The Analysis of the Contract Law - Essay Example

Contract Law Examination By Due Q a) An offer is ceased to be effective in following ways: i. If an offer is not accepted within a reasonable time, it is terminated. The acceptance of such offer after the lapse of a reasonable time would not be a valid acceptance. The offeror reserves a right to revoke his offer at any time before it is accepted unless the offeror has made a promise to hold the offer open which is backed by a consideration. When an offer is revoked by the offeror in this manner, the offer ceases to be effective. ii. When an offeree refuses to accept an offer, the offer becomes ineffective. The offeree cannot accept an offer after his refusal. However, if the offeree asks for further details about the offer, the offer is not rejected and is still effective as seen in Stevenson v McLean. If the offeror makes the offer again, then the offeree can accept it. An offer also ceases to be effective when the offeree makes a counter offer to the original offeror. In Hyde v Wrench, it was held that a counter offer rejects the original offer. The offeror is not bound to accept a counter offer. However, if he accepts the counter offer, a fresh agreement is formed without any regard to the original offer. iii. Failure to fulfill a condition precedent to acceptance also terminates an offer. If the offeror has specified a definite mode of communication of acceptance which is not followed by the offeree, the offer ceases to be effective. In Manchester Diocesan Council of Education v. Commercial and General Investments Ltd, the courts ruled that an offer ceases to effective if the specified mode of communication of acceptance is not followed. iv. The law provides that death of either of the offeror or the offeree would terminate an offer automatically. Q.1 (b) An offeror has a right to revoke his offer at any time before its acceptance. For an offer and acceptance to be valid, effective communication is of paramount importance. An acceptance is not effective if it is not communicated to the offeror. In the given case, Ali sent a letter of acceptance of Yasmin’s offer to her but addressed it wrongly. Until the letter reaches Yasmin, Ali’s acceptance would not be effective as the acceptance would not have been communicated to Yasmin. Therefore, as long as the letter is in transit, Yasmin has a right to revoke her offer. The communication of revocation of offer is also very important. In this case, Yasmin notified Ali’s friend that she had revoked her offer. Assuming that Ali’s friend is a reliable third party, by the application of Dickinson v Dodds, Yasmin’s notice of revocation would be deemed to be sufficient and effective. After her revocation, she would not be bound to perform her promise when the letter of acceptance had reached her. An offeror is not bound to hold the offer open unless he has received some consideration from the offeree for such promise. Again by the application of Dickinson v Dodds, as Yasmin did not receive any consideration from Ali to hold her offer open, her expression of holding her offer open for seven days would make no difference. Q. 2 Condition According to McKendrick , a condition is an essential term that goes to the root of the contract. A breach of condition by the seller entitles the buyer to sue the seller for damages and treat the contract as repudiated. However, the buyer has a right to treat the breach of condition as a breach of warranty and sue for damages only. Conditions can be set expressly by both the parties. However, Sale of Goods Act, 1979 provides for some implied conditions in sections 13 and 14 which must be fulfilled. These conditions are: 1. There is an implied condition that the seller has a right to sell the goods that he is selling and he will pass a good title to the buyer; 2. Where the seller acts in the course business, there is an implied condition that the goods supplied would be of a merchantable quality; 3. Where there is a sale by description, there is an implied condition that the goods would correspond to the description; 4. Where there is a sale by sample, there is an implied condition that the bulk would correspond to the sample and that the buyer had a reasonable opportunity to check the goods; 5. Some implied conditions as to quality and fitness of goods are annexed to a contract of sale by usage. Warranty Sale of Goods Act, 1979 defines warranty as stipulation ‘collateral to the main purpose of the contract’. A breach of warranty entitles the buyer to sue for damages but he cannot treat the contract as repudiated. A breach of warranty causes some inconvenience to the buyer but does not kill the essence of the contract. Warranties can be set by the contracting parties. There are some implied warranties too. The buyer has a right to treat a breach of condition as a breach of warranty. Innominate terms Innominate term is such a term which cannot be defined either as a condition or a warranty. It has a hybrid nature and lays somewhere between the two terms. Whether a buyer is entitled to treat a contract as repudiated in case of breach of such term is