Beef Disposals could claim that the mode of acceptance was stipulated it would only be effective once received in writing (signed agreement) not when posted, that it was a condition precedent. E.g. Holwell Securities v Hughs, CA, 1974, the postal rule was held not to apply where the offer was to be accepted by “notice in writing”.
However in light of what constitutes an offer in the law (see above), the fact instructions were given to validate the agreement & the letter of revocation. It seems logical to assume the courts will find Beef disposals were consenting to contract on the terms specified in the letter with the intention that a legally binding agreement would exist if the offer was accepted. Therefore an offer was made at this stage by Beef Disposals to Plant services and was communicated via the post.
Does an acceptance occur and is it supported by Consideration? Beef disposals post the offer on the 1st however the letter is wrongly addressed & the offer reaches the offeree on the 10th who immediately complies. The agreement is received by Plant Services on the 10th, later than could have been expected in normal circumstances. The delay in the transmission of the offer was the fault of Beef disposals therefore the offer still remains. E.g. Adams v Lindsell (1818) 1 B & Ald 681, it was held that the Plaintiffs were entitled to accept the offer despite the fact the defendants had contracted with a third party, the significant factor was the negligence of the defendants in addressing the letter. Also Acceptance can only occur when the offer has been received. E.g. Taylor v Laird (1856) 1 H&N 226, 25, LJ, Ex 329.
The Law states there must be a communication of the acceptance before a legally binding agreement exists, Plant Services communicated its Acceptance via the post. The Postal rule states, where Acceptance by post has been requested, then Acceptance is complete immediately the letter of Acceptance is posted. E.g. Brinkibon LTD v Stahag Stahl [1983] 2 AC 34, that acceptance is effective when it is placed in the control of the post office.
Acceptance can be defined as, “A final unqualified expression of assent to all the terms of the offer without qualification”. In view of this Plant Services did assent to all the terms of the offer without qualification, therefore it is likely the courts would identify that at this point acceptance was communicated by Plant Services LTD.
In addition to Offer, Acceptance and contractual intent, Consideration is an essential element of a simple contract. Plant services, in accepting the offer and being bound by its terms, promised to provide a service (future) in exchange for a sum of £9000 p.a. In Law a simple contract is required to be a bargain, as approved in Dunlop v Selfridge LTD, HL, 1915. “An act or forbearance of one party, or the promise thereof, is the price for which the promise of the other is bought, and the promise thus given for value is enforceable”. A promise of a service in the future is just as sufficient as the actual rendering of the service. Consideration has moved from the promisee, therefore Plant services showed consideration.
Despite the fact that the essential elements of a contract are present, Offer and Acceptance supported by consideration and the presumed intentions to be legally bound it would be inconclusive to make a judgement if a contract did indeed formulate without clarifying if the Revocation had legal effect.
If and when is the Revocation effective? Beef disposals has heard nothing from Plant Services, so it withdraws the offer at 10:45 am via fax, and the offer is accepted at 12:00 noon on the same day (10th October), but the revocation is received by Plant Services contract department at 2:00 pm. Beef Disposals could claim that no legal obligations existed so they had a legal right to withdraw the offer & did so, before the Postal rule regarding Acceptance took effect and Plant Services did not purchase an option to keep the offer open. E.g. Payne v Cave (1789) 3 Term Rep 148, where it was established it is possible to Revoke an offer at any time before the offer is accepted since no legal obligations exist.
The Law on the concept of Revocation clearly states in order to be effective, notice of the withdrawal of the offer must be communicated to the oferee. E.g. Byrne v Tienhoven (1880) 5 CPD 344, it was held Revocation was not effective on the validity of the contract since it was only effective when received, after a legally binding agreement had come into existence. Important to note is that similar to this case the revocation was sent before acceptance took place. In light of this Plant Services posted their acceptance before the revocation was communicated therefore acceptance had taken effect and a legally binding contract existed when the revocation was received deeming the revocation ineffective. If this were the case then a contract with a third party (Fixit LTD) would be a Prima Facie breach of contract.
However Beef Disposals could also claim that the Revocation was communicated via the fax at 10:45 am, and through the negligence of Plant Services administrative staff it took approximately an additional three hours & fifteen minutes for the revocation to be communicated. That Plant Services were aware of the possibility of a revocation and therefore did not forward it to the contracts department until 2:00pm after they had ensured that the letter of acceptance had taken legal effect. Beef Disposals could remind the court that there are exceptions to the rule that revocation must be communicated. That the revocation should be given legal effect when received not when read. In the case of the Brimnes [1975] QB 929, communication of the revocation would be deemed to have taken place when the letter was opened in the ordinary course of business. At the present time the law on instantaneous communications is in a state of uncertainty. However the courts would take into account the surrounding circumstances, situation and intentions of the parties in making a decision, but it is unlikely that the revocation is deemed effective because it will be difficult to assess these circumstances objectively. The likely outcome is the courts will accept the revocation was read in the ordinary course of business & is therefore ineffective because acceptance had already taken legal effect (see Postal rule above)
The final point to consider concerns the agreement Beef Disposals has with Fixit. The letter containing the offer to Plant Services was sent on the 1st & no reply had been received by the 7th when Fixit responds to the advertisement & negotiations commence. Beef Disposals has heard nothing from Plant services, so telephones & faxes Fixit with an agreement on the 10th. After further telephone discussions a new price is agreed. What constitutes a valid contract has been discussed above, in view of this Beef Disposals have made an offer to Fixit. However acceptance (see above) has not been communicated by fixit, & it could be argued that alternatively the new price of £8,500 amounts not to an acceptance but a counter offer & this destroys the original offer. E.g. Hyde v Wrench (1840) 3 Beav 334, it was held that the plaintiff had made a counter offer, which destroyed the original offer & therefore the original offer could not be accepted. However there is still a possibility that Beef Disposals have entered into a legally binding agreement with Fixit if the courts decide both parties had intentions to be legally bound, arguably Beef disposals did & this is corroborated by the revocation to Plant Services.
The courts will most probably resolve this contract dispute by referring to, Adams v Lindsell (1818) 1 B & Ald 681, emphasizing the fact that Beef disposals erred in correctly addressing the letter containing the offer which arrived later than could have been accepted in normal circumstances. Plant Services accepted the offer immediately & were entitled to do so creating a legally binding agreement. The courts could go either way on a decision of weather Beef Disposals had a valid agreement with Fixit. The method of Fixit communicating an acceptance would have to be investigated & again the intentions of both parties & the surrounding circumstances would be taken into account.
At this point I would advise Beef Disposals to revoke the offer to Fixit if it has not been accepted, or try to come to an alternative arrangement. It follows that Beef Disposals had a valid simple contract with Plant Services & therefore a contract with Fixit is a prima facie, breach of contract, which entitles Plant Services to sue for breach of contract.
BIBLIOGRAPHY
Nutshells Contract Law
Robert Duxbury
Sweet & Maxwell
Law of Contract
Paul Richards
Pitman Publishing
Cases & Materials in Case Law
Max Young
Pitman Publishing
1,911 WORDCOUNT
CONTRACT
COURSEWORK
TAHIR MUSHTAQ
LLB YEAR 1
