Contract Creation Elements And Communication: A Legal Analysis

The Elements of Contract Creation

Whether a contract was created with any of the three parties, based on the submitted tenders?

A contract can be created only when certain important elements are present under it. The elements of agreement, i.e., offer and acceptance are followed by elements like intention, capacity, consideration and consent (Clarke and Clarke, 2016). When a contract has to be started, an offer has to be made, which shows that one party is offering the other party with something. There is a need to differentiate an offer from an invitation to treat. The tenders are deemed as invitation to treat due to the reason that they invite price for the particular task, which then becomes the offer (Ayres and Klass, 2012).

The next requirement for creating a contract is for the offer to be accepted by the party to which the offer is made and this acceptance has to be provided in a time based manner. The date of acceptance is when it reaches the offering party (Andrews, 2015). Though, when it comes to postal rules, this date of acceptance changes and this becomes the date on which the accepting party posts the acceptance letter. It does not matter when the acceptance letter actually reaches the offering party. This is because the postal officers are deemed as the agent of offering party, resulting in the acceptance of postal officers as that of the offering party (Gibson and Fraser, 2013).

It becomes crucial to note here that the postal rules apply in such cases only where the post has been stated as a mode of acceptance or that there is reason enough before the offering party that post would be used for giving the acceptance on a particular matter, as had been seen in Tallerman & Co Pty Ltd v Nathan’s Merchandise (1957) 98 CLR 93.

The facts of this case demonstrate that the University had invited tenders openly where a closing date of 01^st June had been set. As the tenders are the invitation to treat, this invitation would be deemed as invitation to treat. Each reply to this tender would become an offer. Each of the offers made by the different parties need to be analysed now. Greenland sent their offer through hand as the offer was delivered through hand. The laws stated here provide that the date of offer is the date when the offer actually reached University which was 29^th March. In the case of the second party which is Enviro, the offer was sent through post on 15^th May, resulting in the date of offer being 15^th May as a result of applicability of postal rules. The offer of Plant Forever was posted on 30^th May and this would be offering date for them.

Differentiating an Offer from an Invitation to Treat

Coming to the acceptance part, the Enviro offer had being forgotten due to error on part of administrative assistant of University, making it their fault. This fault resulted in no contact being formed. In context of Greenland, their offer was not accepted owing to the rumours. It is not obligatory to accept every offer, so no liabilities arise here. University accepted Plan Forever’s offer through the postal mode. Based on Tallerman & Co Pty Ltd v Nathan’s Merchandise, this would be deemed as a valid mode of acceptance as it was the mode being used for every communication. And the acceptance of postal officer would make the acceptance of University and it would not matter that the post was destroyed.  

Conclusion

Thus, a contract was only formed between University and Plant Forever, and by not following on the contract, Plant Forever would breach the contract.

Whether a contract was created based on ten day communication? 

There is a difference between offer and invitation to treat, as the latter lacks intention. The invitation to treat is merely a showcase of negotiations phase of the contract and it may not necessarily result in a contract. The offer shows that the parties are ready to take on the contractual liabilities. Newspaper advertisements are deemed as invitation to treat in general as per Partridge v Critenden (1968) 2 All ER 425. These do not result in the parties being forced to undertake what has been advertised in the newspaper advertisement (Lambiris and Griffin, 2016).

Once the offer has been made, it needs to be accepted in the exact same manner in which it had been made. If the offer is changed while giving acceptance, a counter offer is made as per Hyde v Wrench (1840) Beav 334, resulting in the original contract ending. It is important that the contract is accepted by the party to which the offer had been made. The next requirement is for the contract to have valid consideration having economic value. In absence of the contract having a valid consideration, it would not be valid (Marson and Ferris, 2015). The parties need to have the capacity of entering in contracts in terms of legal age. The parties also need to have the intention of creating legal relations (Latimer, 2012).

The communication which took place in the ten days of October has different features. The communication sent on 01^st October would be deemed as an invitation to treat as it was a newspaper advertisement due to applicability of Partridge v Critenden. There was a lack of clarity in offer and lack of intention to sell the product. The communication sent on 02^nd October show negotiations being taken up. This resulted in Famous Footwear making an offer. The next communication which occurred on 04^th October showed James making an offer as a result of invitation to treat, where the offer of $30,000 including GST and delivery was made for 2000 pairs of slingback sandals.

The next communication is the one which came on 06^th October where a counter offer was made. The reason for this is that it was stated that “Footloose will sell 2000 pairs of slingback sandals for $30,000, excluding delivery.” Thus, based on Hyde v Wrench, this would be considered as a counter offer, which would mean that the offer sent on 04^th June is no long open for being accepted. The 08^th October communication shows James accepting the offer made by Simon on 06^th June. Yet, a contract was not completed due to lack of clarity in the “earliest delivery date”.

The last day communication, which occurred on 10^th October, would be taken as the date on which a contract was actually formed as this is the date of finalizing the entire terms on which the contract between the two parties had to take place, where it was agreed that 01^st November would be the date of acceptance. This is the stage where all the elements required to form a contract were present in terms of offer and acceptance being present, along with consideration value, clarity regarding terms of contract, and intention between the parties. As there is nothing to prove the contrary, the capacity of the parties is assumed to be present.

Conclusion

Thus, it can be concluded that a contract was completed on 10^th October where every details of the contract was clarified, resulting in contractual relations between James and Simone being created. 

References

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

Ayres, I., and Klass, G. (2012) Studies in Contract Law. 8^th ed. New York: Foundation Press

Clarke, P., and Clarke, J (2016) Contract Law: Commentaries, Cases and Perspectives. 3^rd ed. South Melbourne: Oxford University Press.

Gibson, A., and Fraser, D. (2014) Business Law 2014. 8^th ed. Melbourne, Pearson Education Australia.

Hyde v Wrench (1840) Beav 334

Lambiris, M., and Griffin, L. (2016) First Principles of Business Law 2016. Sydney: CCH.

Latimer, P. (2012) Australian Business Law 2012. 31st ed. Sydney, NSW: CCH Australia Limited.

Marson, J., and Ferris, K. (2015) Business Law. 4^th ed. Oxford: Oxford University Press.

Partridge v Critenden (1968) 2 All ER 425

Tallerman & Co Pty Ltd v Nathan’s Merchandise (1957) 98 CLR 9