Advertisement of Bowford University - Essay Example

Question As counsel for Dustbusters, I will advice my client not to go after Bowford for lack of legal grounds. There was no breach of contract in this case because the parties never had as contract to begin with. For a contract to exist there must be a meeting of the minds between the parties involved. An offer must be made, such offer must be expressly accepted by the other party and the acceptance must be conveyed in unequivocal terms. The fact that my client was able to tender its bid within the time specified and that it tendered the lowest bid does not give it any right over contract. To give us a clear understanding of why this is so, let us take a look at the important issues presented in this case. There are two important issues that are involved in this case namely, (a) whether or not Bowford University is bound by its advertisement and (b) whether or not Dustbusters is entitled to the contract considering that it placed its bid within the prescribed time and that its bid proved to be the lowest. With regards to the first issue at bar, we can clearly see that Bowford University cannot be bound by its advertisement. The decision of the count in the case of Partridge v Crittenden 1 and in the case of Harvey v. Facey2 explicitly stated that a seller should not be bound by the advertisement or to contract the services of the bidder. An advertisement is not a direct offer but rather an invitation to treat or an invitation to negotiate. By nature, an invitation to treat includes the display of goods, advertisement and direct invitation for competitive bids (A Burrows, 2009). Unless these acts are accompanied by express statements or promise to sell or to contract services, the person or entity that placed the advertisement or displays the goods is not bound to sell or contract the services of those who responded to the invitation. According to the case of Spencer v Harding3, an offer inviting tenders does “not amount to an offer capable of acceptance to sell”. Since the advertisement of Bowford University did not clearly stated that they are going to contract the services of the bidders, the bidders cannot compel Bowford to hire them. Clearly, Bowford is only inviting offers which they can either accept or reject as they see fit. Given this scenario, even if Dusbusters did submit their offer within the time stated in the advertisement, that is not an assurance that they will win the contract. When can an advertisement be considered as binding on the invitor? An advertisement can be held as binding on the invitor when such advertisement clearly states that the invitor will sell goods or hire the services of the bidder who meets the specified qualification. For instance, if the advertisement clearly states that Bowford University will contract the services of the lowest bidder, it can be bound by its advertisement. As enunciated by the court in the case of Harvela Investments Ltd v Royal Trust of Canada (CI) Ltd4, where the invitor clearly stated in its advertisement that it will accept the higher tender, the invitor is then bound to honor such statement and the highest bidder can have legal recourse against the invitor if the invitor refuse to honor the promise made in the advertisement. In the same manner, a general statement in the advertisement which unequivocally promised the performance of an act upon the fulfillment of an event can be held as binding against the one who made the advertisement. In the case of Carlill v Carbolic Smoke Ball company5, the court ruled that the company is legally bound to make good its promise to “pay anyone who used their product in the prescribed manner and caught influenza”, the amount £100. Note that the promise here is very clear and unequivocal thus it becomes legally binding. When it comes to the second issue in our case, Dustbusters cannot compel Bowford University to accept its bid and award the contract to it even if it is the lowest bidder. Note that Bowford University did not make a promise in the advertisement to award the contract to the lowest bidder. According to Binghan LJ in his judgement in the case of Blackpool & Fylde Aero Club v Blackpool Borough Council6, a general tendering procedure wherein the invitor did not make any explicit promises is always favorable to the invitor. Since the invitor has control over the procedure, he or she can invite as many tenders from as many parties possible without being legally bound to award the contract to any of these individuals or organizations. He further reiterated that the tendering process is a complex procedure and that it may involve cost but this does not create any legal ties between the invitor and the ones who made the tender. As it is, the invitor need not give any justification when accepting or rejecting the offers made to it. On the other hand, if the invitor did not