Contract Law Engaging in Contracts

Question: Assignment on the basic principles of Contract Law . - Apply their knowledge in daily situations where this area of law comes into play - Make informed decisions in respect of matters covered in the topics of the course, such as engaging in contracts - Recognise and identify the need for professional advice where necessary. Answer: 1. There are several ways in which an offer can be terminated. These are the events that take place after one party has made an offer to the other party but due to these events, the offer comes to an end and as a result, it cannot be accepted by the opposite party any more. Some of the ways of terminating an offer include revocation, rejection, counter-offer, lapse of time, operation of law or death. Revocation: An offer can come to an end as a result of revocation of the offer. In this regard, revocation can be described as a situation where the offer is withdrawn by the opposite party. The general rule related with the revocation of offer was provided by the court in Payne v Cave when it stated that offeror can revoke before it has been accepted by the opposite party. But in such a case, the revocation of the offer should be effectively communicated directly or indirectly to the other party before the offer has been accepted (Atiyah, 2000). This position was further strengthened in Byrne v Van Tienhoven (1880) where the court stated that the withdrawal of the offer that was directed by telegram was considered to be communicated simply when such telegram was received by the other party. However in Dickinson v Dodds (1876), the court said that sufficient communication regarding the withdrawal of offer can also be made through a third-party. Rejection: an offer is also considered to have been terminated when the party to whom the offer was made, communicates its rejection of the offer to the party making the offer. In this way, the law provides that when the offeree has made a counter-offer or has introduced new conditions, the consequence is the rejection of the offer and as a result, the original offer cannot be accepted later on (Beatson, Burrows and Cartwright, 2010). For example in Hyde v Wrench (1840), it was mentioned that the consequence of the counter-offer made by the offeree is that the original offer is terminated. 2 (a) In the present case, a valid and enforceable contract has not been created between Kaira and her aunt due to the lack of consideration. (b) according to law contract, there are certain elements that should be present in a contract to make it valid and legally enforceable. Among these elements is the element of consideration. The law of contract provides that in order to make the agreement binding, the promisee should provide some kind of consideration the return of the comments received by them. The result of this requirement is that generally the gratuitous promises are not considered as being the enforceable. In the same way, the law provides that a past consideration is not valid. Hence, the consideration is required to be existing either with or after the promise (Collins, 2003). On the other hand, when the specified consideration pre-dates the promise, it will be considered as a past consideration and therefore not a good consideration. But certain exceptions are there to the general rule. As a result, the past consideration can be considered as a good consideration if it has been provided at the request of the promisor or if an understanding was present between the parties that such an act will be remunerated or if the promise took place in advance of the act, it would have been legally enforceable (McKendrick, 2009). On the other hand, in the present case Kaira had washed and polished her aunt's car in order to surprise and therefore the act was not done at the request of her aunt. Moreover, there was no understanding between them that they will be remunerated. Therefore in the present case even if Kaira had purchased necessary warm clothes for the trip to Disneyland, the promise made by Kaira's aunt is not legally enforceable. Furthermore, in case of domestic agreements, there is a rebuttable presumption that did not have the intention of creating a legal relationship. Therefore, Kaira is also required to establish that they had the intention of creating a legal relationship. 3.(a) The price tag of $30.00 has been mistakenly placed on the set of pearls. Moreover, the price tag cannot be considered as an offer but it was only an invitation to treat. (b) In the present case, the shopkeeper can refuse to sell the pearls set to Hari at the mistaken price of $30. The reason is that the fact that the set of pearls had been displayed in a showcase along with a price tag does not amount to an offer but it is just an invitation to treat. The distinction between the two is that when an offer is accepted it forms a contract between the parties, an invitation to treat is merely made with a view to invite offers from the other party. As a result, an invitation to treat cannot be accepted for the purpose of creating a legally enforceable contract (Peel and Treitel, 2011). In Pharmaceutical Society of Britain v Boots (1953), the court stated that the display of a product in a store along with its price is not sufficient for being considered as an offer but it is merely an invitation to treat. Similarly in Fisher v Bell (1961), it was stated that displaying a flick knife in the shop did not contravene the law according to which, offering such offensive weapon for sale was prohibited. In the same way if any item has been mistakenly displayed by a shop at a very low price, the shop is not under an obligation to sell the item at that price. 