This report will provide a brief introduction about Consideration, Offer and Acceptance , and Terms Of Contract. The binding precedent of every description will be presented in this report too. Then, in the end this report will provide the conclusions of

2.2.2 The Facts

Dick owes Jane $30,000. He is supposed to repay her in full by 1st May 2008. However, on 1st April 2008, Dick tells Jane to accept a lesser sum of $20,000 from him, as full and final settlement of the sum of $30,000 owed, telling her that was all he has got. Then Jane accepts $20,000 as the final settlement that Dick owes form her. One month later, however, Jane changes her mind and now demands from Dick the remaining sum of $10,000.

2.2.3 The Legal Principle

A promise to waive must supported by a consideration. If the promisee can show that the promisor’s promise to waive supported by consideration then the promisor cannot sue for the reminder.

1. Consideration has been shown if the smaller payment is made at the creditor’s request, at an earlier, at a different place, with an additional item or by a different method.
2. A lesser sum is paid at the time the debt is to be repaid that decision to waive must be supported by consideration.
3.  Payment of  a lesser sum in satisfaction of a larger sum would not discharge the balance owed.

2.2.4 The Issue

1. Advise Jane if she can still demand the sum of $10,000 from Dick. State the relevant legal principle of an offer, consideration and acceptance clearly.

2. State the answer :

1. Jane is the one who had requested Dick to repay her one month early, that is, to pay on 1st April instead of 1st May 2008?
2. Jane had asked Dick to repay her in Edinburg in Scotland, instead of the agreed place for repayment of London in England?
3. Jane had told Dick that he could pay her $20,000 and a Morris Minor valued at $2000 belonging to Dick, in full and final settlement?

2.2.5  The Case Anaylsis

1. The rule in Foakes vs Beer. Payment of  a lesser sum in satisfaction of a larger sum would not discharge the balance owed. This is because there is no consideration from the debtor to the creditor. Consideration has been shown if the smaller payment is made at the creditor’s request .The consideration must flow from debtor to creditor and back of it. Jane can sue Dick of the remaining demand  sum of $ 10.000 because there is no consideration from Dick to Jane.

 

1. Based on legal principle this is the rule in Pinnel’s case. According to the Jane as  creditor had asked to the Dick as a debtor to repay earlier, and Dick did so, then Dick gives consideration to Jane. Therefore, Jane can not sue Dick.
2. This applies to Pinnel’s case again. Jane asking to Dick to repay her in Edinburg in Scotland. As Jane told Dick to repay it at other place, this is consideration from Dick. So, Jane has no case against Dick.
3. According to the rule in Pinnel’s case, Dick had given to Jane by cash at $20,000 and Morris Minor valued at $2,000 that belong to Dick, that car amounts to consideration. Again Jane can’t  sue Dick for the reminder.

2.2.6 Conclusion

1. The consideration must flow from creditor to debtor. Since the consideration doesn’t  made by creditor side,  Jane cannot take her word back to the demand of $10.000 from Dick.

1. Jane had asked Dick to repay earlier, Dick gives consideration to Jane, so Jane can not sue Dick.
2. Jane told Dick to repay it at other place, and the consideration is made by Dick, once again Jane has no case against Dick.
3. Dick had given cash $20,000 and Morris Minor valued at $2,000 that amounts to consideration. And Jane can’t sue Dick for the reminder.

3. Offer and Acceptance

3.1 Introduction

An acceptance may be made in various ways. It may be write in writing and also in orally. This acceptance is not effective to produce a contract merely because the offeree decides that he will accept it. The acceptance must be communicated ; must reach the offeror. If the offeror has not stipulated a method of acceptance the offeree may choose his own method, though where acceptance is by word of mouth it is enough that it be spoken. That is according to the oral acceptances. Another explaination will be explain below.

3.2 The Case Situational Analysis : Donald v Maya

3.2.1 The Theoritical Knowledge

Postal Rule is a rule of contract law that makes an exception to the general rule that an acceptance is only created when communicated directly to the offeror. An acceptance is binding and the contract is said to be perfected when the acceptor places this acceptance to the mailbox for return mail even if, in fact, it never reaches the offeror. This happens where the offeror stipulates that acceptance must be by post.

