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Offer and acceptance- An offer is not an invitation to treat. For an agreement to exist there must be at least 2 parties. One party must make an offer; the other party must accept the offer. The words used through out must be clear and unambiguous. An offer is a proposal by one party to enter into a legally binding contract with another. Acceptance occurs when the party to whom the offer is made agrees to the proposal of the person making the offer.
Rules as to offer and acceptance by post
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Offer and acceptance- An offer is not an invitation to treat. For an agreement to exist there must be at least 2 parties. One party must make an offer; the other party must accept the offer. The words used through out must be clear and unambiguous. An offer is a proposal by one party to enter into a legally binding contract with another. Acceptance occurs when the party to whom the offer is made agrees to the proposal of the person making the offer.
Rules as to offer and acceptance by post
- An offer by letter is not valid until it is received by the offeree.
- An offer may be accepted by letter, if the parties agree on this method.
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Acceptance by letter is valid from the time it is posted, from “when the letter drops” or the postal rule applies even if the letter of acceptance is delayed or lost in the postal system. ( Pendleton and Vickery 2003 p. 218)
Revocation of offers by post.
- Revocation by post must be received before acceptance
- Revocation of an offer by letter is not valid until the offeree receives it.
(Pendleton and Vickery 2003 p. 219)
Considering the above 2 principles there was a valid offer from Armidale wool ltd. Offer was received on June 22nd acceptance was posted back to Armidale wool ltd the same day. Now a legally binding contract is in place. June 23rd a letter of revocation was received. This letter is not valid because it was not received before acceptance of the offer. Therefore the agreement with Armidale wool ltd is still valid.
3) Consideration- The gain or benefit received from a contract is called consideration and must be present in all contracts if they are to be valid. The most common type of consideration is money. If no consideration is present the contract may still be valid if the contract is in the form of a deed. Although there was no set amount of consideration. The “reduced amount” was the consideration needed to make it a valid contract.
When considering the three legal issues outlined. The contract is a valid contract within adhering to the three elements of a legally binding contract. Armidale wool ltd revocation of the contract although posted before acceptance. Is void because revocation did no reach the offeree till after acceptance was made. Armidale wool ltd will be legally obligated to deliver the 200 wool car seat covers at the reduced price. A precedent case would be Byrne v Van Tienhoven and co (1880) 5 CPD 344. Where revocation was received after acceptance had taken place therefore the contract was valid and legally binding.
This case is also very similar to that of Adams v Lindsell (1818) 106 ER 250 where acceptance took place before revocation and Adams breached the contract unintentionally.
As it has been shown Armidale Wool Ltd. is legally obliged to deliver the 200 wool car seat covers to the Automotive Parts Store at a discount price by the 1st of July. If Armidale wool Ltd does not deliver the 200 seat covers at the reduced price by the 1st of July, then they will have breach there contract will the automotive store. The automotive store will have a remedy in breach of contract and could claim damagers for losses that are reasonably foreseeable.
