Contract Formation & Incorporation

This essay explores the provisions under English Contract Law, including the definition of a contract, conditions for forming a contract, and the rights and responsibilities of the parties involved. It provides expert advice for a specific contract scenario. The subject is Contract Law, and the document type is an essay.

Contract formation &
incorporation
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Table of Contents
Introduction......................................................................................................................................3
Main Body.......................................................................................................................................3
Case Scenario..............................................................................................................................3
Contract.......................................................................................................................................3
Conditions for forming a contract...............................................................................................3
Advice for Angharad and Bridie.................................................................................................4
Rights and responsibilities of the parties to the contract.............................................................5
Conclusion.......................................................................................................................................6
References........................................................................................................................................7
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Introduction
Contract is an agreement which is enforceable by law. It can be written or oral. Contracts
in UK are regulated under English Contract Law. It governs the provisions related to fulfilling
consented agreements and are the base on which court decides the results of litigation under
agreements (Cartwright, 2016). Below mentioned is a scenario related to contract and an essay
that aims to explore the provisions under English Contract Law. Definition of contract and
conditions for forming a contract are discussed under the essay. Also, discussed are the
provisions related to the rights and responsibilities of the parties under case law in the context of
the scenario provided.
Main Body
Case Scenario
In the presented case study, two parties are involved – Angharad and Bridie. Angharad
operates a building business and Bridie has contacted him to built a wall in her garden. Angharad
quotes her a price of £500 in writing and the said offer is open for the period of 10 days. In the
given period, Bridie refused the offer and after the lapse of time period, accepted the quotation.
However, this time Angharad has increased the quote to £600.
Contract
Contract refers to an agreement that contains at least two parties which have agreed to
perform or refrain from performing an agreed promise for a specified consideration. A contract
voluntarily entered into by parties to the contract is legally enforceable. Contracts are governed
under Contract Law and are applicable to parties under contract. It contains the provisions which
governs the relationships and the terms, validity and legality between parties to the contracts for
matters regarding consideration, goods and services exchanged or other matters such as
ownership, possession, etc. (Contracts, 2021)
Conditions for forming a contract
Contract begins with an offer. It can be an offer for willing exchange of goods or services
for money or barter or a promise for future service or future payment (Loos, 2016). If the offer of
one party is accepted by other party, it forms the basis of formal agreement between the two
parties. However, other party is allowed to refuse the offer and make a 'counter offer'. This
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counter offer must be communicated to other party as no communication or incomplete
communication will not be treated as acceptance in law. Acceptance can be made in words or by
conduct. In other words, offer is considered accepted when offeree's words or conduct infers that
offeree has agreed to the terms presented by offeror. Once the offer is voluntarily accepted by
both the parties and the consideration has been transacted, a contract is said to come into
existence. Where the contract is conditional, it becomes enforceable when the condition is met or
agreed upon. For a contract to the treated as valid under law, it needs to have three elements
mandatorily – a voluntary agreement, an intention to create legal relations and a consideration.
Contracts does not need to be in written to be legally enforceable, oral contracts are also
considered valid however, contract for sale of land or property must necessarily be in writing and
all the conditions in the contract must be mutually agreed, otherwise it will not be treated as
enforceable (O'Sullivan, 2020).
Advice for Angharad and Bridie
In the given case, there was no concluding agreement, just offers involved. Offeror
Angharad has offered to build a wall for offeree Bridie for £500 in writing. However, the offer
made was treated to be valid for 10 days only post which, it would be at discretion of offeror. In
this period, offeree did not respond. Bridie responded after 10 days by when Angharad has
increased the quote price to £600. Since, there was no legally enforceable contract involved,
Bridie cannot compel Angharad to perform the contract at initially offered price only. At the
same time, Angharad cannot force Bridie to accept his counteroffer of £600 just because she has
agreed to the initial quoted price (Coote, B., 2016).
This scenario can be better understand through the case of Hyde v Wrench (Hyde v
Wrench, 2020) under which Wrench offered to sell his farm to Hyde for £1200. However, Hyde
declined that offer and Wrench presented a revised offer of £1000 stating that it is the final quote
and would not be further altered. But Hyde did not accept that offer and rather made a
counteroffer of £950 which was not agreed by Wrench. In the following days, Hyde agreed to
buy the farm on the consideration of £1000 without any additional agreement from Wrench. This
was refused by Wrench and in response to refusal, Hyde sued Wrench for breach of contract.
