Resolving Contract Disputes

This assignment delves into the different approaches used to settle contract disagreements. It examines methods such as negotiation, where parties directly communicate to reach a solution; mediation, involving a neutral third party who facilitates discussions; and conciliation, where a conciliator guides the parties towards an agreement. The advantages and disadvantages of each method are discussed, emphasizing the importance of considering cost-effectiveness, time constraints, and the level of control desired by the parties.

10/28/2017
Assignment 2 | (Student Details: )
Commercial Law

COMMERICAL LAW
Introduction
A contract is an agreement, which is created between two or more parties, which gives
rise to legal rights and obligations. In a contract there are usually two parties, in which Party X
promises to Party Y to do some task or work and in return, Party Y promises to fulfil the
consideration condition. The formation of contract requires the presence of some specific
elements (Bonell, 2009). These are the element of offer, the acceptance, consideration,
capacity, clarity and intent. Upon these six elements coming together a contract is formed.
Once a contract has been formed, the Party X and Party Y get under an obligation to fulfil the
terms of the contract. Where the terms of the contract are not upheld, a breach of contract
takes place. In order to mitigate the dispute raised from such a breach, the parties have the
option of referring the matter to the different techniques of Alternative Dispute Resolution
(Gibson & Fraser, 2014). This discussion is focused on these different concepts governed by the
contract law.
Part A
I: ISSUE
The first issue relates to the contract formation between the different parties.
R: RULE
As has been provided in the previous segment, the formation of contract requires the
element of offer to be present. An offer is deemed as the expression of willingness of the
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parties to form a contract on the basis of certain key terms and is made with the intention that
once this offer is accepted, it would become binding (Treitel & Peel, 2015). There is a need to
understand that an offer is different from an invitation to treat. An invitation to treat shows
that the parties are only willing to negotiate upon the possible contract, which may or may not
be formed, and required offer to be made. For instance, Partridge v Crittenden [1968] 1 WLR
1204 led the court to decide that the ads which are published in the magazines or the
newspapers are not an offer, but an invitation to treat. However, when it came to the ad
published in the landmark English case of Partridge v Crittenden [1968] 1 WLR 1204, it was
deemed as a unilateral offer. This was because in this case, the offer had been made to the
world, which could be accepted by anyone merely by performing the offer (Latimer, 2012).
Upon an offer being made, it becomes necessary for Party Y to accept the offer made by
Party X. This has to be done in the manner in which the offer was made, and on the same terms
which had been offered (Clarke & Clarke, 2016). Where Party Y makes changes in the terms of
offer, the original offer expires owing to the counter offer having being drawn, and this was
held by the court in the Hyde v. Wrench (1840) 3 Beav 334 case (Marson & Ferris, 2015). It is
also important to note that the acceptance has to be communicated in a proper manner, and
Felthouse v Bindley (1862) EWHC CP J35 provides that when the party remains silent on an
offer, it is not considered as an acceptance (Andrews, 2015).
Another important aspect of acceptance is the ‘date of acceptance’ which is considered
as the date on which the Party X obtains the acceptance of Part Y. However, the condition is
changed when it comes to the ‘postal rules of acceptance’ (Ayres & Klass, 2012). Under these
rules, the ‘date of acceptance’ is taken to be the date on which Party Y posts their acceptance
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through a letter with the postal office, as this office is given the status of the Party X’s implied
agent (Elliot, 2011). A leading example of the applicability of this concept can be seen in Adams
v. Lindsell (1818) 106 ER 250 where the court considered the drawn contract to be valid and
thus, enforceable (E-Law Resources, 2017).
The next step with regards to the creation of a contract is the consideration. When it
comes to the consideration, it is crucial that it is not past, and instead is present. Also, the same
has to be sufficient and not adequate. This means that the value of consideration can be
anything which the parties mutually agreed upon. However, a crucial requirement in this regard
is for the consideration to have legal validity. Without the element of consideration, the
contract cannot be deemed as a valid one (Frey & Frey, 2005).
The next contractual element is the presence of intention. There is a need for the
contracting parties to have a very clear intention of entering in legal relations, which would give
rise to legal obligations. This has to be followed by the presence of contractual capacity by the
parties. In this context, the parties need to have the legal standing of entering in a contract,
which is in terms of their legal age and soundness of mind. The last requirement relates to the
clarity in the terms of the contract, so that the contract is not ambiguous (McKendrick & Liu,
2015).
