Contract law problem scenario

A. Jenny and the owner of the white ute
 
In Jenny’s transaction with the owner of the white ute, an offer was established by the owner stating “Good, I will sell it to you for $23,000”. Although an offer was made, the issue that is prominent in this situation is whether or not an acceptance had been communicated. Acceptance is an essential element in any legally binding contract and must be explicitly communicated back to the offerer, after an offer has been made. This is seen through Carlill v Carbolic Smoke Ball Co as Bowen LJ suggests that acceptance is required as it establishes that the minds of both parties have come together and formed a consensus. In regards to Jenny’s situation, she has only inquired to take a look at the vehicle and has expressed her interest. Although Jenny has interest in the car and intent to potentially enter into a contract, she ultimately does not later accept the offer from the owner to sell the car for $23,000. Evidently, there is no binding contract between Jenny and the owner of the ute due to the absence of acceptance.

B. Jenny and the owner of the red sports car

The issue between Jenny and the owner of the red sports car was whether there was a binding contract between them and whether or not the owner could sell the car to someone else. For the transaction to be a binding contract there would need to be an offer, and it would have to be accepted within the designated time frame set out by the offerer. The only time an offer can be revoked before the offer lapses is if the offeree is notified. This is highlighted in Dickinson v Dodds as the case indicates that explicit communication is not required for revocation but the offeree must have knowledge of it. The owner of the car made an offer as he had explicitly stated that he would sell the car for $28,000 if she came to him before noon on Saturday. Jenny had made the acceptance as she told the seller she would be there at noon and had expressed her interest in entering into an agreement. The offerer successfully received this acceptance. When Jenny had arrived at the owner’s house for the collection of the car, she had arrived before 12pm, which was within the time frame that was outlined by the owner. The owner had not communicated the revocation of his offer to Jenny before he sold the car to another individual and Jenny was not aware that someone else had purchased the car. As there was an offer presented and Jenny had accepted this offer within the proposed time frame, there was a binding contract in place between Jenny and the owner of the car. Jenny is able to seek appropriate remedies to gain compensation as the contract is legally binding.

C. Jenny and the owner of the blue sedan

Within the interactions between Jenny and the owner of the blue sedan, and offer was made by Jenny when she stated she would purchase the vehicle for $12,000 under the condition that the door needed to be fixed. A counter offer was then presented from the car owner when she stated she would accept $12,000 for the car in its current condition. Once a counter offer has been proposed, it is treated like a rejection of the original offer. Individuals can also request information in relation to an alteration of the terms of the contract, however this does not constitute as a counter offer. This concept is evident in Hyde v Wrench as the case reiterates the idea that a counter offer negates the original offer and once a counter offer is made, the original offer cannot be brought up again. The counter offer that the car owner had made to Jenny had eradicated Jenny’s original offer. Jenny’s statement “How about $11,500 as it is?” did not constitute as another counter offer, but as a mere inquiry relating to the alteration of the cost of the car. Although the car owner’s counter offer is still valid, Jenny’s response of “Let me get my money and I will come back” does not constitute as an acceptance as she did not communicate that she would like to purchase the car on the terms that were set out. Evidently, although a counter offer was made to Jenny, an acceptance was not communicated, therefore there was no contract evident between Jenny and the owner of the blue sedan.

D. Jenny and her brother

Within the transaction between Jenny and her brother, her brother had stated that in exchange for the hours she had previously worked for him, he would repay her with the wheels. As he had later no longer wanted to sell or give her the wheels, the issue present in this situation is whether or not Jenny’s brother was contractually bound to sell or give Jenny the wheels. For there to be a binding contract, there must be an offer. An offer may sometimes be confused with an invitation to treat, however an invitation to treat is an invitation to others to make offers or enter into negotiations. A contract also requires quid pro quo, a promise from each party to exchange things or perform. If there is no exchange of promises, a performance from only one party is merely seen as a conditional gift. This is seen through Australian Woollen Mills v Commonwealth as it highlights that without giving something to the offerer, there is an absence of quid pro quo, meaning that there is no contract in place and that the gesture is only a conditional gift. Jenny had indicated that her brother should give her the wheels, however did not make an offer, as she was only suggesting that her brother should enter into a contract. This highlights that Jenny’s statements were merely invitations to treat. Although Jenny’s brother originally offered to give Jenny the wheels, there was no exchange from Jenny after the offer was made. As Jenny did not intend to give anything in return for the wheels after the offer was made, there is an absence of quid pro quo, meaning that there was no enforceable contract between Jenny and her brother.

