Offer, Acceptance, Consideration and Intention of Forming a Legal Relation
Discuss About The Textbook On Contract Law Oxford University.
There are a few fundamental elements which have to be satisfied in order to establish that a valid contract has been created between the parties. These fundamental elements comprise of elements like offer, acceptance, consideration and intention of forming a legal relation. If anyone of these elements are not present in an agreement it is not legally binding upon the parties to it and therefore a contract is not formed. As defined by McKendrick (2014) a contract is a document which sets out terms by the consent of both the parties which are binding legally on them. These elements and the requirements which need to be present in order to identify them are discussed below.
In order to establish whether a valid offer has been made by a person the difference between an invitation to treat and an offer has to be management. Poole (2016) has defined an offer as a statement through which a person signifies that he is willing to get into a contract with another person based on the terms stated through the offer. In order to constitute an offer it needs to be established that the offer is complete and is not merely an invitation to treat. This is because an invitation to treat does not have the legal capacity of establishing a contract. There are various cases through which differences between an offer and an invitation to a treat have been clearly established by the courts. Firstly an offer has to be unambiguous and clear. Therefore when an offeror provide terms on which he is willing to get into a contract and those terms are clear and unambiguous an offer is created. In the case of Grainger & Son v Gough [1896] AC 325 HL it had been ruled by the judge that in order to be an offer a statement has to be definite and detailed or else it becomes an invitation to treat. The same principles had been provided in the case of Norgren Co (CA) v Technomarketing 1983; (Ch D) where the Court ruled that an incomplete advertisement is an invitation to treat.
The element which is required to establish a contract after a valid offer has been identified is known as acceptance. As defined by Poole (2016) acceptance is established when a person to whom the offeror has addressed his offer decides to bind himself in legal terms to the terms of the offer. There are certain requirements for a valid acceptance to be established. In the case of Brennan v. Lockyer [1932] I.R. 100 it had been ruled by the court that a valid acceptance has to be and unequivocal and final expression to agree upon the terms provided by the offer. Where there is any variation to the terms of the original offer and acceptance the acceptance is termed as a counter offer which according to the principles of Tansey v College of Occupational Therapists Ltd [1995] 2 ILRM 601 brings the initial offer to an end.
Difference between an Invitation to Treat and an Offer
In the case of Swan v Miller [1919]1 IR 151 the plaintiff had made an offer to sell his goods for a price of €4,750. However the person to whom the offer was made decided to purchase the goods at a price of €4,450. In this case it was held by the court that the expression of the person to purchase the goods at €4,450 defeated the initial offer and resulted in a counter offer. The same principles had been applied in the case of Tinn v Hoffman (1873) 29 LT 271 where the defendant had made an offer to sell 1200 tons of his goods however the plaintiff wanted to purchase 800 times of the goods and claim the formation of a valid contract. It was held by the court that no contract has been financial between them as the acceptance was not unequivocal. In addition it had been stated in the landmark case of Hyde v Wrench (1840) 49 ER 132 that where a party has made a counter offer he is no longer in a position to accept the initial offer as it has already been revoked. In the case of Covington Marine Corp and Others v Xiamen Shipbuilding Industry Co Ltd. [2006] 1 lloyd’s rep. 745., it had been ruled by the court that in order to determine whether an acceptance is a counter offer or not an objective test has to be applied.
In the case of Embourg Ltd v Tyler Group Ltd [1996] 3 IR 480 the judges rule that and acceptance can only be valid and effective where it has been appropriately communicated to the person who has made the offer. Further in the case of Entores v Miles Far East Corp [1955] 2 QB 327 the court held that until and unless the acceptance is received by the person making the offer it is ineffective.
