Similarly, the advertisement by cosmic Computers was a unilateral offer as it was to the world at large, not to one specific person; also, stated that performance would be given to the first 5 customers to present £500. Despite being the first customer to respond to this offer, Yogesh failed to provide the satisfactory requirement. In fact, Yogesh offered to accept the offer at of £450, which clearly was not a term of the offer in the advertisement.
As the offer advertised was clearly not negotiable (assuming it would have stated if other wise), by making an offer on a new term not contained in the advertisement, this is interpreted by the courts as a rejection of the offer and a counter offer. This rule can be found in the case of Hyde v Wrench (1840), the court held that there was no contract. The analysis given by Lord Langdale (presiding) was that in making an offer to buy the property for £950, “he thereby rejected the offer previously made by the defendant. I think it was not afterwards competent for him to revive the proposal of the defendant, by tendering the acceptance of it; and that therefore, there exists no obligation of any sort between parties”. The principle of this rule asserts that a party cannot go back and accept an offer once a counter offer has already been made. The court may interpret that Yogesh had made a counter offer and despite returning after some minutes to accept the offer, there was no obligation on the manager’s part to accept this latter offer.
Nevertheless, as an alternative argument, it is necessary to consider the series of negotiations that occurred after rejection of the counter offer. It can be interpreted that in requesting a “few minutes” to rethink the offer, Yogesh was making a fresh offer to the manager. As is the rule of counter offer, it is by the discretion of the offeree if he wishes to accept or reject any later offers. Indeed the manager accepted the offer and even extended the period to “10 minutes”. What needs to be established is whether or not this statement was intended to become a legal obligation or intent to form a legal relationship. Assuming that the court interprets this as an agreement, it is necessary to look at the issues that relate to an agreement.
It is a rule of contract that acceptance must take place in either written or spoken form, or by conduct. The two leading cases that illustrate this rule are Brogden v Metropolitan Railway (1877) and Carlill v Carbolic Smoke Ball Co. (1892). It is a rule that acceptance must be communicated as illustrated by the decision held in Entores v Miles Far East Corporation (1955). On making his fresh offer, the manager responded to Yogesh’s request by saying “OK. I will give you ten minutes”. This acceptance was clearly communicated and by Yogesh’s conduct, it appears that he interpreted this statement as an acceptance of his offer and as part of an agreement to reserve the offer until his return.
Although the reservation of the offer was not expressed, it was implied. Also, in a commercial scenario, it is generally ruled that agreements possess the intent to form a legal relationship as illustrated in Rose and Frank Co. v Crompton Brothers (1925). Thus, if acceptance was given and communicated and the intent presumed, was it then acceptable for the manager to terminate the offer despite of this information. There are two relevant rules from the doctrine of Termination of Offer that apply to this case. Firstly, it is a rule that an offer may be revoked at any time before acceptance, as illustrated in Routledge v Grant (1828). Secondly, an offer can be terminated where a lapse of reasonable time has occurred, as illustrated in Ramsgate Victoria Hotel v Montefiore (1866). However, the manager attempted firstly to revoke the offer after it was already accepted and secondly he attempted to terminate it before the ‘reasonable time’ or the “10 minutes” had lapsed. If the court wishes to use this argument, it may decide that the manager breached the agreement by failing to perform after he had accepted and agreed to do so. Also, the court may decide if this argument is leaned on, that the manager behaved inappropriately by terminating the agreement before the time had lapsed.
Nevertheless, the defendant may argue that this statement to give Yogesh “10 minutes” is not enforceable on the following grounds. Firstly, it is a rule in the doctrine of Offer that an offer must not be vague; the leading case that illustrates this is Scammell and Nephew Ltd. V Ousten (1941) It can be argued that the agreement or the statements that gave rise to the agreement did not express any specific performances or outcomes if both parties were bound to it. So exactly what did the agreement bind both parties to; the agreement did not state that the computer would be reserved for Yogesh to purchase if he returned within and up to “10 minutes” nor did it state otherwise. This promise was for “10 minutes” and not a promise for a sale or reservation of the computer. This point is particularly relevant to cases where it has been held that the agreement is too vague or uncertain to be enforced. In Scammell and Nephew Ltd. V Ousten (1941), a statement in the contractual statement said as follows “on hire purchase terms”, as the document failed to elaborate these terms, i.e. the rates etc, it was held by the court as failing to have a definite meaning and thus a contract did not exist as the terms on which it was agreed were vague.
Similarly, the statement, “OK. I will give you 10 minutes” is vague in its nature as it fails to express an expected outcome of what would have happened after the “10 minutes”. It may nit be possible for the courts to enforce this agreement if the terms that brought about the agreement are interpreted as being vague. If this is interpreted in this way, the court may view the statement as an ‘agreement to agree’ i.e. Foley v Classique Coaches Ltd (1934). However, as a contract was not signed or agreed by either Yogesh or the manager with an exemption clause that the agreement was an agreement to agree, it is unlikely that the court will rule favourably on Yogesh’s part.
