Whether Ellison and Jacob can force Jennifer to sell them the French technology?
A valid contract is a document/text which is established between an offeror and an offeree wherein they mutually decide the terms upon which they intent to act upon in exchanged of some kind of benefit. Thus, a valid contract is an outcome of few basic ingredients, that is, offer, acceptance, consideration, legal intention and capacity of the parties. (Larry 2014)
In order to resolve the raised issues the legal provisions behind offer, acceptance, communication and revocation of acceptance through post and email is evaluated.
An offer is the first step for the formation of a contract. An offer initiates an offer wherein he communicates his expectations of compliance of some act or omission to offeree through words, conduct or in written form with a hope that the communication of his desired terms will be approved by the offeree. This communication of terms in law is called offer and is held in (Hanwha Corp v Cedar Petrochemicals Inc 2011). An offer should reach within the notion/knowledge of the offeree to make it complete and binding in nature. No approval can be given to any offer unless it is within the notion of the offeree.
Also, at times an offer is made which is only open for a specific period of time. The offeror has a right to terminate the offer by making a contract with some party and is held in (Carlill v Carbolic Smoke Ball Company 1892). It is only when the person to whom the initial offer was made provide with some consideration in order to hold the offeror to make any contract with some third party, it is then only the offeror cannot terminate the contract before the said period of time.
Once the offer reaches within the knowledge /notion of the offeree then it is up to the whims and fancies of the offeree to accept or not to accept the offeree. If the offeree desires to approve the terms of offer communicated to him then there must be some form of consent from the offeree which is called acceptance in law and is held in (Brogden v Metropolitan Railway 1877). An acceptance can be in the form of words or in written form but whatever may be the form an acceptance should reach within the knowledge of the offeror in order to make it binding. Communication of acceptance is very important as in (Brinkibon v Stahag und Stahlwarenhandelsgesellschaft mbH 1983). Silence was not regarded as valid acceptance in law and is held in (Felthouse v Bindley 1862) (Andrew, Gary and Hse 2004).
An acceptance must correspond to the terms of the offer that are communicated to the offeree. If the offer is approved but some of the terms are not approved or are changed prior approving the same then it is not a valid acceptance in law. If the acceptance is made by bringing changes to the terms of the offer then it is called counter offer in law and it has the capacity to cancel the original offer that is made by the offeror. It is only when the counter offer is accepted by the offeror that it results in the formation of a contract amid the parties and is held in (Stevenson, Jaques, & Co v McLean 1880). (Eliza 2009)
When an acceptance is made to the offer then there is a valid agreement that is made amid the parties.
Now, if the offeror after the communication of an offer wish to revoke or cancel the offer, then, it is necessary that the same must be revoked before an offer is accepted by the offeree and is held in (Dickinson v Dodds 1876). This is because, if an acceptance is made by the offeree then there cannot be any revocation of offer that will invalidate such an acceptance and there will be binding agreement amid the parties.
Likewise, if the offeree intends to revoke or cancel the acceptance that is made by him, then, he can do so only if the same is not communicated to the offeror. Thus, if an acceptance is made then the offeree still have chance to revoke such an acceptance before it reaches the offer.
So, when an acceptance is deem to be complete.
It is held that normally when an acceptance is made by the offeree then it is complete only when it comes within the knowledge of the offeror. If the acceptance is still in transit and not within the knowledge of the offeror, then, by using a faster mode of revocation of acceptance, the acceptance can be revoked by the offeree.
But, this rule is not valid when the acceptance is made by post. In (Adams v Lindsell 1818), it was held that when an acceptance is made by post then the acceptance is deem to be complete at the time when the letter is posted by the offeree. There is no need that the letter of acceptance must come within the knowledge of the offeror in order to make it binding. As soon the letter is posted there is a valid agreement that is established amid the parties regardless of the fact whether the letter of acceptance have reached the offeror or not. (Michael and Tolhurst 2010)
But, the rule is different when the acceptance is made through emails.
In the leading case of (Chwee Kin Keong v Digilandmall.com Pte Ltd 2005), it was specifically submitted that the rule laid down in postal acceptance rule must not be applied in cases of instant mode of communications which includes the acceptance through email. When an acceptance is made via email then the acceptance is not complete instantaneously, rather, the acceptance is complete only when the same comes within the knowledge of the offeror. (Teacher 2017)
But, a more important question emerges is that when the communication of acceptance is complete when the acceptance is made through email? It is complete when the same is read by the offeror or when the same comes within the message box or email ID of the offeror.
It was held in (Brinkibon v Stahag und Stahlwarenhandelsgesellschaft mbH 1983)that the question of when the acceptance is sent by email, then, its completion mainly depends upon the intention of the parties, that is, what is the normal business course that is adopted by the parties. If the normal business course of the parties is that the communication is complete when the email is received regardless of the fact it is read or not, then, the acceptance must be deem to be complete.
However, if there is no general business practice rule that can be inferred from the given facts of the case, then, the basic rule that must be followed is that the acceptance is deem to be complete when it is received by the offeror within his usual business hours regardless of the fact whether the same is read by him or not. If the acceptance is received after business hours then it is converted into an acceptance received the next day when the usual business hours of the business is initiated by the offeror and is held in (Thomas & anr v BPE Solicitors 2010). (Overy 2010)
Once the revocation of acceptance is made before its completion, then, there cannot be valid contract amid the parties. But, if the communication of acceptance is complete before its revocation then there is a valid contract that can be established amid the parties.
The offer along with acceptance results in the formation of tan agreement. The agreement must be accompanied with the legal intention of the parties, the consideration and the capacity of the parties in order to make a valid contract.
The law is now applied to the facts of the case.
