All the above have been decided by the courts.
In relation to Crystal’s offer, she has seen the advert and posted Bobby an offer on the 30th June. It reaches Bobby on 2nd July and so is already a day late due to the fact that Bobby clearly stated that all offers must be received by 1st July. If no time limit was stipulated then the offer will remain open for a reasonable time. However as a date was stated, offerees must respond to this given date or there is no offer for them to make. An offer can only be accepted if it is received.
If Crystal had seen the advert beforehand, she would have had enough time to make her offer to Bobby. However, as she had seen it on the 30th June, she should have taken into consideration that her offer may not be received if at all, by the stated date, therefore it may not be accepted by Bobby. Had Bobby received Crystals offer at an earlier date/ he would have had enough time to consider her offer and to reply accepting or rejecting the offer she made.
The postal rule only applies when a letter of acceptance is sent. If Crystal was sending a letter accepting an offer made by Bobby then her acceptance would become effective from the date it was posted, regardless of the date set by Bobby.
However, in this case the postal rule does not apply as Crystal posted an offer for Bobby to accept.
“The customer cannot make both the offer and acceptance”
Consequently, no contract was made for Crystal to accept as acceptance of her offer had not been communicated.
As Bobby’s advertisement was clearly an invitation to treat, it is his decision weather to accept or reject offers made to him.
In Alexis’s case when making the phone call to Bobby, it is vital that she has a valid answer to her offer. It is up to the person (offeror) making the offer to have full confirmation of the offerees decision as to weather he accepts or reject. When Alexis phoned Bobby to make her offer, he had not given her any indication to accepting it. When her telephone line disconnected she should have phoned Bobby back to confirm his decision. Both parties would need to reach further agreement before there could be a complete contract.
A contract only becomes effective when acceptance has been communicated.
“Lord Dennings explains that an acceptance by phone would not be effective until it was heard by the offeree but that this was only the case if the offeree knew that the acceptance had not been heard.”
The above statement brings me to the final case which is also a telephone offer made by Ellie. Ellie offered Bobby £1,000 for the collection but he (Bobby) was unsure as to weather to accept her offer. Ellie added “if I hear no more from you by the 3rd I will consider the bargain sealed at £1,000”. Bobby did not reply to this statement and the conversation was ended.
Silence does not allow room for assumptions, it requires confirmation, a situation that is illustrated is Felthouse v Bindley (1862).
The claimant had been negotiating to buy his nephew’s horse. He eventually wrote to his nephew: “if I hear no more about him, I shall consider the horse mine at £30.15s (As did Ellie)”. The nephew did not reply to his letter but he did ask the auctioneer, who had been engaged to sell all his farming stock, to keep the horse off the sale as he had sold it to his uncle. The horse was included in the sale by mistake and the auctioneer was sued by the uncle for selling his property. The offer of the horse was mentally accepted by the nephew but the court decided that there was no contract between them. Thus the ownership of the horse had not been passed to the uncle. The case established the principle that the offerees silence or failure to act cannot constitute a valid acceptance.
This case reflects well with Ellie’s circumstances. When she had said to Bobby that she would consider the bargain sealed had he not replied by 3rd July, she has mentally assumed that he has accepted her offer. Looking back at the Felthouse v Bently case, the court decided that the uncle (claimant) and the nephew (defendant) had no contract between them. Therefore Ellie has nothing to claim as there was no contract made and Bobby gave no signal of acceptance.
He later sells his collection on 2nd July to Cliff for £1,500 and needs not to provide any consideration as this was a good offer. The acceptance of this Cliff’s offer forms a legal contract between the two parties.
A contract which possesses the seven essentials requirements is said to be valid
(7 essentials on page 1). Any offer that does not cover these vital elements will be void. Therefore, a contract will not come into existence unless the offer which is accepted contains all of the essential terms of the contract. This has brought me to the conclusion that Bobby was not in breach of contract as no agreements were made in relation to Crystal, Alexis or Ellie’s offers and Bobby was not legally liable for what was an assumption of acceptance.
