Discuss about the Introduction to Business Law and Ethics.
The law of contract oversees the management of promises that people engage each other into that when if not fulfilled; it would amount to one of the parties suffering the misconduct of the other. However, not all promises that are enforceable in law. So with that, the law of contract revolves around the elements of a contract to decided whether a contract is enforceable or not. As an illustration, this paper will look at three study cases where there were promises, and then analyze them using the elements of a contract to decide whether there was a contract or not.
The main issue here is a question whether silence is a valid acceptance of an offer. In (Mettling, Cusic and Stanfill, 2016), some of the rules of acceptance are one; a clear communication from the offeree to the offeror that it has accepted the offer. And Secondly, and the offer should be either oral or in writing. It’s only under very rare situation when silence can accept an offer (Hunter, 2016).
There exist some principles and procedures that govern the methods by which an acceptance should occur. For one, In (Goldman and Sigismond, 2013), the offeror can set his/her procedures for acceptance. The best illustration that outlines the seriousness following the offeror’s strategy is in (Yates Building Co Ltd v R J Pulleyn & Sons (York) Ltd [1975]). In this case, the offeror had stipulated that the acceptance should take a form of notice in writing, and it should be registered or through a recorded delivery. The court strengthened these terms when the plaintiff was sued following a rejection of his acceptance sent through ordinary posts. Besides, acceptance takes any other form where the offeror has not specified the form of acceptance.
In support of that, the law of contract summarizes the methods of acceptance into two, and these are written acceptance and oral acceptance. Acceptance by silence was first dismissed in (Felthouse v Bindley [1862]). The claimant had been contracting to purchase his nephew’s horse. Felthouse wanted to buy the horse at £30 15s. Therefore, he wrote to Bindley telling him that he would consider the horse his if he doesn’t hear from him. The nephew didn’t reply, and later the nephew’s auctioneer sold the horse to another buyer by mistake. Due to that, Felthouse brought a case against Bindley but the court favored the nephew stating that an offer needed an actual acceptance, and the silence was not a valid substantial.
This case set the principle of acceptance by stating that the failure of the offeree’s to communicate cannot establish a substantial acceptance. This principle has been very useful in governing the transactions of goods and services. In particular, it has been applied in the cases of ‘inertia selling.’ A trader cannot enforce a contract where he sends unsolicited goods to a buyer’s home, designating that if the purchaser doesn’t communicate, the trader will assume that he accepted the goods together with the indicated price.
Other than the two modes of acceptance, the law also reserves another method whereby the conduct of one party can demonstrate acceptance. In the case of (Brogden v. Metropolitan Railway Co [1877]), the court concluded that there was a contract amounting from the conducts of Brogden. By amending the agreements, Brogden accepted the offer from the company. And on the side of the company, they counted the contract as complete when they received the first order of coal, or after the latest coal supply.
Being the main issue in this case, the contract between Chan and David didn’t amount to one enforceable by law. The main reason is that David failed to communicate the acceptance in writing or orally, and he also failed to demonstrate the offer through his conduct.
The legal issue here is the revocation of an offer through a counter-offer. A counter-offer can be an attempt by the offeree to accept to some of the terms or can be a direct counter-offer where the offeree replies by quoting new terms. According to (Helewitz, 2010), a counter-offer is simply the same offer from the offeree but with some changed terms.
When an offeree counters the offer with new terms, that offeree becomes the offeror, and the original offeror can choose whether to accept the offer or reject it. Consequently, when the previous offeror rejects the new offer, even the original offer is no longer available for acceptance as held in (Hyde v Wrench [1840]). The defendant was offering to sell his farm for £1,000 to the plaintiff. In his reply, the plaintiff offered to purchase it for £950. The defendant declined to take the £950. Later on, the plaintiff sought to accept, but the defendant declined. In the court, the ruling stated that the plaintiff revoked the offer with a counter-offer canceling the entire contract.