Ellison and Jacob are brothers. They love to sail together and now intent to convert their sporting interest into a business and to do so they start a new business venture in the name of ‘HappyWind Engines Pty Ltd’. The main area of work of the business is the designing and manufacturing of boat engines for all size yachts and supply wholesale to retail outlets.
They are now in need of some more sophisticated machinery to ensure that their business is profitable.
Jennifer, is the cousin of Ellison. He is in the manufacturing business and deals in the supplying plant and manufacturing technology to factories. He is the sole director and marketing manager for the company Machinery Pty Ltd.
Now, the facts further reveal that, on Monday, Jennifer approached Ellison and made an offer to sell Happy Wind Engines Pty Ltd’ few boat engine technologies which are the latest development in France. A claim was made by Jennifer that the new technology will improve output/ efficiency in the engine making factory by 30%. The offer that was made by Jennifer was @ $80,000 and grants time to Ellison and Jacob to accept the said doffer till Friday, 5 PM.
Now, an offer is made by Jenifer to Ellison and Jacob.
The offer is communicated by Jennifer and reaches within the notion of Ellison and Jacob through words. Thus, as per (Carlill v Carbolic Smoke Ball Company 1892)a valid offer is made by Jennifer to Ellison and Jacob.
Now, a valid agreement can only be made amid Ellison and Jacob & Jennifer provided both Ellison and Jacob accept the offer of Jennifer till 5 PM, Friday.
Now, there is no supporting consideration that is provided by Ellison and Jacob to Jennifer, thus, Jennifer is free to sell the new technology to some third party if no acceptance is received from Ellison and Jacob.
Now, Jennifer makes it clear that both Ellison and Jacob can accept the offer within due time either by post and email.
Now, in order to further negotiate the deal with Jennifer, both Ellison and Jacob decides to send an email to Jennifer wherein they try to negotiator the price of the new technology. They submitted that they are keen in buying the technology but they are only willing to accept the offer provided the amount is $50,000 for the technology.
Thus, there is no acceptance to the terms of offer that is made by both Ellison and Jacob. Rather, by changing the terms of the offer they have made a counter offer to the offer of Jennifer. This counter offer has the capacity to cancel the offer that is made by Jennifer provided such counter offer reaches the knowledge of the Jennifer.
Now, Jennifer is not able to read the mail that is sent by Ellison and Jacob for three days, that is, Tuesday – Thursday. So, the revocation of offer is not complete as the same is not within the knowledge of Jennifer.
Now, if Ellison and Jacob still wants to accept the offer which was originally made by Jennifer, they can do so by accepting a faster mode of communication which must reach Jennifer before the revocation of offer.
Now, both Ellison and Jacob in order to accept the offer of Jennifer and to negate the revocation that is made by them, decided to accept the offer by sending a letter of acceptance. On Friday, bith Ellison and Jacob sent a letter of acceptance to Jennifer. Now by applying the rule laid down in (Adams v Lindsell 1818)the acceptance is complete as soon as the letter was posted by Ellison and Jacob.
They also sent am email confirming the offer of Jennifer
Thus, there can be a valid contract amid Ellison and Jacob & Jennifer provided Jennifer has not read the mail of revocation that was sent by Ellison and Jacob before the letter of acceptance was posted by Ellison and Jacob, that is, on Friday.
However, Jennifer was not able to read the mails which are sent by Ellison and Jacob till Friday 6PM.
It is submitted that the offer that was provided by Jennifer was open till Friday 6PM. Both Ellison and Jacob has accepted the offer of Jennifer before the due time by posting the letter which is compete as soon as the same was posted. It reaches the knowledge of Jennifer before the email of revocation is received by Jennifer, that is, Friday 6 PM.
Thus, there is a valid contract that is made amid the parties, that is, Ellison and Jacob & Jennifer when the letter was posted by Ellison and Jacob.
So Jennifer cannot ell the new technology to some other person.
Conclusion
It is thus concluded that there is a valid contract that is made amid Ellison and Jacob * Jennifer when the letter of acceptance was posted by them. Thus, Jennifer cannot sell the technology to some other person.
Adams v Lindsell. (1818).
Andrew, Phang, Chan Gary, and Chiu Hse. Basic principles of Singapore business law. Thomson Learning, 2004.
Brinkibon v Stahag und Stahlwarenhandelsgesellschaft mbH. (1983).
Brogden v Metropolitan Railway. (1877).
Carlill v Carbolic Smoke Ball Company. (1892).
Chwee Kin Keong v Digilandmall.com Pte Ltd. (2005).
Dickinson v Dodds . (1876).
Eliza, MIK. “The Effectiveness of Acceptances Communicated by Electronic Means, Or – Does the Postal Acceptance Rule Apply to Email.” Journal of Contract Law, 2009.
Felthouse v Bindley. (1862).
Hanwha Corp v Cedar Petrochemicals Inc. (2011).
Larry, DiMatteo. International Sales Law: A Global Challenge. Cambridge University Press, 2014.
Michael, Furmston, and G.J. Tolhurst. Contract Formation: Law and Practice. OUP Oxford, 2010.
Overy, Allen &. Email acceptance of offer: when is it effective? 2010. https://www.allenovery.com/publications/en-gb/Pages/Email-acceptance-of-offer–when-is-it-effective-.aspx (accessed 29 May, 2017).
Stevenson, Jaques, & Co v McLean. (1880).
Teacher, The Law. The Law Teacher. 2017. https://www.lawteacher.net/free-law-essays/contract-law/whether-the-postal-rule-is-redundant-contract-law-essay.php (accessed May 29, 2017).
Thomas & anr v BPE Solicitors . (2010).
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