make a general invitation to bid but rather sought only a few individuals or companies known to it to tender, the outcome will be very different. According to the case of Blackpool & Fylde Aero Club v Blackpool Borough Council7, the invitees who submitted tender that meet the requirements of the invitor will not only be entitled to “mere expectation but of contractual right”. Note that the invitation made to selected bidders constitutes a quasi promise to contract, thus, the invitor is legally bound to award the contract to the invited bidder who fulfilled the requirements (Blackpool & Fylde Aero Club v Blackpool Borough Council8. Can Dustbuster compel Bowford University to consider its bid considering the fact that it did submits its documents five minutes before the deadline? Based on the decision of the court in the case of White and Carter (Councils) Ltd. V McGregor9, Bowford University has the contractual duty to consider the tender of Dustbuster since its advertisement clearly said that all bids that are submitted within a specific period of time will be considered. However, the contractual obligation ends there and Dusbuster cannot compel Bowford University to award the contract to it even if Dustbuster is the lowest bidder. Again, as decided by the court in the case of Partridge v Crittenden10 and in the case of Harvey v. Facey11, in the absence of any specific promise to contract, the invitor cannot be held legally bound by the advertisement. Question 2 Dustbusters is contractually bound to provide cleaning services to the Council. The facts of this case are very specific and these facts have binding effects on the parties involved. To have a clear perspective of what the legalities involved in this case, let us get down the basic issues involved. There three essential issues involved in this case namely, (a) whether or not the invitation to tender created a contractual relationship between the parties, (b) whether or not there was a valid acceptance of the officer and (c) whether or not Dusbusters can retract from its over without creating a breach of contract. On the first issue, the invitation of the Council can be construed as an offer. In the case at bar, the Local Council specifically asked Dustbusters for a quote and there was no clear showing this case that other bidders were also asked by the Council for tender. Technically, the decision of the case of Spencer v Harding12 which state that invitors are not bound by their advertisements is not applicable in this case. The facts of this case clearly said that the Council sought the services of Dusbusters so therefore, there was not general advertisement. As it is, the act of the Council can only be construed as an offer and not just a mere invitation to treat. When Dustbusters submitted its quote using its standard forms, Dusbusters impliedly accepted the offer to bid. Note that in the case of Blackpool & Fylde Aero Club v Blackpool Borough Council13, the court rules that tenders and requests for tenders that imply collateral contracts are deemed binding on the parties involved. Technically, there was an implied contract created between the parties, that is, the Council binds itself to consider the bid of Dustbusters while Dusbusters impliedly bind itself to deliver services to the Council if the Council agrees to its terms when it submitted its quote and counter offer upon the request of the Council. With regards to the second issue regarding acceptance, at first glance we may be tempted to say that there was no valid acceptable since the parties never really read the letters until later. Note that the Council posted a letter confirming they were granting Dustbusters Ltd the contract at the price of £40 per hour on Wednesday the 30th but the letter was not delivered until Monday because there was a strike at the post office. The Council also sent the same confirmation by email at 7.30pm on Thursday but due to problems with Dustbusters Ltd’s computer system, the email was not available to read until Friday 2.30 pm. Yet, despite the problems with communication, we have to say that there was a valid acceptance of the offer and therefore, a contractual obligation exists. Why? The postal rule applies to this case. According to the Court in the case of Byrne v Van Tienhoven14, the acceptance of the offer is deemed complete once the letter of acceptance has been posted. This means that even if the letter is still in transit and is yet to be received by the offeror, the offer is already deemed accepted. The court even went so far as to say in this case that even if the letter of acceptance is lost while in transit, the offer is still deemed accepted. When a letter is deemed “posted”? Based on the decision of the Court in the case of Re London & Northern Bank15, a letter is posted when it is handed over to the post office or has been given to an agent of the post office to