Issue
What are the legal rights of Jane against Eric, Gardening Gadgets and Grace?
In Australia, if any party wish to establish a contractual relationship with any other party, then, it is necessary that all the contract essentials must be comply with.
Offer – Any statement or action or conduct which is communicated by an offeror to an offeree with the hope of approval is an offer in contract law. An offer can be made to anyone specific or to the public at large. As per R v Clarke, it is necessary that the offer so made by the offeror should comes within the notion/knowledge of the offeree to consider it complete and binding upon the parties.
Acceptance – When the offeree after receipt of the offer gave his approval to the same, then, such an approval is called an acceptance in law. An acceptance must be given by the person to whom the offer is made and no one else.
An acceptance is complete only when the offeror is within the notion/knowledge of the acceptance so made and is held in Felthouse v Bindley. Silence is not regarded as an acceptance in law. However, as per Adams v Lindsell, when the acceptance is made by letter or post, then, the acceptance is complete immediately and there is no need that the acceptance should come within the knowledge/notion of the offeror.
When the acceptance is made by email, then, the postal acceptance rule is not applicable. In Entores Ltd v Miles Far East Corporation it was held that the postal acceptance rule has no relevance in instant mode of communications for instance, emails. Thus, any acceptance send through email is considered to be valid only when the same comes in the knowledge or read by the offeror or receiver. If the email is not read then the acceptance is not held to be complete and there is no contract formation amid the parties and is held in Re Imperial Land Co of Marseilles.
Invitation to treat – When the person who desires to establish a contract does not make any kind of offers, rather, he acts in such manner so as to receive offers, then, it is an invitation to treat in law. An invitation to treat is not an offer, rather, the person with the help of advertisements, auctions, tenders, etc, seek offers from the intending persons. The persons who rely on such advertisements etc can make an offer to the inviter and when the inviter affirms the offer, then, there is an acceptance which results in the formation of a contract amid the parties. In Fisher v Bell, an advertisement is treated as an invitation to treat and the person relying on the advertisement or the brochure must make an offer to the inviter.
Counter offer – As submitted that when the offer is affirmed by the offeree, then, it is an acceptance in law. But, when the offeree does not give his confirmation but brings changes in the terms of the offer, then, it is not an offer in law and is considered as a counter offer. As per Hyde v Wrench, the counter offer cancels the original offer and the only offer that remains is the counter offer which must be accepted by the original offeror to make a contract amid the parties.
Relevant Law
Revocation of offer – Normally when an offer is made and the same is accepted then there is a contract amid the parties. But, when the offer is made but the same is not accepted by the offeree and the offer remains for certain time duration, then, it is necessary that the offer must be accepted with such time frame otherwise the offer is considered to be revoked because of lapse of time. In Dickinson v Dodds it was held that if any acceptance is received after the lapse of time of offer then it is not an acceptance in law and there is no contract that is made amid the parties.
Apart from offer and acceptance, there must be presence of consideration, legal intenation of the parties (generally legal intention is not present in domestic relationship but can be rebutted with the help of evidence) and the capacity of the parties
(major and of sound mind) in order to establish a contract which is legally enforceable in law.
Jane and Eric/Gardening Gadgets
Jane is the owner of a landscaping and land care business in NSW. He requires a trailer, ride-on mower and chainsaw for the business.
Gardening Gadgets is a retail franchise and has advertised gardening and landscaping equipment at sale prices which includes:
- 9×5 Tandem Trailer Grey/Blue Colour Hydraulic Brakes Carry Capacity 2000kg Cheq Plate Floor & Sides Slipper Suspension. Normal Price $3500 SALE PRICE $2990!!!!
- Jameson 1050 Ride-on Mower 20 HPTwin Cylinder OHV Engine, Zero Turn radius, 50″ (1169mm). Normal Price $4500 SALE PRICE $3990!!!!
- Chainsaw 20″ Bar Two Stroke Engine, 3.5 HP, 58cc capacity, Weight of 4.8Kg, 2 Piston rings, Anti vibrating system, Electronic Ignition. Normal Price $600 SALE PRICE $499!!!!
It is submitted that an advertisement is issued by Gardening Gadgets in the form of a brochure which is issued to the public at large. As per Fisher v Bell an advertisement or the brochures are considered to be invitation to treat and thus Gardening Gadgets is an inviter. Any person who wishes to buy the products that are advertised must make an offer to Gardening Gadgets and if such an offer is accepted by Gardening Gadgets then there is a contract amid the parties.
So,
Jane found the brochure of Gardening Gadgets in her letter box. After two weeks, Jane on Tuesday was passing Gardening Gadgets and wishes to investigate the sale items. Jane intends to buy the items at sale price.
Thus, Jane by relying on the brochure has made an offer to Gardening Gadgets. Thus, the acts of Jane is nothing but an offer that is made and if the same is accepted by Gardening Gadgets then there is a contract amid the parties.
But, she was told by the sales person that the sale is over and that the products are available at the normal price.
Thus, the offer that is made by Jane to Gardening Gadgets is not accepted by the sales persons of Gardening Gadgets and hence there is no contract that is made amid the parties.
But,
Jane has a discussion with the store manager (Eric) and submitted that she intends to buy the articles at a price mentioned in the brochure. However, later Eric submitted that even though the sale is over, however, if Jane is willing to buy all the three items, then, he will gave trailer and mower for the normal price but will gave chainsaw for free.
Analysis
At this stage, there is a new offer that ids made by Eric to Jane apart from the brochure that is issued b y Gardening Gadgets. It is new necessary that Jane must accept the offer of Eric in order to make a contract amid the parties.
