Offer and Acceptance in Contract Formation

Whether or not, a valid contract was formulated in this case?

When an exchange of promise takes place amongst parties which are more than two in number, for a consideration. There are two broad manners in which a contract can be drawn, i.e., a verbal and a written. Even though, the formation of these two is different, but both of these are equally binding (Mau, 2010, p. 5).

The first element to form any contract is the offer. The offer presents that the parties of the contract have the intent of forming legal relationship. The offer is completed when it is accepted by the party to which it was made (Helewitz, 2010, p. 28). Also, the acceptance has to be made to the offer as it was made. If any change is made in the offer that has been made, it is considered as a counter offer, instead of an acceptance. This was held in the case of Hyde v. Wrench (1840) 49 ER 132 (E-law Resources, 2017).

There are postal rules of acceptance as per which the acceptance can be communicated through post. And the date of acceptance is considered as the date of posting the acceptance letter (Andrews, 2015, p. 51). This is because the postal office is the implied agent of the posting party and an acceptance by them is deemed as the acceptance of the other party. Furthermore, electronic communication is deemed as the digital equivalent of post, and so, the postal rules of acceptance, regarding the date of communication, apply to electronic communication (Stone & Devenney, 2015, p.63).

Along with these two elements, the contract needs to have the elements of consideration, clarity regarding the contracting terms, the intent to formulate lawful relationship, and the contractual capacity of the parties (The Law Handbook, 2016).

On Jan 1, the offer was made. The communication of Jan 2 would be deemed as a counter offer, since the contracting terms were different from the offer. This counter offer was rejected on Jan 3 by Mike. And he stated that the acceptance is made for Jan 1 offer. But, once a counter offer is drawn, the original offer expires. The offer here would be the communication of Jan 5, which remained unaccepted by Bob. Due to lack of acceptance, no contract was formed, and the Mike can rightly refuse the computers.

Conclusion 

A valid contract was not formulated in this case.

Key Elements of a Contract

Whether or not, a valid contract was formulated in this case?

(Same as that of Mike)

Through the letter of Jan 10, an offer was made by Bob. And through this very mode, the offer was accepted by Tom on Jan 12.  This would be the date of acceptance. The offer had valid consideration. And there is nothing to suggest that the other elements of the contract are not present. Hence, a contract was formed.

Unless the contracting parties mutually decide to rescind the contract, it cannot be done and so the later email of cancellation of letter remained inapplicable. The delivery date of letter, i.e., Jan 15 is irrelevant. Hence, to save from a breach of contract, Bob would have to pay the requisite amount.

Conclusion

A valid contract was formulated in this case.

Whether or not, a valid contract was formulated in this case?

 As highlighted earlier, consideration is one of the essential elements of a contract. It can be any amount which is decided by the contract parties. Though, there has to be an economic value in it, as was seen in the case of Chappell & Co Ltd v Nestle Co Ltd [1959] UKHL 1 (British and Irish Legal Information Institute, 2017). The judges accepted the three wrappers as valid consideration due to their economic value. Hence, the consideration has to be sufficient. Also, the consideration cannot be past, or old (Currier and Eimermann, 2010, p. 178).

Applying the law, the cat cannot be deemed as a valid consideration, as in this particular case, it has no economic value. Further, the cat here is a past consideration as Steve looked after the cat whilst Bob was away for a holiday. This means that Bob is not under any obligation to give the computer to Steve, due to lack of a valid contract, for the reasons of presence of past consideration.

Conclusion

A valid contract was not formulated in this case.

Whether or not, a valid contract was formulated in this case?

Only when all the essential elements are present in case, can a valid and legally binding contract be formed (Miller & Cross, 2015, p. 257). Though, once a contract is formed, it can still be challenged on some specified grounds. One of such grounds is mistake, which occurs in case where the contracting parties sign a contract due to the belief that the particular thing was true, even though it was not. When only one of the contracting parties makes a mistake, it is considered as a unilateral mistake. Such mistakes cannot however, invalidate the contract (Lawyers, 2017).

Through the given case study, it can be clearly established that an offer was made by a party, which was later on accepted by the party to which the particular offer was made, and a contract was signed. There was clarity in terms of contract and there was a valid consideration of $33,000. Though, Bob had no intention of forming legal relations. Also, the consent was for the contract with supplier of microchips, and not regarding the Toyota Hilux 3000 automatic. Hence, no contract was formed in this case.

Assuming that a valid contract was formed in this case, it can be rescinded by Bob due to his mistake. He had clearly entered into the contract for the microchips and not for the vehicle. But being a unilateral contract, it cannot be used to invalidate the contract. So, due to the refusal of Mary through Capital Motors, for rolling back the contract, the contract would have to be completed or else would be a breach of the same.  

Conclusion

A valid contract was not formulated in this case. Assuming that a contract was formed, a mistake cannot be used as the defense to rescind it.

References

Statutes

Contract Law

Cases

Chappell & Co Ltd v Nestle Co Ltd [1959] UKHL 1

Hyde v. Wrench (1840) 49 ER 132

Books / Articles / On-Line Modules

Andrews, N. (2015). Contract Law, 2^nd ed, Cambridge: Cambridge University Press, p. 51.

British and Irish Legal Information Institute. (2016). Chappell & Co Ltd v Nestle Co Ltd [1959] UKHL 1 (18 June 1959). Retrieved from: https://www.bailii.org/uk/cases/UKHL/1959/1.html

Currier, K A, and Eimermann, T E (2010). Introduction to Paralegal Studies: A Critical Thinking Approach, 4^th ed, New York: Aspen Publishers, p. 178.

E-Law Resources. (2017). Hyde v Wrench (1840) 49 ER 132 Chancery Division (Decided by Lord Langdale MR). Retrieved from: https://www.e-lawresources.co.uk/Hyde-v-Wrench.php

Helewitz, J A (2010). Basic Contract Law for Paralegals, 6^th ed, New York: Aspen Publishers, p. 28.

Mau, S D (2010). Contract Law in Hong Kong: An Introductory Guide, Hong Kong: Hong Kong University Press, p. 5.

Miller, P L, and Cross, FB (2015). The Legal Environment Today, 8^th ed, Stanford, CT: Cengage Learning, p. 257.

Stone, R, and Devenney, J (2014). Text, Cases and Materials on Contract Law, 3^rd ed, Oxon: Routledge, p. 63.

The Law Handbook. (2016). Elements of a contract. Retrieved from: https://www.lawhandbook.org.au/07_01_02_elements_of_a_contract/