Issue:
Whether there is any binding contract between Adam and Ashley?
Rule:
Generally, the first element for constitute valid contract is agreement. Agreement usually consists of two things that are offer and acceptance, and it also involves meeting of minds or consensus between the two or more parties. No matter, whether consensus is determined objectively or not.
Offer: there is no particular form to make an offer, and it is determined as an communication between the parties in which one person makes promise to do something and not to do something if another person to whom the offer is made do something or not do something or makes any promise in return. However, it must be noted that person who gives the offer is known as offeror and person to whom the offer is given is known as offeree (Republic polytechnic, 2009).
There is a clear difference between the offer and invitation to deal, and determination of offer and invitation to deal is not simple. This test includes intention of parties such as whether party makes any statement which intends that any affirmative statements response give rise to an agreement or it simply results in further negotiations. There is an leading case related to this issue is Pharmaceutical Society of Great Britain v Boots, and in this case Court focused mainly on the commercial impact that any classification related to conduct as an offer would have had in that case. Therefore, in case it is not commercially convenient to treat a statement or other conduct of party as an offer then Court will consider it as only invitation to deal.
However, if any particular statement is made which constitutes an offer then it is clearly depend on the intention of the person with which it is made, and it is necessary that offer must be made with intention to be bound. On the other hand if any person is just soliciting the offer and requesting for the information and such person does not have any intention to be bound then it is considered as an invitation to deal. As per the test, person is considered as an making an offer if statement made by such person is of such nature that it makes other person to believe that person making the offer have intention to be bound by the acceptance of the that offer, even though such person has no intention to be bound (Valente, n.d.).
Acceptance: acceptance is a statement which is unequivocal in nature such as it can be made in oral, written, or by conduct by the offeree for the purpose of agreeing to the offer made by offeror. It must be noted that offer can only accepted by the person to whom it is made, and for the purpose of constituting the valid acceptance this statement or conduct of acceptance must be made in response to the offer. However, any action of the person which taken by person for the compliance of a terms of offer is considered as a presumption that act was done in response to the offer. It is sufficient proof if any act of the person was done because of the offer, even though that reason is not dominant in nature.
Certainty and Conditions: It must be noted if any agreement is not certain in any material respect then such agreement cannot constitute a binding contract, and this situation occurred in case agreement is vague or ambiguous, incomplete, and constitutes a mere agreement to agree.
If it is not possible to provide definite meaning to the words stated in agreement then such agreement will be considered too vague or ambiguous for the purpose of constituting the contract. This can be understand through case law Council of the Upper Hunter County District v Australian Chilling & Freezing Co Ltd. In this case Barwick CJ stated that contract is not considered as automatically void on the basis of uncertainty because it is possible that contract is construed in more than one way.
Consideration: promise stated in the agreement is not considered enforceable unless such promise is supported by consideration or stated in the written document kwon as deed. However, it must be noted that consideration must be something of value as per the law. Consideration is requested by the party who making the promise and provided by the party who receives it in exchange of the promise made between the parties (Singapore law, 2017).
Application:
In the present case, both Ashley and Adam only discussed their intention, and Ashley briefly stated her requirements related to the product in which she is interested. Later, Ashley stated that no contract existed between them.
In this case, essential elements of valid contract are not present such as agreement constitutes offer and acceptance, intention to create legal relation, consideration, and certainty. As per law it is necessary that all elements of the contract must be present for the purpose of making the contract valid.
In this, neither party gives the offer and nor any party accepts the offer, and they do not have any intention to be bound legally by the agreement. Therefore, no contract is exists between the parties.
There is no legally binding contract between Ashley and Adam.
Issue:
Whether parties to the contract have capacity to enter into contract and there is a legally binding contract?
Rule:
For the purpose of valid contract, it is necessary that parties to the contract must have contractual capacity to enter into contract, and there are some persons or classes of person who does not have contractual capacity to enter into contract because there is a consequence under which contract is not enforceable against them. Now, lack of capacity is considered as form of fear of vulnerability and exploitation.
