Type: Definition Essays
Sample donated: Pat Lloyd
Last updated: September 23, 2019
According to the Duhaime law dictionary, incontract law, the legal definition of a contract can be defined as an “explicitproposal to contract which, if accepted, completes the contract and binds boththe person that made the offer and the person accepting the offer to the termsof the contract”. “The underlying theory is that a contract is the outcome ofconsenting minds. However, parties are judged by what they have said, writtenor done, rather than by what they were actually thinking”.
Whatever, youexchange in a contract it has to be worth something. Things like thoughts,feelings, emotions etc you can’t have a contract on those terms. First stage to any contract is offer andacceptance; combine the two and you’ve got an agreement. (Offer + Acceptance= Agreement). Another element that makes a legal binding contract isconsideration.
Consideration means that parties exchange promises with oneanother, but you’ve got to gain and lose something at the same time. In this case,a transaction, losing a piano and receiving money in return. Moreover, theparties must have an intention to create legal relations between themselves. There are two types of contracts:1. Bilateral contract, which is 2 sided – partiesexchange promises. Most contracts we enter into are bilateral. 2.
And the other is a unilateral contract, whereone party promises to be bound if the other party performs some specified act.In the case of the piano, we can say it’s a unilateral contract.In order to advise Kelly, it is essential to consider the law regardingoffer and acceptance. The first issue to be considered is whether it’s an offeror invitation to treat.
An invitation to treat is “where a party is initiating negotiationsthey are said to have made an invitation to treat. An invitation to treatcannot be accepted to form a binding contract”. For example, if an individualplace an advertisement its automatically an invitation to treat because oncethey run out that’s it as they don’t have a supplier or a manufacturer. On theother hand, if it it’s a company who places an advertisement it will be treatedas an offer because they are a lot more powerful, they have more money andresources. (fisher v bell 1961), (Partridge vs Crittenden 1968), (Carlil vsthe carbolic smoke ball company 1893), Gibson v Manchester city council 1979),(Storer v Manchester city council 1974).Whereas, an offer is a “definite and unequivocal statement ofwillingness to do or refrain from doing something that is capable of beingconverted by acceptance into a legally binding contract. It is made by anofferor to an offeree and is capable of acceptance only by an offeree who knowsof its existence (Taylor v Allon 1966).”To be valid: § “It has to be communicated in oral terms”§ “Has to be clear and certain then youhave got a legally binding offer”§ “It can be communicated by conduct/withdrawals/oral” The person who makes the offer is called the offeror, and theperson to whom the offer is being made is called the offeree.
We can see thatthere was no designation as to the presence of a valid offer because Kellyclearly “made an offer to sell her piano to charlotte for a specified sum ofmoney (£500)”. Inaddition to that, the offer was made open to charlotte till noon on Saturdayand this was communicated orally. In return charlotte had also put up herconsideration towards the formation of the contract by replying “I will buy itif I can raise the money”. Acceptance has to be communicated and unconditional.”Acceptance is the unqualified and unconditional assent to all the terms of theoffer”.
It can be done in the following:? Oral? Written? ByConduct (Carlill v The Carbolic Smoke Ball Company 1893) Inthe case of Brinkibon Ltd v Stahag Stahl (1983) when an oralconversation takes place between two parties; acceptance comes into effect whenthe attention is actually brought to the offeror, as in the case of Kelly andCharlotte. Thus, the court may find that agreement was reached at this point aswe are told that Kelly promised not to sell the piano to anyone else until theagreed deadline so that charlotte could attempt to raise the money. However, here,charlotte is adding a condition to the acceptance and the rule states that ifyou add a condition to your acceptance you would be making a counter offer. “A counter offer is not an acceptance and has theeffect of destroying the original offer”. (Hyde v Wrench 1840). The fact that charlotte stated that she willbuy the piano if she could ‘raise the money’ introduces uncertainty and leavesthe terms open to negotiations and bargaining.
This suggested that both partieswere intending to form a legally binding contract. So far, they only agreed ona proposal to enter into a contract at a future date. (Foley v Classique Coaches Ltd1934).
“On Thursday, Kellywas invited by Jake who said that he would pay £500 for the piano. Now this isa valid offer made by Jake to Kelly who can either choose to accept or reject.Because Kelly wasn’t in a binding contract with charlotte, she accepts theoffer. Kelly is able to revoke because charlotte still hasn’t told her that shehas the money. However, what Kelly needs to do now is communicate therevocation to charlotte which indeed she does. Revocation is basicallywithdrawing your offer at any time before acceptance occurs from the otherparty as in the case of (Routledge vs grant 1828).
“Laterthat day Kelly posted a letter to Charlotte telling her that she could not havethe piano”. According to the corporate and business law text book “the offerormay revoke their offer at any time before acceptance. If they undertake thattheir offer shall remain open for specified time they may still revoke itwithin that time.
” For the revocation to be valid it has to be communicated.However, if there’s a deposit put down a and you want to revoke, you will notbe able to and therefore, you would have to wait for the deadline to lapse.Furthermore, it is important to note that revocation in writing is only validwhen it’s received by the party before they communicate their acceptance. Acceptancemust effectively be communicated when the offeror receives notice. In thisscenario, a method of acceptance was not specified by post, this was donethrough a third party which was Kelly’s daughter, Leah, sayingthat “she had got the money and would come to collect the piano on Saturdaymorning. Leah forgot to pass on themessage”. Kelly is now bound by the acceptance even if her daughter did notcommunicate the acceptance to her. (Byrnevs Leon Van Tienhoven 1880) and (Routledge vsgrant 1828).
These twocases are important because they both relate to charlotte’s situation regardingrevocation; the former withdrew his offer and the latter revoked but the letterof revocation could not take into effect until its received. “Pat, the postman,delivered it to the wrong address and Charlotte, who never received the letter,appeared with a hire van to collect the piano at 10 o’clock on Saturdaymorning”. Here, unfortunately, the postal letter is not reached to the party shewished to notice, therefore revocation is not valid. In this case, Kelly is inbreach of contract. Breach of contract occurs when where one of the partieshasn’t performed what they promised to do in the initial agreement.
Thus, Kellywould be held accountable for the expenses suffered by charlotte and any otherlosses because she had a duty of care towards charlotte