Vladimir Situation and Contract Law - Case Study Example

Running header: Contract law Student’s name: Instructor’s name: Subject code: Date of submission 1. The facts of the case are that Vladimir owns the Lew Hoa shopping comples at Norton Place. His shopping complex managing agents put an advert for the vacantshops. The advert promises good rates and that electricity will be included. Sasha reads the advert and is interested and therefore arranges to meetVladimir. Vladimir gives Sasha his terms of lease which include $1000 per week but tenant to pay all outgoings including electricity. Sasha protests claiming the advert promised that electricity charges would be included in rental pay. The issue The issue is whether the contents of the advertisement on the noticeboard constituted an offer that was intended to lead to a contract and therefore being enforceable or they constituted an invitation to treat in which case they would not be enforceable. The Australian law of contract contains clear distinctions between an offer and an invitation to treat as well as the elements that have to be satisfied before a breach of an offer can be established as will be established below. These elements will be explored in a bid to determine whether they have been satisfied in a bid to establish whether the advertisement could create a binding contract enforceable on Vladimir. Relevant law The Australian law of contract is clear that a contract is only established when acceptance of an offer has been communicated to the offeror by the offeree. The law defines an offer as an indication by one person to another of their willingness to contract on certain terms with no further negotiations while an invitation to treat is an indication of a person’s willingness to negotiate a contract as was the case in Harvey v Facey 1where the statement by the owner that he was interested in selling the property at a certain price was regarded as an invitation to treat. In Lovett v. Fredrick, it was held that an advertisement is not an offer but only an invitation to enter into negotiations.However in Lefkowitz v. Great Minneapolis Surplus store2, it was held that an advertisement could be deemed an offer if it is specific. In Carlill v Carbolic Smoke Ball Co3, it was held that advertisements that fail to contain words of limitation and they are not be clear, definite and explicit are simply invitations to treat. Application The advertisement in this case contained a promise of good rates, electricity included. However, it was not clear as to whether the advertiser meant that there would be electricity or electricity would be included in the pay. Furthermore, this was an invitation to the public to rent the shop and it was not intended to be an offer. The fact that Sasha solicited for a meeting with Vladimir for negotiations implies that she knew that this was an invitation to negotiate. Furthermore, the advert did not contain clear terms as to what the rates would be though it stated good rates. In addition, the advert was not specifically addressed to Sasha but to anyone who was in need of a shop. As such, most likely the court would find the advert to have been an invitation to treat and not an offer Conclusion Based on the preceding analysis of the facts of the case, relevant law and decided court cases as outlined above, the court would most likely treat the advertisement in this case as an invitation to treat. Thus I don’t consider that Sasha would succeed in a claim to the effect that Vladimir should be bound by the advertisement on the noticeboard. 2. The facts of the case are that Sasha decides to accept Vladimir’s verbal offer four days after the meeting. Sasha writes a letter to Vladimir indicating acceptance on 5th June which is posted on 6th June. Unfortunately, Vladimir makes another offer to Milo who wants to start a business the same day and the offer is accepted. Sasha’s letter of acceptance is read by Vladimir on 7th of June though the latter is dated 5th of June. Vladimir informs Sasha that he already leased the shop stating that he had told Sasha to be quick. The issue The issue is whether the letter sent by Sasha constituted acceptance and if so whether it was communicated in the right form. The Australian contract law details out the elements that have to be satisfied for the offer to be deemed accepted and hence for a contract to be deemed to have occurred between the two parties. As such, these issues will be analyzed in a bid to establish whether Sasha should go ahead and demand for the lease of the shop or she should look for an alternative. The relevant law The law of contract states that acceptance occurs when the offeree agrees to be mutually bound to the terms of the contract by giving consideration or something of value to seal the deal. What is accepted must be what is contained in the offer. Acceptance is said to have occurred when the offeree expressly accepts the offer the offeror has made. Once the offer has been accepted validly, a binding contract is deemed to have occurred. As such, there is need to establish what constitutes a valid offer so as to establish whether Sasha and Vladimir were bound by the letter Sasha sent agreeing to the terms of the offer that Vladimir had made. First the acceptance has to be communicated to the offeror before it becomes effective as was held in entorres v Miles Far East4. It should also be noted that silence cannot amount to acceptance as was held in