The formation of a contract that has legal binding, in Contract Law, requires the two elements of offer and acceptance. These are in detail the terms agreed by the person making the offer and the one the offer is made to and the indication of acceptance of terms as stated therein. There are also the other basic elements of a lawfully binding contract that are consideration and intention of creation of legal relations.
Contract law has perennially been approached from the fundamental analysis of the key elements of offer and acceptance. The offer and acceptance identify agreement during formation showing that the parties think the same. An offer is defined as “an expression of willingness to contract on certain terms, made with the intention that it shall become binding as soon as the person to whom it is addressed accepts it”. It is an embodiment of the statement of the terms, with contractual intent, on which the person making it is eager to be bound; terms that are communicated to the party the offer is made to.
William’s case study involves three “offerees” interested in the same item from one “offeror”. William’s actions with regard to the sale of the antique Royal Lincoln Vase have a contractual liability based on the interests of the three “offerees” and the bond of offer and acceptance. Expressing an offer can be done through any medium of communication provided it communicates effectively the offerors terms of contract. William through a verbal expression bids Nigel, through advertisement he enters a possible contract with Joan and Isabel and strengthens Joans bond by verbal agreement on terms of sale.
The validity of the offers and the agreements reached thereof can be determined using the criteria of the objective test. Emphasis in this test is laid on a reasonable person’s view of the situation in determining whether there was a valid offer and not the subjective intentions. An offer that does not contain the major rapports of the contract is not enough foundation of a contract that binds. The offer to stand such viability ought to include the delivery date, the price, terms of payment (comprising payment date and the item’s description details on offer). In William’s offer, the minimum requirements were met for Joan only and as such, it was a legal offer that binds William to a contractual liability. Joan was furnished with information from the advertisement giving details of the vase; she was given a price and a deadline date to express interest.
In light of the discussion between Nigel and William, there was a unilateral contract as a result of acceptance, by Nigel, of William’s ostensible offer occasioned by his verbal submission of the vase’s price. However, it can be argued to be an invitation to treat on William’s part because his verbal submission of price was just an indication of readiness to discuss a contract; a pre-offer communication. Indication of interest in selling does not directly bind one to a contract and as such, William has no contractual obligation to Nigel. A notification of price should not be mistaken for a distinct offer, as it is merely an invitation to treat. However, should the agreement’s language have been sufficiently explicit skewed in favour of an offer, William would be bound to the offer. There is a consistent approach by the courts to the identification of summonses to treat, in comparison with acceptance and offer, in usual verbal transactions. The mere present goods for sale or indication of interest to is ordinarily not treated as an offer but as a request to treat.
William’s choice to advertise and the choice of diction in the advert makes it sound like an auction; with the clause “ Â£1500 or nearest offer” which points at the basic rule of an auction; highest bidder. Auctions are also regarded as invitations to treat, albeit on a special case basis. The acceptance of a bid by the offeror in whatever way is traditional. William therefore failed to honour the contract in offering the vase to a higher bid than that made by Joan with whom they already had an accepted offer.
William revoked his offer to Joan on Thursday, a day before the stipulated day when she was supposed to make a written submission, despite having sold the Vase to Isabel on Tuesday. Revocation of an offer should be done through timely communication to the person the offer was presented. Revocation however should not occur if an offer is encapsulated in an option. William had advised Joan to make a written submission latest Friday as he was bound by his word in a gentleman’s agreement not to sell the vase to anybody else. As such, in revoking the offer, William went against his contractual obligations to Joan. The offer being one in an unilateral contract should not have been revoked generally since Joan had begun the performance as per her obligations.
The acceptance of the offers can be analysed based on the details of each offer. The essential requirement is there was conduct manifesting to the assent of the parties from a subjective perspective. In this case, the test of agreement shows that Isabel and William entered into a contract based on their agreement and eventual settlement of sale. William and Nigel under the law were not bound by a contract since William can resist a claim of bleach by proving that his intention through his verbal submission of price was not to be obliged by the agreement since the subjective appearance is that he intended to do so. William however bleaches his contract with Joan because he acted without full disclosure and she hence had no way to know his undisclosed intentions in selling Isabel the vase without contacting her. Without objective revelation of intentions, Joan had no reason to act upon the undisclosed intentions and there hence was no meeting of minds.
The rules of acceptance give guidance on a number of elements that are considered in offers and acceptance. The first is Communication of acceptance.
There are numerous fundamental rules on the communication of acceptance. For instance, the acceptance must be conversed and an offer can be withdrawn or revoked prior to acceptance. In light of this, William was right to withdraw his offer to Nigel before his acceptance and consequently sell to Isabel. He however was wrong to withdraw his offer to Joan as he had stipulated the date of acceptance.
The second rule is that only the person it is made to can accept an offer. The offer could not be accepted by anybody else on his behalf without prior ad proper authorization. This however does not affect William’s case.
Thirdly, the person making the offer stipulates the method of acceptance in the prerequisite of communication of recognition also called the waiver of communication. The specified method of acceptance in the offer dictates the method used no less from the stipulation. Joan’s acceptance via a phone call therefore fell short of expectation and would not stand as a standard method of acceptance considering William’s direction that the acceptance should be written. There were no such notices received by William.
The postal rule is a rule of convenience for offers accepted through post. It states that the contract falls into being at the moment the acceptance is posted. There are exclusions however for the contracts involving land, incorrectly addressed letters and prompt ways of communication. Therefore, Joan can lay claim to bleach since according to the rule, they were in a contract since Wednesday when she posted the letter. However, since the letter was incorrectly addressed, William and Joan were exempt from a binding contract.
Termination of an offer should be on the lees of refusal of the rapports of the offer by the person it is made to. It can also be based on the clause of lapse of time in which the party making an offer terminates the offer if the person it is made to fails to accept it within the period stipulated. William included a period when the offer was valid in Joan’s offer but bleached the offer by terminating it before that time elapsed and failure to keep his word not to sell to anybody else before Sunday.
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