Business Contract Law

Business Law   ..Assignment


Student: Goda Geceviciute

Introduction to Contract Law
A contract is a legal document of agreement between two or more parties. . Contracts
have been described as the most important document in business activity , all transactions made by costumers or producers are agreed or signed of a contract to make the transaction legal.


For a contract to be valid, there are certain requirements, such as;
-The parties who are signing the contract must be intended for legal purposes.
-The parties must have capacity to contract.
-The terms of the contract must be legal.
(ref: Business Law Notes )

1.Discuss the distinction between an offer and an invitation to treat with reference to appropriate case law.

Offer:
To recognise an offer, we must first distinguish what are not considered an offer:
-A statement of Intention.
-An option.
-The answer to a question

Case: Carlill V. Carbolic Smoke Ball Co. (1893)
The defendant undertook, in various advertisements, to pay 100 pounds reward to anyone who caught influenza after having sniffed the smoke ball for two weeks. The plaintiff used the smoke ball as assigned and followed the instructions provided. The plaintiff caught influenza after the two weeks, and while still using the smoke ball. She then claimed her 100 pound reward as stated in the offer. The offer which she accepted, and performed by the conditions was an offer to the public eye. While an advertisement is considered not normally an offer but an invitation to treat, a sum of money that was lodged in the bank was seen as a sign of the offers good faith, and providing considerations to support the offer.


Case: Harvey V. Farcey (1893)
The first question asked by the plaintiff was: ‘Will you sell us Bumper Hall Pen? Telegraph lowest cash price’. The defendant telegraphed ‘Lowest price 900 pounds’. The plaintiff confused this with an offer and answered bacl ‘ We agree to buy for 900 pounds asked by you’. The defendant made no reply. This is an example of when no contract has been made, it was not an offer but just an answer to a question. It was only a supply of information.

An offer is when the offer or expresses its willingness to undertake particular terms, made with the intention to be contractually bound if the other person accepts. This other person is called an offeree. An offer is a statement of terms on which the offer or promises to be bound by a contract with certain responsabilities in return. The terms of an offer must be clear ,certain and complete. It can not be vague or explained briefly. If the terms are not clear, certain and incomplete, the court may hold taht there was a failure to make a complete agreement. There are many forms of an offer. An offer can consists of a letter, newspaper advertisement, fax, email  and conduct. The offer must be written or spoken words. The offer must be intended as such before a contract can arise. If an offer is not made with a view to a legal relationship then its not an offer. or another way if an offer is not court enforceable its not an offer. An example of the difference is if you offered to pay your neighbour 100 euro to fix your fence or he done it for free. When the two parties reach an agreement, from there on, the offer is a valid offer. The offer can be accepted by anybody in the public eye. It can also be for a particular individual as well. The most important thing is that the offer must be communicated to the particular party or the public.

(Ref: Classroom, Business Law notes 2014/2015)
(Ref: Essentials of Business Law, Fifth Edition, Aine Keenan)
(Ref: http://en.wikipedia.org/wiki/Offer_and_acceptance)

Invitation to Treat:
An invitation to treat is an invitation to another individual to make an offer. The actions of an invitation to treat can sometimes appear to be offers, However, an invitation to treat is not an offer. It is considered as a pre-offer communication. An offer can be turned into a contract by acceptance, but an invitation to treat cannot be accepted. An invitation to treat is an action inviting other parties to make an offer to form a contract.

Case: Fisher V. Bell (1961)
A shopkeeper kept offensive weapons in the form of knives in his shop window. He was prosecuted for offering these items for sale. Even though he had put them for the public eye to see, accepted buyers offers and sold the goods, he did not offer them for sale, because goods which are displayed on a shop window are not on offer for sale, but an invitation to treat.

Case: Minister for Industry and Commerce V. Pim Bros Ltd (1966)
A coat was displayed for sale in the defendants shop window. It had stated the cash price of the coat and a weekly sum attached to it. The minister took action against Pim Bros Ltd because the minister though that they were in breach of the legislation which made it an offence to offer for sale goods on credit terms without specifically stateting these terms. However, This could have be made into a contract of sale by acceptance which would make it an offer then. It was an invitation to treat for the sale of the article with an indication that the shop allows the coat tobe sold on credit.

ref: http://www.boards.ie/
(Ref: Yahoo answers)

2.Briefly discuss any two methods by which an offer can be terminated, citing case law.

Termination of offer is the expiration of the period of time during which the offer is to remain in effect, whether such be a definite period as fixed by the terms of the offer or by custom or usage of trade.
-If the time of which the offer was valid expired (Lapse of Time)
-If the offeree has rejected (Counter-offer)
-If the explanation of the condition failed.


Revocation
Revocation means an offer is withdrawn by the offeror. The offerror has the right to withdraw the offer at any time before it has been accepted. must be communicated directly or indirectly to the offeree before acceptance. If the offeree accepts the offer by any written document, the postal rule would strictly apply and would not allow the offer to be revoked This is supported with a case underneath Byrne V. Van Tienhoven (1880) In another case Dickinson V. Dodds (1876 and  Routledge V. Grant (1828) On the other hand, if the offeree accepts the offer by any written document, the postal rule would strictly apply and would not allow the offer to be revoked.

