Issue
The legal issue in this case revolves around the establishment of contractual relations on the basis of the three tenders.
Rule
A contract shows a promise whereby one side of the party promises to do something and the other party promises to pay the value of consideration. In order to form a legally binding contract, it is crucial to have an offer, an acceptance, consideration, intent, capacity, clarity and consent (Ayres and Klass, 2012). Without the presence of these elements, a lawfully binding contract cannot be formed. The first stage in contract formation is offer. For a contract to be made, one party needs to offer the other party certain terms. There is a need to differentiate offer from invitation to treat. Tender is deemed as invitation to treat, as the prices are invited for a contract to be formed. Once a price has been quoted, it becomes an offer, which has to be accepted for it to become a contract (Lindgren, 2011).
The next step is acceptance. When an offer has been made, it needs to be accepted by the party to which it was made, in the exact manner in which it was made. It is crucial for the acceptance to be communicated and a mental decision does not result in valid acceptance. The general rule of acceptance is that the date of acceptance is such when the communication of acceptance reaches the offering party (Clarke and Clarke, 2016). However, an exception to this rule is found in the postal rules of acceptance. The postal rules of acceptance are also applicable on offers. As per these rules, the date of acceptance is such, when the letter of acceptance is posted. And the date on which such communication reaches, or not reaches for that matter, the offering party is not relevant (Turner, 2014). This is due to the notion that the postal agency is the agent of the offering party and an acceptance by the postal agency is deemed as the acceptance of the offering party, as was held by the court in the matter of Byrne v Van Tienhoven (1880) LR 5 CPD 344. Though, the postal rules apply only when the party has acknowledged it as a valid means of acceptance (Andrews, 2015). In Tallerman & Co Pty Ltd v Nathan’s Merchandise (1957) 98 CLR 93 it was held that the post would not be a justified means of acceptance, till the time the offering party has the reasons to believe that the postal mode can be used to accept the offer (Jade, 2017).
In the given case study, the tenders were invited with a closing date of June 01st and this is invitation to treat. The reply to this communication would be deemed as offer, instead of invitation to treat, as they clearly state the terms which have been offered. There is a need to analyze the offer of three different cases. The offer of Greenland had been delivered through hand and on the basis of the general rules the date of actual delivery would be the date of offer and this would be May 29th. In case of Enviro, the offer was sent through post, where the postal rules of acceptance are applicable. And the date of offer here would be May 15th. In case of Plan Forever, the offer had been posted on 30th May and this is the date of offer.
For considering the contractual position of each party in this case, the acceptance of the offers which have been made, by the University, has to be taken into consideration. As in the case of Enviro, the administrative assistant forgot about the tender submitted by them and it would be considered as a fault of the University; so due to this fault of university, a contract could not be formed. Due to the rumors related to reliability of Greenland, the tender, i.e., the offer of the party could not be considered. However, this does not mean that there is a contravention of any law. In short, a contract was also not formed with Greenland.
The offer sent by Plant Forever had been accepted by the university and the communication of this had been sent through the medium of post. On the basis of Tallerman & Co Pty Ltd v Nathan’s Merchandise, Plant Forever had the reason to believe that the University would be accepting the offer through post as the offer had been sent through post. Further, on the basis of Byrne v Van Tienhoven, the postal officer is the agent of Plant Forever and the destruction of post by their agent cannot be blamed upon the university. Due to these reasons, the breach was on part of Plan Forever.
Conclusion
To conclude, no contract was formed with Greenland and Enviro, and the university; and the one formed with Plant Forever was breached by Plant Forever, which gives university the right to sue them.
Issue
The legal issue in this case relates to the legal effect of the communication undertaken between the three from Oct 01st to Oct 10th.
Rule
As has been stated earlier, there is a difference between an offer and an invitation to treat. An offer is the wish to create legal relations. The adverts placed in magazines and newspapers are invitation to treat as they showcase the bargain of contractual terms (Latimer, 2012). Harvey v Facey [1893] AC 552 was a case where the indication of price of property by the owner was deemed as an invitation to treat (Poole, 2016).
