LAW011 6 : Foundations of law in International Business : Obligations

In addition to the above elements, some other requirements and concepts are there in the contract law. Few of them are discussed as below.

Invitation to treat: - An invitation to treat is an invitation for offers. Unlike an offer, an invitation to treat cannot get acceptance. As in reply to an offer, acceptance is required to come, similarly in reply to an invitation to treat an offer needs to place. Invitation to treat is a wider term and includes goods on display, advertisements, auctions, and contracts by tender. It was decided in the case of Partridge v Crittenden , that an invitation of treat is different from an offer and cannot be accepted. 

Request for information: - Many of the times, an offeree need to know more about the offer made by the offeror and hence he/she ask some more details about the offer. Such communication from the side of offeree cannot be treated as an acceptance. Even after such request of further information by the offeree, the original offer remains valid and open for the acceptance and this is to say that asking or lodgment of such information does not develop any legal relationship between the parties.

Supply of information: - whatever a party says in respond to the request for information is considered as a supply of information. Both requests for information and supply of information can be there before or after the offer.

Application 1

In the given case, Amanda placed an advertisement in the newspaper stating her desire to sell the professional inflatable kayak. She also mentioned the price of the same as £500. As mentioned in the rule section above, for a valid contract, some essentials are required to be there. Firstly, the offer was missing in the transaction. Applying the provisions of the case of Partridge v Crittenden, the advertisement given by Amanda cannot be considered as an offer as it was merely an invitation to treat. An offer was required to be made in order to develop a contract.

A person named Billy was interested to buy the subjective kayak. He has shown his intention to buy that kayak via e-mail. In the titled e mail, he has stated that he is very interested in a kayak and wants to know that whether the delivery of the same is included in the mentioned price i.e. £500” or not. This e-mail of Billy had a nature of the request for information and not the offer. In reply to this request from the side of Billy, Amanda confirmed that delivery was included in the mentioned price. This mail of Amanda was a supply of information. No party has made an offer to other in the whole transaction. Although the consideration was there it is not enough to prove the existence of a contract. The very basic element of a contract i.e offer was missing and therefore there is no question to check the existence of acceptance. As no contract was there between the parties, no legal liabilities were there. Parties cannot be held each other liable to perform any promises.

Conclusion 1

In the absence of any legal contract, Amanda and Billy do not have any legal rights and obligation in respect to each other.

Issue 2

What rights and obligations, Chris and Amanda have towards each other? Is there any valid contract existed between them.

Rules 2

Considering the basic elements of a contract mentioned under the heading of Rule 1, this is to be stated that in addition to those elements, the mode of communication is also a thing to discuss when it comes to the validity of offer and acceptance. In general, parties can communicate with each other via any mode but in those circumstances where one of the parties clearly mention or show some intention regarding specific mode of communication, then both of the parties are required to use that mode only. If a person does not provide and prescribe any particular mode of communication in a transaction/agreement or a contract, then any reasonable mode of communication can be used. For instance:- If a person requires in an invitation to treat that an offer must come via telegram, then all the person who wants to make an offer needs to submit the offer in that particular mode only. The offer coming via any other mode can be rejected or accepted according to the will of an offeree.

While discussing the acceptance again, this is necessary to mention that the same must be properly developed and communicate to the offeror. It was given in the decision in the case of Felthouse v Bindley  that silence of an offeree cannot be considered as an acceptance. This is the reason that a person cannot be held a part to the contract when he/she do not provide acceptance or remain silent.

Acceptance through conduct: - Many times an offer is of nature that is not required any communication of acceptance. In fact, parties can give their consent by doing a specific task. The facts and decision of the case of Brogden v Metropolitan Railway are required to review in this area. In this case, the claimant was the supplier of coal and he was used to supply coal to the defendant since years without any contract. Later on, both the defendant and claimant have decided to develop a legal contract. Defendant has not made an acceptance communicated his acceptance to the claimant but claimant continued supplying the coal to the defendant. In the decision, it was given that the contract developed between these two parties was valid. In the reasoning behind the decision, it was given that acceptance took place by conduct and therefore communication of the same was not required.

The aforementioned case is related to the acceptance through conduct in cases of the offer. In the cases of advertisements also, a contract can be developed through the performance of a particular act, where such advertisement consists the nature of an offer. In order to check that whether an advertisement is an invitation to treat or an offer, the facts and intention of the parties are basic elements to check.

