The issue in this case is to identify whether the elements of a valid contract has been fulfilled between Ronny and Mick
A contract is an agreement which can be enforced by individuals who are a part of it legally through Court. There are few specific requirements which needs to be followed for an agreement to become legally effective. Out of such requirements the primary requirement for ensuring legal effect to an agreement is a valid offer and acceptance along with consideration and an intention to create a legal relationship.
An offer as defined by McKendrick (2014) is an expression which has been made by one party in order to signify his intentions of creating a legal relationship with another party. An offer is considered the beginning step for formation of a contract.
An acceptance as defined by Andrews (2016) is the assent given by the party to whom the person making the offer addressed his offer that such party is willing to abide by the terms set out in the offer in return of some kind of consideration.
An offer has to be sufficiently comprehensive in nature. This means that the basic elements of the deal such as what the offer is related to, what is the consideration and how the delivery is to be made has to be present in the offer. In the case of Harvey v Facey [1893] AC 552 it was ruled by the court that an offer must be constructed in a method as to convey the offeree that the offeror would abide by the terms of the offer if it is accepted.
An offer can only be considered as illegal and complete offer if it is more than a mere expression of willingness regarding business operations. An advertisement is considered as an invitation to treat rather than an offer as provided in the case of Partridge v Crittenden [1968] 2 All ER 421.
Generally an acceptance has to be communicated to the offeror. An acceptance has to be comprehensively consistent with the original terms of the offer or else it is not regarded as acceptance at all. As stated in the case of Adams v Lindsell (1818) 106 ER 250 when acceptance is made through post it is accepted as soon as the letter is posted. However such rule is not applicable in communication through emails and phones. According to the Electronic Transaction Act 2000 (NSW) the process of communication is complete only when the acceptance reaches the system of the offeror not when it has been sent by the offeree. However it is not required that the acceptance has been read by the offer or not in order to be valid.
It has been provided by the scenario that Ronny has saved money from the past one year to go on a trip. He inquired from his brother who works as a travel agent for a trip to United States. This enquiry made by Ronny would be considered as an invitation to treat according to the principles of the Partridge case as it is a mere enquiry and not a comprehensive offers. In reply to such enquiry Mick who is the brother of Ronny made a formal offer to him which constituted the price, as well as the details of the services provided along with the time till which the offer was valid. This expression made by Mick was an offer as it was comprehensive in nature.
An acceptance has to be made in by compliance with the terms of the offer. Ronny without altering any term accepted the offer and emailed Rick before the stipulated time. However Ronny was unaware of the fact that the Internet provider had stopped Mick’s service till his dues were paid. According to the postal rule of acceptance an offer is accepted as soon as it is posted however the rule is not applicable here because Ronny had used email for accepting the offer. According to the provisions of electronic transactions Act the communication is completed only when the acceptance reaches the system of the person who has made the offer. However in the given situation no mail had reached the system as there was no Internet service available. Thus through the application of these principles in the case it can be provided that the acceptance was not made properly and therefore a valid contract was not formed between the parties.
Conclusion:
A valid contract has not been formed because the mail has not reached the system of Mick.
Whether the elements of intention and consideration were present in the correspondences between Mick and Ronny.
According to Knapp, Crystal and Prince (2016) a legally binding contract can only be created if there is intention on the part of both parties to form a contract. The intentions of the party are determined objectively. This means that whether a reasonable person would believe or not that the agreement is intended to be binding would be used to determine the intention of a party. The surrounding circumstances are also taken into account by the court in order to determine whether there was a valid intention present or not.
When the parties are in a social or domestic agreement the court presume that there is no intention to create a legal obligation. However such presumption can be rebutted by the parties if they are able to provide evidence to the contrary.
In the case of Todd v Nicol [1957] SASR 72 it was held by the court that even though a social and domestic relationship existed between the parties there was a contract because if the promise made by the defendant was not honoured it would bring significant consequences to the plaintiff. In addition any reasonable person in the position of the plaintiff would assume that there was an intention on the part of the defendant to enter into a contract.
A contract cannot be completed if the element of consideration is missing from it. Poole (2016) defines consideration as a promise of doing an act or omission in relation to a contract.
In the case of Thomas v Thomas (1842) QB 851 it was provided by the court that anything which is of a value can be considered as a consideration. In addition the Court ruled that it is not necessary for a consideration to be adequate it only must be sufficient in the eyes of law in order to be effective. In this case the court held that even a small amount can be considered as a consideration to the contract.
It has been provided by the scenario that Ronny and Mick are brothers. This means that there is a social and domestic relationship between them. According to the rules discussed above the court will presume that where there is a domestic and social relationship between the parties there is no intention of creating a legal relationship. However if a reasonable person is placed in the position of Ronny he would assume that the offer made by Mick had intention of being legally bound. This is because the offer was complete and contains all essential terms to induce a person to get into it. In addition Ronny relied on such offer and booked additional services. Therefore if the promise in relation to the offer is not honoured then Ronny would be subjected to significant losses. Applying the principles of the Todd v Nicol case in the given scenario it can be provided that the court would rule in favour of Ronny that there is an intention to create legal obligation between him and his brother.
In addition according to the above discuss rules, even a small amount can be considered as a valid consideration. Therefore consideration was present in the first offer made by Mick to Ronny as well as the second offer which was at all discounted price.
Conclusion:
The elements of intention and consideration have been satisfied in this case although there was no contract between the parties as discussed in the first part.
References:
Adams v Lindsell (1818) 106 ER 250
Andrews, N., 2016. Sources and General Principles of English Contract Law. In Arbitration and Contract Law (pp. 165-175). Springer International Publishing.
Harvey v Facey [1893] AC 552
Hunter, H., 2017. Modern Law of Contracts.
Knapp, C.L., Crystal, N.M. and Prince, H.G., 2016. Problems in Contract Law: cases and materials. Wolters Kluwer Law & Business.
McKendrick, E., 2014. Contract law: text, cases, and materials. Oxford University Press (UK).
Partridge v Crittenden [1968] 2 All ER 421.
Poole, J., 2016. Textbook on contract law. Oxford University Press.
Thomas v Thomas (1842) QB 851
Todd v Nicol [1957] SASR 72
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