Analysis of Contract Law Issues and Alternative Dispute Resolution Options
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This article analyzes the contract law issues in a commercial law assignment question and discusses alternative dispute resolution options such as mediation, neutral evaluation, and arbitration. It also discusses the legal positions of the parties involved in the assignment question and cites relevant case laws.
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Commercial Law Assignment Question Student’s name: University:
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(i) Issue: The issue that has to be decided in this question is, if the parties have entered into a legally enforceable contract. For the purpose of deciding this issue, it has to be considering this question, if all the necessary elements that should be present in a valid contract exist. Likewise, it also has to be seen who the parties are if a valid contract has been formed. Rule: according to rules of the law contract, and contract has been described as an agreement that exists between two or more parties and such agreement can be enforced by the law. Similarly the rights and obligations of the parties are decided on the basis of the terms of the contract. However, the presence of a valid contract between the parties is an objective question. For example, it has to be seen if there is a meeting of the minds between the parties to the agreement. In the beginning of deciding the question regarding the presence of the contract between the parties, it has to be seen if an offer was made and if it was accepted. In terms of contract law, an offer can be described as a promise or the willingness of the party making the offer to be bound by the terms of the contract if these terms are accepted by the other party (Atiyah, 2000). Similarly, there are certain other elements which should be present in a valid contract. These elements include a valid consideration (Wade v Simeon, 1846) and also the intention shared by the parties that they will be legally bound by the contract (Pharmaceutical Society v Boots Ltd., 1953). In this way, when an offer is made and the other party accepts the same and at the same time, the other essential elements are also present, it can be stated that a contract has arisen between the parties that can be enforced by the law. On the other hand, when a statement has been made only with a view to invite offers from the other party, such statement is known as an invitation to treat (Fisher v Bell, 1961). Therefore such statement is not a valid
offer. Hence, such statement cannot be accepted in order to create a valid contract. As mentioned above, usually such statements are termed as invitation to treat. Application:in the given case, Alan had the desire to sell his textbook of commercial law, and also his handwritten notes on the subject. As a result, he put the message to this purpose on his face page. In this message, Alan had expressed his desire to sell the book, as well the notes made by him. But in view of the rules of contract discussed above, such notice cannot be described as an offer (Currie v Misa, 1875). The statement was made to invite offers and therefore it was only an invitation to treat. This conclusion has been made yet another reason that the message posted by Alan only had the intention to invite offers from the other students who wanted to purchase the book “Commercial Law”. For example, the message was seen by Bernard and he made an offer to Alan. According to this offer, Bernard was ready to buy the book from Alan at the price of $150. The law contract provides that the acceptance of the offer should take place exactly on the same terms. Therefore, in case there is some variation in the terms while accepting the offer, it is not a valid acceptance. Instead, it is known as counter offer (Dickinson v Dodds, 1876). In this regard, the law contract provides that when one party makes counteroffer, such party cannot acknowledge such offer afterward (Hyde v Wrench,1840). It also needs to be stated that Alan's younger sister Charleen saw the message on his Facebook page and as she always had a desire to read business law, she expressed her desire to purchase this book for $200. But in order to enter a valid contract, it is needed that both the parties should have the intent of entering legal relations (Merritt v Merritt, 1970). In the same way, it is also required that the offer should be accepted expressly by the other party (Felthouse v Bindley, 1862). This was not the case as Alan had not expressly accepted Charleen’s offer. Similarly, Damien also became aware of the intention of Alan to sell his book. He also had the desire to purchase the
book and also the handwritten notes. Under these circumstances, he sent a message to Alan. In the message he expressed his desire to purchase the book as well as the notes. Under these circumstances, Alan and Damien met on November 4 and Damien gave Alan the price for the book. Alan accepted the money and made a promise to give him the book, as well as the notes. Conclusion: under the circumstances, it can be concluded that the elements required for creating a valid contract exist in the dealings between Alan and Damien, as a result of confusion can be made that they have entered into a valid contract. (ii) Legal position of Bernard: Issue: The issue in this case is related with the acceptance of the offer. Rule: This issue arises due to the fact that the message posted by Alan on his Facebook page was seen by Bernard. After seeing the message, Bernard makes an offer to Alan. According to which he wants to purchase the book, as well as the notes returned by Alan. However, he offered to pay only $150 for the book and the notes. As a result, he asks Alan if he was ready to sell the book for $150 along with the notes. However, Alan plainly replies that he will sell it for $200. At the same time, Alan also tells Bernard that he already got an offer for $200. Therefore, Bernard also decides to purchase the book for $200. However, as Bernard was going abroad, he mails $200 in an envelope to Alan. This letter was posted on 4 November and Alan received it on 5 November. However it needs to be noted in this case that earlier Bernard offered to purchase the book for $150. Such a statement is not the acceptance of the offer, but it amounts to a counter offer under the contract law. In this way, according to the contract law, once a counter offer is made, it amounts to the rejection of the offer. Hence, the original offer is no longer available for
