Notification of Acceptance in Contracts - Coursework Example

Name xxxxxxx Course xxxxxxx Lecturer xxxxxxx Date xxxxxxx Notification of Acceptance Contracts have for ages formed the backbone of business practice. There are both oral and written contracts in business practice. However, given the complexity of contemporary global business practice, there has been a growing need for formal and written contracts. Commerce is essentially a transactional relationship based on an offer, offeror and an offeree. The relationship is initiated by an offeror making an offer which must be accepted by the offeree. The ordinary legal requirement is that an offer has to be accepted. In Carhill V Carbolic Smoke Ball Company (1983), the essence of offer acceptance was underlined but with centrality of communication of the acceptance to the offeree. In the ruling, Bowen L.J. indicated the imperativeness of communicating acceptance of an offer to the offerer. However, he also points the need to consider whether the offerer had intimated to this requirement. This paper is a critique of his statement that“one cannot doubt that, as an ordinary rule of law, an acceptance of an offer made ought to be notified to the person who makes the offer….”1 It presents an argument of various aspects of the ruling relative to contemporary business practice. It shall then make a conclusive statement. Notification of Acceptance Acceptance is a fundamental element in making an offer or a contract binding. As such, it is imperative that contract parties establish to know when an acceptance has made an offer binding. An offer is valid, by common law, if the following are available: intention, definite and reasonable terms and communication. The offerer must demonstrate a focused and certain intention to be bound to the offer and offeree. This is built on the tenets of the objective theory of contracts in which a party’s word and conduct are considered to mean what any reasonable offeree-party would infer they meant. It is to this reasonable inferred meaning that an offeree makes acceptance to and notifies the offeror. 2This theory was coined in Lucy v. Zehmer (1954)3 when the Supreme Court of Appeals of Virginia reversed a lower court decision and ordered that Zehmer proceeds to makes the property sales. With reference to this, business law practice in contemporary commerce has underlined the importance of acceptance and to a greater extent its communication. An acceptance is valid and effectively communicated only when it has come to the knowledge of the offeree (Jalil: 109). The Convention on Contracts for the International Sale of Goods (CISG) adopted by the United Nations also underlines this importance of communication when it attributes the notification centrality in the threshold for cancelling offers (Meiners et al: 322). A contract implies a sense of obligation on both the offerer and offeree to the offer. As such, obligation exists to the extent that the contract exists. If an offeree has accepted the offer, the offerer is not obligated if the latter has not been notified of the acceptance. This implies that the contract and obligation exists to the extent that there was notification of the acceptance to the offerer or the agent.4 By law, it is required that any changes to a contract be communicated to either as the language of the contract requires. As such, if there must be notifications on the changes, then it is imperative that notification and knowledge of acceptance be held as the threshold to determine the extent of legal obligation. In essence, a contract has been interpreted in five various ways.5 Adopting the 1865 Italian Civil Code, contracts are agreements which aim at creating and/ or extingushing rights and obligations.6 As such, they present a bargaining situation in order that the parties may come to an agreement, more often than not, a compromise agreement. In order that the terms in which the rights and obligations are based come into force implying legal liability on either party, each has to have knowledge of the other’s consent to the compromise. Perhaps this may be exemplified using Hathway7 in which the Supreme Court of Texas ruled in favour of one Gregg Hathway who did not accept modifications into an employment contract. The employee General Manager admitted that the plaintiff neither rejected nor disputed the modifications of rates. The Supreme Court jury argued that the plaintiff did not ratify the modifications although the Appeal Court alluded to the ratification due the Hathways silence conduct. The latter court deduced Hathways continuance with the job to imply acceptance to the modifications. Literature has argued that acceptance may be communicated via means such as statement or conduct. In this paper’s opinion, the Hathway case presents the challenge in distinguishing what is implied from what is intended so that the higher court shows reliance on the need for acceptance in statement. The language of the agreement features prominently in this argument. The plaintiff did not sign to the modifications on contract paper. Literature cites that acceptance can be notified using any reasonable means.8 Reference to ‘any reasonable means’ has far reaching implications in practice and may be construed to have ambiguity relative to the Hathway Supreme Court ruling. The Unified code of Commerce (UCC) cites “definite and seasonable expression of acceptance”9 as a threshold for effective acceptance notification (Section 2-206). As such, it appears the argument lies in the interpretation of what is definite. In