A: APPLICATION
Before analysing the case of each individual separately, there is a need to evaluate the
offer which had been made. An offer had been made in this case by Alan, to all the students of
Kaplan, apart from his friends, and this offer was made through the Facebook post of Alan on
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01 November. This is being treated as an offer based on Carlill v Carbolic Smoke Ball Company
as the offer was made to a large group of people and anyone could accept the offer by fulfilling
the conditions laid down in the offer. This also showed the intention of Alan to enter into legal
relations.
When it comes to the case of Bernard, his reply over the Facebook post of Alan would
be considered as a counter offer owing to the change in consideration value. This resulted in
the expiration of original offer based on Hyde v. Wrench. This counter offer was declined by
Alan and he again stated that the original consideration price. However, this offer was still open
as Alan had been made another offer, which was still to be accepted by Alan. So, Bernard
accepted this new offer of Alan and posted his acceptance on 05 November, which would be
the ‘date of acceptance’ based on postal rules. As Alan looked out for the money, the intention
was clearly present. The other elements of contract formation have been assumed to be
present. And so, it can be concluded that a contract was formed in between Alan and Bernard.
When it comes to the case of Charleen, the offer had never been made for Charleen as
she was not yet a student of Kaplan and was sister of Alan, instead of being his friend. Also,
when the offer had been made by Charleen for purchase of book to Alan, the same was not
accepted as Alan remained silent, and silence is not acceptance as per Felthouse v Bindley.
In the case of Damien, the offer would be deemed to have been made to him as he
studied at Kaplan. His acceptance was attained on 04 November when he gave the cash amount
to Alan, as a result of which a contract was created between the two individuals.
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C: CONCLSUION
Hence, a contract had been formed between Alan-Bernard, Alan-Damien but not
between Alan-Charleen.
Part B
I: ISSUE
The second issue relates to the rights of Bernard against Alan.
R: RULE
To reiterate what has been covered in the introductory segment, when the promise
made under a contract is not upheld, a breach of contract takes place. And this gives the parties
the right of raising a claim before a competent court, whereby they are awarded remedies in
form of compensation for the loss, or could other the other party to do something, or refrain
from doing something, in form of specific performance and rescission order (Paterson,
Robertson & Duke, 2012).
The contract law provides certain vitiating factors which render the contract voidable at
the option of the aggrieved party. Misrepresentation is one of such vitiating factors, in which a
false statement is made by Party Y to Party Y to induce Party Y in entering the contract. This
false statement has to be a statement of fact and if the same is of opinion a case of
misrepresentation cannot be upheld (McKendrick, 2014).
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A: APPLICATION
The case study highlights that a promise had been made by Alan to give Bernard the
handwritten notes and the university book. However, this contractual promise was not upheld,
as he was not given the handwritten notes, resulting in a breach of contract. So, Bernard can
make a case of breach of contract against Alan. He can also make a case of misrepresentation
claiming the false representation of Bernard with regards to being given handwritten notes,
which were never provided to him.
C: CONCLSUION
Hence, Bernard has the right of making a case of misrepresentation and breach of
contract against Alan.
Part C
I: ISSUE
The third issue relates to the rights of Charleen against Alan.
R: RULE
As covered in previous segments.
A: APPLICATION
Without a contract being formed, a breach of contract cannot be claimed.
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C: CONCLSUION
Hence, there are no rights available with Charleen in this case.
Part D
I: ISSUE
The fourth issue relates to the rights of Damien against Alan.
R: RULE
As covered in previous segments.
A: APPLICATION
The case study highlights that a promise had been made by Alan to give Damien the
handwritten notes and the university book. However, this contractual promise was not upheld,
as he was not given the university book, resulting in a breach of contract. So, Damien can make
a case of breach of contract against Alan. He can also make a case of misrepresentation
claiming the false representation of Damien with regards to being given university book, which
were never provided to him.
C: CONCLSUION
Hence, Damien has the right of making a case of misrepresentation and breach of
contract against Alan.