4.(a) As mentioned above, there are certain elements that should be present for making an agreement enforceable by the law. Among these elements, the first requirement is that of an offer. Therefore in order to make an agreement the enforceable, a party should make an offer to the other party. There is no particular form required for making an offer. Consequently, when Tom asked Jerry if he will be interested in purchasing his car, he had made an offer to Jerry. (b) In the present case, Jerry was under the impression that Tom wanted to sell the SLK280 because he had always seen Tom drive this car. Under the circumstances, he believed that when Tom made an offer to sell his car, he must have been talking regarding his Mercedes-Benz car. Therefore the issue deals with mistakes under the contract law. Under the contract law, mistake is a complicated field. However the general rule mentions that in case the party is mistaken regarding particular aspect, it will not allow such party to discharge its responsibilities under the contract, even in the mistake is a basic one. However, remedies and will be provided under the contract law only in case of four types of mistakes under limited circumstances. These are common mistake, mutual mistake, unilateral mistake and non est factum. Therefore in the present case while Jerry believed that when Tom was talking about selling his car, he must have been talking about his Mercedes-Benz car as he had never s een Tom drive these are the car, the Lexus S250MR. But in this regard it needs to be noted that as both the cars belong to Tom, he was also correct when he stated that he was willing to sell his car thereby meaning the Lexus S250MR. Under the circumstances, it is clear that Jerry was under a mistake when he believed that Tom was talking about his Mercedes-Benz car. (c) In the present case, the validity of the contract between Jerry and Tom has been affected as a result of the mistake made by them. As mentioned above, under the contract law there are three types of mistakes that are recognized by the courts. These are common mistake, unilateral mistake and mutual mistake. When both the parties have made the same mistake, it is called the common mistake. Mutual mistake takes place when the parties are at cross purposes and in case of a unilateral mistake, only one party is mistaken. However when a finding is made by the court regarding the presence of a mistake in the contract, generally the effect will be that the contract will be rendered void ab initio. In this way, it is considered that a contract never existed between the parties. This position is significantly different from the voidable contracts. In case of a voidable contract, the contract is valid until the innocent party has taken action to set aside the contract. For example, in the present case it appears that Jerry and Tom had made a mutual mistake. In such a case, the parties are at cross purposes. In the present case also, while Jerry wanted to purchase the Mercedes-Benz car, Tom believed that he was going to sell his Lexus. In such a case, an objective test is applied by the courts for the purpose of seeing if the contract can be saved. In this context, it is considered in any other reasonable person, keeping in view the negotiations between the parties, would have understood the contract to have a single meaning. If the answer is in the affirmative the contract is considered as valid regarding that meaning. On the other hand if any other reasonable person would also fail to decide the meaning of the contract, in such a case the contract will be considered as void on the grounds of mistake. In the present case also, the contract between Jerry and Tom is void and therefore, the law considers that there was never a contract between Jerry a nd Tom. References Atiyah, P.S. 2000 An Introduction to the Law of Contract, Clarendon Beatson, J. Burrows A. and Cartwright, J. 2010 Anson's Law of Contract, 29th edn OUP Collins, H. 2003, Contract Law in Context 4th edn CUP McKendrick, E. 2009 Contract Law 8th edn Palgrave Peel E and Treitel, G.H. 2011, Treitel on the Law of Contract, 13th edn Sweet and Maxwell Case Law Byrne Co v Leon Van Tien Hoven Co [1880] 5 CPD 344 Dickinson v Dodds (1876) 2 Ch D 463 Fisher v Bell [1961] 1 QB 394 Hyde v Wrench [1840] EWHC Ch J90 Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd [1953] EWCA Civ