CONTRACT LAW: PART 2
Part 2: Problem Question
In the current situation, Richard intended to sell his Flying Hippo snowboard and Ahmed intends to buy the same. Even though Ahmed and Richard exchanged the first stance of contact showing interest to sell and buy, however, Ahmed later declined to buy Flying Hippo snowboard. In this classic case, it can be advised to Richard that there is no contract with Ahmed because they never entered an agreement made between the two parties where both the parties informed the intent to purchase and sell, the rejection of the intention to purchase was made long before the seller informed that he was ready to sell. According to contract law, a contract is only valid when the sale of a product has been finalised after setting the predetermined time and at a predetermined price.[1]A contract is valid only when there is a legally binding promise either through oral or written modes that the buyer is able to buy the product and when they enter the sale of goods agreement it is a binding between the two that the seller will provide with the mentioned quantity or the product and therefore, guarantees the buyer’s interest either at the mentioned price or negotiated.[2]In addition, the terms of the agreement were only superficial and there was no promised time frame or the initiation of negotiation between Ahmed and Richard. Therefore, Richard does not hold any contract to sell the product because there was no second set of conversations on forming the agreement guaranteeing the sale and purchase of the Flying Hippo snowboard.
The concept of contract law states that there are four main elements that make a contract valid or one can say they have a contract and these are “agreement”, “capacity”, “consideration” and “intention.”[3]The agreement is accepted when both the parties had agreed with the price and quality of the product and their quantity and so on or there is a mutual understanding between the offer and the acceptance. In the case of Ahmed and Richard even though both had made the offer to buy or sale the product, but there was a lack of acceptance from the buyer side. So, under this circumstance, there is no obligation with the buyer to buy the product simply because the buyer had shown intention to purchase or the seller had accepted the buyer’s proposal. The concept of contract law also states that a contract is only a legally binding agreement when business entities or individuals promise to do something in return for a gain or advantage. Again, the agreement is only considerate when either of the parties had decided to provide something to entice both into the agreement and the competency of both the parties are met. In addition, Ahmed and Richard never met the phase of mutuality much less binding or having obligation to buy the product.
Furthermore, the case of Ahmed and Richard can be linked to the case law Alpha State Apparels Ltd vs Revenue & Customs in 2019 which is also classic contract law. According to the case Alpha State Apparels had legal implications from the buying commission which should or should not be paid to the According to the case highlights it was seen that there was no written contract between the two parties; Alpha and AE but “AE was acting as Alpha’s buying agent.”[4] Furthermore, it was also highlighted from the case that AE and Alpha were working with an agency relationship and therefore, they did not need a contract. Based on this it can be stated that there is no need for an oral or written contract if the businesses are operating within an internal acceptance and liability. Again, in case law Trade Electronix Ltd vs Best Buy Today in 2009 both the entities had entered a contract which means they had an agreement “to purchase £150,000 worth of Argos return to stock” and “400 boxes of Argos return to stock.”[5] However, as identified from the case highlights there was no agreement between the two on the further contracts because they had to check on the financial ability of the company to make such purchases. This can also be linked to the part where it was mentioned that a contract is valid based on certain elements. Based on various evidence, it was stated by the judge that there was no evidence of a binding contract between the two because one of the parties did not agree or mention anything about a contract or obligation to buy a product and more appropriately stated that TE did not enter a binding contract with BBT to buy products or return stocks worth £150,000 and therefore, the appeal that BBT has the obligation to buy the product was denied. Again, in another case of Keller vs Crowe, the issue of contract law and binding contracts were addressed and presented. There was an agreement between the two parties that stated that the two parties were in the contract of buying and purchasing the premises.[6] However, based on the purposed agreement would exist if the offer was accepted and the highlights say that since the seller was bound to sell his property and therefore, the case also intimated that the seller had the obligation to sell after the plaintiff acquired all the requisite documents, permissions and even gave some amount to the seller. Since the seller and the buyer were in an agreement to buy the land or the estate, the seller was obligated to sell the same.
Based on these cases it is definite that the seller and buyer have to have or enter an agreement even after the proposals and offers are made. Since Ahmed had denied making an agreement long before Richard accepted the proposal of purchase, Richard and Ahmed did not enter a contract and therefore there was no binding contract.
Bibliography
Alpha State Apparels Ltd v Revenue & Customs [2019] UKFTT 644, (TC)
Anthony T Kronman‘Contract law and distributive justice’ (1979) 89 Yale LJ 472
Janet Landa ‘An exchange economy with legally binding contract: A public choice approach (1976) 10(4) Journal of Economic issues 905-922
Keller v. Crowe [1999] IEHC 25
Mindy Chen-Wishart, Contract law (3rdedn, Oxford University Press 2012)
Trade Electronix Ltd v Best Buy Today (Wholesale) Ltd (In Administration) &Anor [2009] EWCA Civ 828
[1]Anthony T Kronman‘Contract law and distributive justice’ (1979) 89 Yale LJ 472.
[2]Janet Landa ‘An exchange economy with legally binding contract: A public choice approach (1976) 10(4) Journal of Economic issues 905-922.
[3]Mindy Chen-Wishart, Contract law (3rdedn, Oxford University Press 2012).
[4]Alpha State Apparels Ltd v Revenue & Customs [2019] UKFTT 644, (TC)
[5]Trade Electronix Ltd v Best Buy Today (Wholesale) Ltd (In Administration) &Anor [2009] EWCA Civ 828.
[6]Keller v. Crowe [1999] IEHC 25