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Part E
When a dispute is raised between the parties, they have the option of going before the
court by opting for litigation method for solving their dispute. As discussed in the previous
segment, Bernard and Damien can go to the court against Alan for misrepresentation and
breach of contract. However, instead of option for litigation, they can opt for the different
methods of Alternative Dispute Resolution (ADR). The three key ADRs are arbitration,
mediation and conciliation (Nolan-Haley, 2013).
Arbitration is a method in which the parties select an arbitrator, who arbitrates the
disputed issue. Where the parties cannot select a common arbitrator, they can each elect one
arbitrator and then these elected arbitrators elect a final arbitrator, and then the case is
arbitrated by an arbitration panel. The main benefits of arbitration include the method being
cost effective, not only in monetary terms, but also with regards to the time window, as
litigation takes a long period of time to solve a single dispute. And then the litigation decision is
followed by lengthy appeals. The arbitration proceedings are private and confidential, which is
not the case in litigation. The disadvantage of this method is that the arbitration award requires
confirmation by court to be legally binding (Gramberg, 2006).
Coming to the next method of ADR is the method of mediation. In this method, the
parties resort to a mediator who attempts to mediate the method by use of diverse negotiation
techniques. Like arbitration, these proceedings are also confidential and cost effective. And as is
the case with arbitration, the mediator cannot force the order on the parties. Also, the denial of
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mediation result would mean that the matter has to be referred to court, which means more
costs than the parties could have saved (Ware, 2016).
The last method is that of conciliation where the dispute is attempted to be resolved by
conciliator. In this method, the parties can suggest the possible solution to the dispute, thus
giving more control to the parties and resulting in effective resolution of dispute, as the parties
are involved. The parties are met with separately by the conciliator to solve the dispute. The
advantages and disadvantages of this method are similar to the other two methods. Also, a
conciliator cannot force the parties to speak the truth or force the production of any evidence
(Kramer, 2016).
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References
Gibson, A., & Fraser, D. (2014). Business Law 2014 (8th ed.). Melbourne, Pearson Education
Australia.
Andrews, N. (2015). Contract Law (2nd ed.). UK: Cambridge University Press
Ayres, I. & Klass, G. (2012). Studies in Contract Law (8th ed.). New York: Foundation Press.
Bonell, M.J. (2009). An International Restatement of Contract Law: The Unidroit Principles of
International Commercial Contracts (3rd ed.). New York: Transnational Publishers, Inc.
Clarke, P. & Clarke, J (2016). Contract Law: Commentaries, Cases and Perspectives (3rd ed.).
South Melbourne: Oxford University Press.
E-Law Resources. (2017). Adams v Lindsell (1818) 106 ER 250. Retrieved from: http://www.e-
lawresources.co.uk/Adams-v-Lindsell.php
Elliot, C. (2011). Contract Law (8th ed.). London: Pearson.
Frey, H P. & Frey, M A. (2005). Essentials of Contract Law (3rd ed.). Portland: Delmar Cengage
Learning.
Gramberg, G.V. (2006). Managing Workplace Conflict: Alternative Dispute Resolution in
Australia. New South Wales: The Federation Press.
Kramer, H. S. (2016). Alternative Dispute Resolution in the Work Place. New York: Law Journal
Press.
Latimer, P. (2012). Australian Business Law 2012 (31st ed.). Sydney, NSW: CCH Australia Limited.
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Marson, J., & Ferris, K. (2015). Business Law (4th ed.). Oxford: Oxford University Press.
McKendrick, E. & Liu, Q. (2015). Contract Law: Australian Edition. London: Palgrave Macmillan
McKendrick, E. (2014). Contract Law: Text, Cases, and Materials (6th ed.). Oxford: Oxford
University Press.
Nolan-Haley, J.M. (2013). Alternative Dispute Resolution in a Nutshell (4th ed.). Minnesota: West
Academic.
Paterson, J.M., Robertson, A., and Duke, A. (2012). Principles of Contract Law. 4th ed. Rozelle,
NSW: Thomson Reuters (Professional) Australia.
Treitel, G H. & Peel, E. (2015). The Law of Contract (14th ed.) London: Sweet & Maxwell.
Ware, S. (2016). Principles of Alternative Dispute Resolution. Minnesota: West Academic.
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