Contract

Contract Law

Introduction

People and organizations make contract that is a legally binding agreement between two parties. But it is necessary to have some elements of a valid legal agreement for making this contract enforceable by law. This paper analyzes the given case of Peter and Emma and determines the validity and legal enforceability of the agreement that was made between both parties.

For this, different elements of contract law will be considered to determine the validity of the agreement. An advice will be provided to Peter as to whether or not he is contractually bound to Emma or Andy.

Summary of Case

Peter decided to sell his limited edition Range Rover Sports car and placed an advertisement in his car window. Emma contacted him through calling and accepted his offer at offered price of €24750 that was lesser than the advertised amount of €25000 by leaving a message on his answering machine.

However, Peter could not read that message and contacted a dedicated car dealer namely Andy and accepted offer of €26,000 from him. Now, Emma demands the vehicle for €24750. So, it is required to determine whether Peter is contractually bound to Emma or Andy.

Elements of Contract law

According to Contract law, in order to make a valid contract, it is required to have different elements like offer; acceptance, legal aspects, competent parties and legality of object, certainty, etc.

The consideration of all these elements makes the contract valid and legal. If any party does not consider these elements, it may cause formation of a void contract and contract cannot be enforced legally (Frey, 2015).

There should be lawful offer by one party and its legal acceptance by another party in order to make the contract valid.  Apart from this, the parties involved in the contract should be competent physically and mentally to make lawful relationship.

Sometimes, it is also mandatory to be a contact in writing form rather than verbal. The reason is that it is not easy to prove oral contracts if any comfit arises in future.

In addition, both parties should have conscious intention and free consent to enter the contract. Both parties should have intention to create legal relationship and should be capable of entering into a contract. In addition, there should be a lawful consideration as one party should get return for the performance of his promise (McKendrick, 2009).

In a contract, it is also required to exchange something of value in terms of cash, service or goods or a promise to exchange for any value. There should not be any outside pressure on the parties to accept the contract.

In addition, certain terms and conditions should be considered to maintain legality in the objects of the contract agreement. Therefore, it can be stated all these elements are required to make a valid and legally enforceable contract.

Analysis of case

In the given case, it is better to consider written agreement rather than verbal but both contracts are enforceable. So, based on type of agreement, it can be stated that is no violation of this contract law condition. Peter made verbal contract with Emma, but he met face-to-face with Andy to make a contract that makes it more valid and enforceable.

Apart from this, offer was made by Peter to Emma and Andy as the pricing demanded for the car was €25,000. In this Peter gave an offer to the Emma and Andy. This proposal was made with the intention to develop a legal relationship with the parties (Kelly et al., 2013).

An offer is revocable at any time before its acceptance by another party. At the same time, Emma accepted the offers at lower price and tried to communicate with Peter regarding the acceptance of the offer.

Andy accepted and communicated the acceptance of offer to Peter by face-to-face meeting. On the basis of this, the contract between Peter and Andy was enforceable and valid. But on the other hand, the acceptance made by Emma cannot be considered because Peter could not see the acceptance made by Emma (Friedman, 2011).

In the given case, both parties had intention to create legal relationship. At the same time, both parties contracted for a legal object. It is because the contract is only enforceable by law when it is formulated for a lawful purpose.

In the case of Peter and Andy, the contract involved all essential elements of a valid contract due to presence of offer, acceptance, certainty, conscious intention, object legality, legal consideration and proper communication between the offeror to the offeree (Frey & Frey, 2001).

On the other hand, in the case scenario of Peter and Emma, the contract involved all essential elements except proper communication between the offeror to the offeree that cannot be considered as valid contract.

For example, in the case of Felthouse v Bindley [1862], a nephew decided to buy a horse from his uncle. He offered to buy the horse and said he will consider the horse himself, if he does not hear anything from him. But horse was sold because the auctioneer forgot and sold the horse. In this case, court declared that there was no contract because silence cannot be considered as acceptance.

Both parties were capable of entering into the contract as based on this element, it can be said that both cases had valid contract. At the same time, there was free and unaffected consent between both parties that make these contracts valid.

But the acceptance element of contract is major considerable part of making a contract valid and enforceable. If Peter could not see the message sent by Emma, then it can be depicted that the communication regarding acceptance could not be completed (Harrison, 2004).

Emma sent her confirmation of purchasing the car at the offered or bargained price. It was fault of Peter that he could not complete his promise to Emma. Peter needed to contact with Emma regarding the offered price. He did not contact with Emma and sold the car to Andy at higher price.

It will be required for Peter to provide that he could not see the message sent by Emma to avoid any liability. He was legally bounded with Emma due to making a contract for selling car but he could not see the acceptance by Emma.

But in the case of Andy, Peter fulfilled all requirements of an essential contract that made this contract valid and enforceable. In relation to this, another case of Lord Denning in Entores v Miles Far East Corp (1955), if a man shouts an offer to another person but he did not heard the reply due to some disturbance then contract cannot be considered valid.

For making the contract valid, the offeree should wait and provided his acceptance to make it audible for the offeror. The contract is considered complete when the acceptance is received by the offeror.

In the case of Holwell Securities Ltd v Hughes [1974], Holwell Securities provided their acceptance latter to Dr Hughes but due to postal issues the acceptance latter was not received by Dr Hughes.

On the other hand, Holwell Securities has proof that the post was successfully taken by Dr Hughes before expiring the option. So, this offer should be accepted by Dr Hughes because according to the postal rule it was accepted before expire the option.

So, it can be depicted that acceptance of the offer must be communicated to provide final output of the contract. The construction of the contract cannot be established without acceptance of the offer.

In this, the first party offers something to develop the contract and the second party provides their acceptance to make the contract successful.

Sometimes, due to some problems in communication, second party unable to communicate their acceptance to the first party. In this situation, the first party does not accept the offer or it may become invalid contract among the parties.

Conclusion

On the basis of case analysis, it can be stated that it is mandatory for the firms and individuals have all essential elements in the contract to make it valid and enforceable as per the law.

From the case analysis of Peter and Emma and Andy, it is determined that Peter and Emma made a contract but it was void due to no acceptance from Peter. On the other hand, Peter and Andy made a contract that had all essential elements of a valid contract. Therefore,, it can be summarized that  Peter is contractually bound with Andy, but not with Emma.

References

Cases:

Entores v Miles Far East Corp [1955] 2 QB 327

Felthouse v Bindley (1862) EWHC CP J 35, Court of Common Pleas

Holwell Securities Ltd v Hughes [1974] 1 WLR 155

Academic sources:

Frey, M. A. & Frey, P. H. (2001). Essentials of Contract Law. USA: Cengage Learning.

Frey, M.A., (2015). Essentials of contract law. Cengage Learning.

Friedman, L. M. (2011). Contract law in America: a social and economic case study. Quid Pro Books.

Harrison, D. (2004). Is a Long‐term Business Relationship an Implied Contract? Two Views of Relationship Disengagement. Journal of Management Studies, 41(1), 107-125.

Kelly, D., Hayward, R., Hammer, R. & Hendy, J. (2013). Business Law. UK: Taylor & Francis.

McKendrick, E. (2009).  Contract Law. UK: Palgrave.

 

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