Bobby is under no obligation to contact any of the offerors to refuse their offers as he did not show any sign of accepting them in the first place. However he still has a whole day to contact Ellie and the others as a good will gesture.
2. Consideration is a legal impression which describes something of value that is given in exchange for a performance or a promise to perform. The existence of consideration distinguishes contracts from gifts. Consideration can be a promise to do something where there is no legal obligation to do so, or a promise not do something where there is a legal right. Promises to exchange money, goods, or services are forms of consideration. All parties in an agreement must give consideration in order to create a contract, but courts typically do not look at the capability of consideration unless there is evidence of some form of wrongdoing by the party benefiting most from the contract.
Once it is determined that there is a contract, it must be decided whether there are any defences that call into question the validity of the contract. There are some defences that make the contract unenforceable (void) and others that may give the parties the option to enforce the contract or not (voidable).
(a) This brings me to the next problem which is related to consideration.
Arnold, who has decided to go into business, has approached a firm of accountants known as Stevens, Maxwell & Co, for help in developing a business plan. Gordon, a partner of the firm has offered to prepare a business plan for him (Arnold) on the condition that a fee of £200 is made to which Arnold has accepted.
Arnold finds that he is getting on well with Gordon and so requests further assistance from him (Gordon) when he encountered further difficulties. This does not form a contract as the mere request for further help was not based on a condition.
Once the business was established, Arnold wrote to Gordon thanking him for his firm’s assistance with his other problems and as a good will gesture would like to pay the firm an additional £100 for the extra assistance he had received. Again this suggests that no contract had been made. I will continue this argument with my conclusion.
Unfortunately Arnold finds that his business is financially suffering. Due to this calamity, Stevens, Maxwell & Co has not received the fee of £200 nor the £100 that Arnold had promised to pay the firm for the extra help.
Realising that Arnold was experiencing financial difficulty, Gordon wrote to him on behalf of the firm stating that he need only pay 80% of the fees that was owed, but only if this was paid within 14 days. As requested, Arnold paid £160 (80%) of the £200 fee that he owed, within the 14 day period.
With the remaining £40 (from the £200) Arnold invested this towards the business by advertisement for his products.
He later received a letter from the accountants demanding the payment of £100 that he promised to pay and the remainder of £40 that they claim is outstanding from the fees.
My advice to Arnold regarding his circumstances would be as follows:
When asking for further assistance, if Arnold had offered Gordon an additional £100 to which he (Gordon) accepted, this would then form a contract between them. Or if Gordon had agreed to help Arnold on the basis that he received an extra £100 to which Arnold agreed, this would too form a contract as both parties have taken consideration to benefit one another.
When Arnold stated that he would pay Gordon an extra £100 for the firm’s help he did so out of consideration and offered this as a reward for thanking the firm, he was not indebted to make this offer. Gordon did not reject or accept this offer, and so did not give any consideration back; therefore a contract had not been formed.
My advice here to Arnold would be that he is not obliged to make the payment of £100 as it was not negotiated further. It was merely a reward of appreciation which he later could not afford, due to unfortunate circumstances. Had he offered them a box of chocolates as a reward and could not keep to this promise; Gordon would still have no right to demand this form him.
Regarding the remaining £40, my advice here to Arnold would be as follows:
Accepting the fact that Stevens, Maxwell & Co had given Arnold the option that he need only pay 80% of the £200, they have the legal right to sue for the outstanding £40 because the lesser sum of money (£160) could not be consideration for the greater sum owed (£200). The rule may seem somewhat irrational when placed besides the rule of consideration. Therefore, the courts are questioning into the sufficiency of the consideration because it is saying that £160 cannot be worth £200. In Pinnel’s case the claimant was owed £8 10 shillings. The defendant paid £5 2 shillings and 2 pence. The Court of Common Pleas held that this could not be consideration for the whole debt, even though both parties had agreed that it should be.
Therefore my overall advice would be that Arnold cleared his debt of £40 to the accountants.
Ewan Macintyre page 87, Business Law, Great Britain, 2001
Ewan Macintyre page 79, Business Law, Great Britain, 2001
