Offers and acceptance

For a contract to be legally binding there are certain elements it has to have. An offer must be a clear, unequivocal and must be in a direct approach to the other party to the contract. There must be a clear acceptance by the offeree, silence could not be used as a sign of acceptance in a contract but there are certain cases where it could use as an acceptance. The consideration must be sufficient and does not have to be adequate to be enforced by the courts.

Communication

There are different types of ways for communicating in a contract. The courts have ruled certain ways where a contract is formed between different types of communication. The main rule is an offer is accepted when it is posted or sent and it does not have to be received by the offeror so that it can be enforced by the court. If there was an instantaneous method of communication is used, for instance telex, sent, faxed or emailed it will take effect when and where it is received. This rule is strictly used in the postal rule. The postal rule emphasises where acceptance by post has been requested or where it is an appropriate and reasonable means of way of communication between the two or more parties, then acceptance is complete as soon as the letter of acceptance is posted, even if the letter is delayed, destroyed or lost in the post or even if it never reaches the offeror the court will see this as a valid acceptance. The exceptions to the communication rule are in unilateral contracts the normal rule for communication of acceptance is that the offeror does not apply. Carrying out the stipulated task is enough to constitute acceptance of the offer. The offeror may expressly or impliedly waive the need for communication of acceptance by the offeree, e.g., where goods are dispatched in response to an offer to buy. The last exceptions is that where acceptance by post has been requested or where it is an appropriate and reasonable means of communication between the parties, then acceptance is complete as soon as the letter of acceptance is posted, even if the letter is delayed, destroyed or lost in the post so that it never reaches the offeror.

Scenario

Siteing the relevant rules: This case scenario issue is relating to two relevant rules offer and acceptance and counter offer.

First rule: offer and acceptance, the principle of offer and acceptance is that in order for a contract to be binding there must be a clear offer by the offeror and a valid acceptance by the offeree and that the offer and acceptance must meet each other.

Second rule: counter-offer, the principle of counter-offer is if in a reply to an offer, the offeree introduces a new term or varies the terms of the offer, then that reply cannot amount to an acceptance. Instead, the reply is treated as a "counter offer", which the original offeror is free to accept or reject. A counter-offer also amounts to a rejection of the original offer which cannot then be subsequently accepted. Therefore the first offer will be invalid and the new offer can either be rejected or accepted by the original offer.

Case law: Hyde v Wrench (1840: 49 ER 132)

The defendant by his agent offered to sell his farm to the plaintiff for £1,200. The plaintiff by his agent refused. The defendant by his agent offered to sell for £1,000. Then defendant asked for more to time to consider the offer, and then the plaintiff by his agent refused. The plaintiff by his agent offered to buy for £950, then the defendant wrote to the plaintiff's agent rejected the offer of £950. Then the plaintiff's agent wrote back to the defendant's agent accepting the first offer which was £1,200. The defendant refused to complete any sale. The plaintiff sued for specific performance. The defence was that, admitting the facts, there was no concluded contract.

Lord Langdale MR ruled: There was no contract. The offer to buy at £950 rejected the offer to sell at £1000, and it was not competent to the plaintiff to "revive" it by acceptance.

Case law: Butler Machine Tool v Excell-o-Corp (1979:1 ER 965)

The Butler Machine Tool Company quoted a price for a machine with specific terms and conditions for purchase outlined on the back. These terms included a price variation clause which allowed the seller to increase the price if there was an increase in the manufacturing costs. The purchaser sent back an order form outlining their own terms and conditions, which did not include a price variation clause. Attached to this order form was a tear off slip to be signed by the seller acknowledging their acceptance of the buyer's terms? The seller's returned the signed slip but when the machine was delivered in November 1970 they claimed an additional £2,982 under the price variation clause. The buyer disputed this arguing there was no price variation clause in the final contract.

Lord Denning MR ruled: That the contract was made on the Buyer's terms, without a price variation clause. Therefore the Seller had no right to claim the extra manufacturing fee and the appeal was allowed.

The judge's approach to his decision was "he who gets the last shot wins"

The Shaw brother's scenario is similar to the Butler Machine Tool v Excell-o-Corp case. The Shaw brothers wanted the twenty cases of Kenyan mangos but not the delivery. By sending the letter back with the words "we would make our own arrangement for collection and will pay for the goods at that that time" and crossing out the original text, they have automatically invalidated the old contract and validated a new contract in other words they proposed a counter-offer. By the replying of Food for all sending an acknowledgement slip they have signed the contract on new terms and on behalf of the Shaw brother's.

* Offer =. We agreed to pay a delivery charge of £15.00 and pay for the goods on delivery

* Counter Offer = we would make our own arrangement for collection and will pay for the goods at that that time

* Acceptance of Buyer's counter offer = the seller's accepted the order by sending an acknowledgement fax. Similar to the Butler Machine Tool v Excell-o-Corp case mentioned above.

Therefore the Shaw brothers should not be obliged to pay for the delivery charge. Since the contract stated that they will collect the goods on there own.

Business contract

Both parties in this agreement intended there agreement to be legally binding. If they did nit want there agreement to be legally binding they should do this by either saying so or in a form of communication.

Case law: Rose and frank V cromption brothers (1925)

The agreement between RF Co and Crompton contained a term to the effect that it was not ``a formal or legal agreement and shall not be subject to legal jurisdiction in the Law Courts''. The court therefore ruled that the parties did not have a legal contract, and no action could be taken on the basis of it.

If both of the parties wanted to there agreement not to be legally bibding then they should express this by any means.

Ahmed Abuzaid 1 principles of law