made the invitation to treat, it invited the organizations in need of computer repair services to make an offer, which would in turn be accepted by CC, based on the fulfillment of certain conditions. The conditions attached for an offer to become complete were; that the organization in need of the services would contact CC either through mail, post or text before 8th June and inform them of the definitive date the organization would like the services to commence. On its side, GG posted a letter on 3rd June and followed the letter up, with a call to confirm to CC that the letter of offer had been posted. However, it turned out that the letter was not receive by CC, that is why CC did not go to offer the repair services to GG’s computers. The facts of this case prove that an offer was made, but the corresponding requirement of acceptance did not occur (Simpson, 1987). According to the ruling of the case in Partridge Vs Crittenden (1968), the display of goods by the seller does not amount to an offer, but rather an invitation to treat. The same applies to an advertisement made by the seller. Therefore, even when GG would want to enforce the contract based on the fact that they had accepted the terms made by CC, by posting a letter before the stated date, and even went ahead to follow it up with a phone call, just to confirm that they had posted the letter, they are not in a position to do this, because the advertisement made by CC on its websites and a local daily, regarding its offer of computer repair services, did not amount to an offer, but a mere invitation to treat (Koffman & Macdonald, 2007). Therefore, contrary to the belief by GG that they had met the requirement of the contract and thus CC was liable to compensate them for the breach of the contract, the reality is different. GG acted on the basis of an invitation to treat and made an offer which was not accepted by CC, because in this case, GG, who has been invited to take up the services of CC is the offeror, while CC, who has invited organizations with the need for computer repair services, is the offeree, since CC has to accept the offers made by the organizations in need of its services, before a contract is legally established. Acceptance is yet the other principle that is fundamental for this case. For any contract to be valid, and thus enforceable, there must be an offer and acceptance (Koffman & Macdonald, 2007). The rules of acceptance require that, after an offer has been made, then the acceptance must be communicated to the party that had made the offer. The rules for the acceptance of an offer provides that if an offer has to occur, then the specified method of making an offer must be followed, failure to which, any offer made through an alternative form, channel or method, remains null and void, and thus unenforceable (Simpson, 1987). Additionally, according to the ruling on the case in Byrne Vs Tienhoven (1880), an offer can only be accepted by the offeree, and within the specified time and without any conditions that are attached, which are different from the ones that were existing when the offer was made. In this case, GG made an offer within the stipulated time, and using the required channel, which was post. However, the offer that GG made was not receive by CC. Therefore, in this case, there was no fulfillment of the necessary conditions for a valid and legally enforceable contract to occur, since the offer was neither received nor accepted (Koffman & Macdonald, 2007). Therefore, there lacks any basis through which GG can enforce the contract between them and CC, considering that the offer was not received by CC, meaning that there was no acceptance. Additionally, there was no communication regarding the acceptance of the offer. The above conditions are the three rules that are essential for a valid contract to be legally binding, according to the ruling of the case in Hyde Vs Wrench (1840). Thus, GG lacks the essential legal basis of enforcing the contact between them and CC, and thus the offer that was made by GG for the provision of computer services by CC, is null and void. According to the finding of the case Entores Vs Miles Far East Corp (1955), regarding the issue of the communication of acceptance, it was held that; on the event that an offer is being made, the contract is only complete when the acceptance is received by the offeror. Additionally, the findings of the same case provided that a contract is made at the same place where the acceptance is received. Therefore, a valid and legally binding contract is established, where the offeror receives the notification of the acceptance (Koffman & Macdonald, 2007). In this case, the conditions required to fulfill the rule of the communication of the acceptance have not been fulfilled. Despite the fact that GG had sent the letter through post as was required on 3rd June, it is apparent that the letter was not received by CC. Therefore, despite the fact that GG followed up by ringing CC to inform them that the post had been made, that did not amount to the receiving the offer, since the offer should be received in the form that was provided for under the advertisement (Simpson, 1987). The acceptance of this offer should have occurred at CC’s end, since the acceptance of a binding contract occurs at the same place where the acceptance has been received. This means that the acceptance could have occurred the moment CC could have received the post from GG, and communicated the receipt of the post. However, considering the fact that no communication was made to GG regarding the acceptance of the offer, it is apparent that the rule of the communication of acceptance was not fulfilled, and therefore, the contract cannot be enforced in a court of law, because it is not legally valid. The other contractual legal principle applicable in this case, is the principle of acceptance by silence. According to the ruling under the case Felthouse Vs Bindley (1862), the silence on the part of the offeree should not be interpreted to mean that an offer has been accepted. This is because, there is no offer that can be accepted in silence, since the acceptance of an offer, must always be communicated to the offeror by the offeree (Koffman & Macdonald, 2007). Therefore, there is no contract, where the acceptance of the offer has not been communicated. However, the most interesting aspect is that there is an exception to the acceptance of an offer by the offeree, depending on the channel through which the offer is to be communicated. Under the Adams Vs Lindsell (1818) case, the ruling provided that there is an exception to the communication of the offer, when it is made through the post. This ruling held that under the postal rule, a letter of acceptance takes effect the moment it is posted, provided that it is reasonable for the offereor to have used the post. In this case, there was an agreement that the offer to CC should be sent either through post, text or mail. GG opted to use post and followed it up by notifying CC that the post had been made. Therefore, the action of GG to send the offer through post was reasonable, since it was the agreeable channel through which the offer could be communicated (Simpson, 1987). Therefore, while most of the other elements of a contract could not have been fulfilled, which include the acceptance and the communication of acceptance, the provision under the postal rule, as explained in the Adams Vs Lindsell (1818) case, overrides all the other provisions, by providing that under the postal rule, a letter of acceptance takes effect immediately it is posted (Koffman & Macdonald, 2007). Therefore, the acceptance of the offer occurred the moment GG posted the letter to CC, which makes the contract between them valid. Therefore, based on the provisions of the postal rule, it is possible for GG to enforce the contract, since the conditions of the contract remains as valid, from the moment GG posted the letter to CC. It is therefore follows that, GG has the right of claiming compensation for the failure of CC to perform a legally binding contract (Simpson, 1987). Therefore, GG has the right to sue CC for the payment of damages for failing to honor the contract, which affected GG’s business. Reference Koffman, L., & Macdonald, E. (2007). The law of contract. Oxford: Oxford University Press. Top of Form Bottom of Form Simpson, A. W. B. (1987). A history of the common law of contract: The rise of the action of assumpsit. Oxford: Clarendon Press. Read More