Advice to Tommy on Situation with Sarah - Case Study Example

Name: Course: Instructor: Date: Advice to Tommy on Situation with Sarah A contract is an enforceable agreement between two parties. Electronic contracts are contracts that are formed using electronic communications. A valid contract must have the following basic elements: an offer; acceptance of the offer; certainty; intention; and consideration (Christensen, 21). Certainty means the court must be in a position to ascertain what the parties have agreed. It was held that for a contract to be valid, the parties must express themselves in such a manner that the meaning can be determined with a reasonable degree of certainty1.The intention means that from an independent point of view, the parties intended that the agreement will be legally binding. Consideration is the price that is paid in exchange for a promise. To enforce an agreement, one party must promise to do something while the other party must agree to do or not to do something in order to benefit from the promise (Rossiter & Dennis, 96).The basic elements of a contract apply to all contracts whether they are oral, written or electronic. Each jurisdiction in Australia has passed uniform legislation governing electronic transactions based on the United Nations Commission on International Trade (UNCITRAL) Model Law on Electronic Commerce of 1996. The model was adopted to address the legal problems and uncertainties created by formation of contracts (Gillies, 25). Electronic contracts are governed by the relevant Electronic Transactions Act of the state. The Act provides that electronic contracts can be formed through exchange of electronic communications such as email. The basic elements of contract formation remain the same in spite of the technology. The court held that emails can create a binding contractual relationship between the parties to the contract2.Section 4 of The Electronic Transactions Act(Western Australia) 2011 states expressly that use of electronic communication does not render a transaction invalid. The law allows giving of written information, provision of a signature and production of a document to be done electronically (Brown, 63). Tommy’s display of tin toys on his website is an invitation to treat inviting parties to make an offer. Section 18 of The Electronic Transactions Act 2011 states that a proposal to form a contract through electronic communications that is not addressed to a specific party and is generally acceptable to parties making use of information systems is to be considered as an invitation to treat inviting customers to make offers(Gillies,27).When Sarah selects items from the website, puts them in a cart, provides credit card details and clicks on pay, she makes an offer to buy the tin toys which can be accepted or rejected by Tommy. Sarah is thus the offeror while Tommy is the offeree. It is important to determine the exact point in time that formation of an electronic contract takes place as once an offer has been accepted it becomes irrevocable3. The acceptance of an offer becomes effective at the time when it is communicated to the offeror 4(Christensen, 26). When communication takes place it is said that the parties to the contract have reached a consensus. There is an exception to this general rule known as the postal rule and is applied where the post is used as the medium of communication between parties. Application of the postal rule renders acceptance effective at the time when it is posted, rather than the time the acceptance is communicated to the offeror5. The courts have rules that the postal rule does not apply to electronic communications by telex, telephone, facsimile and email. Email is an instantaneous form of communication therefore the postal rule should not apply (Brown, 66).Acceptance should therefore be effective when it is received rather than when it is sent. Section 13 of The Act provides that the time of dispatch is the time when the electronic communication leaves n information system under the control of the originator or the party who sent it on behalf of the originator; if the electronic communication has not left the information system under the control of the originator, then the time of dispatch is the time when the electronic communication is received by the addressee. Under section 14, the time of receipt is the time when the electronic communication becomes capable of being retrieved by the addressee at an electronic address designated by the addressee if the electronic communication is capable of being retrieved by the addressee when it reaches the addressee’s electronic address ; or the time when the electronic communication has become capable of being retrieved by the addressee at the address and the addressee has become aware that the electronic communication has been sent to that address(Gillies,29). In electronic contracts involving emails, the supplier of online services accepts the customer’s offer when he acknowledges the customer’s order. The assumption is that the term order equates with the legal concept of offer and the term acknowledgement is equal to the legal concept of acceptance. The order and acknowledgement of receipt are deemed to be received when the parties to whom they are addressed are able to access them (Brown, 68). There is a right to withdraw from a contract if the person or the party on whose behalf the person was acting, notifies the other party of the error as soon as possible after having learned of the