Contract: AHE v Ben, Ruby, Ann and Others - Essay Example

Contract: AHE v Ben, Ruby, Ann and others Name Course Instructor Date Contract: AHE v Ben, Ruby, Ann and others The issue at hand in this case is whether Andy’s Hospitality Equipment entered into a contract with ten of its customers when it sent them a letter concerning the Quick Chill units. In order for a contract to be formed one party has to make an offer and the other must accept. The offer and acceptance show that both parties are in agreement. Both parties must contribute something of value to the bargain. This contribution is called Consideration, and without it the contract will not be valid, unless it is in a special kind of document called a Deed. A promise to give someone a present is not enforceable unless made by deed. There must also be an intention by the parties to create a legal relationship, should there be evidence that their agreement was meant for purely social or domestic issues, the agreement between them cannot be considered a contract. In order for a contract to be formed, the parties must also be able to form a legal relationship. This is because the law protects certain categories of people since they are vulnerable to exploitation, they are legally defined as having limited contractual capacity, these groups include minors, people under the influence of alcohol or other drugs, mentally ill individuals etc. Even if the general rule is that legally binding contracts can be made in any form, in some contracts, it is demanded that they should be in certain forms. A good example is a land transfer contract which must be in writing. Another requirement for the formation of the contract is that there must be genuine consent between the parties. This means that an agreement cannot be considered a contract if, for instance one of the parties made the agreement under duress, by mistake or through misrepresentation of facts. The other requirement for a contract to be enforceable is that the purpose for which it is made must be legal. If a contract fulfills all the mentioned requirements but the purpose for which it was made is illegal, that contract cannot be fulfilled in law. The issue that needs to be addressed here is whether Andy’s Hospitality Equipment, through their letter to customers, made an offer which the customers accepted thus forming a contract. An offer is an expression of willingness to contract in definite terms the offeror (the person making the offer) needs to show that they are ready to be bound if the terms they outline in their offer are accepted by the offeree (the person to whom the offer is made). Some matters that might appear like offers do not actually qualify as offers, they are referred to as invitations to treat. A good example of an invitation to treat is an advertisement. In their defense, Andy Hospitality Equipment can argue that theirs was not an offer, they simply advertised a product to their customers who were being invited to make an offer which they did not accept. Since a contract can only be made where there is an offer and acceptance, the assertion by Ben, Ruby and Kate that there was a contract between them and AHE was erroneous in law since there was no offer made. The fact that advertisements are not offers was shown in Patridge v Critteden (1968) where the court ruled that an advertisement of a bird in the newspaper was not an offer to sell contrary to Protection of birds Act 1954, rather it was an invitation to treat, the court, accordingly, found the defendant not guilty of offering to sell the bird. An argument may be made that the letter written, though may be considered an advertisement contained a definite promise to be bound if certain conditions were met as was the case in Carllil v Carbolic Smoke Ball Company Limited. This promise is seen in the letter where AHE writes ‘our installation specialist will deliver the machine and install it for you between 7 and 12 march…’ This condition, however can only apply to the customers who responded to the offer with a communicated acceptance. Those that did not cannot argue that they were to buy but did not communicate acceptance due to the statement in the letter allowing acceptance by silence. This is because in the general rules of acceptance, acceptance must be communicated and silence does not constitute acceptance. This was affirmed in the case of Fethouse v Bindley (1986) in which the plaintiff wrote to his nephew offering to buy his horse for £3015. The letter further said ‘if I hear no more about him I will consider the horse mine at that price’. Without replying to the plaintiff’s letter, the nephew instructed the defendant, an auctioneer not to sell the horse. The defendant however, mistakenly sold it, the plaintiff sued him. The action against the defendant depended on whether or not there was a contract between the plaintiff and the nephew regarding the horse. It was held that there was no acceptance of the offer. The