Essay: Offer, acceptance and consideration – problem question

The word ‘agreement’ is central to a contract. Broadly, a contract is a legally enforceable agreement giving rise to obligations for the parties to it. ‘The agreement is often said to require a meeting of minds between the contracting parties, which is sometimes described as consensus ad idem.

The law is not concerned with what is in the minds of the parties, but with what it can be inferred from what was said and done’. It basically states that both parties must agree with the same state of affair otherwise an agreement is not binding.

The case provided has several different issues involving three different people, Barry, a wine merchant, Robert, a local doctor, and Cyril, an industrial Magnate. The current affairs will be divulged in particular areas of the law to see where and whom Barry has a legally binding contract with.

Robert clearly wishes to establish that, at some point, he made a binding contract with Barry.

Barry’s first email was a an offer of sales, ‘communication will be treated as an offer if it indicates the terms on which the offeror is prepared to make a contract, and gives a clear indication that the offeror intends to be bound by those terms if they are accepted by the offeree’ . This differs from an invitation to treat as an ‘an invitation to treat means an invitation to make an offer…where goods are displayed in a shop window or on shelves in a self-service store, the display is construed as an invitation to treat, not an offer to sell” the terms of acceptance differs between them both.

In creating an effective contract, the rule is that acceptance must be communicated. ‘Where an acceptance is instantaneous, receipt is required and the postal rule no longer applies’ , The application of this rule to instantaneous electronic mail for acceptance is contained in the case Entores Ltd v Miles Far East Corporation (1955) , ‘Where an acceptance is instantaneous, receipt is required and the postal rule no longer applies’ . Lord Denning states in the case above ‘the man who sends the message of acceptance knows it has not been received or he has reason to know it’ the contract is only complete when the acceptance is received by the offeror’ ,referring to receipt rule. It is therefore indefinite that Robert received the email with the offer to purchase the champagne.

For acceptance to be made there must be an agreement from both parties (as previously stated as the ‘meeting of minds’) in this case Robert and Barry

The email in question was sent outside of office hours, as in Brinkibon Ltd v Stahag stahl GmbH (1938) , where the House of Lords said stated telex message sent outside working/office hours, such a communication will inevitably be ‘non-instantaneous’.

Nevertheless, on receiving the email Robert immediately wrote a letter of acceptance, as the saw in Holwell Securities Ltd V Hughes (1974) , the offeror can stipulate that the acceptance must to be made in a particular way. He or She may require it to be sent to in certain, or particular form, such as by letter or fax. ‘In order to complete a binding agreement the offeree must normally comply with the prescribed method of acceptance, and states that only the stipulated form will suffice, the offeree must comply with the offerors requirements in order for there to be an effective acceptance.’ In the current case it was not stipulated that the acceptance must be comply with a particular way. Therefore, Robert was in all rights to reply in any way he saw fit.

The Letter being sent would be applicable by Adams v Lindsell (1818) this case relates to Roberts situation as again the defendants did not address the letter correctly, and as a result it did not reach the claimants. The court held in Adam v Lindsell (1818) that a contract was concluded as soon as the acceptance was posted. The ‘general rule for acceptance by post is that they take effect when they are posted, rather than when they are communicated’ ; consequently Roberts letter of acceptance is valid.

Nonetheless this current affair is not the only problem; Robert also left a message on Barry’s answering machine. It seems reasonable for Robert to assume that the answer message would be read shortly after opening the doctor’s surgery at 9am and to expect Barry to check whether any reply had been received. Businesses can generally be expected to check their email and answer machine messages each office day. So for example if a message of acceptance was left at 7pm on a Saturday the acceptance would be valid when the office opens for business at 9am on the Monday.

The receipt of a contractual notice should be deemed to occur at the start of the next working day if it is received and stored outside normal hours, the authority for this was Tenax Steamship Co v Owners of the Motor Vessel Brimnes (1974) ; the judgement of Megaw LJ said at 966H-967A stated: ‘If a notice arrives at the address of a person to be notified, at such a time and by such a means of communication that it would in the normal course of business come to the attention of that person on its arrival, that person cannot rely on some failure of himself or his servants to act in a normal businesslike manner in respect of taking cognisance of the communication so as to postpone the effective time of the notice until some later time when it in fact came to his attention’ There is support for this view in the judgement of Lord Fraser in Brinkibon ltd v Stahag Stahl GmbH(1983)

The next relevant communication is on the Tuesday when Barry was offered ??75000 for the bottle of champagne off Cyril. Cyril and Barry had a legally binding contract, there is an agreement between both parties and therefore, offer and acceptance is complete.

As a general rule, an offer can be revoked at any time before it is accepted. The fact of the matter is, the withdrawal of an offer can take place at any time up until it is accepted, this was established in the case of Payne v Cave (1789) .The offeror must however notify the offeree that it is being revoked.

The original email sent to Robert states ‘offer to remain open until Friday 6th February.’ It is not important, an offeror who ‘promises to keep an offer open for a specified period may still revoke that offer at any time before it is accepted’ .

On Tuesday, after accepting the offer from Cyril, at 3pm, Barry later sent another email to Robert to withdraw the original offer. Barry complied with sending the email within working/office hours. Furthermore, a contract was already made at 1pm on Sunday as soon as the letter of acceptance was sent. As stated in the case of Byrne & Co v Leon Van Tienhoven (1880) it was held that ‘there was a binding contract because revocation could only take effect on communication, but the acceptance by telegram took effect as soon as it was sent’ . A telegram falls under postal rule and thus the same rule applies.

The law states, for an acceptance to be made there must be an agreement by both parties. In the case provided it is clear that Barry has an agreement with both Cyril and Robert. This is because a legally binding contract was composed between Cyril and Barry at the point of ‘meeting minds’ thus agreement by both parties. Robert will be able to seek remedies for any damages brought. This could be in the form of allowing Robert to claim the difference between the original champagne bottle and one of its sort.

Source: Essay UK - http://lecloschateldon.com/essays/law/essay-offer-acceptance-and-consideration-problem-question/


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