Advice for Bob
Issue: the first issue is if an offer has been made by Mike to purchase that the laptops from Bob and if this offer was accepted by Bob. The second issue is related with the fact that a valid contract is formed between Bob and Tom and if the offer can be revoked by Bob. Another issue that has to be decided in this case is if Steve can enforce the promise made by Bob to give him a new computer. Similarly, it also needs to be decided if a valid contract is formed between Bob and Mary, in view of the fact that the document was mistakenly signed by Bob.
Law: under the law of contract, when the party to whom an offer has been made, introduces new terms instead of accepting the offer exactly in the same way, it can be said that the offer was not accepted but such party had made a counter offer (Dickinson v. Dodds, 1876). The law of contract mentions that when a counter offer has been made, the law does not allow such a party to accept the original offer after making a counter offer (Baxt, Fletcher and Fridman, 2008). Under the law of contract, it is considered that once a counter offer has been made, the original offer is revoked. The law was mentioned in Hyde v Wrench (1840) by the court when it was stated that after making a counter offer, such party is not permitted by the law of contract to accept the original offer (Harris, Hargovan and Adams, 2013).
In case of the second issue, it has been mentioned in the law of contract that after making an offer to the other party, such offer can be revoked at whatever time before it is accepted. For this purpose it is required that the revocation has been communicated. But at the same time, it has also been mentioned that when the offer has been accepted other party to whom it was made, the party making the offer is not allowed to revoke the offer.
The posters Roloff except this is also applicable in this case (Sweeney, O’Reilly and Coleman, 2013). This rule provides that when post is contemplated as the means of communicating the acceptance and when the other party has placed the letter of acceptance in the mailbox, the law considers that the acceptance is complete at that moment and a valid contract is the formed. The postal rule was provided in Adams v. Lindsell (1818).
Regarding the third issue that is present in this scenario, under the law of contract, there are certain elements that should be present for the formation of a valid contract. These elements include an offer, symptoms, consideration, intention and capacity. Hence, consideration is one of the elements that are essential for the formation of a legally enforceable contract. Another rule of consideration that was provided in Re McArdle, 1951 mentions that past consideration is not treated by the law as valid consideration.
In case of the third issue that needs to be decided in this scenario, in this case, the mistake is a unilateral mistake. At the same time, it has been held in L’Estrange v Graucob (1934) that when a particular document has been signed by a party, it will be considered to be bound by it even if such party failed to understand the contents of the document or if the party had not read it. Consequently, unless the signatures have been obtained on the document as a result of force or misrepresentation, such party is considered by the law to be bound by it.
Application: in view of the rules of the law of contract that have been mentioned above, in the first issue it can be said that Bob had made a counter offer. As a result, now Bob cannot be allowed to accept the offers made by Mike Jones.
Regarding the second issue, the law provides that a contract is present between Bob and Tom as an effect of the application of the postal rule. This contract was created when Tom placed the letter containing acceptance in the mail box. Therefore now Bob cannot be permitted to remove the offer by sending an e-mail before he had received the letter of acceptance. In the same way, in case of the issue that was present between Bob and Steve, one of the essential elements required for the formation of a valid contract, consideration is not present in this case.
Moreover the acts done by Steve in the past cannot be treated as valid consideration as a past consideration does not amount to a valid consideration. Therefore in this case, consideration is not present to support Bob’s promise. Regarding the issue that is present between Bob and Mary, even if the document was signed mistakenly by Bob, still the contract is enforceable against Bob.
Conclusion: On the application of the rules of law to the facts of this scenario, it can be said that a valid contract is not created between Bob and Mike Jones as Bob had made a counter offer and therefore he cannot be allowed later on to accept the offer. Regarding the issue between Tom and Bob, a contract has been created and Bob cannot be allowed to revoke the offer made by him. On the other hand, there is no valid consideration present to support the promise made by Bob. Therefore Bob is not bound to give a new computer to Steve. However the documents signed by Bob mistakenly is valid against Bob and as a result, Bob and Mary have entered into a valid contract.
References
Baxt, R, Fletcher, K &Fridman, S 2008, Corporations and associations: cases and materials, 10th edn, LexisNexis, Butterworths, Sydney, New South Wales
Harris, J, Hargovan, A & Adams, M, 2013, Australian corporate law, 4thedn, LexisNexis Butterworths, Chatswood, New South Wales
Sweeney, B, O’Reilly, J & Coleman, A, 2013, Law in Commerce, 6thedn.2015, Australian Corporations Legislation, LexisNexis Butterworths/CCH (Vol 1)
Case Law
Adams v. Lindsell (1818) 106 ER 25
Dickinson v. Dodds (1876) 2 Ch.D. 463
Hyde v Wrench (1840) 49 ER 132
L’Estrange v Graucob [1934] 2 KB 394
Re McArdle (1951) Ch 669
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