A contract is an agreement between two or more parties. For a contract to be valid, there are essential elements that have to exist (Anson et al, 2010, p. 13). The essential elements include offer, acceptance, intention, capacity, consideration and illegality. For this case scenario, I will discuss the most important elements being offer and acceptance.
The formation of a contract begins with one party known as the offeror making an offer to the other party known as the offeree. If the offeree accepts the offer that has been made, a contract is created between the parties. An offer is different from an invitation to treat. Advertisements have been categorized as invitation to treat and not an offer. Where goods are displayed in shops or through advertisements, parties are invited to present offers and this amount to invitation to treat. The general rule is that advertisements are invitation to treat and not an offer (Furmston et al, 2012, p. 16).
However, there is an exception to this general rule (Koffman & Macdonald, 2010, p. 76). The exception was developed by the court in the case of Carlill v Carbolic Smoke Ball Co (1893) 1 QB 256.In this case, the defendant had put up an advert offering a reward of £100 to any individual who contract a disease known as influenza as a result of using the ball at least three times in a day for a period of two weeks. The defendants deposited £1000 in a bank to show that the advert was serious and that the money so deposited would be used as part of the reward. The plaintiff did purchase some of the smoke ball and used them as was instructed. She caught flu and claimed the £100. In an attempt to avoid liability, it was advanced by the defence that the advert was not an offer; it was just invitation to make an offer.The Court of Appeal found in the favor of the plaintiff and stated that the defendants were liable to compensate the plaintiff since the advertisement placed was an offer in the circumstances and had created a unilateral contract which the plaintiff had accepted through performing all the conditions that had been indicated on the advert and gave the following reasons:
From the decision in the case of Carlill above, it is therefore possible for an advert to amount to an offer; the rules of acceptance when it comes to such contracts is also slightly different. Part performance can qualify as acceptance and this creates a binding contract (Fried, 2015, p. 87).
Leila lost her gold chain and locket. She became much stressed and placed an advert in the local newspaper promising a reward of $50 to any person who could find and return the locket and the chain, giving a contact and address in the advertisement. Julie has read the advertisement and finds the locket and chain on her way to the park. She then goes directly to Leila’s house but Leila refuses to reward her arguing that she never telephoned. By placing an advert in the local daily, Leila made an offer to the whole world and any person who came across the locket and chain and returned it to Leila is said to have entered into a valid contract through performance of the conditions contained in the advert as was stated by the court in Carlill v Carbolic Smoke Ball Co (1893) 1 QB 256. There is no requirement to communicate in such circumstances as performance is enough as was done in this case scenario by Julie.
Even in circumstances where Julie had no knowledge about the existence of the reward and the advert, the contract is still valid because it is not hard to prove that there had been consideration in form of compensation for any person who could find the locket and chain and return them to her. Julie can still claim the reward at the time when she is informed of its existence by April. The time taken is not much and the contract remained valid.
Conclusion:
In conclusion therefore there is a valid and binding contract between Leila and Julie which is equally enforceable as discussed above and as was stated in Carlill v Carbolic Smoke Ball Co (1893) 1 QB 256.
What remedies are available for breach of contract in the circumstances and whether the answer will be different if the subject matter was a late model Mercedes Benz?
After parties have entered into a valid contract, they acquire rights as well as duties which both of them asre supposed to perform. Non performance of an obligation is categorized and held as a breach of contract. The part that is not in breach can move the court for remedies for such breach (Hunter, 2017, p. 43). The remedies available to a contractual party depend on whether the breach was on a condition or a warranty. A warranty is not an essential term in a contract; its breach only gives a party the right of claiming payment of damages. However, a breach of a condition which is an essential term gives the other party the option of repudiating the contract as well as a claim for payment of damages (Poole, 2016, p. 63).
There are equitable remedies in contract law where damages are not sufficient to compensate a party. A party can sue and claim that the guilty party performs his or her part of the bargain (Stone & Devenney, 2017, p. 89). This is referred to as specific performance. The damages that are open for breach of contract were discussed by the court in the case of Hadley v Baxendale (1854) EWHC Exch J70 Courts of Exchequer. The court stated that damages for breach of contract includes; remedies that are fair and reasonable and those that naturally arise from the breach of the contract or any damage that reasonably might be supposed to have been contemplated by the parties at the time when they were entering into the contract. Further, if there were special circumstances that are present when the contract negotiations are on, damages recoverable by the claimant are those that would naturally arise and arise from the prior existing circumstances when the parties were concluding contract negotiations and finally agreeing to contract based on the known facts.
Specific performance is available to a party especially in circumstances where damages are not a sufficient remedy. It is a discretionary remedy and it requires the guilty party to perform their part of the bargain under the contract (Knapp et al, 2016, p. 18). Courts are however reluctant to order parties to perform their obligations except in very special circumstances such as the adequacy of payment of damages as was stated in Cohen v Roche (1927) 1 KB 169.
The form of agreement culminating into the contract also plays a role whether specific performance would be ordered by the court. Courts will order specific performance for contracts for sale of land or unique chattels.
Adam had agreed to buy a 1925 Rolls Royce from Edwin at an agreed price of $ 500000. Edwin later refused to sell the rare car to Adam after learning that there was another buyer who could buy it for $700, 000. The car which is subject of the contract has been described as a rare car. Payment of damages as a result of contractual breach in the circumstances is therefore not an adequate remedy because it will be difficult to acquire such type of car from somewhere else. On this ground therefore, the court can order specific performance as was stated in Cohen v Roche (1927) 1 KB 169.
There has been a breach of by Edwin and therefore, a remedy has to be found to compensate Adam. In line with the decision in Hadley v Baxendale (1854) EWHC Exch J70 Courts of Exchequer, the court will consider all the surrounding circumstances to arrive at a suitable remedy available to Adam which in this case is specific performance.
On whether the answer would be different for a late model Mercedes Benz, the answer is to the negative. The answer will not be different because a latest model is also very rare and as a result, payment of damages is not sufficient as a remedy (McKendrick, 2014, p. 56).
Conclusion:
The most suitable remedy in both circumstances is an order of the court for specific performance. The car models in the case scenario are very rare and on high demand and if specific performance is not ordered, payment of damages cannot be adequate to compensate parties.
References:
Anson, W. R., Beatson, J., Burrows, A. S., & Cartwright, J. (2010) Anson’s law of contract Oxford University Press
Furmston, M. P., Cheshire, G. C., & Fifoot, C. H. S. (2012) Cheshire, Fifoot and Furmston’s law of contract. Oxford University Press
Hunter, H. (2017). Modern Law of Contracts Oxford University Press
McKendrick, E. (2014). Contract law: text, cases, and materials. Oxford University Press (UK)
Knapp, C. L., Crystal, N. M., & Prince, H. G. (2016) Problems in Contract Law: cases and materials. Wolters Kluwer Law & Business
Koffman, L., & Macdonald, E. (2010) The law of contract Oxford University Press
Stone, R., & Devenney, J. (2017) The modern law of contract Routledge
Poole, J. (2016). Textbook on contract law Oxford University Press
Fried, C. (2015). Contract as promise: A theory of contractual obligation. Oxford University Press, USA
Case law
Carlill v Carbolic Smoke Ball Co (1893) 1 QB 256
Cohen v Roche (1927) 1 KB 169
Hadley v Baxendale (1854) EWHC Exch J70 Courts of Exchequer
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