Using a case study to illustrate a contract

Requirement

What is a contract? Using case law to illustrate your answer, explain how we can identify a valid offer and valid acceptance.

Solution

Introduction

An individual who offers to sell a product to another person who accepts the price of the said product and agrees to buy will only have a valid contract supported by a valid contract and a valid agreement[1]. Therefore, this is the reason why a contract is an agreement made between two parties or people and must be legally binding and supported by different terms of offer and acceptance. 

What is a contract? How to identify a valid offer and valid acceptance.

Basically, a contract is a legally enforceable agreement between two parties or people. For such an enforceable by-law contract to be valid, there is a need to have a valid offer and a valid acceptance. A contract is always complete when the two parties honor or fulfill an agreement by undertaking their specific duties[2]. Nevertheless, due to the special nature of different contractual agreements, it might not be concluded that a contract has not been made without first identifying if the contract was indeed a valid one. Therefore, to understand a contract, one must first prove that there is an existence of an offer and an acceptance.

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An Offer

This means that an offer is a clear statement of terms made between the offeror and the offeree. In short, a valid offer is that which has clearly stated terms. For example, the court case involving Gunthing vs. Lynn found that the offeror agreed to make some payments for the horse in case it wins. However, the court concluded that such an agreement was invalid or the offer was not valid because it appeared vague to be part of or form an offer. This means that for an offer to become valid, it needs to communicate clearly, and offer the offeree an opportunity to either accept or reject it.

Therefore, an offer is a willingness involved in a contract on particular terms made with the actual or apparent purpose that it will eventually become obligatory and binding by the other party that is addressed as in the example case of Stover v Manchester City Council [1974] 1 WLR 1403[3]. In addition, a valid offer requires that there is an objective exhibition of intention made by one party that will be bounded by the offer in case it is accepted by the other party. Thus, a valid offer will require the offeror to have an agreement of what he or communicates either in writing or verbal to develop a rational and realistic third party, and there must be a belief that he or she intends to be bound even though there may be no such intention[4]. For example, such a circumstance was held in the case of Moran v University College Salford (No 2), where the learning institution offered a location to an intending learner due to clerical error[5].

A valid offer must be differentiated from an invite to treat; when an individual does not make an offer, rather he or she invites another group or individual to do so. Indeed, an offer means that there must be an intention from the two parties to engage in a business. For instance, in the case of Carlill v Carbolic Smoke Ball Company [1893] 2 QB 256, there was an advertisement for smokeballs that were used to prevent influenza. In this agreement, there was an offer to pay £100 in case anyone was affected with influenza after using the smoke ball. As a result, the company paid £1000 to the bank to show their commitment to the offer. However, the plaintiff contracted influenza after taking the smoke balls[6]. The court concluded that the plaintiff was to be compensated because she fulfilled the terms given in the advert contract. In this case, the advert from the Smokeball company had an offer, which the victim agreed to and accepted by undertraining the condition provided in the offer, and hence, this was a valid offer.

Acceptance

An acceptance is defined as an unqualified and final expression of agreement to the term within an offer. Just like an offer, the objective of manifestation must be present in an acceptance by the recipient of the offer, and there must be an intention bound by the contract terms. In addition, an offer needs to be accepted in relation to the established terms to create an agreement. Thus, for an acceptance to be valid need to match the offer as well as all the terms to be agreed upon by the two parties.  Further, an offer might be accepted as a result of behavior; for instance, an offer to purchase a book might be recognized by the act of posting it to the buyer, who is the offeror. For instance, the postal acceptance rule becomes valid after the offer letter of acceptance is posted back, as in the case of Henthorn v Fraser [1892][7]. Even when the letter is lost or delayed in being delivered, hence no valid acceptance. Nevertheless, the postal rule might not be valid if the offer’s express terms are not there. In such a case, an offer that is required to be accepted must have clear communication. As in the case between Entores v Miles Far East Corp [1955], it was held that if acceptance happens through postal, it will have to take time to effect until a receipt is placed.

