Business Law : Assignment

Added on - 28 May 2020

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2IRACPart 1IssueWhether or not a contract had been formed between Sam and Danny based on the conversationwhich took place?RuleA contract denotes a promise which has been made by the parties between which the contract isformed. It is a binding agreement under the law, whereby the parties are required to meet theterms on which the contract is based. The formation of contract is not an easy task and requiressome important components to be present, which include offer, acceptance, consideration,intention, capacity and clarity (Stone and Devenney, 2017).The first step in forming the contract is for an offer to be made. This offer has to cover clearterms which are being offered by one party to the other. There is a huge legal difference betweenan offer and an invitation to treat in the sense that the former has an intention of beingcontractually bound, while the latter lacks this intention. The advertisements in the newspaperare deemed as invitation to treat as perPartridge v Crittenden(1968) 2 All ER 425. It is alsoimportant that a difference is made between a request for information and offer (Andrews, 2015).This can be elucidated with the help ofHarvey v Facey[1893] AC 552, where the court statedthat the inquiry about the lowest price for the pen was a request for information. This case is alsoan example of supply of information. An offer can be accepted so long as it is open. Before theacceptance is given on the offer, the same can be revoked at the option of the offering party
3IRAC(Marson and Ferris, 2015). As was seen inDickinson v Dodds(1876) 2 Ch D 463, the court heldthat the offer had been revoked in an effective when the defendant had communicated therevocation of offer to the plaintiff during the time when the offer was open (E-Law Resources,2018a).Once an offer is made by the offering party, it is to be accepted by the party to which the offerhad been made. It is important that the acceptance is given by the party to which the offer wasmade and is given in exactly the same terms. A change or modification of the offered termsresults in a counter offer being made as perHyde v Wrench(1840) 49 ER 132. The acceptancehas to be certain and unconditional (Marson and Ferris, 2015). InScammell and Nephew vOuston[1941] AC 251, even though an agreement on price had been attained by there was nocertainty in terms of agreement (E-Law Resources, 2018b). The date of acceptance is alsoimportant and as per the instantaneous rules, the date of acceptance, as per the law, is the date onwhich communication of acceptance is attained by the offering party. Though, in cases of postalrules of acceptance, this date is the date on which the letter of acceptance is posted (Clarke andClarke, 2016). TheElectronic Transactions Act, 1999 is an important legislation in this regard.Section 14 provides that the date of dispatch and receipt in electronic communications is alignedwith postal rules(Federal Register of Legislation, 2011).The other requirements of creating contract include consideration, where the parties need to havea valid consideration amount for the contract to be valid. The amount of consideration needs tobe mutually decided between the parties, and has to be sufficient and not adequate. For instance,inChappell v Nestle[1960] AC 87, the wrappers were held as valid consideration. The nextrequirement is for the parties to have the intention of creating legal relations (Latimer, 2012). For
4IRACinstance, inBalfour v Balfour[1919] 2 KB 571, this intent was absent due to the agreementbeing totally domestic and social. The parties also need to have the capacity of entering into thecontracts which is usually defined by legal age. Lastly, the parties need to be clear on the termsof the contract (E-law Resources, 2018c). Once all of these terms are present, a valid contract ineyes of law is created (Abbott, Pendlebury and Wardman, 2007).ApplicationIn the given case study, for a contract to be deemed to have been created between Sam andDanny, there is a need to show the presence of the requisite elements of contract. In this regard,firstly it needs to be shown that an offer had been made. The advertisement given in this casewould be taken to be an invitation to treat as per the ruling given inPartridge v Crittenden. Theoffer was made by Danny after he undertook the inspection of the laptop. However, instead ofgiving acceptance on this, a counter offer was made by Sam, as there was difference inconsideration value, based onHyde v Wrench.Upon this, the reply by Danny was given whichwould not be deemed as acceptance as it was not certain as perScammell and Nephew v Ouston.The communication which followed after these occurrences, where Danny sent the email to Samwould be deemed as request for information based onHarvey v Facey.The reply of Sam on thiswas a supply of information based on the same case. So, till this point an offer had been made bySam with consideration value of $800. This would be deemed as valid consideration as this hadeconomic value as perChappell v Nestle. Here there was presence of intention between theparties as this was not a social agreement as perBalfour v Balfour. As these were electroniccommunications, postal rules would be applied and the moment when the communication wassent would be deemed as the date of communication. Finally, when the offer was still open,
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