Role of Acceptance in Contract Formation, Improvement of the Australian Contract Law - Coursework Example

ROLE OF ACCEPTANCE IN CONTRACT FORMATION By Student’s Name Code + Name of Course Professor/Tutor Institution City/State Date Role of Acceptance in Contract Formation Efficient and fair systems of contract law take an important role in fruitful economies. Contract law augments people’s autonomy by permitting them to undertake enforceable agreements, and reinforces economic growth by providing individuals and businesses with predictability and the stability they require to invest and trade (Lindgren, Carter & Harland 1986, 6). Contract law also maintains basic standards of justice in people’s dealings with one another. The system of Australia’s contract law is generated from different sources that are primarily composed of equitable principles and common law that are established by judicial rulings in individual cases. There are six important elements required for legally binding contract creation: an agreement (offer and acceptance), consideration (usually, the supply of services, money or property), Capacity to undertake legal relations (i.e. of legal age or sound mind and legal age), the parties’ intention to enter into legal relations, formalities and certainty. The basis of the legal relations is the agreement of the involved parties. For an agreement to be legally binding, it must be reinforced by consideration. The agreement has to be sufficiently complete and certain for it to be obligatory in the courts and the parties are required to show intention of their agreement to be a contract. For a contract to occur, normally one party must make an offer, while the other must accept it. Upon acceptance, a contract will often be binding on the two parties, and the guidelines of offer and acceptance are characteristically used to identify when a chain of deliberations has passed that instance in order to resolve whether the parties are gratified to fulfill their assurances. There is usually no halfway done contracts-the negotiations must crystallize into a binding agreement or they are will not be obligatory at all. The element of acceptance of an offer suggests an unconditional agreement to all the provisions of that offer (Carter, Harland & Lindgren1996, 323). Usually, acceptance will be in writing or oral but in some instances an offeree may accept an offer by undertaking an action like delivering goods as a rejoinder to an offer to purchase. The courts will only construe conduct as demonstrating acceptance if it appears rational to deduce that the offeree showed intent of accepting the offer. There are several types of acceptance under Australian contract law. These are implied, conditional, and express acceptance. A conditional acceptance, also referred to as a qualified acceptance, exists when an individual to whom an offer has been done informs the offeror that he or she will agree to the offer as long as some alterations are effected in its terms or that some event or condition occurs. This kind of acceptance works as a counteroffer and must be acknowledged by the original offeror before establishing a contract between the parties(Carter, Harland & Lindgren1996, 323).Another kind of conditional acceptance can happen when a drawee pledges to pay a draft after the fulfillment of a situation like the shipment of products reaching its terminus on the specified date in the contract. An express acceptance is one that occurs when a person explicitly and clearly agrees to a given offer or agrees to pay a draft, which is presented for payment. An implied acceptance is one, which is not directly mentioned but is validated by any actions that indicate an individual’s assent to the suggested bargain. This acceptance occurs when a shopper chooses an item in a supermarket and then pays the clerk for it. The customer's conduct illustrates that he or she has accepted to offer of the owner of the supermarket to sell the product for the price specified on it (Carter, Harland & Lindgren1996, 323). Acceptance of an offer is an affirmation to engagement into a unilateral contract. Unilateral contracts are normally acknowledged by conduct. For example, if an individual offers £120 to anyone who traces his lost dog, finding the dog is the acceptance of the offer that makes the promise binding. It is not essential for anyone to contact the owner of the dog and mention their intention to take up the offer and trace the dog. Here, there is no acceptance until the pertinent act has been totally performed. The acceptance must be unconditional, which suggests that an acceptance has to accept the exact terms stipulated by the offer (Lindgren, Carter & Harland 1986, 13). In the negotiations of the offer, where the involved parties undertake a long negotiation process, it may be hard to point precisely when an offer has been made and acknowledged. In such situations, the courts will observe the whole series of negotiations to choose whether the parties involved have reached any agreement whatsoever, and, if so, the date. This procedure can be particularly challenging where the ‘battle of the forms’ issue under contract law arises(Carter, Harland & Lindgren1996, 327).Instead of negotiating terms every time a contract is made, most businesses try to save money and time by contracting on standard grounds, which will be published on their company’s delivery notes or order forms. The ‘battle of the forms’ normally happens where one party of the contract party refers a form that states that the contract is based on their standard standings of business, and the other party may respond by sending their own form and declaring that the contract should is on their terms (Lindgren, Carter & Harland 1986, 16). Communication of acceptance: When applied to acceptance, the word communication does not imply a similar thing as when used in an offer. There has to be actual communication of the offer, meaning the offer has to be known to the other party. However, acceptance is believed to be conversed when it is made in the method indicated by the offeror although the offeror may not be fully aware of the acceptance. Communication of approval is not essential in situations such as when the acceptance is to assume the nature of an act. Moreover, communication is not essential in a situation where the offeree had accepted the offer in the way indicated in an advert by obtaining the advertised merchandise and consuming it as directed. The situation also applies where the offeror has allotted with the notice of acceptance. It must be open that notification of acceptance is needless (Carter, Harland & Lindgren1996, 329).Communication of acceptance has to be made in an authorized and regular manner. In terms of the specified means of acceptance, if an offeror mentions that his or her offer has to be accepted in a certain way, then only acceptance using that method or a correspondinglyoperative one will be binding. To be regarded equally operational, a method of acceptance should