Identify
The relevant legal issue in the case study is whether a binding contract existed between Rosa and Basil. The facts indicate that Basil intended to purchase a table from Rosa. He even sent her a letter of confirmation. However, after seeing another piece of furniture on offer, he decided to buy that one instead and declined Rosa’s offer, via voicemail. Rosa insists that Basil enacted a binding contract for the purchase of her table. Through the application of relevant legal knowledge, this article will identify whether or not the issue raised by Rosa is valid enough to exercise any litigation claims. Did the binding agreement take place between Basil and Rosa? What are the prominent reasons that the contract did or did not exist?
The term contract stands for a relationship or agreement that is legally binding that exists between two or more groups. The aim is to abstain or perform particular actions stipulated in the document. Therefore, a contract is lawful promise exchange between the parties that the legal process will enforce (MacRobertson Miller Airline Services v Commissioner of State Taxation (WA)(1975, par. 1)). An agreement, on the other hand, entails a cross reference between various groups or individuals that could be oral or written and relies on the honor of the parties for fulfillment but is not enforceable in any manner. Since the law that dictates contract is the baseline for most business transactions, it is amongst the essential disciplines of legal concern. It also involves various complexities and circumstances (Thornton v Shoe Lane Parking, 1971, par. 1).
The contract comprises of much more than an agreement between parties. It has basic elements, out of which, offer and acceptance must exist for it to be considered legally binding. Other components include the promise to execute an action, an event or time the commitment will be made, a valuable consideration, conditions and terms of the promise, and the actual performance. The offer and acceptance elements are the key focus of this case study. At least one of the parties must act as the offeror (the individual who makes the promise), and the other should be the offeree (the recipient of the action who accepts the pledge). The offer refers to a proposal established based on specific terms by the offeror with the intention of being bound by the agreement if the offeree agrees to the stated requirements. The offer may be created expressly such as a boss writing to a prospective worker to offer the individual a post. It could also be instituted impliedly like bidding during the auction (Hyde v. Wrench, 1840, par. 1).
The offer is provided to a specific person, in that case, only him or she is expected to accept the terms. If it is made to a group of individuals, any member can present the acceptance. The offer could also be made to the entire world such as a person offering a price for anyone who locates his lost dog. The acceptance can; therefore, be given by someone who is aware of the reward and finds the animal. However, the agreement can also end when the offer is revoked or terminated by acceptance or rejection of the terms (Heathcote Ball v Barry, 2000, par.2). Acceptance is an implication or expressing an act that manifests the assent of the requirements of the offer so that the binding agreement occurs. It happens through three ways. One is conditional acceptance also known as qualified acceptance where the individual to whom the offer is directed agrees to the terms on condition that some sections are amended, or a particular event takes place (Sudbrook Trading Estate v Eggleton, 1983, par.3).
The conditional acceptance operates through a counteroffer where it must be accepted to the original offer before the contract is legalized. At times the counteroffer is rejected by the offeror and the offeree is forced to bear the conditions of the offeror (Harvey v Facey [1893]). Such a contract is termed as an unconditional acceptance. The second form of acceptance is called express. Here, the person vividly agrees to the terms and makes the payments if necessary. The last acceptance is implied where the individual does not have to give the actual consent, but can show compliance through his or her actions. An example of an implied acceptance is a shopper who selects a product from a store and pays the cashier. The conduct of the shopper indicates that he or she has accepted the terms and price of the owner. The above definitions will provide a better understanding of the case at hand.
Explanation
Certain conditions and terms legalize a binding contract recognized by the legal system apart from offer and acceptance. They seek to solve disputes that may erupt due to the breach of the elements of a contract. The use of previous cases relating to contracts can also assist in the determination of the appropriate application of legal concepts. Most states settle the law only is the two parties were bound to an agreement reduced to signing or writing. Otherwise, if neither of the individuals was linked based on the above conditions, the contract is revoked. The writing acts as the ultimate operative fact required to enforce a binding agreement (Gibson v Manchester City Council - CA [1978] par. 2). Contracts that are written and signed are known as specialty contracts or deeds. The situation occurs because oral contracts are very hard to prove. Any false statements, duress, unconscionable dealings, and undue influence could make the contract void or illegal (Walford v. Miles, 1992, par.1).
The law of binding agreements focuses on the elements of a contract to enforce whether a breach took place. The parties in a binding contract should have the capacity to enter into the agreement. The condition covers the power to contract, infancy, and mental incompetence. The covenant is not accepted if cognitive impairment restricted either of the parties from comprehending the consequences or nature of the transaction. The mental incapacity could be due to alcohol or drug intoxication, insanity, developmental disability, or senility. There is also a particular age that the person should attain before transacting a contract. In most cases, it is 18 years. Lastly, the individual must have the authority to enter into the agreement especially in the situation where the person in the position of another one (Entorres v Mills Far East, [1955] par.1).
Legality also determines the validity of the contract. When the individual intends to perform an illegal action through the agreement, the contract is revoked. The valid covenant also requires an exchange of certain consideration. The consideration consists of promise, act, forbearance, modification, legal relationship, or a creation. Affection and love do not constitute as appropriate proposals for a contract because they do not provide legal benefits (Carlill v Carbolic Smoke ball co., 1893, par.3). The binding agreements must express mutual obligations. The parties must both consent to the terms and objectives of the contract and manifest a common intention. The following case can practically exhibit the prominent elements of that make a binding agreement legal. The trial of Shah v Shah (2001, par.1) involved a claim that the defendants had promised to invest 1.5 million Euros to a Kenyan Bank where they were senior correspondents.
