Issue
The issue is to identify whether a valid contract has been formed between Bob and Mike, Tom, Steve and Mary or not.
In order to establish a contractual relationship there must be an offer followed by an acceptance (Rakoff, 2016, p. 32). The acceptance which is followed by the offer must be totally complying with the provisions of the offer. In case additional provisions are incorporated into an acceptance it can no longer be regarded as acceptance in law. In Hyde v Wrench (1840) EWHC Ch J90 the court had to determine whether a contract was formed between the plaintiff and the defendant or not. Wrench in this case had made an offer to sell his house to Hyde for £1200 but the offer was rejected. Wrench made a fresh offer to sell the house at 1000 but Hyde in return made a counter offer of 950. The counter offer was rejected by wrench and Hyde made a fresh offer of 1000. However Wrench rejected the offer and Hyde claimed breach of contract in court.
The court ruled that an incomplete acceptance cannot be regarded as a lawful acceptance and once an offer has been rejected it cannot be accepted again by the offeree unless the offeror makes a fresh offer.
When a party accepts an offer the acceptance has to be brought to the knowledge of the offeree. However according the postal rule of acceptance the offer is deemed to be accepted as soon as the offeree posts the letter of acceptance and the letter goes out of his control (McKendrick, 2014, p. 114). In the case of Adams v Lindsell (1818) 1 B & Ald 681 the postal rule of acceptance had been established. The concept was also used in the case of Byrne v Van Tienhoven (1880) LR 5 CPD 344 and has since become a common law. In Adams V Lindsell the defendant had made an offer to the plaintiff in relation to the sale of wool. The acceptance posted by the plaintiff did not reach the defendant within the specified time of the offer as the letter got misdirected. As the defendant did not receive the letter they sold the goods to a third party. The court in order to abolish uncertainty from a contract ruled that the offer was accepted the moment the letter was posted.
When an offer has not been accepted by the offeree than the rejection is communicated to the offeror in an expressed or implied for the offer ceases to exist. This concept of common law was provided through the case of Hyde v Wrench the facts of which have been discussed above.
A contract cannot solely be formed based on a valid offer and acceptance. A lawful consideration is also needed to form a contract along with offer and acceptance. As a general rule a past consideration cannot be regarded as good consideration in contract law (Hillman, 2013, p. 132). A past consideration arises when the promise has already been performed before parties get into a contract. The concept was first provided in the case of Roscorla v Thomas (1842) 114 ER 496 where the court ruled that a party cannot claim damages based on promises which it had performed prior to the contract. The only exception to this rule was given by the case of Pao On v Lau Yiu Long (1980) 3 All ER 65 where the court ruled that if the act was done based on the request of the promisor than the act is a valid consideration.
Law
In the case of L’Estrange v F Graucob Ltd (1934) 2 KB 394 the court ruled that even if a person did not have intention to get into a contract he is bound to do so the contract is in written form and has been signed by him. The only defense which a person can rely on to escape the contract is misrepresentation or fraud by the other party in relation to the contract.
According to the first scenario Mike had made an offer to purchase computers from Bob at the rate of $300 per computer inclusive of GST. The offer was not accepted by Bob who had demanded a price of $300 per computer exclusive of GST. Bob had latter expressed his intention to accept the initial offer but by that time the offer had already ceased. There was no contract between them as the terms of the offer was not completely agreed. The situation is very similar to the circumstances in the case of Hyde v Wrench as discussed above where the plaintiff could not be successful in his case. Similarly bob would also not be able to be successful if he wants to claim against the refusal of Mike to purchase the computers.
Referring to the second scenario the postal rule as discussed above in the case of Adam v Lindsell and the rule in relation to rejection of an offer as provided in the case of Hyde v Wrench would be the most appropriate rules to address the issue. In the scenario an offer was made by Bob which was accepted by Tom. The offer was accepted through post by tom the moment the post was sent the offer was accepted according to the postal rule. An offer can only be revoked before it has been accepted as provided in Hyde v Wrench. Thus Bob is liable to purchase the goods from Tom.
The third scenario is clearly in relation to past consideration. As Steve has taken care of Bob’s cat before Bob promised him to give the computer Steve has no right to claim against Bob according to the case of Roscorla v Thomas. Bob had not requested Steve to take care of his cat in order to get the computer so Steve cannot avail the exception ruled in the case of Pao On v Lau Yiu Long.
In the final scenario applying the principles of provided by the case of L’Estrange v F Graucob Ltd it can clearly be stated that Bob is liable to purchase the vehicle from marry as he has signed the offer and sent it by fax. In addition marry has not used any misrepresentation or fraud to Make Bob sign the contract. Thus there is a contract between Bob and Mary.
Conclusion
A contract exists between Bob and Mike, Mary and Tom. No contract exists between Bob and Steve.
Hillman, R. (2013). Principles of Contract Law, 3d (Concise Hornbook Series). West Academic.
McKendrick, E. (2014). Contract law: text, cases, and materials. Oxford University Press (UK).
Rakoff, T. D. (2016). The Five Justices of Contract Law. Wis. L. Rev., 733.
Adams v Lindsell (1818) 1 B & Ald 681
Byrne v Van Tienhoven (1880) LR 5 CPD 344
Hyde v Wrench (1840) EWHC Ch J90
L’Estrange v F Graucob Ltd (1934) 2 KB 394
Pao On v Lau Yiu Long (1980) 3 All ER 65
Roscorla v Thomas (1842) 114 ER 496
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