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Thus, the basic rule of a valid acceptance is that an agreement between two parties or people will always attract acceptance in any way that appears to be reasonable, except the fact that the circumstances and language clearly show otherwise[8]. Thus, for a valid acceptance, the court will have to decide whether there is a form of language that appears to control the technique of contract acceptance. Hence, maintaining a reasonable language method will create a valid acceptance without having a particular language influence the buyer.  Further, an offer can become valid and accepted through the action of the offeree by executing the tasks requested in the agreement or even by making a verbal or written statement demonstrating acceptance of the offer[9]. The important aspect here is that the acceptance is directly communicated by the offeree to the offeror, as in the case of St. Romain v. Midas Exploration, Inc. (1983)[10]. Indeed, an offer will only become a legal contract after it has been accepted, as it was demonstrated by the case of I & R Mech. v. Hazelton Mfg. Co., 817 N.E. 2d 799, 802, where no contract was created between the two parties because the defendant sued by plentiful requested a price quote for a boiler without having a knowledge of whether such communication could be binding on a particular project because the communication was intended to be a mere invitation to make an offer and it was understood by the plaintiff.

Bibliography

Chen-Wishart, Mindy. Contract law. Oxford University Press, 2012.

Lawteacher.net. 2022. Carlill v Carbolic Smoke Ball Co – 1893. [online] Available at: <https://www.lawteacher.net/cases/carlill-v-carbolic-smoke-ball-co.php> [Accessed 17 May 2022].

LawLessons. 2022. Contract Law Case: Storer v Manchester City Council [1974] 1 WLR 1403. [online] Available at: <https://lawlessons.co.uk/storer-v-manchester-city-council-1974-1-wlr-1403> [Accessed 17 May 2022].

Georgakopoulos, Nicholas L. “Principles and methods of law and economics.” Cambridge Books (2005).t

Holmes, Stephanie. “Stevens v. Publicis: The Rise of No E-Mail Modification Clauses.” Wash. JL Tech. & Arts 6 (2010): 67.

Lawteacher.net. 2022. Carlill v Carbolic Smoke Ball Co – 1893. [online] Available at: <https://www.lawteacher.net/cases/carlill-v-carbolic-smoke-ball-co.php> [Accessed 17 May 2022].

Martin, Jacqueline, and Denis Lancer. AQA Law for A2 Fifth Edition. Hodder Education, 2014.

Moran v University College Salford (No 2), The Times, November 23, 1993.


[1] Jacqueline Martin and Chris Turner, AQA Law for A2, Hodder Education, 2011, 4th ed.

[2] Jacqueline Martin and Chris Turner,

[3] LawLessons. 2022. Contract Law Case: Storer v Manchester City Council [1974] 1 WLR 1403. [online] Available at: <https://lawlessons.co.uk/storer-v-manchester-city-council-1974-1-wlr-1403> [Accessed 17 May 2022].

[4] Georgakopoulos, Nicholas L. “Principles and methods of law and economics.” Cambridge Books (2005).

[5] Moran v University College Salford (No 2), The Times, November 23, 1993.

[6] Lawteacher.net. 2022. Carlill v Carbolic Smoke Ball Co – 1893. [online] Available at: <https://www.lawteacher.net/cases/carlill-v-carbolic-smoke-ball-co.php> [Accessed 17 May 2022].

[7] Lawteacher.net. 2022. Carlill v Carbolic Smoke Ball Co – 1893. [online] Available at: <https://www.lawteacher.net/cases/carlill-v-carbolic-smoke-ball-co.php> [Accessed 17 May 2022].

[8] Williston on Contracts  6:1 (4th ed.).

[9] Holmes, Stephanie. “Stevens v. Publicis: The Rise of No E-Mail Modification Clauses.” Wash. JL Tech. & Arts 6 (2010): 67.

[10] St.Romain v. Midas Exploration, Inc., 430 So. 2d 1354, 1357 (La. Ct. App. 1983).