The defendant could argue that the statement or negotiations lacked a contractual intent and that there was not an agreement as it was too vague to be a contract, this point can be argued using the doctrine of Rebuttable Presumptions. However, there are few cases where the presumption has been rebutted in a commercial transaction. Such a case is that of Rose and Frank Co. v JR Crompton and Bros Ltd (1925). However, the contract in this case contained an exemption clause which prevented their agreement from amounting to a contract in law. The defendant may argue by giving evidence that this presumption made by Yogesh is not effective, which would in effect make the presumption redundant. Equally, Yogesh could argue, if the manager relies on this presumption, with evidence that the agreement was intended to create a legal presumption by showing evidence of his intention to give the £500.
Another principal that the defendant can base his argument against Yogesh is by using the doctrine of consideration. The essence of this doctrine is that the promise cannot enforce a promise unless he has given a promise in return – in other words, there must be a bargain in between the parties. In order to use this doctrine, three rules must be outlined; i) Consideration must be sufficient but need not be adequate ii) consideration must not be past iii) consideration must move from the promisee. What needs to be established hereafter is whether or not the promisee has or would have obtained a benefit as a result of the promise made by the promisor.
The leading case that illustrates this doctrine and its principals are Williams v Roffey Brothers and Nicholls Ltd (1991) and Foakes v Beer (1884). What was held in both cases is that the promisor needs to give some consideration, either of a monetary value or other benefit, to the promisee as an incentive for the agreement to be enforced. However, the negotiations between Yogesh and the manager did not express that a benefit would be exchanged, although it was implied ( i.e. Yogesh would give £500 to the manager and the manager the Banana computer on receivership of the money), the courts avoid enforcing an outcome if it is not resolved or suggested by the parties in their agreement.
Nonetheless, there are many cases where the doctrine of Promissory Estoppel can be used to enforce an agreement that is not supported by sufficient consideration. This is enforced by using the law of equity. As defined by Lord Denning, “Estoppel …. is a principal of justice and of equity. It comes to this: when a man, by his words or conduct, has led another to believe in a particular state of affairs, he will not be allowed to go back on it when it would be unjust or inequitable for him to do so”. There are two leading cases which illustrate this, Hughes v Metropolitan Railway Company (1877), and Central London Property Trust Ltd v High Trees House Ltd (1947). It could be found that based on Yogesh’s conduct, he had intended to give the manager £500 within the “10 minutes”, upon both parties satisfying the conditions. If the court finds that Yogesh’s conduct was led by the manager leading him to believe a “state of affairs”, the court may estop the case in Yogesh’s favour if it finds that the manager acted without reasonableness by not adhering to his part of the bargain. In which the court may rule that it was inequitable for the manager to withdraw his promise.
Having analysed the possible arguments for and against the plaintiff and the defendant, it is submitted that the outcome of the case cannot be determined by this analysis alone. The courts may wish to lean on one argument whilst dismissing another, the decision to do so is at the courts discretion. The analysis cannot prescribe in whose favour the court may decide, however, a possible remedy can be suggested. Perhaps it would have been beneficial for the manager to have reserved the offer for Yogesh as implied in their agreement. When the 6th customer arrived, the manager could have informed him that the last Banana computer had been reserved for another customer, but, if that customer failed to return within and up to 10 minutes, then he could sell the computer to the 6th customer. As Yogesh suffered as a consequence of the proceedings, if the court holds in his favour, Yogesh may be entitled to damages as the conditions were, equally, the court could rule that Yogesh is not entitled to any damages. As a measure of good will, the court may suggest that Cosmic Computers offer Yogesh a similar bargain as a gesture of good will, however, the outcome of the case is a decision of the court. Nevertheless, Yogesh has some substantial arguments to base his case on if he wishes to pursue the issue through a court.
References
Cases
Brogden v Metropolitan Railway (1877)
Carlill v Carbolic Smoke Ball Co. (1892).
Central London Property Trust Ltd v High Trees House Ltd (1947).
Dickinson v Dodds (1876)
Foakes v Beer (1884).
Foley v Classique Coaches Ltd (1934).
Hughes v Metropolitan Railway Company (1877)
Hyde v Wrench (1840).
Lefkowitz v Great Minneapolis Surplus Stores Inc. (1957)
The Supreme Court of Minnesota, Judge Murphy J
Ramsgate Victoria Hotel v Montefiore (1866)
Rose and Frank Co. v JR Crompton and Bros Ltd (1925).
Routledge v Grant (1828
Scammell and Nephew Ltd. V Ousten (1941),
Williams v Roffey Brothers and Nicholls Ltd (1991) and
Bibliography
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Lord Langdale presiding, Hyde v Wrench (1840), pp 337
The Honourable Lord Denning presiding Central London Property Trust Ltd v High Trees House Ltd (1947)