Plaintiff therefore had no title to the horse and could maintain no action against the defendant (Beal et al 2002. Communicating acceptance Acceptance can be by conduct, in writing or oral. It is the unqualified assent the terms of the offer (Trietal, 1995). An example of acceptance by conduct would be when the offeree supplies or receives goods on the terms proposed by the offeror .e.g. in Brogden v metropolitan railway in which the House of Lords found that although the terms of the draft agreement between the parties had not been formally accepted. This could be inferred from the fact that both the parties were acting in accordance with the terms of the draft. An acceptance must correspond exactly with the terms of the offer. It must be final and unconditional. Acceptance that introduces a new term or is subject to conditions, is not acceptance but a counter offer (and therefore a rejection) .In the case of Hyde V Wrench (1840), there was no acceptance when the claimant introduced a new price into the deal. The people who accepted the deal with Andy’s Hospitality Equipment accepted the deal as it was offered and therefore qualified as proper acceptance in the eyes of the law (Baker, 2002). Generally, a contract is not made until acceptance is communicated by the offeree and received by the oferor. However, acceptance by post as was the case with Ben was acceptable as a way of establishing a binding contract. This is because Ben posted the letter on 27th February which was before 5th March when Andy posts the email to inform the customers of withdrawal of the offer. This is in line with rules for acceptance by post which shows that a contract is made as soon as the letter is posted regardless of whether it is received in good time or not or even if it is never received. This rule was est5ablished in Adams v Lindsell [1818] and applied in Household fire insurance v Grant [1879] Grant offered to buy shares in the claimant company and the letter was posted accepting his offer. He did not receive the offer but the court found that the contract was made as soon as the letter was posted, and therefore Grant was a shareholder in the company and was liable to contribute when the company went to liquidation. Obviously the rule may create hardship, but this is reduced by the following factors. The rule, however, can only apply if the letter communicating acceptance is properly stamped and addressed and the parties have not agreed to exclude the rule. Andy received the letter which shows that it was properly addressed and stamped. All factors considered, Andy is legally obligated to install the Quick Chill unit for Ben. Ruby called at 6 pm on 1 Friday 1st March and left a message that was not read until Tuesday 5th March at 10am. The time when Ruby communicated her acceptance was not ordinary working hours. This is the same rule that applies in acceptance by telex as shown in Entores v miles far East Corporation (1955) established that an acceptance sent by telex is valid is valid and the contract is made when and where it is received, provided that it is within normal business hours , and the same would apply to acceptance made by telephone. The fact that a message was left in the answering machine is irrelevant since it was not an human being who answered. This means that Ruby’s acceptance was not proper and Andy does not have to install Quick Chill for her. The fact that Kate did not communicate her acceptance to Andy’s did not constitute acceptance as was demonstrated in Felthouse v Bindley (1986) in this case the plaintiff wrote to his nephew offering to buy his horse for ￡3015 shillings. This letter further said ‘if I hear no more about him I will consider the horse mine at that price’. Without replying to the plaintiff’s letter, the nephew instructed t6he defendant, an auctioneer not to sell the horse. The defendant however, mistakenly sold it, the plaintiff sued him. . The action against the defendant depended on whether or not there was a contract between the plaintiff and the nephew regarding the horse. It was held that there was no acceptance of the offer. The Plaintiff therefore had no title to the horse and could maintain no action against the defendant. This shows clearly that a contract was not established between AHE and Kate. AHE had therefore established a contract with Ben and they had to install a Quick Chill systems for him at $3,500 as indicated in the letter. They, however are under no obligation to install the systems for Ruby, Kate and the rest of the group. References Adams v Lindsell [1818] EWHC KB J59 Baker. 2002, 'Gilmore and the Strange Case of the Failure of Contract to Die After All' 18 Journal of Contract Law 1. Beale, Hugh; Hartkamp, Hein Kotz, Tallon 2002. Cases, Materials and Texts on Contract Law. Hart Publishing. Entores v miles far East Corporation (1955) EWCA civ 3. Felthouse v Bindley (1986) 142 ER 1026 Peel, E, 2011.Treitel: The Law of Contract 13th ed. Wiley and Sons Read More