This question concerns the law relating to offers and invitations to treat, in particular advertisements. I will be discussing the distinction between the both and how this applies to the question concerned.

In advising CM Cumming of the legal consequences of the advertisement in question, it would appear that the advertisement is an invitation to treat rather than an offer.  Thus the courts could not recognize this as a legally binding contract and would have no enforcement in the eyes of the law.

Question 2

This question concerns the law relating to consideration, in particular existing contractual duty.  I will be discussing the legal issues concerning this area and how they relate to the concerned question.

In addition to offer and acceptance and contractual intent, consideration is an essential element in the formation of any contract not by deed.  The traditional definition of consideration concentrates on the requirement that “something of value” must be given and accordingly states that consideration is either some detriment to the promise or some benefit to the promisor.  A simply, early way of defining consideration came in Currie v Misa (1875), where it was described in terms of benefit and detriment.  Without consideration, the agreement is a mere gratuitous promise, and unenforceable in law.  There are several different rules of consideration.

One of the rules of consideration is the rule of existing contractual duty, the rule here is that the performance of existing contractual duty owed to the promisor is not sufficient consideration.  Authority for the principle is to be found in Stilk v Myrick (1809), where two sailors deserted a ship and the captain promised the remaining eight crew members extra wages if they would work the ship home.  They were already bound to do this under their contracts and it was held that the captain’s promise was not binding.  In Williams v Roffey (1989) a “qualification” to Stilk v Myrick was introduced whereby if the performance of an existing contractual duty confers a practical benefit on the other party this can constitute valid consideration.

In Hartley v Ponsonby (1857) it was held, on similar fact to Stilk v Myrick, that there was consideration for the promise to pay extra wages.  The desertion of half the crew had rendered he ship shorthanded and so the voyage became more dangerous.  Existing contractual duty had been exceeded and effectively a fresh bargain had been entered into.

In advising CM Cumming whether they could avoid the payment of the extra sum, it would appear that using the principles of contract law in the above stated cases there was an existing contractual duty owed.  It could be argued that the contractual duty had not been exceeded and there was no extra benefit to be gained.

Question 3

This question concerns the law relating to acceptance, particularly concerning electronic acceptance and revocation of an offer.  I will also be discussing counter offers.

Acceptance may be defined as an unconditional assent, communicated by the offeree to the offeror, to all terms of the offer, made with the intention of accepting.  Whether an acceptance has in fact occurred is ascertained from the behaviour of the parties, including any correspondence that has passed between them.  The offeree must accept the exact terms proposed by the offeror unconditionally; i.e without introducing any new terms which the offeror has not had the opportunity to consider.  The introduction of new terms is referred to as a ‘counter offer’ and its effect in law is to bring to an end the original offer.  Authority for this principle is addressed in the case of Hyde v Wrench (1840).  D offered to sell a farm to P for £1,000.  P offered £900, which was rejected.  P then purported to accept the offer to sell at £1,000.  D refused to go through with the transaction, and P brought an action for specific performance.  The court held that a rejection of an offer in effect destroyed it.  It could not later be accepted.

In accepting the offer, this must be communicated to the offeror, this is determined in the case of Entores v Miles Far East Corporation [1955].  It has held that the acceptance of the hold took place when it was received rather than when it was sent.  This rule applies to all types of sophisticated electronic communication which can be said to be more or less instantaneous in their effect.  Revocation of an offer must also be communicated to be effective.  This was implicit in the decision in Bryne v van Tienhoven (1880) where the withdrawal of an offer, which was sent by telegram, was held not to take effect until it was received.

In applying all these main principles of law to the fact in this question, it would appear that a counter offer took place when a 5% discount was offered to them.  This offer was accepted.  The revocation of the offer to place when a fax was sent cancelling the order.  Unfortunately this fax was not received.  Applying the authority principle in Bryne v van Tienhoven, it would seem that because the fax was never received the offer was never revoked.  It could be argued that they could actually be sued in breach of contract.

Bibliography

ATIYAH, P.S, 1995. Law of Contract. 5th Ed. Oxford: Oxford University Press.

STONE, R, 1998. The Modern Law of Contract. 5th Ed, Newport: Cavendish Publishing Pty Ltd.

TREITEL, G.H, 1999. The Law of Contract. 10th Ed, London: Sweet & Maxwell.  

 

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