Business Law and Law of Contract - Essay Example

work In Cheryl’s situation, the main legal issues that have to be clarified are the following Should Cheryl’s advertisement in the local newspaper about her selling the two black ford transit minibuses for £15,000 be considered as an offer to enter into a contract? 2. If yes, does she have a contract with any of the three parties that have expressed their willingness to accept her offer? It is a fact that Cheryl wanted to sell her two minibuses and, as a result, she placed an advertisement in a local newspaper, which is read by the whole community. According to Paul Richards (2007, 16) “An offer is an expression of a willingness to contract on certain terms made with the intention that a binding agreement will exist once the offer is accepted.”1 Thus, resulting from the brief definition of an offer it is possible to assume that Cheryl’s advertisement represents an offer to contract. Her offer was made in writing, as a published advertisement in a local newspaper. Moreover, her offer was published in a local newspaper, read by a large group of persons. Cheryl’s offer is unilateral as she “promised” in her advertisement to sell her minibuses to anyone who will pay £15,000. Therefore, Cheryl made a legal conditional promise. On the other hand, there is the possibility, as it happened in Cheryl’s case, that more than one person will become interested in her offer and will be willing to accept it. Thus, it is necessary to clarify, judging by each person’s actions, who has the right to enter into a contract with Cheryl. The general rule of acceptance of an offer resulted from the case of Holwell Securities V Hughes 1974, where it was stated that the acceptance of one’s offer must be communicated to the offeror by the person that is accepting the offer in any possible way. Of course, the manifestation of the acceptance must be exteriorized, so that it is understood by the offeror. Moreover, the manifestation of accepting the offer must be linked to the offer itself and the offeror must receive the acceptance. There are several manners of accepting an offer: in written form, orally or by mail. In order to understand if Cheryl has a contract with any of the accepting parties, their manners of acceptance must be analyzed. The first person – Britney – told Cheryl she would let her know within the following week whether or not she would purchase the minibuses. The following week Britney accepted the purchase price of the black minibuses for £15,000 by speaking to Cheryl directly. In the meantime, Cheryl made an offer via an e-mail for a reduced price of £12,000 to her friend Amy, who agrees to purchase the minibuses on the condition that they are re-sprayed white. So, Amy made a cross offer, stating that she would accept Cheryl’s offer if this condition was respected. In the case of Tinn v Hoffmann & Co (1873) 29 LT 271 it was shown that cross offers do not lead to a binding contract.2 Therefore, Cheryl does not have a contract with Amy, as the latter did not accept the offer of her friend, but made a cross offer, stating that she would accept the offer if her condition was fulfilled. In legal terms, Amy’s answer is regarded as an offer, too. She promised Cheryl, or, in other words, she offered to Cheryl, to enter into a contract with her if the minibuses were painted in white. Considering the arguments stated above, there is no contract between Cheryl and Amy. In the case of Manchester Diocesan Council for Education v Commercial Investments Ltd [1969] 3 All ER 1593 it was stated by J. Buckley that by law, the offer must be accepted in a reasonable time, yet, no legal provisions state the exact period of time.3 Therefore, the term “reasonable” should be assessed based on the circumstances and the expectations both of the offeror and the offeree. Of course, it is expected that a certain degree of uncertainty would appear and lead to un-equivalent meaning of “reasonable”. In the case of Britney, she told Cheryl she would let her know within the following week whether or not she would purchase the minibuses. This means that Britney put Cheryl on hold for a week, with no guarantee that she would finally accept the offer. Therefore, there is no binding contract between Cheryl and Britney. A contract would have been formed a week later, starting with the moment when Britney informed Cheryl that she accepts her offer. Moreover, there is no legal obligation for the offeror to keep his/her offer open for a specified period of time. Cheryl had the right to revoke her offer from Britney anytime during the week, but only until the moment of acceptance. In the case of Routledge v Grant (1828) 4 Bing 653 it was stated that the offeror could be legally held to keep his offer open only by signing a separate contract with the offeree, with the appropriate provisions4. In Cheryl’s case, she did not sign any contract with Britney that would have obliged her to keep her offer open for the latter for any period of time. However, Cheryl did not inform Britney of a possible revocation of her offer, and, in case she refused to enter into a contract with Britney, after the latter’s acceptance, this might be regarded as a breach of contract. In the meantime, another person – Mohammed has posted his acceptance to buy the minibuses for £15,000 to Cheryl. Following the “general mailbox rule”, the acceptance takes place as soon as it is posted by mail, and the letter gets out of the control of the offeree and is placed into the control of the Post Office. In Mohammed’s case, it should be sought out if he placed his letter into the post-box or he handed it to the postman. This is important, as in order for the acceptance to be effective, the letter must be placed directly into the post-box.5 On the other hand, Cheryl did not expressly mention in her advertisement that a postal acceptance is sufficient for the contract to be started. Moreover, Paul Richards (2007, 40) states that “a letter of acceptance posted but not received by the offeror was insufficient to form a contract.”6 Therefore, if Cheryl did not receive Mohammed’s letter, legally, she does not know about his acceptance and she is not obliged to enter into a contract with him. The situation would be different if the offer was made personally to Mohammed, in which case Cheryl would know for sure the identity of the person she wants to enter into a contract with and she would be attentive at his conduct, in order to understand if he accepts her offer or rejects it. But, the offer was made to an unidentified group of persons. In the case of Henthorn v Fraser [1892] 2 Ch. 27 (C.A. 1892) it was concluded that the postal rule shall be applied only when its usage is reasonable for the offeree7. In Mohammed’s case, considering all the available ways of communication, it would have been reasonable to telephone Cheryl, or use any other way of instantaneous communication, making his acceptance known to her in a matter of seconds. Moreover, considering the facts stated above and the fact that by refusing to enter into a contract with Britney, Cheryl’s actions may be considered as breaches of the contract, I would advise Cheryl the following: 1. In case she did not receive the letter from Mohammed until Britney accepted her offer, Cheryl should enter into a contract with Britney in order to avoid further legal issues with the latter. In this case, Mohammed’s acceptance would have no legal power, as the offer is automatically closed by its acceptance on behalf of Britney. This is the consequence of the fact that the acceptance of an offer terminates the offer for the other parties. 2. In case Cheryl did receive Mohammed’s letter of acceptance, she should immediately inform Britney on the subject of the revocation of her offer. This way, further legal problems with Britney could be avoided, as she would not have any legal ground to consider Cheryl’s revocation as a breach of contract. In conclusion, considering the facts stated above, depending on the moment of receipt of Mohammed’s acceptance, Cheryl would have a contract with Mohammed or with Britney. Number of words: 1499 Works cited: 1. Richards, Paul. 2007. Law of Contract.8th Edition. England. Edinburgh Gate. 2. Waddams, S.M., et. al. 2005. Cases and Materials on Contracts. 3rd Edition. Toronto: Edmond Montgomery Publications Limited. 3. Itutorials. Offer and Acceptance. Available at http://www.itutorials.co.uk/offer-and-acceptance.php. Accessed at 15 Jan 2009. 4. William S. Boyd School of Law. Henthorn v Fraser [1892] 2 Ch. 27 (C.A. 1892). Available at http://www.law.unlv.edu/faculty/rowley/Henthorn.pdf. Accessed at 15 Jan 2009. Read More