Case: Byrne V. Van Tienhoven
The defendant, offered by letter on October 1 to sell goods to the plaintiff. The defendants situation was Cardiff,While the plaintiffs New York. On October 8, the defendant wrote to the plaintiff,as he wanted to revoke the offer. The plaintiff received the letetr of offer on October 11 and telegraphed his acceptance of the offer. He conformed this acceptance by letter dated 15 October. The letter of withdrawal was received by the plaintiff on October 20. The withdrawal actually had no meaning until received.

Case: Dickinson V. Dodds (1876)
The defendant offered to sell property by letetr to the plaintiff for 800 pounds. This letter stated that, this offer is to be open until Friday, 12 June, 9.00 am. On Thursday, 11 June, the plaintiff accepted and sent back a letter of acceptance to an adress which the defendant was no longer situated at, and therefore the defendant did not receive it. The defendant sold the property to another costumer. The other buyer was Mr. Berry, who had been intermediary between the plaintiff and the defendant, informed the plaintiff of this sale.  Anyway, Mr.Berry delivered a duplicate letter to the defendant on Friday 12 June. There was no contract. Therefore, the offer could be easily withdrawn before acceptance. Third party communication is valid in this case. An offer was revoked due to implications, and so, the item has been sold to another individual.

Case: Routledge V. Grant (1828)
The defendant, in an offer to buy the plaintiff’s house, prepared an account of requirements of his offer being accepted during a period of six weeks. Within this period of time, he revoked his offer. This is totally acceptable at any time because no aption agreement existed.

Ref: http://www.lawteacher.net/contract-law/essays/how-is-an-offer-terminated-contract-law-essay.php
(Ref: http://www.casebriefs.com/blog/law/contracts/outline-contracts-law/offer-and-acceptance/termination-of-an-offer/)

3.With reference to case law distinguish between:
a. Conditions
b. Warranties
c. Innominate Terms

Conditions
A term of the contract may be classified as a condition. A condition is an important term of a contract, this is here so that the injured party to abolish the contract, but also alows the injurdes party to repeat the contract.In whichever case, the injured party may also recover damages for any losses that have happened.

Case: Poussard V. Spiers (1876)
The plaintiff contracted to sigh in a London Operetta throughout a series of performances. However, she failed to perform during the first week, due to an ilness.So,for the entire run there had to be a replacement, which there was. When the plaintiff was better, the producers of the opera did not take her back to perform. As the singer had failed to come in for the first week, it was a breach of condition which let the producer to rescind the contract.

Warranties
A warranty is not such an important term in a contract. It is when the injured party can claim damages. The injured party is still bound by the contract.


Claim: Bettini V. Gye (1876)
The plaintiff who was an opera singer,has contracted to sing at a performance. However, this required for the palintiff to attend six days of rehearsals. The palintiff did not attend three of the days because of an ilness and so he was informed that his service was not required anymore. The plaintiff had breached a warranty only because, the rehearsal was considered to be only the subsidiary to the main purpose of the contract.  Therefore, the producer had to accept the services of this singer and counld not revoke the contract. But he could claim damages because the plaintiff did not arrive to the rehearsal, if there was any proof of any loss.


Innominate terms
An innominate term (sometimes also called an intermediate term) is one which could be a condition or a warranty, depending on the nature and seriousness of the breach. If a term is to be considered very important and to be broken, the party that is injured is entitled to revoke the contract. Depends on the seriousness of the term that is to be broken is judged by the court and will not limit to a specific remedy due to premature classification as a breach of condition or breach of warranty.

(Ref: Aine Keenan, Fifth edition,Essencial of Business Law)
(Ref: http://en.wikipedia.org/wiki/Condition_subsequent)
(Ref: http://singaporelegaladvice.com/what-are-warranties-conditions-and-innominate-terms/)


4.
Consideration
Consideration is required for all written contracts, except does made by deed. An individual has no right to sue another party on a simple contract unless they can provide proof that they gave, or promised to give, any advantage available to the party they want to sue, in exchange for what the party promised in return. The promise is only legally binding if there is something in return that the other party promised, in other words, if it is a part of a bargain.
If there is no proof that consideration was given in return, it can be used in court as complete defence. To make this more clear, there have been many rules made in case the question as to the existence of consideration arises.

A contract in its most basic definition is nothing more than a legally enforceable promise. Consideration must be something which the promise is not bound to do under the general law or under an existing contract with the other party.
If there is an existing obligation which has to be completed,it is no consideration return for a promise. But,if there is any extra service given then that is sufficient consideration.

In this case, Frank was legally obliged to give evidence in court and Betty did not have to pay the 200 euro. She had the right to refuse now to pay, as it was the duty of Frank to go act as a witness. So the performance of an exsisting obligation was no consideration for a promise of the 200 euro. The promise,therefore, was invalid.

In my opinion, eventhough Betty was not obliged to give Frank the 200 euro expenses, she could have kept her promise as now Frank has to take time off his work and therefore he was not content about this because he would not bet paid for his absence. Howeve, Bad news for Frank as the promise was not valid as it was only the discussion between the two people and not legally enforced. There is nothing Frank can do if Betty refuses to pay him the money that she promised.

Case: Collins V. Godefroy (1831)
The plaintiff, a witness in a lawsuit, was promised to get paid by the defendant in return for an asked service to give evidence. It turned out that the witness had already been ordered to come and he had no choice. The performance of an exsisting obligation was no consideration fora promise made between the palintiff and the defendant. The promise was therefore, invalid.