Whether Qualified Acceptance Result to Binding Agreement - Case Study Example

Name Institution Course Tutor Date Business Law Any acceptance is a definite and unqualified assent to an offer, on all of its terms. Any acceptance given conditionally will not result in a legally binding agreement. Individuals get into agreements in form of a contract. Well, in the process, it is observed that there are some aspects of the agreement that need to occur in order to finally create a binding agreement. A contract if defined as a legal agreement carried out by people with similar contractual capacities. A contract begins with an offer, then an agreement is reached when the offer is received by way of acceptance. Acceptance is a major principle in the Law of Contract. The first requirement of a contract is an agreement which constitutes of an offer and acceptance, and there should be meeting of minds. Acceptance is defined as an unequivocal statement whether oral, written or by conduct by the offeree as a sign of agreeing to the offer.1 The most interesting and vital area of acceptance is communication of the acceptance. It is said that an agreement is concluded when and where communication of acceptance is received. Is an acceptance given conditionally result to a binding agreement? This document provides supportive case laws to get an understanding of whether qualified acceptance result to binding agreement. Pym v. Campbell In this casePym invented a washing and amalgamated machine which he applied 1/8 interest in the benefits to accrue from future sales.2 During trial, Pym, the plaintiff produced a document which was signed by both parties, to show an adherence to the terms and conditions of the agreement. The two engineers were supposed to scrutinize the machine and approve its efficiency, where Pym did while the defendant Campbell did not. It appeared that Campbell did not abide by the written agreement and Pym filed a case against him. The written agreement contained conditions precedent to the formation of the agreement and it was a matter of determining whether the condition precedent to the formation made a contract was binding.3 The legal issue in this case is whether a condition precedent to the agreement, Campbell’s approval, made the written agreement unenforceable. According to the court, ‘evidence to vary the terms of an agreement in writing is not admissible, but evidence to show that there was not agreement is admissible.’ It was proved that the writing were signed on terms that it was to be an agreement if Campbell approved the innovation, and the signed paper was not to be the record of the terms of agreement.The ruling here was similarly used as a basis in the case of Ware v. Allen (1888).4Therefore, since there wasevidence to prove that the agreement was conditional, the court held that there was no legally binding agreement. Meehan v. Jones (1982) In the case of Meehan v Jones (1982) 149 CLR 571 involves a vendor and purchaser. The type of contract analysed under this case is the contract of sale. The contract by the two parties involved a Purchaser or his nominee entering into an Agreement arrangement with the vendor for the supply of satisfactory quantity of crude oil. International Oil proprietary has organized for finance on satisfactory terms to enable them complete the purchase.5 In this case, there was evidence that conditions were there for the acceptance of the offer. The terms ‘satisfactory’ meant satisfaction to both the vendor and the purchaser. Therefore, if the condition were not met or satisfied reasonably in this case, the ruling was that the contract shall be unenforceable at the end and if considerations were paid by the purchaser, then he shall be refunded. Scammell v Ouston In this case, Ouston wanted to purchase a new vehicle from Scammell. He made an order on the understanding that balance could be paid by hire purchase.6 The agreement was reached at when Scammell accepted. However, there was disagreement and Scammell refused to supply the van.No such terms and conditions of the hire purchase agreement existed. The House of Lords held that the vagueness of the agreement rendered the contract legally unenforceable, especially given that there were no previous dealings between the two parties that would have taken into consideration the implied terms.7 It was also held that there was uncertainty in the terms of the hire purchase agreement stating the time intervals of payment of the installments. Therefore, if the conditions of the terms were not clearly stated and agreed upon, then the agreement was unenforceable according to this case. Whitlock v. Brew The plaintiff entered into a contract to purchase land from the Defendant. A condition provided that part of the land was to be used for the sale of shell products and on taking possession of the land, the Plaintiff would lease that part of land used for the sale of shell products to Shell upon reasonable terms. It happened that the Defendant revoked the contract and forfeited the payment and the Plaintiff sued him to recover the deposit. It appeared that the document that contained written agreement did not contain any provisions of the contract and that the document does not make a consensus. Since the conditions were not clear and had no effect, it did not affect the main body of the contract. It was held that if the contract of sale was to exist, then this would need a change in the nature of the agreement. There was no contract of sale in this case. They uncertainty of conditions of their agreement makes it not valid to be a sale contract. Masters v Cameron (1954) 91 CLR 353 The above case involves an agreement that was entered into by Masters and Cameron for selling of Cameron’s land. A detailed description of the land was included in the agreement. The case issue that emerged in this case is whether the pre-contract signed by both parties can be accounted for as a final contract for the sale because the circumstances show that it was still not the final contract.8 The decision of the court was that the preliminary contract cannot be considered as a final contract. This is based on the court rationale that; a contract can only take effect if contains the terms agreed upon by the parties. Secondly, the intention to engage into a contract can