deliver. In other words, where the Council handed the letter of acceptance to the post office or its agents, the contractual relationship between the Council and Dustbusters is deemed perfected. Since there is now a valid contract between the parties, the Council may now compel Dustbusters to deliver the services t promised. With regards to the copy of the letter of acceptance which was emailed by the Council to Dustbusters, we can safely say that the letter arrived within the time specified. Despite the fact that the posting rule does not apply to instantaneous communications (see Entores Ltd v Miles Far East Corporation16, still, the email was read by Dustbusters within the specified time. Note that Dustbuster specifically stated in its letter to the Council that it needs the reply of the Council by Friday and it received the letter from the Council on Friday 2.30 pm. With regards to the third issue, Dustbusters may not retract its offer without committing a breach of contract. Why? First, there was already a valid acceptance of its offer by the Council when the council posted the letter at the post office. As ruled by the Court in the case of Byrne v Van Tienhoven17, the offer is deemed accepted when the letter of acceptance was posted. To quote Lord Herschell’s argument in the case of Henthorn v Fraser18 "Where the circumstances are such that it must have been within the contemplation of the parties that, according to ordinary usage of mankind, the post must be used as a means of communicating the acceptance of an offer, the acceptance is complete as soon as it is posted." In the case of Henthorn v Fraser19, the defendant withdraw it offer ever receiving the letter of acceptance but since the letter was posted before the withdrawal was made, the court ruled that a contractual relationship exist between the parties. In our case, the withdrawal of the offer was made on Thursday while the letter of acceptance was posted on Wednesday. As it is, there was already a valid acceptance before the withdrawal was made. The fact that the letter of withdrawal was only received by the Council on Monday is also significant in this case. According to the case of Entores Ltd v Miles Far East Corporation20, the postal rule does not apply to instant communications such as telex or fax. Instant communications need to be received actually received by the parties before its content can be held as binding. Therefore, Dustbusters cannot claim that it sent the letter before they received the acceptance letter. Again, let us remember that the point of reckoning here when it comes to the validity of the contractual obligation is at the time of acceptance of the offer. In this case, valid acceptance of the office happened on Wednesday when the Council posted their letter. Can Dustbusters argue that they only got knew about the acceptance of the council when they received the email on Friday? No. The rule of acceptance by post is very clear so even if Dustbusters did not receive the email at all, there was still a valid acceptance by mail. Since there offer was already accepted, whichever way it goes, the contract is still deemed perfected and Dustbusters can now be held liable for breach of contract if it fails to deliver cleaning services to the council. Now, if the Council did not send the letter through the post office and only sent an email accepting the offer, the scenario would still be the same. Why? The facts of the case clearly said that the letter of withdrawal which was sent by Dustbusters through fax was only received by the Council on Monday. Since instant communications are only deemed as binding on the parties when they are received, the withdrawal of Dusbusters has not been made in a timely manner. Another factor that can make Dusbuster liable to the Council is the fact it asked the council to convey its acceptance of the tender not later than Friday, October 2. With these words, Dusbusters created a contractual obligation to wait for the time to lapse. In applying the decision of the case of Blackpool Borough Council21, to our case, the Council does not have only “mere expectation but of contractual right” arising from the terms specified by Dustbusters. Since the Council has a contractual right with regards to the timeframe set by Dustbusters, it may enforce such right and compel Dustbusters to honor the timeframe. Can Dustbusters compel the Council to reject its offer? No. The case of Felthouse v Bindley22 clearly states that one “cannot impose an obligation to reject one’s offer.” Since Dustbusters is contractually bound to deliver services to the Council, it has no choice but to do the same. In case Dustbusters refuse to fulfill its end of the contract, the Council can file a suit against Dustbusters. Question 3 There are two legal scenarios that may arise in this case. First, if the parties did not specifically agree to create a new