The offer has to be accepted by the party to which it has been made and in the exact manner in which it had been made. If the offer is changed to the slightest while accepting, the communication becomes counter offer (Lambiris and Griffin, 2016). In Hyde v Wrench (1840) Beav 334, it was held by the court that the counter offer results in the expiration of the original offer and the same cannot be accepted later one (Marson and Ferris, 2015).
The other elements of contract include the intent, as per which, the parties need to have the legal intent of creating a contract. The next requirement is for the parties to have the contractual capacity (Gibson and Fraser, 2013). This has to be followed by consent, which means, that the contractual parties have given a free consent to create the contract. Lastly, the terms of the contract have to be clear so that there is no ambiguity regarding the duties and responsibilities of the parties (Blum, 2007).
The rules discussed above have to be now applied to the correspondence which took place between the three parties, i.e., Footloose, Famous Footwear and James’s Shoes from the date of 01st Oct to 10th Oct.
01st Oct: The newspaper advert was an invitation to treat. Applying the case of Harvey v Facey, this was merely an indication of the interest to sell the product at the price which had been quoted. This is due to the fact that unlike an offer, a clear price was not identified here.
02nd Oct: Once, the negotiations taking place in the invitation to treat becomes acceptable, an offer is made. So, this communication is an offer by Famous Footwear.
04th Oct: Upon the terms of invitation of treat becoming favorable, James made an offer for 200 pairs and the price of this offer was $30,000 which included the prices for GST and delivery.
06th Oct: Here, a counter offer was made due to the changes in price where the price of $30,000 was stated, which excluded the delivery. There was a difference in terms from this date to the date of offer and this would be deemed as a counter offer on the basis of Hyde v Wrench, instead of acceptance.
08th Oct: The acceptance from James was attained on this date due to the acceptance of the offer made on 06th Oct by Simone. However, due to the lack of clarity regarding the contractual terms, with regards to the delivery date, a contract was not formed.
10th Oct: This day marked the finalization of the contractual terms and the date of delivery was finalized to be 01st Nov. Hence, a contract, due to the clarity of contract, was formed on this day, after a chain of invitation to treat, offer and acceptance. The legal effects of contract were initiated from this very date. This is due to the fact that till this date, a lawful document was not created in the form of a contract, as only with the contract formation, are the lawful effects given birth to.
Conclusion
To conclude the discussion carried on above, the correspondence which was undertaken between the three parties in the given time period had different aspects of invitation to treat, offer, acceptance and the clarity in terms of the contractual terms. And the real contract was formed on 10th Oct and from this date onwards, the legal effects were given rise to. So, on the final day, the communication of the ten day period led to the formation of contract.
References
Andrews, N. (2015) Contract Law. 2nd ed. UK: Cambridge University Press
Ayres, I., and Klass, G. (2012) Studies in Contract Law. 8th ed. New York: Foundation Press
Blum, B.A. (2007) Contracts: Examples & Explanations. 4th ed. New York: Aspen Publishers.
Clarke, P., and Clarke, J (2016) Contract Law: Commentaries, Cases and Perspectives. 3rd ed. South Melbourne: Oxford University Press.
Gibson, A., and Fraser, D. (2014) Business Law 2014. 8th ed. Melbourne, Pearson Education Australia.
Jade. (2017) Tallerman and Co Pty Ltd v Nathan’s Merchandise (Vic) Pty Ltd. [Online] Jade. Available from: https://jade.io/j/?a=outline&id=65197 [Accessed on: 13/08/17]
Lambiris, M., and Griffin, L. (2016) First Principles of Business Law 2016. Sydney: CCH.
Latimer, P. (2012) Australian Business Law 2012. 31st ed. Sydney, NSW: CCH Australia Limited.
Lindgren, K.E. (2011) Vermeesch and Lindgren’s Business Law of Australia. Chatswood, NSW: LexisNexis Butterworths.
Marson, J., and Ferris, K. (2015) Business Law. 4th ed. Oxford: Oxford University Press.
Poole, J. (2016) Textbook on Contract Law. 13th ed. Oxford: Oxford University Press.
Turner, C. (2014) Unlocking Contract Law. 4th ed. Oxon: Routledge.
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