Legally Binding Contract - Assignment Example

work Issues The issues to be considered are Whether there is any legally binding contract between Jim and Triumph Trophies 2. Whether there is an enforceable agreement between Jim and Acme Sportswear Company. Rule of Law Contracts that are legally enforceable include several essential features, which could be either implicit or explicit, a promise to supply something or to do something, and agreement and an exchange of money for goods or services. These essential features have been examined and defined by the courts as offer, acceptance and consideration. Scottish law goes a step further, and insists upon the presence of consensus ad idem. This principle assumes the existence of an agreement and mutual understanding betwixt the parties to a contract1. Thus, in Scottish law, there are two important elements related to the formation of contracts. These are first, consensus in idem, and second, the intention of the parties to enter into legal relations. The courts accord considerable significance to these elements. Essentially, the courts are seized with the intention of the parties to enter into a legal relationship. In some cases, the parties used this to prove that they were not in a contract, even though there was consensus2. Consensus in idem implies a meeting of minds. For a contract to exist the offer should be exactly matched by the acceptance. Thus, the parties must be in agreement, regarding all the important features of the contract. As long as there are areas of disagreements between the parties, there is no contract, and the extant state is purely one of negotiation3. This was clearly spelled out in the decision in Harvey v Facey4. The facet of intention must be present in the formation of a contract. It is the determining factor for the validity of the contract, and indicates the moment when the contract is formed. Intention binds the parties to the contract. Thus, invoking the element of intention is very useful in determining the existence of a legally binding agreement between the parties. The intention to form a contract establishes an enforceable contract, irrespective of whether there had been complete consensus among the parties5. Analysis In this problem, Jim had enquired of Triumph Trophies, for a quotation regarding the manufacture of a silver trophy. The latter offered to manufacture the trophy for a sum of £300, and that it would take four weeks. This constitutes an offer from Triumph Trophies to Jim. After 6 weeks, Jim communicated to Triumph Trophies that he was agreeable to Jim’s offer. However, as a considerable time had elapsed and the commodity in question was subject to significant price fluctuations, Jim’s acceptance will be deemed to be delayed acceptance. As per the decision in Wylie and Lochhead v McElroy and Sons6, and Glasgow Steam Shipping Company v Watson7 the time taken by Jim, was unwarranted. Hence, his acceptance is invalid. For the formation of a contract there should be acceptance of an offer, and consensus in idem will be established only if the offer and acceptance coincide. An offer becomes an enforceable contract only when the offeror receives acceptance from the offeree. The acceptance must reach the offeror within a reasonable period of time. In some cases, the offeree can take months to decide whether to accept the offer. In general, the offeree is required to take an expeditious decision with regard to acceptance. The offeror may stipulate the reasonable time to accept his offer8. In the absence of such specification, the reasonable time will depend on the nature of the offer. For instance, if the contract involves commodities that are subject to frequent price fluctuations, then the offeree will have to take a quick decision. This rule also applies to contracts involving perishable goods. In all these cases, the offeree should not make any delay in conveying acceptance9. The courts attach much importance to this aspect of reasonable time, in disputes related to delayed acceptance. On several occasions, it has been observed that the very acts of the parties indicate their intention to form a contract. This was established in a number of cases10. In the Latta v Burns case, the parties contended that there was no legally binding agreement between them. The contention that Heads of Agreement were not legally enforceable was overturned by the fact that these parties had intended to enter into a contract11. The following case law reveals the importance of the elements of consensus in idem and the intention of the parties to form contracts. In Karoulias v Drambuie, it was held that the consensus of the parties was not sufficient, as there was no intention among the parties to form a contract. Thus, an agreement devoid of intention does not become a binding contract12. In