An offer is an announcement of a person’s willingness to enter into a contract. An offer may be made to a particular person or, in some cases, to the public at large. An offer to the public at large can only be made where the contract which eventually comes into being is a unilateral one. (Source : Keenan, D 2000, Advance business law, 11th edn, Pearson Education Ltd, pp. 2)

An acceptance is not effective to produce a contract merely because the offeree decides that he will accept it. His decision must in most cases be accompanied by some external sign of assent.An acceptance maybe made in various way. It may be made in writing or orally but it must in general be communicated. (Source : Keenan, D 2000, Advance business law, 11th edn, Pearson Education Ltd, pp. 15)

One of the binding precedent is Adams vs Lindsell 1818.

On 2 September 1817 the defendants, wrote to the plaintiffs who were woollen manufactures in Bromsgrove, offering to sell them some wool and asking for the answer ‘in course of post’. This letter was wrongly addressed and as a result it did not reach the plaintiffs posted on a letter of acceptance which reached the defedants on 9 September.The evidence wass that if the letter was correctly expected on 7 September. On 8 September the defedants sold  the wool to someone else. It was offeror’s mistake was held against him. In reaching this conclusion it was the defedants’s misdirection of the offer letter which led to the delayed acceptance that the court may be influenced by the fact.  p. 5-330)

3.2.2 The Facts

On 1st April , Maya offered to sell all her kitchewares to Donald fpr $10,000.

On 2nd April, Donald immediately accepted the offer, by sending a letter of acceptance, saying that hereby accept the offer to sell all the  kitchen wares for $10,000. He posted his letter of acceptance on 2nd April by dropping it into a postal box just outside his home. That letter from Donald to Maya, however was delayed in the post and it was only delivered to Maya at her house on 12th April. Meanwhile, Maya already sold all her kitchenwares to Linda.

When Donald subsequently learnt about Maya having sold her all kitchenwares to Linda instead of selling it to him, he was very upset.

3.2.3 The Legal Principle

The acceptance was made when offeree posted the letter in the post box and not when it reached the offeror. There was a valid contract. Postal Rule contract is formed when acceptance is actually communicated to the offeror.

3.2.4The Issue

 Would Donald be successful to sue Maya for breach of contract ?

3.2.5 The Case Analysis

Based on the case facts, the issue that being discussed here concerns the postal rule in offer and acceptance in contract law. According to the Postal Rule that a letter of acceptance that sent  by post is considered to be effective, it does not matter if the letter of acceptance is delayed or even lost in the post, the contract is still valid. This rule contrally with “instantoeous” contract medium like telephone, telex, fax, etc. “Instantoeous” contracts are valid at the time the offeror received the acceptance. Besides, “Postal” contracts are valid right at the letter of acceptance posted to an offeror. So, from the casefacts, we know that Donald can sue May for breach of contract.

3.2.6 Conclusion

The acceptance was made when offeree posted the letter in the post box and not when it reached the offeror. There was a valid contract. In that case, Donald can sue Maya for breach of contract.

4.Terms Of Contract

4.1 Expressed Terms

Having decided that a particular statement is a term of the contract and not a mere inducement, the court must then consider the importance of the statement of that statement in the context of the contract as a whole.(Source : Lawson, R 1998, Business law, 1st edn, Financial Times, Pitman Publishing, pp. 269-8 ). Expressed terms of a contract are those terms which have been expressly agreed to by both parties to the contract. Expressed terms are also classified as condition and warranties as explained below:

Condition : is a vital term that goes to the roof of the contract. It is a requirement so fundamental that the party who inserted it would not have made the contract without it. Breach of conditions entitles the innocent party to repudiate the contract and also may entitled to damage.