Years after the claim was made in 1998; the financial institution was placed under a statutory management instituted by the Kenyan Authority since the bank did not repay the investments. The defendants signed a deed that gave them personal liability for repaying the money of the claimant. The document said that the signatory process took place in the presence of witnesses. However, this was not true since the defendants took the deed and signed it without the observers and claimed that they did so with them. They later argued before the courts that they were not bound by the agreement because they did not complete all its formalities. All the evidence of signatures and contents prescribed by the deed was present; therefore, the tribunal had to enforce the rule of estoppel to prevent the defendants from escaping the personal liability (Shah v Shah, 2001, par.1). The query is thus: Can the same rule be executed on Basil for failing to conform to the requirements of their binding agreement?
Application
The law of estoppel provides that a person should be prevented from giving the concrete facts if he or she had provided a contrary statement earlier. According to Butler Machine Tool v Ex-cell-o Corporation [1979, par.2], the policy is an attempt to prevent the parties bound by a contract from escaping their obligations by highlighting defects in the contract. The rule can be applied in the case of Basil as a technique of preventing him from refusing to buy Rosa’s table since he had already agreed to do so. However, since Basil called Rosa after changing his mind to reject her offer, the law does not carry any effect since it will infringe the legal rights of Basil because he did present any defects in the binding agreement. Here, the issue of time takes over to define the period that a contract should stand before the offer and acceptance phase is completed. An example can be drawn from the trial of Van Tienhoven v Bryne (1980, par.1) where the defendants wrote a letter on 1st October to the Cardiff to sell 1000 tinplate boxes.
The defendants withdrew their offer on 8th October through a letter that the Cardiff received on 20th October. Unfortunately, the claimants had already accepted the terms on 11th October through a telegraph and a letter on 15th of the same month. Therefore, the contract was legally binding the moment the acceptance occurred. The revocation of the offer only takes place when it is communicated to the party being offered a promise. Since that did not happen before the acceptance, the letter written by the defendants of revocation became ineffective. If the similar circumstances are applied to the case of Basil v Rosa, they will apply as follows. On 10 December 2015, Rosa sent Basil the letter to offer the table. Basil then sent a text to accept the terms under certain conditions. However, since he did not receive any affirmation from Rosa he sent her a letter of acceptance on 20th December.
After sending the letter to Rosa, Basil saw another piece of furniture in a newspaper and opted to buy it instead. He immediately called Rosa to decline the offer and told her to ignore the letter that was due to arrive the following day. In their case, the acceptance had not taken place since Rosa did not receive the letter that showed that Basil had chosen to buy the table. Even though, he had sent a text earlier; Rosa did not communicate indicating that she might not have received it. Therefore, the time application in this case of the offer and acceptance shows that the binding agreement did not occur. Rosa; therefore, does not have any right to declare the breach of contract.
Conclusively, the two laws: time application and estoppel would have presented an argument for the offerer, Rosa, if Basil would have denied partaking his obligations contradicting his acceptance based on defects in the covenant. Also, if Basil did not revoke his acceptance before Rosa received the letter that showed acceptance. But since they above conditions are not present, the legal process and the law of contracts grant a verdict in favor of Basil. Contracts are difficult to litigate during particular situations, but through the application of rules governing the elements and the breach of a binding agreement, individuals can make correct and unbiased judgments (Adame & Adame, 2014, par.2).
References
Adame & Adame, 2014. FCCA 42 | Binding Financial Agreement. Beacon Family Law Journal. Retrieved January 13, 2016 http://www.beaconfamilylaw.com.au/2014/06/04/adame- binding-financial-agreement/.
Butler Machine Tool v Ex-cell-o Corporation, 1979. 1 WLR 401, Court of Appeal. Retrieved January 13, 2016 http://www.e-lawresources.co.uk/Butler-Machine-Tool-v-Ex-Cell-O- Corporation.php.
Carlill v Carbolic Smoke ball co., 1893. 1 QB 256. Court of Appeal. Retrieved January 13, 2016 from http://www.e-lawresources.co.uk/Carlill-v-Carbolic-Smoke-Ball-Co.php.
Entorres v Mills Far East., 1955. 2 QB 327, Court of Appeal. Retrieved January 13, 2016 from http://www.e-lawresources.co.uk/Entorres-v-Miles-Far-East.php.
Gibson v Manchester City Council – CA, 1978. 1 WLR 520, Court Of Appeal. Retrieved January 13, 2016 from http://netk.net.au/Contract/Gibson.asp.
Harvey v Facey, 1893.. UKPC 1, AC 552 Privy Council. Retrieved January 13, 2016 from http://www.e-lawresources.co.uk/Harvey-v-Facey.php.
Heathcote Ball v Barry, 2000. EWCA Civ 235. Applied Law Journal. 86 (11) LIJ, p.67.
Hyde v. Wrench, 1840. 3 Bea 334; 49 ER 132. Retrieved January 13, 2016 from http://www.lawnix.com/cases/hyde-wrench.html.
MacRobertson Miller Airline Services v Commissioner of State Taxation (WA)(1975). Retrieved January 13, 2016 from http://netk.net.au/Contract/MacRobertson.asp.
Parker v Parker, 2012. Applied Law Journal. 86 (11) LIJ, p.34.
Shah v Shah, 2001. 3 WLR 31, [2001] 4 All ER 138, [2001] EWCA Civ 527. Court of Appeal.
Sudbrook Trading Estate v Eggleton, 1983. AC AC 444 House of Lords
Thornton v Shoe Lane Parking, 1971. 2 WLR 585. Applied Law Journal. 86 (11) LIJ, p.67.
Van Tienhoven v Bryne, 1980). Court of Common Pleas. LR 5 CPD 344
Walford v. Miles, 1992. 2 AC 128. On this leading case, see inter alia N. Andrews, Contract Law (2011), at 23-30
