Commercial contracts take time in their creation. Typically, the process starts with negotiations. While parties are negotiating, they may decide to have their negotiations binding, or they may choose to have non-binding negotiations. It is upon the parties to choose what they want because the law always avoids creating terms for the contracting parties. Some long negotiations end up with confusion where each party giving its terms making it hard to distinguish between the offeror and the offeree. Similarly, the same negotiations become confusing when one party pulls out asserting that there was no contract, while the other party claims that there was a contract. This paper will be an examination of such a scenario.
Part (a) Mary claims that they had binding negotiations with Lianne when their negotiation breaks.
This dispute is a question to determine whether inquiry results to normal negotiation or it can create a binding negotiation.
For an enforceable agreement, the law of contract must ensure that it passes the component check. That is, the main elements must be present. Some of these elements are offer and acceptance. So where the is a contract, there must be an offeror and an offeree. The offeror makes the offer, while the offeree accepts it. Secondly, there must be a consideration. Here the rules are that both parties must be exchanging something valuable to either of them. It could be a service or goods. Apart from the two, the law requires that both parties be willing to contract. In other words, the intention to create a binding agreement should be clear from either side.
In regard to these rules, it is a fact that many contracts do not just start with the offer, acceptance, consideration and then the parties’ intention. Sometimes these elements may come one after the other as the parties nail out their concerns during a process of negotiation. More than that, the parties may agree and disagree with the party which was the offeror becoming the offeree. As more and terms emerge during the negotiation, the harder it gets to determine the offeror, and the more the intention to create a binding agreement becomes unclear. Therefore, the law of contract assumes that negotiations are not binding unless the parties make it express that they would want them to be binding.
Negotiations can take different forms. They can be oral or written. It can be an inquiry, or it can be a request for more information. Likewise, a counter-offer in the process of negotiation does not amount to acceptance, but it can be a reason for the original offeror to withdraw the original offer. Sometimes it happens that parties may clearly decide to make their negotiations binding or their objective intentions to have a legal bond becomes so clear. Take for example when parties sign preliminary negotiations forms stating that the negotiations are binding. At other times, parties say that that “we have made a deal” in the process of negotiating. Such circumstances gives the court an insight that the parties intended to be bound by the so called “deal’ or the terms inside the negotiation terms.
In contrast, there are negotiations with exchange of offers and counter-offers, such negotiations even if the intention happened to be clear at first, the emergence of counter-offers fades away the intention for a legal bond that the parties had shown at the start. Therefore, no party can later come back to say that they want the court to enforce the contract based on the intention that was manifested before the counter offers.
Next is the completeness of the negotiation, where negotiations were complete, and no counter-offers emerged, that one becomes a sign that the terms are clear and the party’s intention to create a legal bond is so clear.
The judgment whether there was an agreement or not during negotiations was once discussed in Masters v Cameron [1954]. The dispute arose from the papers that the parties had signed as part of their terms to be included in the future contract for the sale of land. The parties had signed a document with a phrase indicating that the parties would agree more terms in future. Later the negotiations broke, and the claimant sort to enforce the preliminary agreement. The court advised that since the terms indicated that the contract was not complete, it therefore meant that the intention of the parties to enter into a legal agreement depended on the filling of those gaps.
Another case regarding inquiries was decided in Harvey v Facey [1893]. The claimant sent a telegraph asking the defendant whether he would sell his Bumper Hall Pen. In reply, the defendant gave the lowest price for the said Bumper Hall Pen as £900. Later the claimant sent another telegraph accepting the price of agreed on the Bumper Hall Pen. The defendants cut the communications hence the claimant brought an action. The court dismissed the case terming the defendant reply as a statement offering more information for the lowest price but not an offer. The court found that the claimant’s reply as the offer instead of the defendant reply.
Conclusion
By analysis, the inquiry requested by Lianne cannot amount to a binding agreement. The court will find that the parties had not demonstrated their clear intention to forming a legal bond. Even though there are negotiations that can amount to an offer, such negotiations are complete where the offeree just needs to respond without questions. An example of such scenarios is the case of Stellard Pty Ltd v North Queensland Fuel Pty Ltd [2015]. In this case, the offeree who was the seller agent who received an offer from the claimant requesting him to accept the offer. The claimant replied with sending the contract to be signed by the defendant. The contract that the defendant emailed included details such as price, deposit amount required, date of the settlement plus other conditions. The claimant just emailed back requesting urgent confirmation of a deal. The seller accepted, though the claimant continued to push for additional amendments. In the meantime, the defendant found another purchaser and entered into a sale agreement and set aside the negotiations with the claimant. When the case came to court, the court confirmed that the negotiations were binding. This scenario is by far different from that of Mary and Lianne.