After listening to the arguments of both the sides, Judge passed a judgement stating that no valid
binding contract existed between the parties for purchase of farm property. Had plaintiff (Hyde)
unconditionally accepted the offer of defendant (Wrench) to buy it for £1000, it would have been
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a binding contract. Rather, plaintiff made a counteroffer which was rejected by defendant,
making the original offer's position stand cancelled and losing the right to be legally enforceable.
Therefore, the plaintiff cannot sue defendant for accepting the proposal as at the moment there
exists no legally enforceable obligations between two parties. In summary words, ruling of this
case law was that counteroffer cancels the original offer.
In the given case scenario as well, it can be seen that original offer was not accepted in
the period time and was accepted only post period, when a revised offer was made. Based on this
judgement mentioned above, it can be deduced there was no counteroffer involved in this case as
Bridie has not made any counter-offer, rather it was a conditional offer and only when the
conditions were fulfilled, could have been treated as valid (Poole, 2016). She failed to fulfil time
condition and on the basis of it, it can be advised to Bridie that she cannot force original offer to
be legally enforceable and therefore, either she should accept revised offer or present counter-
offer to Angharad as per her requirements. On the other hand, Angharad, though not legally
bound by the original offer as one of the condition of the offer is lapsed, can make negotiations
with Bridie at his discretion so that original offer can stand a further chance of being fulfilled.
Though, they do not look like being into a legally enforceable contract or agreement at the
moment, they can renegotiate and revisit the offer conditions as both the parties are interested
and Angharad has not stated that offer would further not be renegotiated or there would be any
other hidden terms or conditions, in case of non-acceptance or late acceptance of offer
conditions.
Rights and responsibilities of the parties to the contract
Contract rights refers to those benefits that one is entitled to receive under contract and
contract obligations refers to the duties or responsibilities that is expected to be performed under
the contract. Rights and obligation are also subjected to legal provisions. Contractual obligation
can be either in the form of service or payment consideration or many be fulfilment of any
promise made to the opposite party (Goldberger, 2019). Under contract law, if these obligations
are not fulfilled or the rights are violated, it amounts to breach of contract and any party can
move to court against it. In the given case scenario, it can be observed that they have not entered
into any legally enforceable contract or agreement. Rather, they were in the process of offer-
acceptance and counter-offer. In such case, general contractual rights are not applicable.
However, implied rights i.e. those rights which are treated implied under law and does not need
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to be written explicitly to be followed such as right to good faith and fair dealing, right to enter
contract without force, forgery and fraud and others like right during quasi-contracts are
available to both Bridie and Angharad. During the period of initial offer, Bridie has right to
accept or decline offer while Angharad was obligated to perform the contract in the case of
acceptance. Post non-acceptance of contract during offer time, Angharad got the right to revoke
or take no-answer as declination of offer as obligation to abide by no-answer situation lies with
Bridie (Burrows, 2016) . In further situation, it was right of Angharad to cancel initial offer and
revise the term while Bridie has right to refuse or renegotiate the offer by giving counter-offer.
Conclusion
Essay above elucidates provisions related to contracts and their conditions and it can be
deduced that a valid contract starts with an offer requires to fulfil three conditions to be treated as
valid and legally enforceable i.e. there needs to a valid agreement which contains a consideration
and has been drawn with an intention to create legal relations. Further, it can be observed that an
offer is different from agreement and only when an offer is accepted unconditionally or while
fulfilling all the conditions, can it be treated as basis of legally enforceable agreement. It can be
concluded from essay above that rights and obligations of parties to the offer are different from
parties to the contract.
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References
Books and Journal
Burrows, A., 2016. A restatement of the English law of contract. Oxford University Press.
Cartwright, J., 2016. Contract law: An introduction to the English law of contract for the civil
lawyer. Bloomsbury Publishing.
Coote, B., 2016. Contract as Assumption II: Formation, Performance and Enforcement.
Bloomsbury Publishing.
Goldberger, J., 2019. Incorporation by terms of reference or by a course of dealing-part 3 of
3. Commercial Law Quarterly: The Journal of the Commercial Law Association of
Australia, 33(3), pp.33-45.
Loos, M., 2016. Art. 70–71: Incorporation and Making Available of Standard Contract Terms.
In Contents and Effects of Contracts-Lessons to Learn From The Common European
Sales Law (pp. 179-202). Springer, Cham.
O'Sullivan, J., 2020. O'Sullivan and Hilliard's the Law of Contract. Oxford University Press.
Poole, J., 2016. Textbook on contract law. Oxford University Press.
Online
Contracts. 2021. [Online]. Available
through:<https://www.inbrief.co.uk/contract-law/contracts/>
Hyde v Wrench. 2020. [Online]. Available through:<https://www.explore-law.com/hyde-v-
wrench/>
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