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Contract Law, Scenario Assignment

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Introduction

Tutorial 4: Practice Assignment A contract can be defined as a legally binding agreement between two individuals or a group of people. The quintessential elements of a contract are agreement, consideration and intention. An agreement is reached through an offer and then acceptance. Consideration is simple the “value” element whereby, money is paid for goods provided or work carried out. There is also intention which is where the parties involved intend to be legally bound; this may not always be stating rather it may be implied between the respective parties. An offer is a proposal made by an offerror to the offeree which includes specific terms and a promise to hold to that proposal if it is accepted. The proposal made by Brown & Co Ltd to Khan & Co Ltd offering to a sell a quantity of steel for £20,000 resulted in the latter replying with a counter offer. A counter offer is a rejection of the initial offer which is replaced by another offer, normally consisting of a price/service which is preferred by the offeree. There can also be cases where the price remains fixed by both parties and where the disagreement lies within certain conditions or clauses in that contract. However, a compromise must be reached before any sort of agreement can be reached. ...read more.

Middle

If they had rejected the offer from Steel Supplies and then also had their £17500 counter-offer rejected by Brown’s, it would have created further problems for them. They were unsure as to whether Brown’s would accept the counter-offer and so decided to go with Steel Supplies. “Offer and acceptance must be properly communicated in order to be effective”[3]. There are likely to be occasions where the parties involved in the process aren’t face to face therefore, other methods of communicating their acceptance must be used. The sales manager of Brown’s told his secretary to post the letter of acceptance on Thursday 8th September and the day before, Khan’s had tied up a deal with Steel Supplies. Offers involving the use of letter as a method of communication or acceptance brings in to effect, the “postal rule” This is where the acceptance becomes effective as soon as the letter is posted. A case in point is Adams v Lindsell [1818][4] which involved the sale of wool between two parties. The letter containing the offer was received late by the offeree which resulted in their letter of acceptance being received late by the offerror; who having not received the letter on the expected day and assumed rejection or silence, sold the wool to a third party. ...read more.

Conclusion

In NM Superannuation Pty Limited v. Hughes (1992) 10 ACLC 477, a decision of the New South Wales Supreme Court, Cohen J held that if a fax is left switched on its owner is indicating their preparedness to receive messages on it and in such circumstances it was sufficient for a notice to be communicated by fax, even though the document might arrive outside normal business hours. The same principles probably apply to other electronic means of communications, such as email but these have so far not been tested in a court. Basically, acceptance must be communicated effectively. Where timing is, or may be critical, you should agree on a method of acceptance and its timing at the beginning. As faster communication becomes the norm, the protection offered by the postal rules has been reduced for others forms of communication. For example, faxes are communicated when received rather than when sent, although they need not have been read, or even printed if the fax machine can save faxes to its memory, as it was in the case of Anson -v- Trump. http://vlex.co.uk/vid/tes-of-bernal-reporting-180-tel-to-the-52584405 ________________ [1] Hyde v Wrench [1840] 3 Bea 334 [2] Felthouse v Bindley [1862] EWHC CP J 35 [3] Jill Poole (2008). Textbook on Contract Law. London. Oxford University Press. p33 [4] Adams v Lindsell [1818] EWHC KB J59 ...read more.

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