Elements of Contract Formation
Discuss about the Meghan Will And Harry Contract Case Study.
The main issue of this case revolves around a possible contract being drawn between Kate and Meghan based on the facts provided in the case study.
A contract shows a promise undertaken in a legally binding agreement, where each party promises something, be it payment of consideration, or undertaking the act as has been promised. In order to create any contract, there is a need for different elements to be present in the contract. These include offer, acceptance, consideration, intention, legality and consent[1]. Consideration is the value which is paid by one of the contracting parties, to the other party, for the other party carrying on the performance of act covered under the contract[2]. The value of consideration can be anything which is mutually decided between the parties, but it is important that the consideration has economic value in the eyes of law as per Thomas v Thomas[3].
Another important rule which relates to consideration is that it has to be present and cannot be past. In Re McArdle[4], a wife lived with her three grown up children in a house. One of the children’s wives had undertaken some work and the children promised to give her a payment of £488, for which a document was signed to give effect to this transaction. However, the court held that the promise had been unenforceable as the work had been undertaken before promise had been made, resulting in the contract having inadequate consideration owing to presence of past consideration.
In the present case study, the contract formation of Kate and Meghan revolve around this very aspect of elements of contract. In this matter, Meghan had told Kate that she would give her the painting for the free tutoring which Kate had given to Meghan in the past for etiquette, finishing and deportment lessons. Thomas v Thomas would make this consideration value having economic value as tutoring costs money. However, this is the case of past consideration, which based on Re McArdle would make the consideration value in invalid consideration.
Thus, on the basis of this discussion, it can be concluded that a contract was not formed between Kate and Meghan owing to the lack of element of consideration. This means that Kate cannot sue Meghan for giving her the painting and for getting it delivered to her on Wednesday March 12th.
Contract Formation in the Case of Kate and Meghan
The main issue of this case revolves around a possible contract being drawn between Kate and Will based on the facts provided in the case study.
The first step in formation of any contract is for one party to offer certain terms to another party in a clear and express manner, which becomes the offer of the case. It is important to make the difference clear between an offer and an invitation to treat[5]. When it comes to invitation to treat, the inviting party is not obliged to sell the products for which invitation has been made as was established through Pharmaceutical Society of Great Britain v Boots[6]. Partridge v Critenden[7] dictates that that the advertisements which are put in the newspapers are invitation to treat. However, there are cases where these can be deemed as offer, where the unilateral offer is based, as was held in Carlill v Carbolic Smoke Ball Co[8]. When an offer is made, it is important that the same is accepted by the other party in the duration for which the offer had been open[9].
In the present case study, an advertisement had been placed in the newspaper by Kate to sell the painting for a price of $3,000. This was not a unilateral offer, as it could not be accepted by mere performance of the terms of contract, which were open for anyone; so, Carlill v Carbolic Smoke Ball Co would not apply. Thus, based on Pharmaceutical Society of Great Britain v Boots this advertisement would be deemed as an invitation to treat. Will made the offer in this case where he expressed his intention of purchasing the painting for $3,000.
However, he stated that the offer was open only till 5pm on Friday 7th March. This means that Kate had to accept this offer till this time. She accepts the offer of Will on 10 am on Friday 7th March. Even though Will though that Kate had changed her mind, the offer was never revoked, and this thought was never conveyed, resulting in the offer being open for being accepted. Only after Kate gave her acceptance, did Will inform her of her thoughts. The contract by then had already been formed. The later communication of Kate and Will would not matter here as the contract had already been created by that time.
Thus, on the basis of this discussion, it can be concluded that a contract was had been formed between Kate and Will due to acceptance of Will’s offer by Kate in the given time frame for which the offer was open.
Contract Formation in the Case of Kate and Will
The main issue of this case revolves around a possible contract being drawn between Kate and Harry based on the facts provided in the case study.
Where the offer is to be revoked, it is to be done before the acceptance is given on such offer as was held in Dickinson v Dodds[10].
After an offer has been made by one of the parties, it is important for the other party to accept the offer. The general rule regarding the date of acceptance is that the date on which the acceptance actually reaches the offer making party, is to be deemed as the acceptance date for the purpose of contract formation[11]. Though, this rule has one leading acceptance and this is of postal rules. These rules present that for the purpose of contract formation, the acceptance date is the date on which the letter of acceptance is posted by the accepting party. The reason for taking this view is that the postal office is given the status of being an agent of the offer making party; which means that the acceptance by the agent is that of the principal[12].
Another important point which has to be carefully noted in context of acceptance is that it has to be provided in the mode which had been specified in the offer[13]. In Eliason v Henshaw[14], it was held that where the offering party provides a specific manner of acceptance but does not mention it as the only method of accepting the offer, the acceptance given through any other method would be deemed as legally valid only when the same was more advantageous to the offer making party. Tallerman & Co v Nathan’s Merchandise[15] provides that the posting of latter is to be deemed as justified only when the offering party contemplated this mode as the mode of acceptance.
