Contract Formation and Breach

This assignment examines the concept of contract formation and breach of contract through a case study involving Juan and Crystal. Juan asks Crystal to deliver goods but she is unable to due to being at a convention. The analysis focuses on whether a valid contract was formed between the parties, considering the offer, acceptance, and any breach that may have occurred. Relevant legal cases are discussed to support the arguments presented.

Business Law
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Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
CONCLUSION................................................................................................................................4
REFERENCES................................................................................................................................6
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INTRODUCTION
Contracts are the most significant part of laws. Either it is business or other field,
contracts are use to bind the parties to perform those acts for which they are being paid. A
contract is an agreement which is enforceable by the court. This report is about providing legal
advice to Juan who is a young entrepreneur, owner of super-foods smoothie stand. He always
buy contents for his product from an organic farmer, Crystal. Juan called Crystal to know the
price of kale in return she was informed about the price and availability of the product.
Immediately Juan faxed her and place this order in it but she was out in farmer's convention. And
during such event she sold the two boxes to another party and know Juan has no idea where to
get his kale from. The case is about the existence of a valid contract between the parties and
advising them related to such incident with relevant laws and reasons.
MAIN BODY
Laws are derived from various sources. Similarly, contract laws are the essence of
statutes and ordinance enforced by the state. Contract laws in UK are regulated by the English
Contract Law. It came into existence during the industrial revolution and the social legislation of
the 20th century. The European contract laws are the essence of Ancient Athenian and Roman
Law. Not all agreements are contract. In certain cases an agreement is deemed to be
unenforceable until and unless it comes in the ambit of those statutes which regulates contract
laws. Generally there are three sources to create a law in UK, the legislature, the European laws
and the courts. The courts are considered as secondary source of laws while the other are the
primary sources for its creation. Also there is process for making a law that is a bill is proposed
in the parliament in it s First Reading, in the Second reading debate and discussion related to the
proposed bill takes place and after that it is forwarded to a committee to find out any error in it is
Report Stage. Then the bill is transferred again to the legislature for the final decision, it is
basically done to think over any amendment which could be done in the proposed bill, in it Third
Reading. A bill become 'An Act of parliament' after it gets the Royal Assent. Similarly. Statutes
related to contract are being regulated by such procedure. For enforcing a law it is essential to
comply with sources and procedure as mentioned above. The statues that regulates business in
UK are Companies Act 2001, English Contract Laws, Supply of Goods Act, etc. (Alix Adams
Bagley, C.E., 2010)
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A contract is binding upon the parties who are getting into a business. It provided terms
and conditions according to which the parties has to comply with their business. A contract is a
legal promise of performing an act between the parties. It has certain essential elements, such as
an offer , acceptance, consideration and communication of the contract. A contract is constructed
by publishing an offer it can to a specific person or addressed to the public. Also a contract can
be expressed and implied. An expressed contract is such which clarifies the promise made by the
party, either oral or in written whereas an implied contracts are constructed by conducting some
act which makes the parties to believe in an agreement. A contract is valid only if it follows the
principles. First an offer is made, as discussed above, to that offer an acceptance shall be there.
An acceptance is generally of three kinds, expressed, implied and conditional acceptance.
Similar to an offer an acceptance can be made orally or in written or by any conduct. A
conditional acceptance is generally initiation of a new contract also know as counter offer. An
acceptance comes with a consideration. It is generally in the form of money. It is the value for
which a promise is made (Dunlop v Selfridge). Also, there must be an intention to form a
contract and such intention should be a legal binding upon the parties (Rose & Frank Co v JR
Crompton & Bros Ltd). The objective of a contract must not be prohibited by law, that is it
should be according to the public policy and also when being enforced it shall not destroy any
provision of law. This is how a valid contract is formed in order to immune the parties from any
threat by laws.(Bodie, Z., Kane, A. and Marcus, A.J., 2014)
It is also important to communicate an offer and acceptance to the parties. There are
certain ways which proves a legal communication of them. The person to whom the offer is
made is an offeree. An offer can be made by various ways, it can be made orally or in written.
When an offer is delivered by post it will came into existence only when the offeree receives it In
Adams v Lindsell, 1818, an offer was made to sell some wool to the claimant by the defendant
and a reply was asked 'in the course of post'. But the letter was delayed in the post and on
receiving it the claimant send his acceptance by the post. The defendant misinterpret it as the
claimant is not interested in such offer so he sold it to some other party. It was held that an
acceptance is valid when it has been put in the post box thus the claimant was liable for the
remedies caused due to the breach of contract. Similarly, communication of an acceptance is also
an essential part of a contract. An acceptance is the last stage of a valid contract, it must be
communicated to the offeror. Mere silence is not an acceptance. In the case of Felthouse v
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Bindley, it was said that silence is not an acceptance to an offer but a conduct of an act is. The
landmark case which deals with the conduct of an act is Carlil v Carbolic Smoke Ball Co., 1893,
an offer was made to pay an amount of 100 euros who use their product according to the
instruction provided but still got influenza. Mrs Carlil does it as it was mentioned but suffered
from influenza so the company was sued and they have to pay the claimant the said amount. In
this case it was held, a conduct to an offer is an acceptance.(Crane, A and Matten, D., 2016)
Now, the question is, a contract constructed by the way of fax is a legal binding over the
parties? Generally acceptance made by post is complete as soon as the letter is drop in to the post
box, but is it same in the context of Fax? A fax is not considered as a legal document unlike
telex, in which the answer backs are considered as proof of transmission and receipt of the
complete message can be find out by such answer backs. A scrambled fax which was not
possible to be transferred are result in the binding of the contract. Moreover, a scrambled fax is
treated as a legal document. There are certain rules of acceptance hat need to followed.