E. Jenny and her co-worker

A unilateral contract was formed between Jenny and her co-worker, when she stated that he could take her car for a drive, under the condition that he cleans her office and shreds all of her files while she is at lunch. The issue that is evident in this interaction is whether Jenny could revoke her offer, when her co-worker had already begun to perform the act of acceptance. An offer can be revoked at any time before it is accepted, therefore in a unilateral contract, the offerer can revoke the contract before the offeree has performed the act that constitutes as an acceptance. This is seen through Mobil Oil Australia v Wellcome International as the case highlights that unless there is an implied ancillary unilateral contract, offerer can revoke an offer at anytime before an acceptance, even if the offeree has already begun performance. As Jenny’s co-worker was not bound in an implied ancillary unilateral contract, Jenny was able to revoke her offer. Jenny’s co-worker had also failed to complete the performance of the task before she had returned from lunch, meaning that he was unable to complete the acceptance of the offer had already lapsed. As the offer from Jenny could be revoked, and as her co-worker had not performed the task required, there was not contract evident between them both.

PART B

The concept of the meeting of the minds being an essential requirement of contract agreement should be retained, as it ensures both parties understand the conditions of the agreement and prevents conflict from arising after the contract has been bound. The meeting of the minds of two parties plays a necessary part within contract formation in today’s society, as different parties can interpret terms and conditions in a contract differently.

The primary purpose of having a meeting of the minds is that both parties can have a mutual understanding of the contractual matter from an objective standpoint. The concept supports establish the fact that both parties have the same intention within a contract. Consideration and acceptance will only be valid when it is in response to the original offer and it’s terms. This is highlighted through The Crown v Clarke where a unilateral contract was not binding due to the absence of the meeting of the minds. Ultimately the purpose of the meeting of the minds is to ensure that the offeree understands the conditions and circumstances presented by the offerer. The concept should be retained as it removes the ambiguity of terms and agreements, and eradicates any grey areas within a contract.

The concept of the meeting of the minds is necessary in contract formation in today’s society, as individuals perceive instruction, phrases and terms differently. Terms and obligations in contracts in many cases can be vague, leading individuals to interpret them in different ways. This can be seen through Smith v Hughes as the two parties had not effectively communicated the terms of the agreement correctly and had interpreted them differently, leading to a conflict after the contract had already been formed. The idea of the meeting of the minds should be retained as a necessary part of contract formation as it ensures that both parties have an in depth understanding of their obligations, the potential outcome, terms and limitations of the contract that they are wishing to engage in. If contract formation did not include the meeting of the mind, parties to a contract could be unsure or mistaken about the circumstances of the agreement or the obligations that they have.

The meeting of the minds is an essential component of contracts formation and should be retained because it allows both parties that are about to enter into a contract to agree on it’s fundamental terms and conditions. This is evident in Dickinson v Dodds where James LJ states that “the existence of the same mind between the two parties…is an essential point of law to the making of an agreement”. It is an essential part of contract formation as the meeting of the minds in a contract in an enforceable contract would establish the fact that the intentions of the party were the same and will clarify ambiguities in a contract.

The concept of the meeting of the minds should be retained within contract law as it identifies the intent of each party in a contract and helps establish whether the contract was enforceable. It will ensure that parties must have an understanding of the conditions within the offer, meaning that there is a lesser change for conflict to arise after a contract has been formed.

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