However in the Landmark case of Adams v Lindsell (1818) 1 B & Ald 681 the court provided a judgement that when an acceptance is made through the means of post it becomes effective as soon as the post is sent and has been addressed correctly. Whether or not it has reached its destination a contract is said to be formed. In the case of Chwee Kin Keong v Digilandmall.com Pte Ltd [2005] 1 SLR(R) 502 it has been ruled by the court that the application of Postal rule in the age of modern means of communication is not appropriate. Where acceptance is made by modern communication means such as email or fax it is said to be made when it actually reaches the system of the offeror as per Tenax Steamship Co v Owners of the Motor Vessel Brimnes [1974] EWCA Civ 15. It is irrelevant that whether the offer reads the acceptance or not. This rule had been adopted in Ireland so the case of Park Grange Investments Limited v Shandon Park Mills Limited. Further it had been ruled in the case of Mondial Shipping and Chartering BV v Astarte Shipping Ltd (1995) CLC 1011 that where an acceptance is made by fax or email outside the office hours it is only said to be effective until the office resumes the next day.
Requirements for a Valid Acceptance
According to the fact pattern provided in the case study it is clear that Peter had made an invitation to an offer and not an offer itself as he had made an advertisement. This can be stated evidently by applying the principles of the Norgren Co case. The invitation to offer included the purchase of the car Atta price of €25,000. It was also mentioned that he should only be contacted within office hours. An offer in relation to the Purchase of the car had been made by Emma who wanted to purchase the car at a price of€24,500. However this offer was not accepted by Peter and a counter offer as for the principles of the Tansey case had been made in the given situation as Peter wanted to sell the car at a price of€24,750. In the given situation the initial offer made by Emma to purchase the car at a price of €24,500 comes to an end as soon as the counter offer had been made by Peter. This counter offer was not immediately accepted by Emma as she notified Peter that she needs to have a discussion in relation to the offer with her husband. It is provided through the facts of the study that beta ask for a call back at 6 p.m. however the call which was made by Emma where she was ready to accept the offer made by Peter to purchase the car at €24,750 was at 7:30 p.m and she was not able to contact Peter as his phone was switched off. Another message was sent by Emma to Peter the next day in the answering machine that she is ready to purchase the car at a price of€24,750.
This is a valid acceptance or not is to be determined by applying the rules of economics acceptance in this case. It is clear that Emma has notified peter that she is willing to purchase the car at the price of €24,750 during office hours of Peter. The acceptance was communicated via voice message and through the application of the Tenax Steamship Co case is can be stated that the acceptance would be effective whether or not it has been read by Peter. Therefore in a situation where there is a valid offer and then effective acceptance between the parties to the contract a contract is said to be formed between them. In the given situation it is further provided that Peter having no knowledge of the acceptance made by Emma sold the car to Andy at a price of €26,000 after a contract between him and Emma had already been formed. Therefore the actions of peter in this case can be regarded as a breach of contract and he has to compensate Emma for the same as the card has been sold to Andy.
Conclusion
Therefore from the above analysis it can be evidently stated that there was a contractual relationship with had been formed between Peter and Emma when the voice message of Emma entered the answering machine of Peter during office hours.
References
Adams v Lindsell (1818) 1 B & Ald 681
Brennan v. Lockyer [1932] I.R. 100
Chwee Kin Keong v Digilandmall.com Pte Ltd [2005] 1business(R) 502
Covington Marine Corp and Others v Xiamen Shipbuilding Industry Co Ltd. [2006] 1 lloyd’s rep. 745.,
Embourg Ltd v Tyler Group Ltd [1996] 3 IR 480
Entores v Miles Far East Corp [1955] 2 QB 327
Grainger & Son v Gough [1896] AC 325 HL
Hyde v Wrench (1840) 49 ER 132
McKendrick, E., 2014. Contract law: text, cases, and materials. Oxford University Press (UK).
Mondial Shipping and Chartering BV v Astarte Shipping Ltd (1995) CLC 1011
Norgren Co (CA) v Technomarketing 1983; (Ch D)
Poole, J., 2016. Textbook on contract law. Oxford University Press.
Swan v Miller [1919]1 IR 151
Tansey v College of Occupational Therapists Ltd [1995] 2 ILRM 601
Tenax Steamship Co v Owners of the Motor Vessel Brimnes [1974] EWCA Civ 15
Tinn v Hoffman (1873) 29 LT 27
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