Sometimes, an acceptance is giving according to the manner that has been asked in the offer. An
offer has a valid acceptance only if it is done by the authorised person. Also an agent to the
authorise person can also accept an offer. It there is a specific method of acceptance then it has to
been send in that way only.(DiMatteo, L.A., 2010)(Eren, S.S and et. al., 2012)
The given case can be divided in two stages, first one is when the communication is done
by telephone and the other one is when it was done by fax. The above analysis was done to
explain the situation of the case. Juan called Crystal to ask the price of kale for his smoothie
shop. Mere asking price does not create any contract, as discussed above. The information was
provided by the Crystal was not an acceptance of the contract. So till now there exists no
contract. After receiving the information, Juan send her fax asking to deliver two boxes of kale
on Wednesday and other two on Friday with same price. Here an offer was made by Juan
through fax. In return no reply came to him from Crystal as she was in farmer's convention. She
received such fax until Tuesday morning, till then she sold those two boxes to some other party.
(Foss, N.J and Knudsen, C. eds., 2013)
Here it is necessary to understand whether there is a formation of contract or not. At the
first stage there was sharing of only the information related to the product and mere asking the
price of product does not create a contract. At the second stage Juan send Crystal a fax for asking
her to deliver the boxes of kale. This situation is crucial because according to Juan he has entered
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into the contract by telephone calling. But it is not true cause the actual formation of contract
started when the offer was made through the fax. So, the completion of a contract there must
exists an acceptance which was not made by the Crystal as she was in farmer's convention. So
there exist no contract or we can say that the parties did not enter into any contract. It necessary
to communicate the acceptance mere offering is not considered as contract, also silence is not
considered as an acceptance. In this case the mere sending the fax of order d9oes not create a
contract. A contract would be created if the Crystal would have send Juan a confirmation fax or
by delivering the boxes directly to him. But this didn't happen and she sold the two boxes to
other parties at higher cost in order to earn more profit, as Juan was asking it to deliver it for a
price half than the purchase price of the other party.(Grundfest, J.A., 2010)
There exist no breach of contract by the Crystal as she did not gave her consent for the
accepting the offer of Juan. So, there exist no contract in the course of communication. The
principles of a valid contract is very complicated. It is essential to understand the circumstances
in which it has been made. There are certain things that needs to be considered while interpreting
a contract. Some times provisions of the contract are easy to interpret. It is usually easy in the
case of a written contract but becomes difficult when an oral contract is made. It much
complicated when a contract is formed by conducting an act. In a written contract, interpretation
is done as it is unlike an ambiguous contract. At that time the circumstance in which it has been
formed are considered.(Johnson, L., 2013)
CONCLUSION
In the given case it is really tough to identify the existence of the contract. After the
extensive analysis of contract laws it became easier to know whether the parties enters into the
contract or not. The decided cases gives an idea about a valid contract. Also it has been provided
in this report that communication of an offer and acceptance is an essential part for the
completion of a contract. In the given case Juan has been provided with legal advice. According
to him he has entered into the contract but it is not an actual situation because the call was made
to know the value of kale. It was just to gain the information about the product. Also after getting
response from Crystal was not an acceptance because she gave him the information which he has
asked her. But here it is essential to understand the offer was made by Juan by asking her to
deliver the goods, so there exists an offer. Also, it is necessary to know that no acceptance was
made for that offer as Crystal was busy in a farmer's convention. To prove these points relevant
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cases are being considered in the report. So at the end there was no contract between the parties
and Crystal was not responsible for the breach of contract.
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REFERENCES
Books and Journals
Bagley, C.E., 2010. What's Law Got to Do With It?: Integrating Law and Strategy. American
Business Law Journal. 47(4). pp.587-639.
Bodie, Z., Kane, A. and Marcus, A.J., 2014. Investments, 10e. McGraw-Hill Education.
Crane, A and Matten, D., 2016. Business ethics: Managing corporate citizenship and
sustainability in the age of globalization. Oxford University Press.
DiMatteo, L.A., 2010. Strategic contracting: contract law as a source of competitive advantage.
American Business Law Journal. 47(4). pp.727-794.
Eren, S.S and et. al., 2012. Caching message fragments during real-time messaging
conversations. U.S. Patent 8,255,473.
Foss, N.J and Knudsen, C. eds., 2013. Towards a competence theory of the firm (Vol. 2).
Routledge.
Grundfest, J.A., 2010. The SEC's Proposed Proxy Access Rules: Politics, Economics, and the
Law. The Business Lawyer, pp.361-394.
Johnson, L., 2013. Unsettledness Delaware Corporate Law: Business Judgment Rule, Corporate
Purpose. Del. J. Corp. L., 38, p.405.
Kinicki, A and Kreitner, R., 2012. Organizational behavior: Key concepts, skills & best
practices. McGraw-Hill Irwin.Swartz, L.B., Cole, M.T and Shelley, D.J., 2010.
Instructor satisfaction with teaching business law: Online vs. onground. International
Journal of Information and Communication Technology Education (IJICTE). 6(1),
pp.1-16.
Ye, Q and et. al., 2011. The influence of user-generated content on traveler behavior: An
empirical investigation on the effects of e-word-of-mouth to hotel online bookings.
Computers in Human Behavior. 27(2). pp.634-639.
Online
Alternative dispute resolution (ADR). 2017. Available through
<https://www.citizensadvice.org.uk/consumer/alternative-dispute-resolution/settling-
out-of-court/>.
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