Contract Law Discussion: Formation, Legal Positions, And Remedies

Question 1

Question 1

There are some essentials that are required to enact an enforceable contract between two parties. These essentials are as highlighted below:

• Presence of valid offer on the part of the offeror, which is directed towards a particular offeree or multiple offerees (Carter, 2012).
• Valid acceptance on behalf of the offeree. It is pivotal that the acceptance must be unconditional. Any conditional acceptance would lead the formation of counter offer and would only be valid when the offeror has accepted it (Andrews, 2011).
• Further, it is noteworthy that when an offeree extends a conational acceptance than the original offer also gets terminated and no contract can be enacted based on the initial offer. The Hyde v Wrench(1840) 3 Beav 334 case is the evidence of this aspect.
• Offeree must send the acceptance before or on time mentioned by the concerned offeror under the case decision of Ramsgate Victoria Hotel v Montefiore(1866) LR 1 Ex 109 case.
• It is pre-requisite for contract formation that offeree must communicate the acceptance to the offeror. Any mental level acceptance would not lead the enactment of an enforceable contract (Carter, 2012). The most leading case is this scenario is Entores Ltd v Miles Far East Corporation [1955] EWCA Civ 3 case.
• Presence of lawful consideration between the parties. This is an amount or promise which is extended by the offeree to the offeror in the return of the offer. It is also noteworthy that parties cannot enter into legal relationship on the basis of the past or illegal consideration (McKendrick, 2006).
• Intention and capacity of the parties to create a legal relationship is essential to enact a contract and fulfil the contractual obligation as per common law (Richard, 2013)

Based on the case facts, it is apparent that an enforceable contract is enacted between Bernard and Alan. On November 4, 2015, Bernard has communicated the acceptance to Alan without any conditions and that moment only the contract had been created by the parties.

Question 2

Issue

The issue is to determine the legal position of Bernard and to extend him the remedies available under the highlights of common law.

Law

A contract become enforceable when there is a lawful offer and unconditional acceptance along with the consideration. It is essential that the offeree must communicate the acceptance towards the offer. In case, when the offeror has directed the offer to several offerees then, it is not essential that the acceptance would be received by offeror (Andrews, 2011). Any party who performed the activity mentioned in the offer is liable to enact a contract with offeror as per the highlights of Great Northern Railway Company v Witham (1873) LR 9 CP 16 case. In such cases, the offer is termed as unilateral offer. Also, it is noteworthy that any conditional acceptance would result in counter offer and the initial offer also get destroyed as per the decision made in Hyde v Wrench (1840) 3 Beav 334 case. Further, if the party redirected the offer to a particular offeree and offeree accepts it unconditionally then also the contract is enacted irrespective of the fact that at the initial stage the offeror has rejected the counter offer (Paterson et al. 2015).

Application

In the present case, Alan (offeror) has made an offer to sell his book and lecture notes. He has posted this offer on his Facebook page along with the consideration and clearly stated that the price of the book would be $200 and anyone who made the payment by 5 Nov, 2015 would take the book along with the notes from him. Bernard a friend of Alan wanted to purchase the material and hence, he posted on his Facebook page with a conditional acceptance and stated that he can buy the material for a consideration amount of $150. This results in the formation of counter offer on the part of Bernard and same has been rejected by Alan. When Bernard has extended a counter offer, at that point the initial offer gets revoked. However, Alan has again made an offer and directed to Bernard that he can only be able to sell at $200.

Further, on November 4, 2015 Bernard has accepted the offer and communicated the valid acceptance along with the consideration amount through post. He also informed Alan about the acceptance. This would result the enactment of a valid contract between the parties because Bernard has sent valid acceptance to Alan within the specified time mentioned by Alan.  Also, Alan has received the letter from Barnard and accepted the amount on November 5, 2015. Therefore, Alan is accountable to discharge the contractual obligations. However, Alan has not extended the complete material to Bernard as per the offer. Therefore, Bernard has the legal rights to demand for the complete material from Alan or else he can sue Alan for not performing the contractual responsibilities. Moreover, there is no accountability present on the part of the Alan about the fact that the respective book is offered free of cost to the students by Kaplan.

Question 2

It is apparent from the above discussion that Alan is liable to complete the contractual obligations or else Bernard can sue him for not performing the duties. Also, for the second case when Barnard got to know that book is freely available then he could not claim for any damage from Alan on the account of the contract made in first case.

Question 3

Issue

The issue is to determine the legal position of Charleen and to extend the available remedies available under the highlights of common law.

Law

A valid unconditional acceptance would lead to contract enactment between the parties. It is imperative that it must be communicated on behalf of the offeree. It should not be just mere silence or in the form of metal level acceptance on the part of offeree. The Felthouse v Bindley (1862) 11 CBNS 869 case is the testimony of this. Therefore, it is pivotal that the acceptance towards the offer must be communicated to the offeror. Only then, it would be termed a valid acceptance and same must have been accepted by the offeror. Additionally, there must be intention on the parts of the parties to create a legal relation (Edlin, 2007).

Application

It is apparent from the case facts that Charleen is Alan’s younger sister, who has enrolled in different course. Further, she read the post made by Alan and then extended an offer to him regarding the purchase of material. In this case, Alan did not make any acceptance towards the offer. However, when she proposed to pay the amount on November 6, 2015 Alan nodded his head but there was no intention on the part of Alan to make a legal relationship with Charleen regarding the offer. Therefore, no enforceable contract is enacted between Charleen and Alan.  Hence, Charleen cannot claim for the damage from Alan.

Due to the lack of valid acceptance and in the intention on the part of the offeror to create legal relationship no enforceable contract is enacted between Charleen and Alan. 