contract, Dusbusters cannot be compelled to give the extra sums to Quincy Construction Ltd. Second, if a new contract was expressly or impliedly entered into by the parties, such new agreement involves the giving of the additional sum of money, then Dusbusters may be held as contractually liable to give the same. In the first scenario, Dustbusters do not have any legal obligation to give the extra money to Quincy Construction Ltd. According to the Count in the case of Stilk v Myrick23, where a person or entity is already bound to do a specific duty under a valid and subsisting contract, that duty cannot be considered as basis for consideration of a new contract. In the case at bar, Dusbusters already hired the services of Quincy Construction to do the renovations. The parties already agreed the price of the construction and it was just unfortunately that Quincy made a huge mistake in its pricing. Since Dustbusters was not at fault, then there is no need for it to bear the additional cost. Yes, the whole idea may seem quite unfair but then again, the law is the law. Can Quincy Construction Ltd invoke the doctrine of promissory estoppel against Dusbusters? No, it cannot. According to the case of Central London Property Trust Ltd v High Trees House Ltd24, for promissory estoppel to occur, there must be an unequivocal promise through words or actions, there must be a clear showing that a change in the position of the promisee happened because of the promise made and that inequity will happen if the promisor will not fulfill such promise. In this case, although there was an unequivocal promise to give money, there was not evident change in the position of the promisee because of such promise. The promise to give the extra £1000 to Quincy Construction was only made after the renovation was completed so it could not have affected the fulfilment of the contract. When it comes to the issue of inequity, the promise was made after the construction as a gratuitous gesture on the part of Dustbusters so equity is not an issue in this case. In the second scenario where the parties entered into an implied contract to give additional sum of money, Dustbusters can be held liable to give the additional £1000 to Quincy Construction. According to the Count in the case of Williams v Roffey Bros & Nicholls (Contractors) Ltd25, a varying contract may give rise to additional consideration especially if “practical benefits” are involved. The court ruled in this case that a contract can be legitimately varied if the following conditions are met (a) a valid contract is in effect, (b) there is a compelling reason why the contract cannot be fulfilled as it is, (c) one of the parties promised the other more compensation if the subject of the contract is delivered on time, (d) that the party who made the promise benefited or was able to avoid damages because of the promise made and (e) no economic duress or fraud was involved in the transaction. The facts of our case more or less satisfy the requirements set under the case of Williams v Roffey Bros & Nicholls (Contractors) Ltd26. Note that there is a valid contract between the parties and the consideration for that contract is too small compared to the actual cost. Furthermore, Dustbusters promised to give additional compensation to Quincy Construction if it finishes the renovation in time. Because Quincy Construction finished the construction on time, Dustbusters was able to enjoy practical benefits. Given this situation, we can safely say that a varying contract exists between the parties and that Dusbusters is contractually liable to give the extra sum of money as part of the consideration. Note that in the case of Watkins & Son Inc. v Carrig27 the court ruled that an oral promise to give more money in connection with an existing contract is enforceable. Bibliography Books 1. A Burrows, ( 2009) A Casebook on Contract 2nd edn Hart, Oxford 2. Jill Poole, (2006) Casebook on Contract Law 8th Ed., Oxford University Press 3. Ewan McKendrick, (2005) Contract Law - Text, Cases and Materials Oxford Table of Cases 1. Blackpool & Fylde Aero Club v Blackpool Borough Council [1990] 1 WLR 1195 2. Byrne v Van Tienhoven (1880) 5 CPD 344 3. Carlill v Carbolic Smoke Ball company (1893) 1 Q 256 4. Central London Property Trust Ltd v High Trees House Ltd (1947) K.B. 130 5. Entores Ltd v Miles Far East Corporation (1955) 2 QB 327) 6. Felthouse v Bindley (1862) EWHC CO J 35 7. Harvela Investments Ltd v Royal Trust of Canada (CI) Ltd (1986) AC 207 8. Harvey v. Facey, [1893] AC 552 9. Henthorn v Fraser [1892] 2 Ch 27 10. Partridge v Crittenden [1968] 1 WLR 1204 11. Re London & Northern Bank (1900) 1 Ch 220 12. Spencer v Harding (1870) LR 5 CP 561 13. Stilk v Myrick (1809) EWHC KB J58 14. White and Carter (Councils) Ltd. V McGregor [1962] AC 413 at 430 A 15. Williams v Roffey Bros & Nicholls (Contractors) Ltd [1991] 1 QB 1 Read More