An easier claim that Mary can try is claiming for damages for revocation of an offer after acceptance. However, this would follow the rules of revocation which allows the offeror to revoke the offer before the offeree starts the process of acceptance. Besides, the claimant can only recover the reasonable damages that he has suffered due to revocation. In this case, the same may fail as the offer was revoked immediately after the acceptance.
Issue
This scenario is case of substantial performance.
Rules
After making the agreement, parties promise each other that they would deliver the performance in good faith and the performance would match the output requested by the other party. Substantial performance requires each party performance would not deviate from what was agreed. Also, such performance should equal the benefits as contemplated in the contract. If one party errors or makes some omissions, that party would be guilty of rendering non-substantial performance. Non-substantial performance is punished with receiving the contract price less the amount that equals the non-performed duties or services.
A scenario that features non-substantial performance is the case of Hoenig v Isaacs [1952]. This case arose from a decoration and furnishing contract worth for £750. The claimant only paid the defendant £400 and refused to pay the remaining £350 because the service was defective. The court decided that the defendant should not receive the whole price, but the claimant should subtract the amount required to repair the defects.
Conclusion
Following this analysis, Lianne will be advised the by the court to only pay Mary for the quality of service provided instead of the full contract price.
Advertisement regulations deal with the legal rules that aim to address the concerns of both the advertisers and the consumers. Most of these rules come from the consumer protection laws, the trademark laws, and privacy laws among others. Whereas in the past such laws would only affect advertisements in the newspaper, currently they regulate any advertisement be it oral, written, symbolic or audio. Despite that the law means to regulate the businesses actions on consumers, the same laws help business to the business relationship as they both work to outsmart the other.
Starting with consumer protection laws, it is vital that every business should understand these rules before they start advertising. These laws mainly touch on instances where businesses can hurt consumers in the manner in which they conduct their advertisements. For instance, the law prohibits business from using deceptive advertisements to attract customers in entering into non-beneficial purchases. The law encourages businesses to display of good conduct in their business, to increase confidence and reliability of their products and to make sure their advertisements take into the welfare of children. More than that, the law requires the business to allow others to exercise their freedom of speech as they market their products within the congested communications pipe.
The next issue that advertisements rules seek to address is the issue of privacy. Unlike the past mechanisms of advertisement, it is evident that the emergence of the internet and online advertisement has brought so many concerns on the issue of privacy. The main concerns are in the use of cookies, spam emails, and viruses that track customer movements online One example of this is the American case with the DoubleClick Inc in 2001. The plaintiff had brought cause claiming that DoubleClick had mounted some cookies that stole users’ information in the user’s hard drive. Though the court found some truth in using cookies, it also came to the knowledge that DoubleClick cookies were not accessing the user information.
Again the 2012 case of FTC and Google raised another concern. FTC had brought a course of action to Google accusing them of abusing customers’ information stored on Apple’s. Assuredly, Google had employed the mechanism of cookies as their method of tracking those customers who were good at blocking cookies, so they found a better way to get them on IPhone and Ipad’s Safari browser. Indeed, the action violated users’ privacy rules, and Google decided to settle the claims by paying $22.5 million. Therefore, business should be aware of the risk of suits following a violation of user data.If they have to use cookies and emails, they should make sure that these fall in the rules set like allowing the user to opt out of getting future spam emails.
Issues of trademark affect business to business relations. The law prohibits trademark infringement as well as trademark dilution. Trademark infringement deals with unauthorized use other business’ person trademark in selling your goods or services. Trademark dilution rules regulate the use of other business’ or persons’ trademark in the manners that degrade it. As anayzed above, businesses should be aware of these rules to avoid conflicting with customers or other businesses rights that can cause the intervention of the government.
References
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Marsden, Gregory J. and George J. Siedel, “The Duty To Negotiate In Good Faith: Are BATNA Strategies Legal?” (2017) 14(1) Berkeley Business Law Journal https://scholarship.law.berkeley.edu/bblj/vol14/iss1/4/
Monaghan, Nicola and Christopher Monaghan, Beginning Contract Law (Routledge, 1st ed, 2013)
Cawley, John, Rosemary Avery and Matthew Eisenberg, “The Effect Of Deceptive Advertising On Consumption Of The Advertised Good And Its Substitutes: The Case Of Over-The-Counter Weight Loss Products” https://www.nber.org/papers/w18863
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Ullah, Najeeb and Mustansar Hussain, “Impact Of Unethical Advertising, Misleading Information Or Deceptive Advertising On Customer Purchasing Intention With Mediating Effect Of Word Of Mouth: Case Of Pakistan” (2017) 1(4) International Journal of Innovation and Economic Development https://ideas.repec.org/a/mgs/ijoied/v1y2015i4p49-69.html
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Miller, Roger .L, Business Law Today, Comprehensive (Cengage Learning, 11th ed, 2016)
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Stellard Pty Ltd v North Queensland Fuel Pty Ltd [2015] QSC 119
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