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Contract law - Coursework Example

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In order to determine whether there was a valid legal contract between Mr. Spike and Mr. Tom and to best advice the parties it is necessary to discuss the above mentioned essential elements for formation of a contract and how the presence of each element is achieved. An offer has been defined as an expression of willingness by one party known as the offeror, to contract or be bound on stated terms, provided that such terms are accepted by the party to whom the offer is made that is the offeree. The courts have drawn a distinction between an offer and an invitation to treat, as the latter is merely an expression of willingness by one party to enter into negotiations and is not unconditional and there is a lack of intention to create legal relations. The most important and land mark cases which distinguished between an offer and invitation to treat are of Gibson v Manchester City Council1 and Storer v Manchester City Council2. In Gibson, where treasurer had sent a letter to Mr. Gibson, stating that council may be prepared to sell the house, was held to be an invitation to treat, which was further confirmed by the fact that Mr. Gibson was asked to make a formal application to purchase the house. The courts therefore took into account the correspondence between the parties. However, in Storer the courts found that a contract had come into existence as negotiations had moved beyond what had happened in Gibson but an exchange of contracts had not taken place. These cases clearly point out that fact that judges can interpret and differ in the results and so the decision would be said to be based on its own facts. The next step is that of acceptance. The general rule for the acceptance of an offer is that the offer should be accepted unconditionally and must be communicated to the offeror. (Holwell Securities v. Hughes3). However there are certain exception to this general rule and one of them is the infamous postal rule. The postal rule states that when an acceptance is sent by means of a post, it takes place as soon as the letter is validly posted. (Adams v. Lindsell), furthermore Instanta Instantaneous modes of communication has lately been scrutinized by the courts (Lord Wilberforce in Brinkibon Ltd. v Stahag Stahl GmbH), however the problem of when acceptance is effective has clearly not been addressed and still lies in an area of uncertainty.neous modes of communication has lately been scrutinized by the courts (Lord Wilberforce in Brinkibon Ltd. v Stahag Stahl GmbH), however the problem of when acceptance is effective has clearly not been addressed and still lies in an area of uncertainty, however it is a settled law that a communication made through instant mode of communication is deemed effective if it is despatched and received during working hours i.e if a fax is sent on Sunday evening it will only deemed to be effectively communicated on Monday morning, when office working hours start. Acceptance must be looked into carefully, as the fact that it must be unconditional is strict and so if new terms and conditions are introduced that would not be acceptance and would merely be a counter offer, which can then be accepted by the original offeror, who now becomes the offeree as in (Hyde v Wrench)4 in which the defendant offered to sell some land to the claimant for $1000 and the claimant replied with an offer of ...Show more


Law of Contract This question pertains to the basic formation of contract and focuses most importantly on the postal rule, law in respect of instant communication devices and whether the contract in this particular case was breached. The formation of contracts and its legal effectiveness is a subject which has been critically reviewed in case law and statutes…
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Contract law essay example
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