These classes of person includes minor, person of unsound mind, intoxication, companies, Etc.
Intoxication: contract is considered as voidable at the party’s option that because of the result of intoxication is not bale to understand the nature of the contract and its consequences. However, for making the contract voidable it is necessary that other party knew or ought to be known about the disability of such party. The party who wants to make the contract void must prove both these requirements that:
In state of the first requirement question is whether party wants to avoid the contract was in actual not able to understand the nature of the contract and what are the ultimate effect of the contract on him. However, it is not essential that resulting contract is unfair.
Party to the contract has right to ratify the contract which was made by the party while suffering from mental disorder and after that such disability is ceases to operate upon them. Law generally stated the exception related to such necessities. It stated that if any person is intoxicated to such an extent which states that they are not able to understand the nature of the contract and impact of the contract upon them then seller is not able to enforce the contract against such person (Singapore Legal Advice, 2012).
However, it is clear that incapacity to contract is arise in case of minor, person of unsound mind, and status. It must be noted that soundness of person depends on two factors, and these factors are stated below:
In case person is not capable because any of the above factors, then in such case person said to be of unsound mind. However, at the time of entering into contract party is of sound mind or unsound mind is the question of fact and it must be decided by Court, and person who wants to prove that he is of unsound mind at the time of making the contract has to convince the Court.
Therefore, it is clear that any contract made by person of unsound mind and under intoxication is considered as valid contract unless such person proves that he was not able to understand the terms of the contract and other party knows about the disability of such person. In this case, party who is of unsound mind at the time of making the contract has power to make the contract void. This can be understand through case law Blomley v Ryan (1956) 99 CLR 362, in this case Court stated that intoxication is self-induced state and it is also reprehensible thing, but court considered it as dangerous consideration if party is able to escape themselves from the liabilities of the contract by simply proving that person in in the influence of liquor at the time of making the contract.
Court further stated, mere drunkenness will not allow the person to get out of a contract, but situations are completely different if other party knows that such person is seriously affected by drink then in such case equity will refuse the chances of specific performance. Additionally, if court is satisfied that court other party put the person in disadvantage by obtained such person in drink then it will be considered as a real unfairness for taking advantage of his condition, and the contract may be set aside (Yihan, Woan, & Ho, 2014).
Application:
In the present case, both the parties are under the influence of drink and they both are in good mood and both are agreed to enter into a contract for educational products. Before both the parties discuss further details and then Ashley started to flirt with Adam and their conversation diverted to other areas, and Ashley also stated in jokingly form that Adam is so handsome she was not mind anything that he has to offer. In addition Adam was distracted by the Ashley flirting that he was not stated clearly the products he wants to offer and Ashley was not clearly stated what she is clearly looking for.
In this case, contract was made under the intoxication and both the parties are completely drunk, and there is no clarity in the terms of the contract. Therefore, there is no legally binding contract between the parties because Ashley is not under the contractual capacity to enter into contract (.
Parties do not have contractual capacity to enter into contract therefore there is no binding contract between the parties.
Issue:
Whether there is any valid contract between the parties?
Rule:
Contract which is induced by misrepresentation can be set aside by the party, and party also has power to claim for damages. Generally, misrepresentation occurs when any one party to the contract makes any false statement of the fact which is material to the other party of the contract, and on the basis of such fact other party enters into contract. For the purpose of being operative such misrepresentation must be related to the past and present fact. This follows that any vague or exaggerated statement that is of puff nature is not sufficient for misrepresentation, and any statement related to the party’s intention or opinion is also not considered as sufficient ground for relief. However, it must be noted that if any representator does not have honest intention or opinion then it is considered as a representation of mind. It must be noted that statement of person related to his opinion is also considered as material if such person possess any special skill or knowledge (Startup, n.d.).