Felthouse v Bindley. If the parties agreed to use the post to communicate acceptance, then the letter has to be properly addressed and stamped and acceptance will be deemed to have occurred when the letter is placed in the post box as was held in Adams v Lindsell5. Acceptance could also be through conduct as was held in Brogden v. Metropolitan Railway Co6. Application It has been stated that Sasha decided to accept the terms contained in the offer by Vladimir. This implies that the first condition of acceptance had been fulfilled in that what was offered was what was accepted. Sasha wrote the letter of acceptance to Vladimir and placed on the post office on 6thJune this was the same day that Vladimir made an offer to Milo who accepted the offer through the word of mouth. It should be noted that Sasha’s earlier conduct of protesting the offer by Vladimir would have made him to assume that Sasha had rejected his offer and hence the reason why he went ahead to give the same offer to Milo. As such, by the time the communication of the offer is reaching him, another acceptance has already been communicated. Furthermore, it had been communicated to Sasha to act quickly through email since the offeror would still invite other people for the same offer. As such, it is highly likely that although Sasha offer had fulfilled all the requirements, it will be deemed to have been late. Conclusion Based on the preceding analysis, it is highly likely that although the acceptance by Sasha has fulfilled all the elements of acceptance, it will be deemed to have been late since it was communicated after another offer had already been accepted. 3. The facts of the case are that Vladimir offered a shop fitted out as coffee shop to Roberto who wants to start a business. They agreed on $1000 as the weekly rent and Robert signs the lease. Business conditions change and Roberto is worried as other shopkeepers are leaving the complex. He asks Vladimir to reduce rent to $500 per week in a conversation which he agrees though no document is signed. Roberto pays the reduced fee for 20 weeks which is accepted by Vladimir. On hearing that Roberto intends to terminate the lease, Vladimir is annoyed and sues Roberto for the arrears. The issue The issue is Roberto’s legal position. In other words, the issue is to determine whether Roberto was right in relying on the promise by Vladimir to the effect he has been paying half the rent or $ 500 per week as opposed to paying the full fee of $ 1000. As such, it has to be determined whether Roberto should pay the $10,000 arrears or should not pay placing his reliance on the promise although no formal contract or promise exists and no consideration has been paid. The doctrine of promissory estoppel lays out elements that must be fulfilled for a promise to be enforceable although no formal contract exists and no consideration as been paid. Relevant law The relevant law in this case is the doctrine of promissory estoppel. This is because a promise was made and reliance was placed on it but the promisor has now reneged. The doctrine of promissory estoppel arose in the case of Central London Property Trust Ltd v High Trees House Ltd7 where the plaintiff was estopped from demanding rent arrears owing to a promise he had made to the tenant earlier. In the case of Walton stores (interstate) Ltd v Maher8, the judge outlined the elements that need to be observed for a promise to be enforceable on the promisor. First, the promisee must have placed his reliance on the promise by the promisor the promise having arisen from an existing contractual arrangement. The defendant must have induced the promisee to rely on the promise and hence the promisee acted or failed to act in reliance to the promise. That this action would cause detriment to the promise and the defendant ailed to act to prevent the detriment. Application In the above case, it is clear that a promise for a less rent was made to Roberto and Roberto paid the reduced rate as a consideration for the original rate. The promise arose from an existing contractual arrangement as a lease had already been in operation. Roberto relied on the promise made by Vladimir in failing to pay the $500 in good faith. Therefore, the detriment that would arise to Roberto for having to pay the 20 weeks arrears would arise from the promise made by the landlord. The landlord having received the reduced rent rate for the last 20 weeks therefore failed to do something to stop the detriment on time. As such, it is highly likely that the court will estop Vladimir from claiming the rent arrears based on the doctrine o promissory estoppel. Conclusion Based on the analysis of the case above, it is clear that courts will most likely estop Vladimir from claiming the rent arrears on the basis of promissory estoppel. In this regard, I would advise Roberto not to pay the arrears but seek a court intervention to stop Vladimir from claiming the arrears. References: Cohen, L, 2000, Choice of a new generation: can an advertisement create a binding contract, Missouri Law Review, vol.65, no. 7, pp. 2-20. Robertson, R2011, Principles of contract law, Sydney, Prentice Hall. Stephen, G2010, Introduction to the law of contracts, Oxford, Oxford University Press. Carter, J2012, Contract Law in Australia, Sydney, Prentice Hall. Jared, B2011, Application of doctrines of unconscionability, London, Rutledge. Vermeesch, L2011, Business Law of Australia, Lexis Nexis Butterworth. Read More