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acceptance to such party. It is said that a counter offer has been made by the other party when such party makes an attempt to accept the offer but on different terms. Whenever there is a difference in the terms while accepting the offer, it is considered as a counter offer. Under the law contract, it is necessary that the offer should be accepted exactly on the same terms. In case there is a variation in the terms while accepting the offer, it amounts to a counter offer. Therefore in such a case, the acceptance is not complete and it can be stated that such a party has made a counter offer. In such a situation the original offer is considered to be revoked. Application: On account of the legal rules mentioned above, in the present is also it can be stated that Bernard had made a counter offer when he tried to purchase the book for $150. The effect of making a counteroffer is that now. Bernard cannot be allowed to accept the offers made by Alan. Conclusion: in the present case, there is no contract between Allen and Bernard. (iii) The legal position of Charleen: Issue: the issue in this case is related with the intention of the parties and the legal relations. Rule: under the law of contract, all essential elements should be present in order to form a valid contract. Therefore, among others, it should be the parties’ intent that they are going to enter a legal relationship. However, regarding social or domestic arrangements (Balfour v Balfour, 1919), a presumption is present, according to which it was not the intention of the parties to enter a legal relationship (Household Fire Insurance v Grant1879). Therefore in such cases, there is the need to establish that in fact, it was intention of the parties to enter the legal relationship.
Similarly, it is also required under the contract law that the party making the offer should expressly accept the offer. Application: in the present case, it can be stated that Alan had not expressly accepted the offer made by Charleen to buy the book. In the same way, it is also essential to establish that both the parties had the intent of entering the legal relationship. Conclusion:under these circumstances it can be concluded that in this case a legally enforceable contract is not present between Charlie and Alan. (iv) The legal position of Damien: Issue: The issue is if Damien can accept the offer even if the offer was not made to him. Rule: Under the contract law, only the party to whom offer was made, can accept the offer. In the present case, Damien was told regarding the offer by Bernard. He decided to accept and purchase the book. Therefore he sent an SMS to Alan and expressing his desire to purchase. However,heaskedAlanifhecanpaythemoneyon4November.Accordingtothis arrangement, Damien paid $200 for the book. Alan also promised to give the book and the notes on 7 November. But he did not give the original book. He purchased a new book and gave to Damien and the notes. Application: This behavior on the part of Alan amounts to the breach of contract. In this case, it can be concluded that a valid contract was formed between the parties. Conclusion: It can be concluded that the agreement between Alan and Damien was enforceable by law.
Various alternative dispute resolution options: While the main method to resolve disputes is litigation, there are many alternative methods that can be used to resolve disputes. Whenever there is a dispute, the parties may consider legal action, but due to certain disadvantages, like high cost and too much time, the parties may think of alternative methods of resolving the dispute. At the same time, the courts also encourage the parties to use alternative methods for resolving their disputes. Some of the major alternative methods of resolving disputes include arbitration, mediation, conciliation and neuter evaluation. Mediation: in case of mediation, a neutral third party acts as the mediator. The mediator has the responsibility to guide and facilitate the parties so that they may arrive at a mutually acceptable settlement through negotiations. In this way, when the parties use mediation for resolving the dispute, the mediator does not directly deal with the issue, but the mediator helps the parties in their efforts to find a solution to the dispute that can take care of all the concerns of the parties. Similarly, in mediation, the decision is not forced on the parties. Neutral evaluation: The next alternative method to resolve disputes is that of neutral evaluation. When the parties have decided to use the method of neutral evaluation, a gift to a third party acts as the evaluator, who reviews the case and also expresses its opinion concerning the merits of the case of the parties. Arbitration: when you parties have decided to use the method of arbitration, the parties present their case to a neutral third party called the arbitrator. The arbitrator gives its verdict concerning the issue. During the arbitration proceedings, the case may be presented by parties or their lawyers. In arbitration, the verdict given by the arbitrator is based on merits. Furthermore, such a verdict is binding for the parties.
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Hence, the parties can use the methods discussed above in order to resolve their disputes instead of taking legal action.
References/Case Law Balfour v Balfour[1919] 2 KB 571 Currie v Misa(1875) LR 10 Ex 893 Dickinson v Dodds(1876) 2 Ch D 463 Felthouse v Bindley(1862) EWHC CP J 35 Fisher v Bell [1961] 1 QB 394 Household Fire Insurance v Grant1879 Hyde v Wrench[1840] EWHC Ch J90 Merritt v Merritt[1970] EWCA Civ 6 Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd[1953] 1 QB 401 Wade v Simeon(1846) 2 CB 548