Warranties : is a less vital term which is merely collateral to the main terms of contract. It is basically a matter for the court which will be decided on the basis of the commercial importance of the term. The term warranty is used by manufacturer as equivalent to a guarantee. We are concerned here with its use as a term of contract.

4.2 Implied Terms

The general rule is that the parties to a contract must state the terms explicitly. Implied terms, it is a terms may be implied from a variety of sources which include legislation of general application in commerce such as consumer protection legislation and Sale of Goods Act. (Source : Soh, A 2001, BA 333 – Principles of business law, 2nd edn, Informatics Holdings Ltd, 15-2)

S.12 Title

There is an implied condition on the part of the seller that in the case of a sale he has a right to sell the goods, and in the case of an agreement to sell he will have the right to sell when the property is to  pass. If the seller cannot pass good title to the buyer, he will be liable for breach of a condition.

S.13 Sale By Description

There is a contract for the sale of goods by description. There is an implied condition that the goods will correspond by the description. Even the buyer has seen goods and perhaps selected himself, it may still called sale by description, provided he has relied to some extend on a description. It doesn’t matter if the goods are inspected.

S.14(2)  Quality and Suitability

This section,as amended by the Sale and Supply of Goods Act 1994, provides that where a seller sells goods in the course of a busines there is an implied condition that the goods supplied are of satisfactory quality expect to the extends which are brought before the contract is made or ought to have been noticed by the buyer if he has examined the goods.

S.14(3) Fitness for Purpose

This section provides that where the seller sells goods in the course of a business and the buyer, expressly or by the implication, makes known to the seller any particular purpose for which that the goods are bought. In order to successful under this section, the buyer mus show that he relied on the seller’s skill and judgement.

S.15 Sale By Sample

Provides that in the contract of sale by sample there is an implied condition :

1. The Bulk will correspond wth the sample in quality.
2. The buyer will have a reasonable opportunity of comparing with sample.
3. The goods will be free from any detect making their quality unsatisfactory.

Implied terms arise mainly by operation of law as in the kind of situation seen in the case of the Moorcock.

The Moorcock (1889)

(1889) LR 14, PD 64. Shipowners contracted with wharf operators to unload the ship at the owner's dock. In attempting to do so, the ship grounded on a ridge and was damaged. In their defence, the wharf operators claimed that the contract did not contain a provision that the ship would not be damaged. The Court of Appeal held that such a provision had to be implied to give the contract `business efficacy. (Source : Keenan, D 2000, Advance business law, 11th edn, Pearson Education Ltd, pp. 150).

In business transactions such as this, what the law desires to effect by the implication is to give such business efficacy to the transaction as must have been intended at all eventsby both parties who are businessmen; not to impose on one side all the perish of the transaction.

5. Conclusion

Pinnel’s Case, the main rule is that a promise to waive must supported by a consideration. If the promisee can show that the promisor’s promise to waive supported by consideration then the promisor cannot sue for the reminder.

An offer is an announcement of a person’s willingness to enter into a contract. An offer may be made to a particular person or, in some cases, to the public at large. An offer to the public at large can only be made where the contract which eventually comes into being is a unilateral one. The acceptance was made when offeree posted the letter in the post box and not when it reached the offeror. There was a valid contract.

Expressed terms of a contract are those terms which have been expressly agreed to by both parties to the contract. Expressed terms are also classified as condition and warranties. Implied terms, it is a terms may be implied from a variety of sources which include legislation of general application in commerce such as consumer protection legislation and Sale of Goods Act.

6. List of  References

Soh, A 2001, BA 333 – Principles of business law, 2nd edn, Informatics Holdings Ltd, Singapore.

Keenan, D & Riches, S 1998, Business law, 5th edn, Financial Times, Pitman Publishing, London.

Lawson, R 1998, Business law, 1st edn, Financial Times, Pitman Publishing, London.

Keenan, D 2000, Advance business law, 11th edn, Pearson Education Ltd, England.

Latimer, P, Australian Business law, 18th edn, CCH Australian Limited, 1999, Australia.

Boone, K 1994-206, The K-Zone, retrieved 1 march 2007, from ()