Contract Law: Analyzing Contract Formation in Irish Law

This case study analyzes a contract law scenario involving Peter, Emma, and Andy, focusing on the formation of a valid contract under Irish law. The student identifies the issue of whether a contract was formed based on the elements of offer, acceptance, consideration, and intention to create legal relations. The analysis differentiates between an offer and an invitation to treat, referencing relevant case law like Grainger & Son v Gough and Norgren Co. The study examines the requirements for valid acceptance, including unequivocal and final expression, and the impact of counteroffers, referencing cases like Hyde v Wrench and Tinn v Hoffman. The application section analyzes Peter's advertisement as an invitation to treat, Emma's counteroffers, and the timing of acceptance via voice message, applying the postal rule and electronic communication rules from cases like Entores v Miles Far East Corp and Tenax Steamship Co v Owners of the Motor Vessel Brimnes to determine if a contract was formed between Peter and Emma before Peter sold the car to Andy. The conclusion finds that a contract was formed between Peter and Emma, leading to a breach of contract by Peter.

Running head: CONTRACT LAW
Contract Law
Name of the Student
Name of the University
Author Note

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Issue
The issue identified by going through the fact pattern provided in the case study is that
whether a valid contract has been formed between Peter and Emma/Andy based on elements of a
contract in Irish law.
Rule
Contract
There are a few fundamental elements which have to be satisfied in order to establish that
a valid contract has been created between the parties. These fundamental elements comprise of
elements like offer, acceptance, consideration and intention of forming a legal relation. If anyone
of these elements are not present in an agreement it is not legally binding upon the parties to it
and therefore a contract is not formed. As defined by McKendrick (2014) a contract is a
document which sets out terms by the consent of both the parties which are binding legally on
them. These elements and the requirements which need to be present in order to identify them
are discussed below.
Offer
In order to establish whether a valid offer has been made by a person the difference
between an invitation to treat and an offer has to be established. Poole (2016) has defined an
offer as a statement through which a person signifies that he is willing to get into a contract with
another person based on the terms stated through the offer. In order to constitute an offer it needs
to be established that the offer is complete and is not merely an invitation to treat. This is
because an invitation to treat does not have the legal capacity of establishing a contract. There

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are various cases through which differences between an offer and an invitation to a treat have
been clearly established by the courts. Firstly an offer has to be unambiguous and clear.
Therefore when an offeror provide terms on which he is willing to get into a contract and those
terms are clear and unambiguous an offer is created. In the case of Grainger & Son v Gough
[1896] AC 325 HL it had been ruled by the judge that in order to be an offer a statement has to
be definite and detailed or else it becomes an invitation to treat. The same principles had been
provided in the case of Norgren Co (CA) v Technomarketing 1983; (Ch D) where the Court
ruled that an incomplete advertisement is an invitation to treat.
Acceptance
The element which is required to establish a contract after a valid offer has been
identified is known as acceptance. As defined by Poole (2016) acceptance is established when a
person to whom the offeror has addressed his offer decides to bind himself in legal terms to the
terms of the offer. There are certain requirements for a valid acceptance to be established. In the
case of Brennan v. Lockyer [1932] I.R. 100 it had been ruled by the court that a valid
acceptance has to be and unequivocal and final expression to agree upon the terms provided by
the offer. Where there is any variation to the terms of the original offer and acceptance the
acceptance is termed as a counter offer which according to the principles of Tansey v College of
Occupational Therapists Ltd [1995] 2 ILRM 601 brings the initial offer to an end.
In the case of Swan v Miller [1919]1 IR 151 the plaintiff had made an offer to sell his
goods for a price of €4,750. However the person to whom the offer was made decided to
purchase the goods at a price of €4,450. In this case it was held by the court that the expression
of the person to purchase the goods at €4,450 defeated the initial offer and resulted in a counter

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offer. The same principles had been applied in the case of Tinn v Hoffman (1873) 29 LT 271
where the defendant had made an offer to sell 1200 tons of his goods however the plaintiff
wanted to purchase 800 times of the goods and claim the formation of a valid contract. It was
held by the court that no contract has been formed between them as the acceptance was not
unequivocal. In addition it had been stated in the landmark case of Hyde v Wrench (1840) 49 ER
132 that where a party has made a counter offer he is no longer in a position to accept the initial
offer as it has already been revoked. In the case of Covington Marine Corp and Others v
Xiamen Shipbuilding Industry Co Ltd. [2006] 1 lloyd's rep. 745., it had been ruled by the court
that in order to determine whether an acceptance is a counter offer or not an objective test has to
be applied.
In the case of Embourg Ltd v Tyler Group Ltd [1996] 3 IR 480 the judges rule that and
acceptance can only be valid and effective where it has been appropriately communicated to the
person who has made the offer. Further in the case of Entores v Miles Far East Corp [1955] 2
QB 327 the court held that until and unless the acceptance is received by the person making the
offer it is ineffective.
However in the Landmark case of Adams v Lindsell (1818) 1 B & Ald 681 the court
provided a judgement that when an acceptance is made through the means of post it becomes
effective as soon as the post is sent and has been addressed correctly. Whether or not it has
reached its destination a contract is said to be formed. In the case of Chwee Kin Keong v
Digilandmall.com Pte Ltd [2005] 1 SLR(R) 502 it has been ruled by the court that the
application of Postal rule in the age of modern means of communication is not appropriate.
Where acceptance is made by modern communication means such as email or fax it is said to be

