When a promise is made to do some task for a consideration, between two or more parties, a contract is formed (Marson & Ferris, 2015). A contract can be either written or oral. In an oral contract, the terms of the contract are exchanged in a verbal manner. And in a written contract, the terms of the contract are stated on a piece of paper, which is then signed by the contracting parties. Both the oral and verbal contracts are legally valid and equally binding upon the contracting parties. However, to form a legally binding contract, the elements of contract have to be present in the contract (Latimer, 2012). The given case study has been analyzed in the following parts, which revolves around the elements of a contract.
Issue
Whether any contract was formed between the given parties, or not?
Rule
The foremost element to form any contract is an offer. An offer has to be made by one party to the other party, denoting the willingness to create contractual relations. This offer has to be then accepted, as it was made, by the other party and this element is known as the acceptance (Mulcahy, 2008). In case of Hyde v. Wrench (1840) 49 ER 132, the judges concluded that since the acceptance given contained different terms than what was being offered, the acceptance was not attained, and instead, a counter offer was made (E-Law Resources, 2017a). The conduct of an individual can also be considered while judging if an acceptance has been made (Latimer, 2012).
The postal rules are applicable on acceptance, as per which, the date of acceptance is taken to be such date, on which the letter of acceptance was posted (O’Brien, 2007). It remains irrelevant that the post was received by the other party, as postal office is considered as an implied agent of the posting party. The enforceability of contract was maintained in Adams v. Lindsell (1818) 106 ER 250, as the letter of acceptance was posted (E-Law Resources, 2017b).
The next element is consideration and the amount of consideration can be something which is discussed between the parties, so long as it has an economic value. Even the wrappers were considered as a valid consideration in Chappell & Co Ltd v Nestle Co Ltd [1960] AC 87 (Gibson & Fraser, 2013). The next element relates to the clarity regarding the terms of the contract, as per which, the contracting parties need to be clear regarding the terms of the contract. The fifth element relates to the contractual capacity, which necessitates that the contracting parties are of legal age, as well as, of sound mind (Abbott, Pendlebury & Wardman, 2007). The last element relates to the intention of being legally bound. So, the contracting parties need to have the intent to form legal relationship (Elliot, 2011).
Application
An offer was made through a Facebook (Fb) page by Alan on 01 Nov 2015 to the students of Kaplan Higher Education and to the friends of Alan.
A counter offer was made on Alan’s offer by Bernard on 02 Nov 2015 on the Fb wall as per Hyde v. Wrench, and hence, would not be deemed as Bernard’s acceptance. The acceptance can however be taken from the conduct of Bernard. He posted the consideration, which is a valid means of acceptance, and hence, this post would be taken as Bernard’s acceptance. The date of acceptance would be the date of posting, i.e., 3 Nov 2015. The intention was present to create legal relations, and the parties had the contractual capacity. The terms were also clear and hence, due to the presence of elements of contract, a contract was formed between Alan & Bernard.
The offer was restricted to Alan’s friends and students of Kaplan Higher Education. Charleen was Alan’s sister and not a friend and she was not enrolled in Kaplan Higher Education. Hence, the offer was not made to her. In absence of an offer, a contract cannot be made.
Damien was enrolled in Kaplan Higher Education and so, the offer was made to him. Damien had specifically called to convey his acceptance and had paid consideration on 04 Nov 2015. Alan kept the consideration which further affirms the acceptance. All the other elements of a contract are present in this case and so, a contract was formed between these two.
Conclusion
To conclude, a contract was formed between Alan & Bernard and Alan & Damien, though a contract was not formed between Alan & Charleen.
Issue
Whether or not Bernard has any rights for the breach of contract?
Rule
When a promise made in the contract remains unfulfilled, it is a breach of contract and in such case; the aggrieved party can claim damages in form of monetary remedies or equitable remedies (Andrews, 2015). The monetary remedies are in form of monetary compensation and equitable remedies are in form of rescission, injunction and specific performance. A misstatement can also be claimed against in a contract. A misstatement is a false statement made, which induces the party into forming the contract, during the course of negotiations (LexisNexis, 2013).
Application
The contract required Bernard being given both the book and the handwritten notes, but he was only provided the former, and so, Alan breached the contract. Additionally, Alan stated that the book contained the notes, which made Bernard enter into the contract for purchase of the book. This was a misstatement and a claim against this can also be made. A claim for specific performance, where by Alan be required to give Bernard the handwritten notes, can also be made.
Conclusion
To conclude, Bernard can claim both monetary and equitable damages for the breach of contract.
Issue
Whether or not Charleen has any rights for the breach of contract?