error and indicates that he or she made an error in the electronic communication6. The consumer can cancel the contract within a minimum of seven working days without giving any reason or facing any penalty except the cost of returning the goods, in contracts, in which goods have been delivered (Gillies,30). Where the consumer cancels the contract, he or she is entitled to a refund within 30 days of cancellation7.There is no contract between Tommy and Sarah, because even if a contract had been formed initially, Sarah exercised her rights to withdraw from the contract by sending an email saying she did not want to go through with the purchase which arrived before Tommy could send the email confirming his acceptance of her offer. Advice to Tommy on Situation with Hannah Hannah’s situation is similar to Sarah’s in that both involve electronic contracts transacted through emails. Most of the principles applying to Sarah’s case will therefore apply to Hannah’s case. When Tommy displays tin toys on his website he makes an invitation to treat. When Hannah open’s the cart, provides credit card details and clicks pay she makes an offer to buy. Tommy accepts the offer immediately through an automatic email sent confirming order and payment. Contracts formed by interaction of an automated message system and a natural person; or the interaction of automated message systems are not void, invalid or unenforceable on the sole ground that there was no review or intervention by a natural person in the activities carried out by the automated message systems8. Acceptance through an automated message system is thus binding on the offeror (Gillies, 31). The place of dispatch is the place where the addressee has its place of business while the place of receipt is the place where the addressee has its place of business9. Where the party is a natural person and does not have a place of business, the party’s place of business is the party’s habitual residence. Traditional contract law principles allow for revocation of offers anytime before the offer is accepted (Lindgrers, 207). Revocation is done by the offeror and is an expression of unwillingness to contract with the offeree as there is no intention to contract. The offeree must have direct or indirect knowledge of the revocation. The revocation is effective when it is received by the offeree. Hannah sent the message that she didn’t want to buy the toys and only did so after having too much to drink on 11th January. It was too late as acceptance had already taken place on 10th January through the automatic email. Revocation cannot take place after the offer has been accepted (Christensen, 27). There is therefore a valid contract between Tommy and Hannah. Advice to Tommy on Situation with Ned When Ned discusses possibility of leasing land from Tommy and states that he can only lease land which has a shower and a toilet block, Ned makes an invitation to treat to Tommy. When Tommy agrees to lease land to Ned and begins building the shower and toilet block, he makes an offer to Ned. Ned is in a position to accept or reject Tommy’s offer to lease the land to him. In Australia for a contract involving land to be valid, it must be in writing and the guarantee or deed must be signed by both parties or by authorized parties on their behalf (Duncan& Weld, 121). Preliminary negotiations do not comprise offer or acceptance because there is no requisite intention to be bound (Lindgrers, 209).There is therefore no contract between Tommy and Ned as Ned failed to sign the agreement deposited with the lawyer. Tommy can only obtain remedy for the loss he has suffered by relying on the doctrine of quasi-contracts. A quasi contract is an implied or constructive contract that is imposed by courts for equitable rather than contractual purposes (Rossiter & Denis, 98).Quasi-contracts are created by the courts on the basis that a contract ought to have been formed even if it was not formed. Courts use it to ensure fairness and avoid injustice by creating obligations upon the other party even if he was not a party to the contract. Quasi- contracts are used for restitution of the undue and to avoid unjust enrichment (Duncan & Weld, 124). Consent of the parties is not required in quasi-contracts as the obligation arises from equity based on the facts of the case10. The liability of the defendant in quasi-contracts is equal to the loss suffered by the plaintiff in securing a benefit for the defendant. The estimate is based on the fair market value based from the concept of quantum meirut (as much as is deserved). The measure of damages in a quasi-contract is the amount that will compensate the aggrieved party for the detriment suffered as a result of conduct of the other party. Works Cited Brown, Allan. Regulation of Electronic Commerce in Australia. St. Lucia: University of Queensland Press, 2009. Print. Christensen, Sharon. The Law of Contract in Australia. Annandale, N.S.W: Federation Press, 2011. Print. Duncan, W D, and H A. Weld. The Standard Land Contract and Conveyancing There under in Australia. Sydney: Law Book Co, 2011. Print. Gillies, Lorna E. Electronic Commerce and International Private Law: A Study of Electronic Consumer Contracts. Sydney: Butterworths, 2008. Internet resource. Lindgren, Kevin E. Essence of Time in the Performance of Contracts. Melbourne: Butterworths, 2012. Print. Rossiter, C J, and Denis J. Harley. Principles of Contracts and Options in Australia. Sydney: LexisNexis Butterworths, 2009. Print. Read More