In the present case study, Harry had also made an offer for the painting to Kate and he had provided that he was ready to purchase the painting for a consideration value of $3,000. However, he stipulated that the acceptance had to be given to him in writing only. Based on Eliason v Henshaw, this would be deemed as the valid mode of acceptance. As had been instructed, Kate mailed a letter to Harry for accepting the offer made by him. This acceptance was given at 12 pm on March, as the letter had been posted at that time. Once the offer is accepted, Dickinson v Dodds dictates that it cannot be revoked.
Contract Formation in the Case of Kate and Harry
So, the message left on the answering machine of Harry would not be of relevance due to a contract already having being formed. This is due to two reasons; the telephone is not an advantageous mode here for Harry but just for Kate. Further, the offer had already been accepted and the revocation would not matter now. This is also based on Tallerman & Co v Nathan’s Merchandise as telephone was not deemed as a mode of acceptance here, but post was. So, Harry is right in claiming the painting. Not being able to provide this painting to Harry would result in Kate breaching the contract, as the contract dictated that Kate sells the painting to Harry.
Thus, on the basis of this discussion, it can be concluded that a contract had been formed between Kate and Harry. And Harry does have the right of claiming the promised painting at the promised price. Where this is not done, Kate would have to bear liabilities arising from breach of contract.
The main issue of this case revolves around a possible contract being drawn between Kate and Liz based on the facts provided in the case study.
As has been stated earlier, in order to create a contract, there is a need for certain important elements to be present in the contract and these include the offer and acceptance. In context of offer, it is important to make a differentiation between an offer and a request for information, and even between an offer and supply for information[16]. Harvey v Facey[17] is a case which proves to be of assistance in this context. In this case, the defendant had been asked by the plaintiff regarding if the bumper hall pen would be sold to the plaintiff and to post the lowest cash price for it. The reply was given by the defendant on the lowest cash price and then the plaintiff agreed to purchase this pen at the quoted price. The court held that there was no offer made in this case as it was just a supply of information.
In the present case study, Liz asked for the giraffe painting being still for sale. This would be deemed as request for information. The reply of yes given by Kate would be deemed as supply of information. The offer was then made by Liz and this offer was accepted by Kate. This resulted in a contract being formed between the two for the giraffe painting to be sold off by Kate to Liz for $2,500.
Thus, on the basis of this discussion, it can be concluded that a contract had been formed between Kate and Liz. Where Kate is unable to provide the giraffe painting to Liz for $2,500, she would be held in breach of contract.
Andrews N, Contract Law (Cambridge University Press, 2nd ed, 2015)
Carter JW, Contract Law in Australia (LexisNexis Butterworths, 2013)
Carter JW, Peden E, and Tolhurst G, Contract Law in Australia (LexisNexis Butterworths, 5th ed, 2007)
Furmston M, and Tolhurst GJ, Contract Formation: Law and Practice (Oxford University Press, 2010)
Gibson A, and Fraser D, Business Law (Pearson Higher Education AU, 2013)
Latimer P, Australian Business Law 2012 (CCH Australia Limited, 31st ed, 2012)
McKendrick E, and Liu Q, Contract Law: Australian Edition (Palgrave Macmillan, 2015)
Poole J, Casebook on Contract Law (Oxford University Press, 2016)
Cases
Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256
Dickinson v Dodds (1876) 2 Ch D 463
Eliason v Henshaw (1819) 17 U.S. 4 Wheat 225
Harvey v Facey [1893] AC 552
Partridge v Critenden (1968) 2 All ER 425
Pharmaceutical Society of Great Britain v Boots [1953] 1 QB 401
Re McArdle (1951) Ch 669
Tallerman & Co v Nathan’s Merchandise (1957) 98 CLR 93
Thomas v Thomas (1842) 2 QB 851
Contract Law
[1] Neil Andrews, Contract Law (Cambridge University Press, 2nd ed, 2015)
[2] Andy Gibson and Douglas Fraser, Business Law (Pearson Higher Education AU, 2013)
[3] (1842) 2 QB 851
[4] (1951) Ch 669
[5] Jill Poole, Casebook on Contract Law (Oxford University Press, 2016)
[6] [1953] 1 QB 401
[7] (1968) 2 All ER 425
[8] [1893] 1 QB 256
[9] Michael Furmston and G.J. Tolhurst, Contract Formation: Law and Practice (Oxford University Press, 2010)
[10] (1876) 2 Ch D 463
[11] John W. Carter, Contract Law in Australia (LexisNexis Butterworths, 2013)
[12] Paul Latimer, Australian Business Law 2012 (CCH Australia Limited, 31st ed, 2012)
[13] Ewan McKendrick and Qiao Liu, Contract Law: Australian Edition (Palgrave Macmillan, 2015)
[14] (1819) 17 U.S. 4 Wheat 225
[15] (1957) 98 CLR 93
[16] John W. Carter, Elisabeth Peden and Greg Tolhurst, Contract Law in Australia (LexisNexis Butterworths, 5th ed, 2007)
[17] [1893] AC 552
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