not be unhurried than the means outlined in the offer, or have any drawbacks for the offeror. Usually, an acceptance cannot take effect without communicating to the offeror. Lord Denning elucidated in Miles Far East Corporation vs Entores Ltd (1955), that if an individual X calls an offer to another (Y)on the other side of a river but, just as Y shouts back an acceptance, and a noisy aircraft hovers over, preventing person X from hearing Y’s response, no contract will have been made. X has to hear Y’s acceptance for the contract to take effect. The same would relate if the contract was done over telephone, and X failed to get what Y said due to interference on the line. Here, there would be no contract until X knows that Y is affirming to the offer. The major reason for this regulation is that, devoid of it, individuals might engage in a contract without knowing that their offers had been acknowledged, and this could obviously generate difficulties in all types of situations. Where parties negotiate face-to-face, communicating the acceptance is less likely to be a challenge. However, there are some exceptions to the rule of communication. There are some situations where an acceptance may take place with no communication made to the offeror. An offer may imply or state that acceptance has to be conveyed to the offeror. A case by Bindley vs Felthouse documents that it is impossible to mention that the offeree will bebound by the contract he or she specifies that the offer is unaccepted (meaning silence will be regarded as acceptance). This suggests that offerors are at liberty to render themselves to the harm of unknowingly undertaking an obligation, but may not execute that risk on a different party. This seems to follow from the case of Bindley vs Felthouse concerning the sale of a horse by the uncle versus his nephew. If the uncle had rejected to purchase it, the nephew could have taken legal action against him. The uncle would have been incapable of depending on the principle that there was no communication of acceptance (Carter, Harland & Lindgren1996, 332).Unilateral contracts do not often necessitate the acceptance to be conveyed to the offeror. In Carbolic Smoke Ball Covs, Carlill (1893) the offenders argued that the accuser should have informed them that she was affirming to their offer, but the court maintained that such a unilateral offer suggested that presentation of the conditions of the offer would be sufficient to quantify acceptance. There are several rules relating to acceptance. The first rule is that the notice of acceptance, which is to assume the nature a promise as opposed to the performance of some action must be communicated by the offeree to the offeror. Mere mental acceptance that has not been communicated will be pointless because silence does not imply consent. An illustration of this rule is found in the case of Felthouse v Bindley11 CB (NS) 869. The second rule is that the acceptance, which is to assume the form of an action does not need communication to the offeree, unless if it is required by the terms of the offer. Another rule is that the acceptance has to be unconditional (Carter, Harland & Lindgren1996, 327). Any conditions linked to an acceptance comprise of a counter offer. The acceptance has to adhere to the conditions stipulated in the offer; for example, if the offer specified ‘fax reply’, the acceptance has to must be channeled by facsimile. Only the individual or people to whom the offer was made can make the acceptance. For instance, if an offer is made to Wendy, and is accepted by Jane and her friend Martin, the acceptance is not an acceptance of the initial offer, but is a fresh offer by Jane and Martin to make a contract based on the initial offer. An acceptance cannot be canceled without the offeror’s consent. Moreover, acceptance has to be made within the given period, or, if no time specified, within a realistic time. Realistic time is decided in connection to the particulars of the case. Lastly, the occurrence of the offer must be familiar to the offeree. An illustration of this scenario can be seen in the case of Clarke vs Crown 40 CLR 227. Improvement of the Australian Contract Law The contract law system of Australia was developed by Australian courts and is based on English common law. Commonwealth, equitable doctrines, global law instruments, and territory statutes complement these common law legislations (Lindgren, Carter& Harland 1986, 19). The contract terms themselves also direct the parties’ performance and expectation. The complex association between legislation, equity, and common law as well as the numerous statutes and number of cases involved in the acceptance element make it challenging to recognize the applicable law or the prediction of the outcome of particular cases. Some significant issues like the material used when analyzing acceptance in contract law reform is a difficult affair. There is a widespread range of possible alternatives lying in between ‘radical overhaul’ and ‘no action.’ Therefore, the contract law should be reformed in order to foster greater clarity in as to the composition of a valid acceptance. These reforms comprise restatement of the rules: The rules should be expressed in the existing acceptance law in a single text to augment its accessibility, while effecting only minimal alterations to the matter of the law. Greater accessibility would refine the value of legal advice and minimize user costs. Legal practitioners who do not specialize in contract law would be well positioned to provide reliable and informed legal advice at lower costs. The rules should be simplified by changing the law in order to eradicate the unnecessary complexity while making minimal attempts at overhauling them (Lindgren, Carter & Harland 1986, 29). This can be coupled with full-scale reforms to the rules of accepting. This would entail making meaningful changes to the elements of contract law. In conclusion, under contract law, offer and acceptance must relate. They must reflect each other in all aspects. Any withdrawal will generate in the acceptance being unsuccessful- a conditional acceptance turning into a "counter offer." The formation of a legally binding contract requires offer and acceptance. It has been established that the communication of an offer to contract on particular conditions by one individual to another person and an intimation by the offeree of its affirmation of those terms. In order to clarify the acceptance terms, the rules related should be expressed in the existing acceptance law in one text to improve its accessibility. Greater accessibility would develop the quality of legal advice and reduce costs for parties involved. Moreover, the rules should be simplified to eliminate the unnecessary complexity involve in the attempts of overhauling them. Reference List Carter, J, Harland, D & Lindgren, K1996 Contract law in Australia, Sydney, Butterworths. Lindgren, K, Carter, J& Harland, D1986, Contract Law in Australia, Butterworths. Read More