Business Law and Ethics, Offer and Acceptance for a Contract
Business Law and Ethics Assignment 14/03/2013 Module : 26313 Module leader : Phil Robinson Words count : 1088 In order to advise Neil, it is necessary to consider the law of the contracts, especially about offer and acceptance - Business Law and Ethics, Offer and Acceptance for a Contract introduction. We will analyze the situation to see what laws are applicable and advise Neil. In this case, we have three different people: Firstly an offeror, a person who makes an offer (in this case, Neil) and two offerees, the person to whom an offer is made (in this case, Theresa and Alex). Neil placed an advert in the “Cats Weekly” magazine, which offer a rare female utopian cat for sale ? 00 or nearest offer. This is an invitation to treat, which is “an indication that a person is prepared to receive offers with a view to entering into a binding example, an advertisement of goods for sale or a company prospectus inviting for shares. It must be distinguished from an offer which requires only acceptance to conclude the contract” (Corporate and Business Law). On the Monday, Theresa phoned Neil to make a counter-offer of ? 450. He does not want to sell it less than ? 475, and tell her she has until Friday noon to do a written acceptance.
On Wednesday Alex, made an appointment to see the cat at 10. 00 am on Thursday. He made an offer of 470? for it, which Neil accepts. “An offer is an express or implied statement of the terms on which the maker is prepared to be contractually bound if it is accepted unconditionally. The offer may be made to one person, to a class of persons or to the world at large, and only the person or one of the persons to whom it is made may accept it. ” (Corporate and Business Law). Case of Theresa Theresa saw the advertisement, and called Neil to make a counter-offer of 450?.
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Indeed, “An advertisement of goods for sale is usually an attempt to induce offers” [Partridge v Crittenden (1968)]. He declined it by saying he won’t sell it for less than 475?. It means he has done a counter-offer, so Theresa may accept it, but “if she rejects it the original offer is no longer available for acceptance” [Butler Machine Tool Co v Ex-Cell-O Corp (1979)]. As Neil has rejected the offer, according to Hyde v Wrench (1840) “when the person to whom the offer was made proposes new or amended terms, also terminated the original offer”.
This means that Neil can’t propose ? 500 anymore to Theresa. She has until 12. 00 noon on Friday to write the acceptance if she still wants it for ? 475. Neil is entitled to revoke the offer at any time before acceptance [Payne v Cave (1789)]. Furthermore, according to Routledge v Grant (1828) “The defendant could revoke his offer at any time before acceptance, even though the time limit had not expired”. In this case, Neil has not made any acceptance with Theresa yet, so he is able to withdraw the offer whenever he wants.
Theresa has phoned Neil on Wednesday morning, and left a message to accept the offer at ? 475. But Neil’s phone malfunctioned, so he did not receive the message. “The postal rule states that, where the use of the post is within the contemplation of both the parties, the acceptance is complete and effective as soon as a letter is posted, even though it may be delayed or even lost altogether in the post” [Adams v Lindsell (1818)]. Here Theresa has left a message which Neil never heard. According to this rule, it should be an acceptance.
But during their first phone call, Neil has specifically said that he wanted a written acceptance. Indeed, “if the offer stipulates a particular mode of communication, the postal rule may not apply” [Holwell Securities v Hughes (1974)] and “the offeror may call for communication of acceptance by specified means” [Tinn v Hoffmann (1873)] On Thursday, Theresa sees Alex’s old mother, who tells her that her granddaughter has bought a cat with the same characteristics. She’s not sure that this is the same cat, but she posts a letter to Neil to tell him she has left a message and that she still wants it.
Actually, on the authority of Dickinson v Dodds (1876) “the revocation of offer may be communicated by any third party who is a sufficiently reliable informant”. In this case, Alex’s grandmother is not a “reliable informant”. On Friday, at 11. 00 am, Theresa receives a revocation letter from Neil. We know that “the offeror’s revocation does not take effect until the revocation is communicated to the oferee” [Byrne v Van Tienhoven (1880)]. So at this time, Theresa is aware that the cat has been sold to someone else.
Moreover, Neil receives Theresa’s letter only at 1. 00pm, whereas he had told her she has until 12. 00 to accept the offer. Thanks to all these arguments, we can see that Neil and Theresa have never set an acceptance, so Neil is not bound with a contract to Theresa. Case of Alex On Wednesday, Alex sees the advertisement and made an appointment with Neil on Thursday. He made an offer of ? 470 for the cat, and Neil accepts it. “Acceptance is a positive act by a person to whom an offer has been made which, if unconditional, brings a binding contract into effect”.
To be valid, a contract must respect rules such as: validity, form, content, genuine consent, and legality. First of all, Alex seems to don’t have any restricted capacity, so she is able to do the contract. “As a general rule, a contract may be made in any form. It may be written, or oral, or inferred from the conduct of the parties” (Corporate and Business Law). Neil has not fixed any particular form, so they made it oral, and both of them have accepted the terms of it. The two have understood and were not influence or duress for any terms of this contract.
Regarding the legality, this is a proper offer, which is “definite promise to be bound on specific terms”, and in agreement with the public policy and the law. All the validity factors are respected, so this is a valid contract. To conclude, on one side we have seen that Neil and Theresa had not made a contract, because the acceptance was not valid. Indeed, he has sent his revocation letter before 12. 00 noon on Friday, which means the offer was not valid anymore. On the other side, the contract with Alex respects all the validity factors, so they are bound. Neil has to sold the cat to Alex at ? 470.