Business Law : Business Circumstances

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Business Law : Business Circumstances

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Business Law : Business Circumstances

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Question:

Discuss about the Business Law for Business Circumstances.

Answer:

The issue in this case is if a valid contract has been created between Chan and David and if Chan was bound by the promise to the offer open during the time, David decides regarding purchasing the car.
The law provides in these cases that our party is not bound by the promised to keep the offer if such a promise is not supported by any consideration. For example in Dickinson v Dodds (1876), the defendant offered to sell his house. The defendant also stated that the offer can be accepted till Friday. But on Thursday, the offer made by a third party was accepted by the defendant. Thereafter, the defendant asked a friend to inform the claimant that the offer is no longer available. But on hearing it, the claimant tried to accept the offer on Friday morning. Later on the claimant brought action in the court for the specific performance of the contract. However the court stated that in this case the offer was effectively revoked. As a result, there was no contractor present between the claimant and the defendant. The court also held that the defendant did not require to keep the offer open. The reason was that no consideration was given by the claimant in return of the promise. Under these circumstances, the position under the common law can be described as follows. The party making the offer can withdraw the same at any time before such an offer was accepted or if consideration has been paid by the other party to keep the offer open for a particular period.
In such cases, no particular form of the revocation of offer is necessary. Therefore all that is required in these cases is that the party making the offer, should convey in some way, that the offeror had changed his mind regarding the offer. As a result, the offer was no longer available for the other party to be accepted. For example in Dickinson v Dodds, Dickinson was aware of the fact that Dodds was no longer ready to sell the house before purporting to accept the offer.
In this case, Chan made an offer to sell his car for $20,000. However, David did not accept the offer immediately but wanted some time to think over the offer. Although, David decided to accept the offer and sent an e-mail in which he had accepted the offer made by Chan but Chan replies that because he had not heard from David, he had sold the car to Noddy. In this case, David had not provided any consideration in return of the promise made by Chan to keep the offer open. As a result, Chan could have withdrawn the offer at any time before it was accepted by David. Consequently, no contract has been created between Chan and David.
The issue in this case is if the elements that are vital for creating a valid contract are present and as a result, a valid contract has been formed between Cammy Pty Ltd and Tina Turnaround Co (TT) regarding the supply of raspberry pulp.
The law of contract requires that an offer has to be made by one party and the same should be accepted by the party to whom the offer was made. In this regard, the party making the offer is known as the offeror and the person to whom the offer has been made is known as the offeree. A particular communication can be considered as an offer if such communication reveals the terms on which such party is ready to make a contract and when the statement provides a clear indication that it is the intention of the offeror to be bound by these terms if the offeree accepts them. An offer has to be made to a particular person but the law provides that an offer can also be made to the world at large (Carlill v Carbolic Smoke Ball Co., 1892). Similarly, under the law contract a distinction is present between an offer and the invitations to treat. There are certain transactions in which a preliminary stages involved according to which, one party invites offers from the other party. The stage is known as the invitation to treat.

The law also provides in such a case that the original offer is terminated if the other party has made a counteroffer. Therefore in In Hyde v Wrench (1840), an offer was made by the defendant to sell the farm at a price of £1,000. In its reply, the plaintiff offered to purchase it at £950. The owner declined and afterwards the plaintiff tried to accept the original offer and was ready to purchase the farm at £1,000. However the court stated that because a counteroffer has been made by the plaintiff, the original offer was no longer available for acceptance. It was terminated when the plaintiff had made a counteroffer. In such a situation, a new offer on similar terms can be made, but the offeror is not bound.
However, mere request for information is not to be considered as a counteroffer. Therefore in such a case, the original offer can be accepted by the other party. For instance in Stevenson Jaques & Co v McLean (1880), an offer was made by the defendant on Saturday to sell iron at cash on delivery price of 40 shillings. The offer was to remain open till the next Monday. However in reply, the plaintiffs asked if they could buy the goods on credit but no answer was given to them. Therefore on Monday afternoon they conveyed their acceptance of the offer but by that time the iron was previously sold to another party. In this case the court stated that the reply was only a call for information and therefore it cannot be treated as a counteroffer. As a result the original offer was still available to be accepted and a binding contract has been created between the parties.
In the present case also, TT had made an offer and it has been accepted by Cammy Pty Ltd. Therefore, a legally enforceable contract has been created between the two companies. If TT Co declines to deliver the fruit pulp, Cammy Pty Ltd can sue them for the breach of contract.
3. The issue in this case is related with promissory estoppel. It has to be seen if Lee can rely on the statement made by Harry’s solicitor.
The facts of this case are similar to that of Legione v Hateley (1983). In this case, the parties had entered into a contract regarding the sale of land. A deposit was made by the buyers and the rest of the amount was due after one year. Meanwhile, the land was occupied by the buyer and the house was built on it without informing the seller. It was the intention of the buyer to finance the purchase by sending another property but that same could not materialize. Accordingly they asked for an extension of time but were refused. The vendors suggested that the buyer should get a bridging loan. For this purpose they required a week. According to a clause of the contract, the balance amount has to be paid by 10 August. But on 9th, the buyer made an offer to settle on 17 August to the solicitor. The secretary at the office of the solicitor stated that it will be alright but you’ll have to get further instructions. However on 14 August, the solicitor stated that the contract has been rescinded.
While deciding this case, it was stated by the court after a review of certain earlier cases, that a representation, in order to amount to estoppel, should be clear. This is not equal to saying that it should be express, but it can also be plainly inferred from the behavior of the parties. In this case, such a clear representation has not been made by the secretary. Therefore it can be said that no promise has been made regarding a further extension. The reason was that there was no statement or conduct which would suggest that such an extension will be allowed. It was not considered to be reasonable to rely on such a statement made by the secretary. In this case, no assurance has been given that the buyers will not insist on their legal rights. Under these circumstances, the Court considered that the purchaser should be allowed to raise the claim of relief against forfeiture in order to prevent an injustice due to the fact that house has been built on the land.
In the present case also, a similar statement has been made by the solicitor of Harry. Therefore under the circumstances, it will not be reasonable for Lee to reasonably rely on such a statement. As a result, it can be said that Harry’s legal right is not forfeited by the statement made by the solicitor. Therefore Lee cannot sue Harry for breach of contract and the representation made by Harry’s solicitor does not amount to promissory estoppel.

References
Carlill v Carbolic Smoke Ball Company [1892] EWCA Civ 1
Dickinson v Dodds (1876) 2 Ch D 463
Legione v Hateley [1983] 57 ALJR 152
Stevenson, Jaques, & Co v McLean [1880] 5 QBD 346

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