be legally binding as long as the current agreement does not indicate any suspension of a term or condition will be made once a formal document has been signed. Thirdly, it also appeared that the two parties were not ready to be bound by the contract before a formal document has been effective. In this case, it also appears that in formal contracts such as this, the conditional acceptance of an offer does not make it void, if the terms are clear and certain, provided the parties agree to the terms and conditions of their agreement. The pre-contract did not have any legal binding effect to the parties involved in this case. Souter v Shyamba In Souter v. Shyamba concerning an agreement for purchase of land and hotel business also helps understand that acceptance should be final and unconditional. Both parties came into an agreement setting out particular of the parties, the property, the price and the settlement date executed by each party. It was indicated in the document that the balance would be paid to the vendor’s solicitor on exchange of contracts. The case issue here was whether the intention of the parties to be legally bound based on the document and surrounding circumstances evidence and whether the terms had any contractual effect. It was in the decision of the court the document was immediately binding and enforceable. In this case, three principle issues came into light. Firstly, is that an agreement is a binding contract if , to be performed when the obligation fall due, whether or not a formal agreement is executed. Secondly, the agreement is a binding contract, but performance is postponed pending execution of a formal agreement. Thirdly, is that an agreement is not binding as a contract until execution of a formal agreement. In reference to this case and its provisions, the case is consistent to the principles in Masters v Cameron, where the parties were said to have entered into a settlement agreement. In the case of Niesmann v Collingridge, similarly, the parties entered into an agreement on the sale of land, where the seller signed a written document which bound him to the to the payment provisions of the contract. The issue that arose in this case was whether there is a binding agreement on the contract, or there is a contract after they signed the formal document. It appeared that all the essential terms had been agreed upon and there did not exist any conditions to the acceptance of the offer. The contract was legally binding. Attorney General of Hong Kong v. Humphrey estate This case involves an agreement based on the principle of ‘subject to contract’. It happened that the Government of Hong kong acquired some flats owned by the Plaintiff Group of companies in return of the Government granting. The Government took possession of the flats and had spent some amount upon them and some civil servants had been moved into them. The Government allowed the group to enter the Crown land and to demolish buildings upon it. It was held by the Lord of House that: ‘the Government acted voluntary on the agreement in the principle expressly made ‘subject to contract’ and therefore, not binding, would eventually be followed by the achievement of legal relationships in the form of grants and transfer of properties.’9 The principle of proprietaryestoppel was an issue that was quite controversial in this case. The agreement was not complete but since early possession was given to the Government, the marking ‘subject to contract’ it was evident that negotiations were still ongoing and the Government made some improvement to the flats hoping that negotiations would be concluded. Conclusion A contractual relationship must fulfill the two principles of offer and acceptance. Acceptance is a very important aspect in formation of a contract. Acceptance if not communicated can be deemed by way of conduct. A contract comes into effect when there is acceptance. The fisr rule of acceptance is that it should be final and unconditional. This means that the terms of the contract should also not be postponed where acceptance is to be made. The above past case laws have been able to clearly prove that acceptance should unconditional. The rulings in several cases have shown how the ‘subject to contract’ and subject to finance have been to make rulings regarding binding agreements. In the case ofPym and Campbell, it was ruled that a condition prior to acceptance made a contract binding. In Maheen v. Jones, it was proved that a condition existed before acceptance and based on the ‘subject to contract’, the conditions for acceptance made the contract not binding. The other cases also show the same. It is also shown that the estoppels principle may not apply in situations such as the case of Attorney General of Hong kong v. Humphrey state. Early possession of the property by the government made the government believed that negotiations were ongoing. However, subject to contract, acceptance was not fully exercised by Hamphrey since the terms of the contract were postponed to meet future formal agreement as negotiations continued. This implies that the general rule that acceptance is final and unconditional is not negotiable. Bibliography Case Laws Burke v. Dulaney, 153 U.S. 228, 14 S. Ct. 816, 38 L. Ed. 698 (1894). Ware v. Allen, 128 U.S. 590, 9 S. Ct. 174, 32 L. Ed. 563 (1888). SOUTHERN FIRE & CASUALTY COMPANY v. Teal, 287 F. Supp. 617 (D.S.C. 1968). Mayer v. Boston Metropolitan Airport, Inc., 244 N.E.2d 568, 355 Mass. 344 (1969) Meehan v. Jones, 149 C.L.R. 571 (1982). https://scholar.google.com/scholar_case?about=6726944693885425874&hl=en&as_sdt=2006&scfhb=1 Masters v. Cameron, 91 C.L.R. 353 (1954).https://scholar.google.com/scholar_case?about=12549772404123055390&q=masters+v+cameron&hl=en&as_sdt=2006 Att-Gen of Hong Kong v] Humphreys Estate, 1987 A.C. 114 (1987). https://scholar.google.com/scholar_case?about=14399183548747391403&q=Hong+kong+V.+Humphreys+estate&hl=en&as_sdt=2006 Articles Katz, Avery. "The strategic structure of offer and acceptance: game theory and the law of contract formation."Michigan Law Review (1990): 215-295. Internet sources http://www.4lawschool.com/contracts/pym.shtml http://netk.net.au/Contract/Meehan.asp http://netk.net.au/contract/masters.asp http://www.e-lawresources.co.uk/Scammell-and-Nephew-v-Ouston.php Read More