Such misrepresentation must be expressed and it must be influenced from the conduct of representator own conduct. There are some exceptions to this rule such as if any party makes positive disclosure but such disclosure is incomplete, then it is considered as misrepresentation only in that case if such omission is distracting the truth of the information disclosed. Similarly, if party fails to correct any representation which is true at the time of making it but subsequently such representation becomes incorrect.
On general basis, misrepresentation must be related to the material facts, and it must be of such nature that it influences the decision of any reasonable person for the purpose of entering into the contract. In case representation is ambiguous in nature and can be interpreted in two ways in which one way is true and other is false then it is not considered as misrepresentation unless representator has intended to be understood in that sense which is false (Guide Scroll, n.d.).
There is one more condition which states that misrepresentation is considered as ground of relief only when such misrepresentation induced the contract made between the parties. In other words, if person is not aware about the representation or knows that representation is untrue or does not believe that representation it to be true then such person cannot reasonable relied on such representation at the time of entering into contract. Relief is also not provided in such situation when representeee itself verified the truth and it must be noted that failure to verify is not considered as itself a bar to relief. However, even in case misrepresentation is considered as inducing factor then only it doesn’t matter that it is the only inducing factor or not. It must be noted that those persons who rely on such representation are not the only who confined to those directly addressed by the representator, but they also include those person to whom the representator intends to reach and influence, even if such a person learns of the representation indirectly from a third party (Singapore Legal advice, 2011).
Application:
In the present case, majority of Ashley was not the only factor which induced the Adam to entered into the contract but in actual Adam was influenced with the fact that Ashley is actually the owner of a major distribution of education products in her hometown, and it was also stated that minority of the Ashley does not influence the contract because in one week she is turning to the age of 18 years and ready to fulfill her promise. Therefore, no relief is available to Adam on the basis of this representation.
Conclusion:
Misrepresentation made by Ashley does not materially affect the contract which means there is legally binding agreement between the parties to the contract.
Reference:
Republic Polytechnic, (2009). Contract Law: Essential Elements. Available at: https://www.rp.edu.sg/furtherstudies/Curricula%20Information/Schools%20and%20Centres/SHL/SDESLM/Lesson%20Plans%20&%20Student%20Work%20Samples/Legal%20Considerations%20in%20Events%20&%20Sports/A%20sample%20of%20facilitator%20workshop%20notes/Lesson%202%20-%20Contract%20Law_Students.pdf. Accessed on 16th June 2017.
Yihan, G. Woan, P. L. & Ho, C. T. (2014). Contract law. Available at: https://ink.library.smu.edu.sg/cgi/viewcontent.cgi?article=3631&context=sol_research. Accessed on 16th June 2017.
Upper Hunter County District v Australian Chilling & Freezing Co Ltd.
Singapore Law. Section 1 General Application. Available at: https://www.singaporelaw.sg/sglaw/laws-of-singapore/commercial-law/chapter-8. Accessed on 16th June 2017.
Blomley v Ryan (1956) 99 CLR 362. Valente, D. Enforcing Promises. Available at: https://www.otago.ac.nz/law/research/journals/otago036314.pdf. Accessed on 16th June 2017.
Singapore Legal Advice, (2012). Requisite elements in the formation of a contract. Available at: https://singaporelegaladvice.com/law-articles/requisite-elements-in-the-formation-of-a-contract/. Accessed on 16th June 2017.
Singapore Legal advice, (2011). When can I void a contract for misrepresentation. Available at: https://singaporelegaladvice.com/law-articles/when-can-i-void-a-contract-for-misrepresentation/. Accessed on 16th June 2017.
Guide Scroll. Contract Law – Misrepresentation. Available at: https://guidescroll.com/2010/04/singapore-contract-law-misrepresentation/. Accessed on 16th June 2017.
Startup. Contract Law in Singapore. Available at: https://www.startupdecisions.com.sg/singapore/business-laws/contract-law/. Accessed on 16th June 2017.
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