Sometimes a counter-offer can be accepted by the first offeror as in the case of (Butler Machine Tool Co v Ex-cell-O Corp (England) [1979]). In this case, the plaintiff was offering to sell tools to the respondent. The quotation covered the details of the standard contractual terms. In reply, the defendant sent back the offer with their standard terms. The plaintiff accepted by returning a tear-off slip from the order form. The defendant refused to pay according to the terms of the plaintiff and then the plaintiff sued the defendant. The judge held that the defendant’s order was counter-offer, and the plaintiff accepted it.
Similar to the cases illustrated above, when Cammy Pty Ltd accepted some terms of the TT Co offer but changed the other terms canceling the entire contract. The contract would have only been successful if TT Co approved the new offer. Additionally, Cammy cannot rely on the silence of TT as the acceptance. The law takes silence as acceptance under rare situations as explained in (Hunter, 2016). So with the fact that Cammy refused some terms and replied with its terms, and the absent of some indication from TT that it accepted the new offer, there was no contract.
In the formation sale of land contracts, the seller’s duty is to transfer ownership to the purchaser and then the complete the payments the agreed date. In most the times, the contract includes a provision where time is of the essence like the clause in this case of Lee and Hurry. Under such circumstances, the specified date becomes a material term of a contract as stated in (Beatty and Samuelson, 2015). Each party will be bound to perform its duty within the specified time. Any omission will definitely constitute a breach which would entitle the innocent party to rescind the contract at once. In other words, since Lee failed to clear the payments following a time stipulation, Hurry had to repudiate the contract putting it to an end. After that, any effort for Lee to seek specific performance will be unsuccessful.
The famous illustration of this is the judgment in (Tanwar Enterprises Pty Limited v Cauchi [2003]). In that case, the respondents duly rescinded the contract for a sale of land after the purchaser failed to pay on the set date, but he obtained the funds the following day. The Court denied the plaintiff the right to specific performance.
Accordingly, Lee may argue that he gave a notice for late payments or he deserved a notice of repudiation from Hurry. The fact is that a notice is not necessary in the cases of repudiation. In (Galafassi v Kelly [2014]), the court held that “service of a notice to complete was not a prerequisite to a right to terminate.” The main reason behind not sending a notice is that after purchaser’s failure, the innocent party is no longer bound by any of the terms of the contract. With this explanation, Hurry was not bound by the contract, and hence there was no need to send a notice to complete. In short, Lee should accept that he can no benefit from that contract.
Conclusion
When parties form a contract, they simply accept the liabilities from each other. The process of contract formation begins with one party making an offer, and the other one accepting. The acceptance must be unconditional, and any condition or term in the acceptance will amount to a counter-offer. Furthermore, the offeree must clearly communicate the acceptance to the offeror. In sale of land contracts, a default of payments from a purchaser constitutes a breach. And as a result, the innocent party can terminate the contract without the need to notify the bleaching party.
References
Mettling, S., Cusic, D. and Stanfill, J. (2016). Principles of real estate practice in Georgia. 1st ed. Performance Programs Company, p.128.
Goldman, A. and Sigismond, W. (2013). Business law. 9th ed. Mason, OH: South-Western Cengage Learning, p.148.
Helewitz, J. (2010). Basic contract law for paralegals. 6th ed. Austin [Tex.]: Wolters Kluwer Law & Business, p.84.
Hunter, R. (2016). Contracts for engineers. 6th ed. Boca Raton, Fla.: CRC Press, p.8.
Beatty, J. and Samuelson, S. (2015). Business law and the legal environment. 7th ed. Mason, Ohio: Cengage Learning, p.443.
Cases
Brogden v Metropolitan Railway Co [1877] 2 AC 666
Felthouse v Bindley [1862] EWHC CP J35
Galafassi v Kelly [2014] NSWCA 190
Hyde v Wrench [1840] EWHC Ch J90
Machine Tool Co v Ex-cell-O Corp (England) [1979] 1 All ER 965 (UK).
Tanwar Enterprises Pty Limited v Cauchi [2003] HCA 57
Yates Building Co. Ltd v RJ Pulleyn & Son (York) Ltd [1975] 237 EG 183
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