Rules of Offer
A contract is any agreement between parties which can be enforced through the court. Any agreement cannot be called as a contract. In order to be enforceable by a court an agreement has to have the essentials of a valid contract. There are five major essentials of a valid contract (Knapp, Crystal & Prince, 2016).
- Offer
- Acceptance
- Consideration
- Intention
- Capacity
Thus an agreement can be regarded as a contract if the person making an offer (offerer) has made a valid offer and the offer has been accepted by the person to who it has been made( (offeree) lawfully. The contract must have a valid consideration and capable parties must have the intention to bind each other legally to its terms (McKendrick, 2014).=
Issue
The issue is to identify
- Whether a contract was formed between the parties or not?
- If yes then when was it formed?
Rules
An offer is an expression made by the offerer to the any person, group or to the public with respect to a set of promises. The parties to the contract must be able to prove that the offerer had the intention to legally bind the offeree to the terms of the agreement. In the case of Harvey v Facey [1893] UKPC 1 the court came to a conclusion that an offer cannot be valid in unless the offer had the intention to bind the offeree (Ayres & Schwartz, 2014).
An offer is often misunderstood with the invitation to an offer. Both the terms may create a confusion in relation to a contract as the former is legally binding and the latter is not. An invitation to an offer is not a valid offer it’s just a statement made by a person so that another can make him an offer. The concept was discussed in the case of Fisher v Bell [1961] 1 QB 394.
An offer has to be compete otherwise it cannot be held valid. It has to contain the elements like price, time, intention and description of goods or services reasonably as provided by the case of Partridge v Critenden (1968) 2 All ER 425.
An offer can be taken back by the offerer at any moment but before it has been accepted by the offeree. This concept was used in the case of Dickinson v Dodds (1876) 2 Ch. D. 463. It was further provided in this case that if an offer is rejected it comes to an end and cannot be accepted again.
When the offeree responds to the offer made to him by offering alteration and additions to the original offer it comes a counter offer. A counter offer also like rejection terminates the original offer and it cannot be accepted again. The principles of a counter offer were provided in the case of Hyde v Wrench 1840 49 ER 132.
Acceptance
Acceptance
As soon as the offeree makes a lawful acceptance a binding agreement is created between the parties. The principles in relation to a valid acceptance are provided in this section.
Firstly the offeree must communicate the acceptance to the offerer in the mode in which it has been prescribed by the offerer.
Secondly, the terms of the acceptance must be an exactly the same like the terms of the offer. Any alternation in the terms would result in a counter offer as discussed above (Poole, 2016).
Thirdly there must be no uncertainty in the terms of the agreement in order to be a valid contract.
According to principle of acceptance as discussed in the case of Entorres v Miles Far East [1955] 2 QB 327 an acceptance has to be received before becoming effective.
However when the parties agree that post can be used as a mean of communication or does not expressly say that post cannot be used as a mean of communication than the postal rule of acceptance is applicable. According to the postal principles if the offeree has properly stamped and addressed the letter than the acceptance is made as soon as the letter is placed in the postal box. This rule has been given by the case of Adam v Lindsell (1818) 106 ER 250.
Consideration
Consideration in a contract has to be a reasonable promise. It is not necessary for the consideration to be just as compared to the promise. Consideration cannot be past and cannot be in relation to an existing obligation (Hunter, 2015).
Intention
A contract only comes to existence when the parties have the intention to bind each other (Austen, 2017). The intentions of the parties are derived by the court through the objective test as provided in the case of Hyde v Wrench.
Capacity.
The parties to the contract must not be of an unsound mind and should not be a minor in order to be eligible for a contract (Rakoff, 2016).
Application
The above discussed rules would be applied to the facts in this section. Alan has made a valid offer as all essentials of a valid offer are fulfilled in this case. Alan has provided the description of the goods, the price and mode of acceptance and the date till the offer is valid.
As discussed above only a person to whom the offer is made can accept the offer. The offer is not binding on any other third person. Thus as Damien is not on the friend list of Alan and the line of the offer specifically said that it is made to his friends Damien does not have the right to accept the offer. Thus no contract exists between Alan and Damien as there is no valid offer which can be accepted. However an invitation to offer was sent by Damien to Alan to purchase the book through SMS. The invitation was accepted by Alan and he provided to sell the book at $200. The offer was accepted by Damien on 4th November when he gave the Alan $200 for the book. Thus the contract was formed on 4th November between Alan and Damien.
Consideration
In relation to Charleen although there was proper offer and acceptance the contract between her and Alan did not take place because of two reasons. Firstly, Charleen is a minor as she is only 16 and she does not have the capacity to enter into the contract. Secondly, Alan did not have the intention to bind Charleen legally as he was thinking about something else when he unconsciously accepted her offer.
Bernard was in the friend list of Alan and had said that he is willing to purchase the book at $150 instead of $200. This statement was against the rule of acceptance and resulted in a counter offer. When the counter offer was made the original offer ceased to exist. However a fresh offer was made when Alan said that he wants to sell the book at $200 again. According to the postal rule discussed above the offer had been accepted by Bernard on 4th November as soon as he posted the letter. Thus a contract between them was formed on 4th November.