determined after examining the consequences of the breach. If the consequences cause serious detriment to the purpose of the contract, the buyer is entitled to treat the contract as repudiated as seen in Cehave NV v Bremer Handelsgesellschaft mbH, The Hansa Nord. Otherwise, the buyer is not permitted to repudiate the contract as seen in Bunge Corporation (New York) v Tradax Export SA (Panama). Q. 3 Angela v Philip An offer when accepted becomes an agreement. If there is consideration for the contracting parties and there is an intention to create legal relations, the agreement becomes a contract. In the given case, Angela engaged Philip in November for the refurbishment of her office by the end of December for £3000. Angela must have offered Philip and he must have accepted. There is a contract between the two parties. Angela is bound to pay Philip £3000 when he finishes the job and Philip is bound to finish the job by the end of December. If any one of the parties fails to perform its duty, the other is entitled to enforce the contract through court. Philip notified Angela after the agreement was made that due to his other engagements, he would not be able to refurbish her office by the end of June. Angela offered him £400 if he would finish the job by the end of June. This a term which is attempted to be annexed to the contract after the agreement is made. In Dale v See, the courts held that when an agreement is made, neither of the contracting parties has a right to impose new conditions on the contract without the consent of the other. When Peter communicated his difficulty to Angela, the agreement was already made but the contract had not been executed. The condition of extra payment was imposed with the consent of Angela and not without her knowledge. Therefore, Angela is bound to pay the extra £400 to Philip as he has finished the job within the stipulated time. Angela’s defense for non-payment would not hold. Angela v Colleen The definition of offer includes that an offer is valid if a party agrees to do something for the offeree if the offeree agrees to abstain from doing something. The promise of abstinence is sufficient consideration for the offeror and the agreement would be enforceable by law. While Angela’s office was in the process of refurbishment, Colleen, a solicitor next door and Angela’s cousin, complained of noise made by worker. Angela promised to pay her £80 if she stopped complaining. She agreed. Colleen’s promise is about abstinence from complaining. It is a valid and sufficient consideration for the payment of £80 because Colleen had agreed to give up a legal right. In this case, there is a valid offer, a valid acceptance; consideration for both parties, and the agreement thus made is free of duress, undue influence and misrepresentation. The fact that Colleen and Angela are cousins will have no effect. As long as there is an intention to create legal relations, the agreement is a contract enforceable by law despite the relationship of parties outside the contract. Such a contract could have been made even if the parties were not each other’s cousins. In Merritt v Merritt, it was ruled that despite the existence of a conjugal relation, the agreement between a husband and wife was enforceable by law because there was an intention to create relations. Angela is bound to pay the promised amount of £80 to Colleen as she has fulfilled her promise. Angela v John Every promise or set of promises become an agreement when they form consideration for each other. For the promises to become an agreement, they must be reciprocal. In the given case, Angela promised John to pay £100 towards his travel expenses and ‘hoped’ that one day, he would think of applying for a paid post with her firm. He agreed to think about it. There are promises but they are not reciprocal. Angela just expressed her hopes that John would apply in her office one day. She did not promise to pay £100 for John’s promise to think about applying for a paid post in her firm. Angela’s promise to pay John £100 was without consideration. John’s promise was not elicited by Angela and it did not reciprocate her promise to pay £100. Therefore, it is just a domestic agreement which lacks consideration and an intention to create legal relations and hence not enforceable by law. It depends solely on Angela’s discretion whether she wants to pay John £100 or not. According to the facts, she has refused to pay this amount. Therefore, Angela’s defense for non-payment would hold in this case. References 1. Bunge Corp. New York v Tradax Export S.A. Panama [1981] 1 WLR 711. 2. Cehave N.V. v Bremer Handelgesellschaft m.b.H. (The Hansa Nord) [1976] QB 44 Court of Appeal. 3. Dale v. See [1889] 18 A. 306. 4. Dickinson v. Dodds [1876], 2 Ch. D. 463 (C.A.). 5. Hyde v Wrench [1840] EWHC Ch J90. 6. Manchester Diocesan Council of Education v. Commercial and General Investments Ltd [1970] 1 W.L.R. 241, [1969] 3 All E.R. 1593 (Ch.D.). 7. Merritt v Merritt [1970] 1 WLR 1211. 8. Sale of Goods Act, 1979. (UK) s 13. 9. Sale of Goods Act, 1979. (UK) s 14. 10. Stevenson, Jacques & Co v. McLean [1880] 5 QBD 346. Read More