Rule
(As stated earlier)
Application
A contract was not formed between Alan & Charleen and so, a breach of contract cannot be claimed, which could give rise to legal remedies.
Conclusion
To conclude, Charleen has no rights for the breach of contract.
Issue
Whether or not Damien has any rights for the breach of contract?
Rule
(As stated earlier)
Application
The contract stated that Damien would be given the book of Alan with the handwritten notes. However, he was given the book brought from the store. This was a clear breach of contract and hence, Alan can be sued for this breach. In the same manner in which Bernard can claim both monetary, as well as, equitable remedies, from Alan, Damien can also initiate claims for both these. However, the specific injunction in this case would be for the book, instead of notes. He can also get the contract rescinded.
Conclusion
To conclude, Damien can claim both monetary and equitable damages for the breach of contract.
ADR, is the acronym for Alternative Dispute Resolution, which a leading method of resolving the disputes between the parties, without going through the hassle of litigations. ADR has a number of forms including mediation, arbitration, conciliation, negotiation, and neutral evaluation. However, the two key modes of ADR are arbitration and mediation (Tania, 2008).
Under arbitration, an arbitrator, either one or three in number, is elected by the disputing parties. This arbitrator listens to the claims made by each party and resolves the dispute. The arbitration clause is a set clause in the contracts made in the recent times. Even if such a clause is not entered into the contract, the parties can refer to arbitration. The process of arbitration is confidential, swift and the parties even have the freedom of selecting the language of arbitration. Also, the parties can freely select the arbitrator as decided amongst the parties. However, there are certain disadvantages of arbitration. For instance, unless the award of arbitration is confirmed by court, the parties cannot be obligated to enforce such an award (Tania, 2008).
Mediation is another famous form of ADR. Under this, a neutral individual is elected as a mediator, to settle upon the dispute. Instead of making a decision on which party was at fault, in mediation, the solution to the issue is discovered. The matter remains confidential and private under mediation as the proceedings are private. The control over the outcome of such a dispute is in the hands of the parties as it is mutually decided between the parties. The neutrality of the mediator makes the entire procedure of mediation fair and just. It is also a cost effective method, which is both flexible and informal. The costs of mediation are also remarkably less than the litigation (Nolan-Haley, 2013).
The major problem in mediation is that a settlement is usually not attained. Also, as this process lacks the protection of constitution, the parties cannot be forced to make full disclosures or provide the proper evidence or documents which could prove a certain point. Another disadvantage of mediation is that the rule of precedent cannot be applied in the mediation proceedings. In other words, the decision made in a previous case of mediation cannot be applied to another case of mediation (Fiadjoe, 2013).
References
Abbott, K., Pendlebury, N., & Wardman, K. (2007). Business law (8th ed.). London: Thompson Learning.
Andrews, N. (2015). Contract Law (2nd ed.). UK: Cambridge University Press
E-Law Resources. (2017a). Hyde v Wrench (1840) 49 ER 132 Chancery Division (Decided by Lord Langdale MR). Retrieved from: https://www.e-lawresources.co.uk/Hyde-v-Wrench.php
E-Law Resources. (2017b). Adams v Lindsell (1818) 106 ER 250. Retrieved from: https://www.e-lawresources.co.uk/Adams-v-Lindsell.php
Elliot, C. (2011) Contract Law (8th ed.). London: Pearson.
Fiadjoe, A. (2013). Alternative Dispute Resolution: A Developing World Perspective. London: Cavendish Publishing Limited.
Gibson, A., & Fraser, D. (2014). Business Law 2014 (8th ed.). Melbourne, Pearson Education Australia.
Latimer, P. (2012). Australian Business Law 2012 (31st ed.). Sydney, NSW: CCH Australia Limited.
LexisNexis. (2013). Misrepresentation and misstatement. Retrieved from: https://lexisweb.co.uk/sub-topics/misrepresentation-and-misstatement
Marson, J., & Ferris, K. (2015). Business Law (4th ed.). Oxford: Oxford University Press.
Mulcahy, L. (2008). Contract Law in Perspective (5th ed.). Oxon: Routledge.
Nolan-Haley, J.M. (2013). Alternative Dispute Resolution in a Nutshell (4th ed.). Minnesota: West Academic.
O’Brien, R. (2007). Analysis of the Postal Rule. Retrieved from: https://corkonlinelawreview.com/editions/2007/COLR%202007%2013%20O’Brien.pdf
Tania, S. (2008). Alternative dispute resolution (3rd ed.). Pyrmont, N.S.W., Australia: Thomson Lawbook Company.
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