Conclusion
|
Persons |
Bernard |
Damien |
Charleen |
|
Contract Formed |
YES |
YES |
NO |
|
When |
4th November |
4th November |
NA |
Issue
Legal position of Bernard with Alan and remedies
Rule
As discussed above a valid contract existed between Alan and Bernard.
When the rights of the parties are breached they are entitled to contractual remedies. Contractual conditions have to be fulfilled by the parties to the contract in case the parties fail to deliver what had been promised by the contract then they are liable to pay compensation and damages (Fletcher & Spargo, 2016).
There are many remedies when the contractual rights of a party have been violated such as
- Damages
- Injunction
- Restitutionary awards
- Specific performance
- Repudiation
- Rescission
The rules in relation to damages and compensation had be specifically elaborated by the court in the case of Addis v Gramophone [1909] AC 488. The case ruled that the parties should be compensated for what they have lost and the compensation should be the same which would be adequate to restore the position of the party if the rights of the contract was not breached or the contract was not formed.
Application
In this case Alan had promised through the offer that he would provide the book along with his hand written notes for a given price. Bernard and Alan had entered into a contract on 4th November where Alan was to supply Bernard his book and hand written notes. It was later found that the book was available for free but according to the rules of consideration the book is a valid consideration as its cost is immaterial. As all the terms of the contract with Bernard has been satisfied by Alan no further claim can be made by Bernard against Alan.
Intention
Conclusion
Bernard is not entitled to any further claim.
The legal position of Charleen and Damien
Rule
It has already been analyzed that no contract existed between Charleen and Alan
When no contract has been formed there is no further question of contractual remedies which are discussed above (Stone, 2013).
Application
The contract between Chareleen and Alan was Void on the grounds of intention and capacity. Charleen wished to purchase the book but Alan had no intention to sell the book to her. Charleen had put $200 on the table and for that she can morally request Alan to pay back in case he has taken the money. Alan should not accept the money given by Charleen and if he does than it would lead to a contract and Alan would be regarded to breach it as the book has been sold already.
Conclusion
No remedy exists for Charleen as there is no Contract.
The issue is to find out Damien’s contractual position and remedies
Rules
The rules in relation to remedies have already been discussed above.
There was a contract between Alan and Damien formed on 4th November as discussed above.
Application
In the given circumstances there was a contract between Alan and Damien. According to the terms of the contract Alan was to provide his book along with his hand written notes. Although the book as mentioned in the contract had been provided to Damien but Alan did not provide him with the same hand written notes. Instead he wrote a few notes in the book itself. Thus in this case the contractual obligation of Alan has been breached by him.
Damien can claim specific performance which would entitle him to the notes. He can also claim compensation and rescind the contract as the notes were a major condition of the contract.
Conclusion
Damien is entitled to remedies as his rights have been breached.
There are three types of Alternative dispute Resolution methods namely (Bix, 2017)
- Mediation- in this form of ADR a neutral third party assists the parties to the dispute to mutually and conclusively reach an agreement
Advantage
Mediation is quick and cost effective
Procedure is simple without complex proceedings
Disadvantages
Decision is not binding on the party
It has no formal and fixed discovery process
- Arbitration- in this form of ADR the dispute of the parties is presented to an Arbitrator. The outcome of the dispute is determined by the arbitrator.
Advantages
Provide quick and cost effective solutions
Follows precedents and statues towards decisions
Disadvantage
No control over the decision of the arbitrator
Relatively expensive as compared to other ADRs
- Conciliation- in this form of ADR positive relationship is built between the parties by the another person in order to come to a decision
Advantages-
Flexible process in relation to content, time and structure
Simple, cheap and quick results
Disadvantages
The process is not legally binding
No guarantee of a result being provided
Conclusion
Thus, it can be concluded from the above paper that Alan is only Liable to Damien as he has full filled his obligations with Bernard and has no obligation towards Charleen. Damien and Alan can solve the issue through the various ADRs discussed above.
References
Austen-Baker, R. (2017). Implied terms in English contract law. Edward Elgar Publishing.
Ayres, I., & Schwartz, A. (2014). The no-reading problem in consumer contract law. Stan. L. Rev., 66, 545.
Bix, B. H. (2017). 1. Theories of contract law. Comparative Contract Law, 7.
Fletcher, T., & Spargo, P. (2016). Uncertainty and risk: contract law. Without Prejudice, 16(6), 20-21.
Hunter, H. (2015). Modern Law of Contracts.
Knapp, C. L., Crystal, N. M., & Prince, H. G. (2016). Problems in Contract Law: cases and materials.
McKendrick, E. (2014) Wolters Kluwer Law & Business. Contract law: text, cases, and materials. Oxford University Press (UK).
Poole, J. (2016). Textbook on contract law. Oxford University Press.
Rakoff, T. D. (2016). The Five Justices of Contract Law. Wis. L. Rev., 733.
Stone, R. (2013). Q&A Contract Law 2013-2014. Routledge.
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