The Carlill v Carbolic Smoke Ball Co is an important case to study in this area. In this case, the defendant placed an advertisement in the newspaper stating that company will award £100 to the person who contracts influenza while consuming ball thrice in a day for two weeks in accordance of the prescription provided with such balls. Mrs. Carlill, the claimant of the case has purchased and consumed the balls in accordance with the direction and caught the flu. She asked the reward of £100 according to the terms of advertisement. The defendant refused to pay the same and raised the point of stating that the advertisement was an invitation to treat and not the offer. Defendant argued that the advertisement was not an offer and therefore there cannot be an issue involved in relation to acceptance through conduct. An advertisement cannot be held offer as an offer cannot make to the world.

In the decision of the case, the court of appeal held that it is quite possible to make the offer to the world. In cases of unilateral contract, an acceptance can be provided through conduct.

Application 2 

In the case provided, the first issue is related to the mode of communication. Amanda has not stated anything about the mode of communication in her advertisement, but she has mentioned her e-mail ID. This is to state that it was her intention to use the e-mail as a mode of communication in all the further transaction related to the advertisement.

The issue of the case has started when the brother of Amanda, Chris called her and made an offer. It was an original offer of the transactions between Amanda and Chris. He used the telephone as a method to communicate an offer, which was not a valid one. Further, it can also assume that, as it was an original offer, the same was not bound with the requirements of invitation to treat. In such a situation, this would be treated as a valid offer as all the essentials of a valid offer were there. Consideration was there and the offer been communicated to the offeree. The offer made by Chris was required to be accepted by Amanda in the course of development of a valid contract. Amanda did not provide any acceptance to the offer made by Chris. Applying to the provision of the case Felthouse v Bindley, the silence of Amanda cannot be treated as an acceptance. In the absence of an acceptance, no contract has been developed between the parties.

Now, applying the provisions of Carlill v Carbolic Smoke Ball Co, the advertisement made by Amanda, was not an offer but merely an invitation to treat. This is the reason, that it could not be accepted throw conduct because an offer can be accepted through performance but not an invitation to treat. Chris sent the cheque to his sister, but his this conduct cannot be treated as acceptance as the offer of the transaction was his call to Amanda which was required to be accepted by Amanda and the advertisement was not an offer. In this manner, there was a valid offer from the side of Chris but acceptance was missing on the part of Amanda.

Conclusion 2

Chris has no right in against if Amanda as she never accepted the offer made by Chris. Further, Amanda also has no obligation and rights with respect to Chris.

Issue 3 

Is there any contract made between Daniel and Amanda. If yes, what rights and obligation, both of this person have in respect to each other.

Rule 3 

In every contract, certain terms are there that required to be fulfilled by the parties to a contract in order to perform a contract. Non-fulfillment of any such terms can lead an issue of breach of contract. Mainly two types of terms are there. One is condition and another one is warranty. A condition is more crucial in nature in comparison to warranty. A condition is as significant as in the absence of which the same, the purpose of a contract remains no longer useful for one of the party to the contract. It was given in the decision of the case of Poussard v Spiers & Pond  that a party of a contract can rescind the contract if the other party do not perform a condition of a contract in addition to make a claim for the damages. On the other side, in cases of breach of warranty, the victim party can only ask for the damages.

A term of the contract can be expressed as well as implied. Implied terms are those terms that are not expressly decided between the parties but courts assume their presence in a contract because of their nature. An implied term has the same impact as an expressed term and similar to an expressed term, an implied term can be there in the form of condition or warranty.

Misrepresentation is a situation where one of the parties of the contract makes a false representation about the certain important term of a contract with the intention to induce the other to enter into the contract. In cases of misrepresentation, the innocent party has an option to rescind the contract.

In cases of invitation to treat, a person who makes the same cannot be held bind with any statement made by him/her in such an invitation. It means an invitation to treat do not create any legal obligations to the parties.

Application 3

In the given case, Daniel sent an e-mail stating that he is ready to buy kayak offered by Amanda in the advertisement. He also stated that he is ready to buy the same for £550. The price stated by Amanda in the published advertisement was £500. As the advertisement was an invitation to treat, the subjective e-mail of Daniel was the original offer of the transaction. Firstly, to check the validity of this offer, this is to be stated that all the elements of a valid offer were there. The offer was communicated via e-mail, which was a valid mode of communication. Further, the same also consisted of a valid consideration. However, Amanda was expecting a consideration worth £500 but Daniel offered her £550. It was a valid and sufficient consideration.

