Basic Elements of a Valid Contract - Essay Example

Question For a contact to exist between Taite, Lewis and Co Whizz PC Ltd the basic element of a valid contract have to be present. They are: OfferAcceptance and Consideration. Question2 An intention to enter into legal relation can be add as a fourth, although parties to contract do not consciously contemplate this element even when entering into a contract. Very often what one part regards as a clear -cut case of offer or acceptance is firmly rejected by the other part that claims that it is something else. Hence, related factors like invitation to treat, counter- offers, cross-offer, conditional acceptance, “provisional” agreement, acceptance in ignorance have all developed together with the study of what constitute an offer and acceptance respectively. On the 22 January, Whizz PC Ltd sent to the firm of Taite, Lewis and Co its brochure, which gave information about the models, including specification, together with a price list of its product. It was thus making an offer of its product to firm of Taite, Lewis and Co, at a particular price each model specification is also spelt out in the brochure. Sagay, I.E., (1993) defined an offer in his book, Nigerian of contract as “… a definite undertaking or promise made by one part with the intention that it shall become binding on the party making it as soon as it is accepted by the party to whom it is addressed”. Whizz PC Ltd becomes the offeror and Taite, Lewis and Co becomes the offeree. A contract comes into existence only between the offeror and the person or persons responding to the offer and accepting it. This principle was declared in the famous case of Carbolic Smoke Ball Co v. Carllil1 by brown, L.J., is now expressed by stating that an offer can be made not only to an individual or group of persons, but also to the whole world. In the case2, defendant had argued that no contract could arise from their advertisement because you cannot make a contract with the whole world. This argument the court demolished by stating as follows: It was also said that contract is made with the whole world – that is, with every body; and that you can not contract with every body. It is not a contract made with all the world. That is fallacy of the argument. It is an offer made to all the world; and should not an offer be made to all the world which is ripen to contract with every body who come forward and performs the condition? It is an offer to liable to any one whom, before it is retracted, performs condition, and although the offer is made to the world the contract ids made with that limited portion of the public who come forward and perform the condition on the faith of the advertisement. For an offer capable of becoming binding on acceptance, it must be definitely clear and final. If it is merely a preliminary move in negotiation which may lead to a contract, it not an offer but an invitation to treat. This was the case when Whizz PC Ltd sent its brochure to the Taite, Lewis and Co firm. The offeror must not “merely have been feeling his way towards an agreement not merely initiating negotiations from which an agreement might or might not in time result”3. Question 3 On 27 of January, the partners of Taite, Lewis and Co wrote to whizz PC ltd placing an order for 20 of the whiz 4000 PCs stipulating that the price of 500 Pounds must include installation and a 24 months onsite repair/troubleshooting service. The firm of Taite, Lewis and Co, stated that it will pay for the supply if machines 60 days after the date of the delivery. In the invitation of treat sent by Whizz PC Ltd did not specify installation and onsite repair/troubleshooting as part of the 500 pounds cost of each machine. The payment methods were not even specified. Thus the order made by Taite, Lewis and Co will be seen as a counter offer to the offer made by Whizz Ltd. In Hyde v. Wrench4 the defendant on June 6 made an offer to sale an estate to the plaintiff for 1000 pounds. On Jun 8, the plaintiff replied with an offer to buy the estate for 950 pounds. The defendant rejected this offer on June 27. 