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made when it actually reaches the system of the offeror as per Tenax Steamship Co v Owners of
the Motor Vessel Brimnes [1974] EWCA Civ 15. It is irrelevant that whether the offer reads the
acceptance or not. This rule had been adopted in Ireland so the case of Park Grange Investments
Limited v Shandon Park Mills Limited. Further it had been ruled in the case of Mondial
Shipping and Chartering BV v Astarte Shipping Ltd (1995) CLC 1011 that where an
acceptance is made by fax or email outside the office hours it is only said to be effective until the
office resumes the next day.
Application
According to the fact pattern provided in the case study it is clear that Peter had made an
invitation to an offer and not an offer itself as he had made an advertisement. This can be stated
evidently by applying the principles of the Norgren Co case. The invitation to offer included the
purchase of the car Atta price of €25,000. It was also mentioned that he should only be contacted
within office hours. An offer in relation to the Purchase of the car had been made by Emma who
wanted to purchase the car at a price of€24,500. However this offer was not accepted by Peter
and a counter offer as for the principles of the Tansey case had been made in the given situation
as Peter wanted to sell the car at a price of€24,750. In the given situation the initial offer made
by Emma to purchase the car at a price of €24,500 comes to an end as soon as the counter offer
had been made by Peter. This counter offer was not immediately accepted by Emma as she
notified Peter that she needs to have a discussion in relation to the offer with her husband. It is
provided through the facts of the study that beta ask for a call back at 6 p.m. however the call
which was made by Emma where she was ready to accept the offer made by Peter to purchase
the car at €24,750 was at 7:30 p.m and she was not able to contact Peter as his phone was

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switched off. Another message was sent by Emma to Peter the next day in the answering
machine that she is ready to purchase the car at a price of€24,750.
This is a valid acceptance or not is to be determined by applying the rules of electronic
acceptance in this case. It is clear that Emma has notified peter that she is willing to purchase the
car at the price of €24,750 during office hours of Peter. The acceptance was communicated via
voice message and through the application of the Tenax Steamship Co case is can be stated that
the acceptance would be effective whether or not it has been read by Peter. Therefore in a
situation where there is a valid offer and then effective acceptance between the parties to the
contract a contract is said to be formed between them. In the given situation it is further
provided that Peter having no knowledge of the acceptance made by Emma sold the car to Andy
at a price of €26,000 after a contract between him and Emma had already been formed.
Therefore the actions of peter in this case can be regarded as a breach of contract and he has to
compensate Emma for the same as the card has been sold to Andy.
Conclusion
Therefore from the above analysis it can be evidently stated that there was a contractual
relationship with had been formed between Peter and Emma when the voice message of Emma
entered the answering machine of Peter during office hours.

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References
Adams v Lindsell (1818) 1 B & Ald 681
Brennan v. Lockyer [1932] I.R. 100
Chwee Kin Keong v Digilandmall.com Pte Ltd [2005] 1 SLR(R) 502
Covington Marine Corp and Others v Xiamen Shipbuilding Industry Co Ltd. [2006] 1 lloyd's
rep. 745.,
Embourg Ltd v Tyler Group Ltd [1996] 3 IR 480
Entores v Miles Far East Corp [1955] 2 QB 327
Grainger & Son v Gough [1896] AC 325 HL
Hyde v Wrench (1840) 49 ER 132
McKendrick, E., 2014. Contract law: text, cases, and materials. Oxford University Press (UK).
Mondial Shipping and Chartering BV v Astarte Shipping Ltd (1995) CLC 1011
Norgren Co (CA) v Technomarketing 1983; (Ch D)
Poole, J., 2016. Textbook on contract law. Oxford University Press.
Swan v Miller [1919]1 IR 151
Tansey v College of Occupational Therapists Ltd [1995] 2 ILRM 601
Tenax Steamship Co v Owners of the Motor Vessel Brimnes [1974] EWCA Civ 15

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Tinn v Hoffman (1873) 29 LT 271