This offer made by Daniel was required to be accepted by Amanda. Amanda replied to Daniel and provided her home address. It was an acceptance of this contract. The acceptance was also valid as the offeree itself made it. Further, the same has been properly communicated to the offeror. As soon as Amanda sent this e-mail to Daniel, a valid contract has been developed between both of them. Daniel further collected Kayak and started using the same, Later on, he came to know that the Kayak was not good in quality as it was presented as in the advertisement Amanda presented the Kayak “as good as new.” Daniel found that Kayak was not fully inflated and had major wear and tear cause of which it capsized while using the same for the first time.

As mentioned in the rule area, any statement made under an invitation to treat, do not create a legal obligation, and hence the statement “as good as new” will not be treated as a term of an offer. It will also not be treated as a misrepresentation as the same was not a part of the offer of the contract. However, the working condition of Kayak will be treated as an implied term of the contract. It will be treated as an implied condition as in the absence of a good working condition, there was no use to buy that kayak for Daniel. Parties to the transaction did not discuss anything regarding the condition of the kayak and hence court will assume that a good working condition of a kayak was an implied condition of the discussed contract. By providing a Kayak of the poor working condition, Amanda breached the implied term of the contract.

Conclusion 3 

Applying the provisions of the case of Poussard v Spiers & Pond Daniel will be able to rescind the contract. Further, he can also ask for the damages from Amanda. Amanda will be required to pay the damages to Daniel and will not be entitled to force the contract on Daniel.

Issue 4

What rights and duties Amanda and Ellen do have in respect to each other?

Rule 4 

Whenever the parties to the case use the post as a method of communication, postal rules are applicable there. In the case of postal rules, for an offer as well as an acceptance, different rules are applicable. These rules provide the time when an offer or an acceptance complete in a transaction. According to the postal rules, an offer gets complete as soon as offeree receives the same. However, this rule is not applicable in case of acceptance. An acceptance gets complete as soon as the offeree places the letter to the mailbox. It means regardless of the fact that whether an offeror received the acceptance letter or not, an acceptance will be treated completely as soon as the offeree would place his/her acceptance to the post. Postal rules are not an exception to the general rules of a contract and are merely another medium of communication. Even in those cases, where postal rules are applicable, an offer needs to be accepted.

An incomplete offer cannot be treated as a valid one and an offeree cannot accept the same. For a valid offer, all the terms and conditions must be clear and the same must get acceptance from offeree.

Application 4

In the provided case, Ellen sent a letter stating that he is ready to buy Kayak for a consideration of £600. It was an offer from his side. In addition to this, a request of information was also there on the part of Ellen. Letter sent by Ellen cannot be treated as an acceptance as the advertisement published by Amanda was not an offer and hence this is to say that it was an offer. Ellen posted the letter of offer to the post on Tuesday. Further, Amanda received the same on Thursday. In this case, postal rules will be applicable. The offer made by Ellen will be treated as complete as on Thursday. In addition to this, this is to be stated that cause of request of information, this offer could not get acceptance, as the same was not complete.

Amanda has not provided any consent to Ellen and therefore, no contract has ever been developed between both of them. Neither an acceptance not a valid offer was there in the whole transaction.

Conclusion 4

Parties have no right in respect to each other. The offer made by Ellen cannot be considered as a valid offer as it contained a request for information. Further, Amanda has not given any reply to the offer made by Ellen and hence in the absence of a contract, both the parties do not have any right as well as obligation towards each other.

Bibliography 

Case Laws

Brogden v Metropolitan Railway (1877) 2 App. Cas. 666

Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256

Chappell v Nestle [1960] AC 87 

Felthouse v Bindley [1862] EWHC CP J35

Harvey v Facey [1893] UKPC 1

Partridge v Crittenden (1968) 2 All ER 421

Poussard v Spiers & Pond (1876) 1 QBD 410

Books/Journals

F Cross and R Miller, The Legal Environment of Business: Text and Cases -- Ethical, Regulatory, Global, and E-Commerce Issues (Cengage Learning 2008)

J Roger Knowles, 200 Contractual Problems and their Solutions (John Wiley & Sons 2012)

J Sweet and M M Schneier, Legal Aspects of Architecture, Engineering & the Construction Process (Cengage Learning 2008)

L Koffman and E Macdonald, The Law of Contract (OUP Oxford 2010)

Paul S Davies, JC Smith's the Law of Contract (Oxford University Press 2018)

Robbert O'Connor, Love: The You, The Me, The Us (Total Health Publications 2016)

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