Question 4

Issue

The issue is to determine the legal position of Damien and to make an advice about the remedies available under the aegis of common law.

Law

When one party who extended a unilateral offer to the offerees received a valid acceptance from a party then the contract is enacted between the parties. Hence, at that point only, the offer becomes revoked for other offerees as the object under sale would be no longer available. The offeror is not authorized to enact a contract by considering the acceptance with the other party on the account of revoked offer under the ambit of common law (Taylor and Taylor, 2015)

Application

After seeing the Facebook post, Damien has decided to purchase the book and lecture notes. In order to communicate the same, Damien had sent a SMS to Alan by. He stated that he will extend the requisite consideration amount of $200 to him on November 1, 2015. Alan does not reply to his SMS. Further, Damien has issued the consideration amount, which has been accepted by Alan.  Also, Alan has insured Damien that he will issue the complete material on November 7, 2015.

It is apparent from the above case acts that Alan already received the acceptance extended on the part of Bernard. Moreover, Alan has enacted a contract with Bernard. Therefore, the original unilateral offer is no more available for acceptance. Further, he made the commitments to issue material to Damien on the account of initial offer and thus, he has purchased a new book and extended it to Damien along with the original lecture notes. It is apparent from the above course of action performed by Alan is fraudulent misrepresentation by issuing the new book and hiding the facts that the original book already been sold to someone else. Therefore, no enforceable contract is made on the account of the unilateral offer because Alan already entered into a legal relation with Bernard for the respective offer. Therefore, Damien has the legal rights to sue Alan for conducting fraudulent misrepresentation.

Conclusion

In this case, Alan and Damien are not entered into a contractual legal relation. However, Damien can recover the consideration amount from him and also, claim for the damage made by performing fraudulent misrepresentation.

Question 5

There a host of alternate dispute resolution methods that are available and some of the prominent ones are analysed below.

• Arbitration – It refers to the underlying process in which the dispute resolution is facilitated through arbitrator appointment. A pivotal point in arbitration is that the decision announced by the arbitrator is binding on the parties involved (LRC, 2008).

Pros:

• Allows the parties to reduce the overall litigation costs
• Helps in saving time as decision is quick
• With regards to the operating procedures along with evidence norms, a high deal of flexibility is available which simplifies the process and enhances the speed of making a decision
• Hostility between party can be avoided due to presence of a neutral arbitrator
• In the process of negotiation and consequent settlement, privacy may be maintained

Cons:

• At times, level playing field is not provided which leads to favouritism
• Transparency lacks as negotiations and hearing is done in private and not in public which might lead the parties to question the objectivity
• Once the final award is announced, recourse possibilities are very slim.

• Mediation

This process involves the usage of a neutral party making efforts to defuse the situation and aim for dispute resolution. Unlike other processes, mediation is an informal process and may or may not lead to a decision. This is mainly aimed at bringing the parties on a common platform where they can communicate and mutually address the various issues in order to reach a conclusion amongst themselves where mediator is only a facilitator (LRC, 2010).

Pros:

• In order to reach a solution, parties must show active participation as the mediator is only a facilitator.
• Saves on time along with litigation costs
• It provides a facilitating environment where the issues on both sides can brought in the open and then resolved
• The process is highly flexible as the ground rules depend on the disputing parties involved.

Cons:

• The onus on reaching a solution lies on cooperation from the involved parties
• The process of mediation may not result in a final decision being agreed to and even in the case one is made, there is no guarantee of the underlying enforceability.
• There is acute shortage of skilled mediators

• Conciliation – A relatively more formal approach of mediation involving active participation from parties is called conciliation. It begins with the appointment of conciliator for making ground which enables the parties to reach a decision. Here, unlike mediation, the conciliator can propose new proposals for settlement which the parties can evaluate (Ming, nd).

Pros:

• Saves on time along with litigation costs
• Even though parties may not reach settlement but privacy and confidentiality of discussions is maintained
• Active inputs from conciliator may facilitate consensus building

Cons:

• It is possible that no consensus is reached and hence no decision is taken.
• The success of the process is dependent on underlying cooperation on the part of the disputing parties
• Enforceability remains a concern and would be driven by underlying parties’ commitment

Reference

Andrews, N. (2011) Contract Law. 3rd edn. Cambridge: Cambridge University Press.

Carter, J. (2012) Contract Act in Australia. 3rd edn. Sydney:  LexisNexis Publications.

Edlin, D. (2007) Common law theory. 4th edn. Cambridge: University Press Cambridge.

LRC (2008), ALTERNATIVE DISPUTE RESOLUTION, [Online] Available at, https://www.lawreform.ie/_fileupload/consultation%20papers/cpadr.pdf [Accessed March 30, 2017]

LRC (2010), ALTERNATIVE DISPUTE RESOLUTION: MEDIATION AND CONCILIATION, [Online] Available at, https://www.lawreform.ie/_fileupload/reports/r98adr.pdf [Accessed March 30, 2017]

McKendrick, E.  (2006) Contract Law. 7th edn. Basingstoke: Palgrave.

Ming, C. (nd), Alternative dispute resolution mechanisms, [Online] Available at, https://www.acc.com/chapters/euro/upload/106program.pdf [Accessed March 30, 2017]

Paterson, J. Robertson, A. and Duke, A. (2015) Principles of Contract Law. 5th edn. Sydney: Thomson Reuters.   

Richard, S. (2003) The Modern Law of Contract. 5thedn. London: Cavendish.

Taylor, R. and Taylor, D. (2015) Contract Law. 5th edn. London: Oxford University Press.