But, this offer that is made by Eric is not accepted by Jane immediately and she submitted that although she appreciate the offer but she needs to check with her overdraft and it is then only she can send her acceptance. So, there is no acceptance.
At this point, Eric submitted that the offer that is made by him is only open till Thursday night and of no acceptance is received by then, then the offer stands terminated. Thus, the offer is considered to be revoked if the acceptance is made post Thursday.
Now,
On Wednesday, Jane decided that she will buy all the three items. She finds the website of Gardening Gadgets and sends an email to Eric’s store. She wrote that she is willing to buy the trailer, mower and chainsaw for $8000 and that she will visit the store on Thursday afternoon to pick up the goods.
Now, as per Entores Ltd v Miles Far East Corporation it is necessary that Eric must read the mail in order to consider the acceptance to be completed. The postal acceptance rule does not apply to emails.
The mail was sent to Eric but Eric did not check his mails on Wednesday or Thursday. Thus, the acceptance is not complete which is made via email.
Jane visits the store on Thursday afternoon buy before anything is said to Eric, Eric submitted that he now does not wish to sell the items and that the offer is withdrawn. Now, before any oral acceptance could be made by Jane, Eric withdraws his offer.
Thus, there is no acceptance that is made to the offer of Eric which was with drawn by Eric.
Jane and Grace
Grace and Jane are close friends. Grace wishes to sell her property and wanted to live near her son Ignatius. Jane always wishes to buy the property of Grace. Grace rings Jane and told her that she is willing to sell her house for $700,000 and whether Jane is interested or not.
Thus, an offer is made by Grace to Jane wherein the offer price is settled @$700,000. This offer must be accepted by Jane in order to establish a contract amid the two.
At this, Jane submitted that she is very interested in buying the property but she needs to see her finances. Thus, there is no immediate acceptance that is made by Jane to Grace.
However, Grace submitted that she will leave next week and Jane can communicate her decision as soon as she can. So, a time frame is provided by Grace to Jane that she must communicate her acceptance with the week.
After a week, Jane told Grace that she can only afford a 5% deposit and the rest of the balance can be paid only after three months. She also expresses to move in the property early so that she can stop paying the rent.
Conclusion
Now, the acceptance that is made by Jane is not the mirror image of the offer that is made by Grace. Thus, the acceptance is not valid rather the same is treated as counter offer wherein Jane has changed the terms of the offer. Now, the only new offer that is valid is the new counter offer that is made by Jane.
This new offer must be affirmed by Grace in order to make a binding contract amid the two.
Then, Grace agrees to the same. Thus, the counter offer that is made by Jade is affirmed by Grace. Thus, there is an acceptance that is made Grace, resulting in a contract amid the parties.
Next day, Jane sends a letter with a cheque of $35,000 stating that the cheque is for the 5% deposit for the sale of your house. The sending of letter and the cheque is nothing but the affirmation that is made amid the parties.
Later Grace submitted that she is writing back as an acknowledgment for the letter and a cheque. She further stated that she is cashing the cheque for the deposit, which is for the purchase of 25 Elm Avenue, Armidale.
There is a contract that is created amid the parties when Grace affirmed to the counter offer of Jane.
Also, though Jane and Grace are friends and there is generally no legal intention in cordial relationship, still, there is legal intention that was present amid them and they are bound by the promises legally.
Further, the promises are supported with legal consideration of $35,000 and the parties are major and are sound.
Thus, there is presence of all the contractual elements.
Later when Jane moves in the property and spends $70 000 in renovations. After two months. Grace has a fight with her son and now she wants to cancel the sale.
However, the contract is already concluded amid the parties and it makes no difference e whether Grace later cancels the contract.
There is a binding contract amid the parties
Conclusion
It is concluded, that Jane has no legal rights against Eric/ Gardening Gadgets as there is no acceptance that is made by Jane to the offer of Eric. Rather, the offer was withdrawn by Eric before the same is accepted. Thus, there is no contract amid Jane and Gardening Gadgets/Eric.
Further, there is a binding contract mid Jane and Grace and Jane has every right not to move out of the property and consider the contract as binding. The contract stands concluded when Grace accepted the counter offer that is made by Jane.
So, Jane can sue Grace for breach of contract and is entitled to remain in the property.
References
Books/Articles/Journals
Burrows, Andrew, A Casebook on Contract, Bloomsbury Publishing, 20-Sep-2018.
McKendrick, Ewan and Liu, Qiao, Contract Law: Australian Edition, Macmillan International Higher Education, 25-Sep-2015.
Latimer, Paul, Australian Business Law 2012, CCH Australia Limited, 2011.
Hill, Simone, Email Contracts – When is the Contract Formed?” [2001] JlLawInfoSci 4.
Furmston, Michael and Tolhurst, G.J, Contract Formation: Law and Practice, OUP Oxford, 25-Mar-2010.
Case Laws
Adams v Lindsell (1818) 1 B & Ald 681
Carlill v Carbolic Smoke Ball Co [1893].
Dickinson v Dodds (1876).
Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 527.
Entores Ltd v Miles Far East Corporation [1955] EWCA Civ 3.
Fisher v Bell (1961)
Felthouse v Bindley (1862) 142 ER 1037).
Hyde v Wrench (1840) 49 ER 132.
Pharmaceutical Society v Boots Chemists (1953)
R v Clarke (1927).
Re Imperial Land Co of Marseilles (Wall’s Case) (1872) LR 15 Eq 18.
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