0n June 29, the plaintiff purported to accept the defendant’s original offer of the estate for 1,000 pounds, the defendant rejected this and the plaintiff brought an action for specific performance. It was held that the original offer was no longer open to the plaintiff accept. By “accepting to buy the estate for 950 pounds instead of the 1000 pounds for which it was offered, the plaintiff rejected the original offer and was in effect making a counter-offer. Therefore, there was no obligation whatsoever between the parties. In putting another offer via their standard forms to supply 20 machines at 500 pounds, to include installation and 24month offsite repair/troubleshooting (instead of onsite as requested by the firm. Whizz PC Ltd have put a new offer to satisfying the counter-offer made by the firm. But Taite, Lewis and Co will want an onsite repair/troubleshooting and so write back demanding for that from Whizz PC Ltd. In response, Whizz made another offer of each machine selling for 545 pounds to include installation and 24 months on site repair/troubleshooting. A 30 pounds discount has also been given from the normal change for such services, whiz requires a confirmation within 7 days. Whilst Taite, Lewis and Co write a confirmation on 7 February, Whizz received it on 10 October. This is an 8month delay. The firm could sue Whizz PC Ltd for breach of contract for not executing their order after three months. Whiz could claim not to have received a confirmation of the order. Thus it has not received an acceptance of the offer it made. But the firm can tender a copy of the confirmation order it made to shoe that it indeed confirmed the order. Whiz Pc Ltd will be sued for breach of contract. Until they get the confirmation on 10 October they may be liable for breach of contract and after receipt of the confirmation may decide to sue the postal service. Question 4 There was no contract (No acceptance) and the only thing that existed counter-offer since the confirmation of order did not get to Whizz PC Ltd on time there was no contract before 10 October. This is from whiz Pc Ltd’s perspective. From the perspective of Taite, Lewis & Co, there exists a contract at 545 pounds per machine and it will be installed and onsite repair/trouble shooting for 24 months will be carried out. Not implementing within 3 months signify breach of contract by Whizz and the firm could sue. It is arguable however that there was contract as Whizz PC Ltd did not receive a confirmation order which is acceptance from Taite, Lewis & Co within the stipulated 7 days from submission of a new offer on 3 February. In other worlds there was no meeting of minds or consensus ad idum. In Tinn V. Hoffman & Co5 the defendants wrote to the plaintiff on Novemebr 28, 1871, offering to sell him 800 tons of iron at 69 shilling per ton. On the same day the plaintiff wrote to the defendant offering to buy 800 tons at 69 shilling per ton, the letters crossed the post. The plaintiff argued that there was a contract for 800 tons at 69 shilling per ton. It was held that there was no contract. According to Salmond and Williams6 “Agreement invites the apparent meeting of the minds of the parties, an apparent union of wills. How can thus be a apparent union of wills when the party at the moment when he declares his, can have bound the declaration to the will of the other”. If the confirmation got to Whizz Pc Ltd, the terms of the contract in terms of payment will be that each machines will be bought at 545 pound, and 20 machines will be bought. 50% will be paid within 7 days of delivery and 50 within 3 days of delivery. Question 5 Once the partners of Taite, Lewis and Co have sent an acceptance of offer, there exists a contract. Thus pulling out of the contract constitutes a breach of contract and they are thus liable. With post, once the acceptance is posted, the acceptance takes effect. Therefore a contract comes into existence the moment the letter of acceptance is posted. This rule was laid down by Lord Ellensborough is 1818 in the famous cases of Adams v. Lindsell7. By a letter dated September 2, 1817, the defendants, wool merchants, offered to sell a quantity of wool to the plaintiffs, wool manufacturers, and required a reply to post. The defendants misdirected their letter and it did not reach the plaintiff until the evening of September 5. That same night the plaintiffs posted a letter of acceptance which reached the defendants on September 9, if the letter containing the offer had been properly directed, an answer ought to have been received by September 7. Meanwhile on September 8, not having receives a reply from the plaintiff the defendant sold the wool to another person. The plaintiffs sued for breach of contract. It was argued that there was no contract until the letter was received and by that time the wool was actually sold to a third party. It was held that in a contract concluded by post, the contract comes into existence the moment the letter of acceptance was posted. It thus implies that the firm will be breaching the contract if it cancels the contract, and are liable for breach of contract. Reference 1. Fifoot, Cheshire and Fifoot, Law of Contract, 10th edn. (London: Butterworth, 1981) 2. All England law reports, London 3. Margaret Cavendish, The contract (Newcastle, Kessinger Publishing, 1999) 4. Sagay, I.E., Nigerian Law of Contracts (Ibadan, Spectrum Books,1993) Read More