addition, offers are time-limited and thus it is vital that seasonality of the acceptance be highly regarded. There have been cases whose subject has been the means of notification. In 1999, the Supreme Court of Oklahoma reversed a lower court ruling on lease premises eviction between Osprey L.L.C v. Kelly-Moore Paint Co., Inc.10 Osprey’s offer had indicated that any desire to renew the lease required notification by a US mail, registered mail, return receipt requested or personal delivery. Kelly-Moore communicated by fax and therefore Osprey rejected the notice, ending the contract. The trial court was in favour of Kelly-Moore and the fax. However, the Appeal Court reversed the ruling stressing on the need to follow the plain language of the lease. This implies not only the importance of communication of the acceptance, but also of the means of the notification. There are some contracts that carry in the terms content the means of notification. This implies a need for both parties of the offer to stick to the forms of notification. However, this question was has been raised as a concern by Svantesson11 evaluating Justice Nordheimer’s approach in Kanitz v. Rogers Cable, Inc.12 In order to adequately address the concern for forms of notification, it is imperative that parties are concerned about the reasonableness of the forms. The Hathway ruling sought to clear this up as the employer assumed the plaintiff’s acceptance, by the virtue of his continuing to work for the organization. A critical examination of this reveals two aspects. On one hand, it could be construed that the plaintiff conduct communicated acceptance. However, given that the plaintiff had expressed displeasure with the change of rates, then it would be unreasonable to deduce his continuance with work as implying acceptance. Furthering Svantesson’s argument, it was vital that the employee knows of employer’s changes into the employment contract, to which the employer well responded. However much the notice was contemporaneous, this was in part, fairness to the employee. Thus, it gets unfair to makes deductions or assumptions with prior knowledge of refusal to acceptance or shifting from the prior form of notification- written to conduct. This is unlike in MA Morteson Co. v. Timberline Software Corporation where the latter was sued for alleged breach of software warranties.13 Though the purchase order and licensing contract was not integrated, there was a licensing agreement in the software manual. The defendant had this indicated that the “use of the program indicates your acknowledgment that you have read the licence, understand it, and agree to be bound by its terms and conditions”. This is a common element in today’s business practice especially over the internet where contract parties hardly ever meet. The action to use the software was interpreted by the Washington Court of Appeals as consent to the terms. In conclusion, a contract is essentially factored by three elements: intention, definite and reasonable terms and communication between the offeror and the offeree. In MA Morteson Co. v. Timberline Software Corporation14, the offeror has been cited as the master of an offer. The offeror initiates the contract, prepares the terms and makes it, prior to being the eventual decisive factor. The offer relationship is strongly based on the offeree acceptance which must be communicated to the offeror. As Bowen L.J indicated in Carhill V Carbolic Smoke Ball Company (1983), ‘one cannot doubt that, as an ordinary rule of law, an acceptance of an offer made ought to be notified to the person who makes the offer.’15 This paper identifies that the concern has not been more with the notification, than it has been with the forms of communication. Essentially, the issues raised in notification are determining its definite nature, the language or terms about it in any contract, its reasonableness and seasonality. Bibliography Carlill v. Carbolic Smoke Ball Company. [1892] 1 Q B 256 [1893]. 7 December 1892. Ct.) Friedman, Jack and Lindeman, Bruce. Barron's real estate licensing exams : salesperson, broker, appraiser (8th Ed.). (Hauppauge, N.Y.: Barron's , 2010). Gregg N. Hathaway, et ux., v. General Mills, Inc., [1896] 711 S.W.2d. 227. 23 April 1986. Jalil, Abdul. ‘Clarification of rules of acceptance in making business contracts .’ (2011) 1 Journal of politics and law, 4. Jennings, Marianne. Business : its legal, ethical, and global environment (9th Ed). (Mason, OH: South-Western Cengage Learning , 2012). Jentz, Gaylord, Miller, Roger and Cross, Frank. Business Law : text and summarized cases : legal, ethical, global, and e-commerce environment (11th Ed.). (Mason, OH: South-Western Cengage Learning , 2010). Kanitz v. Rogers Cable (2002), 58 O.R. (3d) 299, 21 B.L.R. (3d) 104, 16 C.P.C. (5th) 84 (Sup. M.A. Mortenson Company, Inc., v. Timberline Software Corporation and Softworks Data Systems. [2000]. 998 P.2d 305 140 Wash.2d 568. 4 May 2000. Meiners, Roger, Ringleb, Al H and Edwards, Frances. The legal environment of business. (Mason, OH: South-Western Cengage Learning , 2012). O. Lucy and J. C. Lucy v. A. H. Zehmer and Ida S. Zehmer. [1954] 196 Va. 493. 22 November 1954. Osprey L.L.C., v. Kelly-Moore Paint Co. Inc., [1999] 984 P.2d 194 (1999) . 25 May 1999. Silva, Antonio. ‘The role of consent in the formation of contract in comparative private law.’ (2004) 2 International Journal of Baltic Law, 1. Svantesson, Dan. Kanitz v. Rogers Cable Inc- Time to rethink Article 4 of the proposed Hague Convention? (NSW: University of New-South Wales , 2002). Read More