Wolf & Wolf v Forfar Potato Co, the defendant Forfar offered to sell potatoes. The plaintiff responded to the offer and sent its acceptance through a telex message with some conditions. Forfar informed Wolf & Wolf over phone that these additional conditions were not acceptable to it. Subsequently, Wolf & Wolf Company sent another telex message to Forfar informing it that it had accepted the original offer13. In this case, the court found that there was no contract between the parties and held that the counter offer had effectively supplanted the original offer. Thus, it was held that there was no contract between these parties and that their actions had indicated that no consensus idem had been reached between them. In Avintair Ltd v Ryder Airline Services Ltd, there was a contract of services between the parties. It was contended that a contract was implied if there was part performance. The court held that there was difference between a contract for services that was yet to be performed and a contract of services that had been performed14. If a party performs his part of a contract, before an agreement had been arrived with regard to remuneration, with the other party, then he is eligible to receive reasonable remuneration. The legal principle Quantum meruit was deemed to have been invoked. Actions under implied contracts are considered as part performance of the contracts15. In Matheson Gee v Quigley, the court held that as the acceptance had failed to meet the terms of the offer, there was no contract as there was no consensus in idem16. In our problem, Triumph Trophies made a new offer to Jim, when he approached them after 6 weeks, whereby they specified the cost of manufacturing the trophy as £375, on account of increase in the cost of silver. In respect of this offer there was no acceptance from Jim. As such, there was no consensus in idem. Therefore, there was no valid contract between Jim and Triumph Trophies. In the second case, Acme Sportswear had offered to provide strips for £900 to Jim. He felt that this was exorbitant and asked Acme Sportswear to reduce the cost to £750. Jim’s response was a counter offer, as his response did not match the offer made by Acme Sportswear. A valid acceptance has to match the offer in every detail. This was the ruling in Howgate Shopping Centre Ltd v GLS 164 Ltd, wherein qualified acceptance was held to be a counter offer17. Acme Sportswear did not accept Jim’s offer. Subsequently, Jim approached Acme Sportswear and agreed to pay £900, as originally quoted them. However, the original offer had been extinguished, due to Jim’s counter offer. Conclusion In our problem, there was no legally binding contract between Triumph Trophies and Jim. As per the case law discussed above, the unwarranted delay caused by Jim in accepting the original offer by Triumphs Trophy made his acceptance invalid. Moreover, Jim did not accept the new offer made by the Triumph Company. Hence, he cannot get the Trophy for the original price as there was no enforceable contract between them. In the second case Jim’s purported acceptance of the offer made by Acme Sportswear is not unqualified, since it had added some other stipulations. As such, this acceptance constituted a counter offer and it supplanted the original offer made by Triumph Trophies. Jim cannot accept the original offer as it had been extinguished. Moreover, Acme Sportswear did not accept the new offer made by Jim, as they had changed the price. Thus, there was no consensus in idem to form a binding contract between Jim and Acme Sportswear. Jim’s belief that he had entered in to a contract with Acne Sportswear Company is incorrect. He cannot make any claim against the Acme Company. Bibliography 1. Books Mitchesl, Barbara and Bond, Tim, Essential law for counselors & Psychotherapists, Sage Publications, 2010 Zimmerman, Reinhard and Whittaker, Simon, Good faith in European contract law, Cambridge University Press, 2000 Black, Gillian, Wolman on contract, Thomas Reuters (Legal) Limited, 2010 2. Websites Black, Gillian, “Formation of Contract: Consensus or Intention?” 18 November 2009, Retrieved 31 October 2010 from http://www.law.ed.ac.uk/centreforcommerciallaw/files/Centre%20for%20Commercial%20law%20files/Gillian%20Black%20-%20Contract%20Formation.pdf Introductory Scots Law: Theory and Practice, retrieved 1 November 2010 from http://www.hoddereducation.co.uk/SiteImages/fe/fe26175f-caa0-44e2-85b5-61ea17a072e1.pdf 3. Table of Cases Avintair Ltd v Ryder Airline Services Ltd (1993) SCLR 576 Glasgow Steam Shipping Company v Watson (1873) 1R189 Harvey v Facey (1893) AC 552 Howgate Shopping Centre Ltd v GLS 164 Ltd (2002) SLT 820 Latta v Burns 20040304 (Unreported) Matheson Gee (Ayrshire) v Quigley (1952) SC (HL) Small v. Fleming (2003) SCLR 647 Wolf & Wolf v Forfar Potato Co (1984) SLT 100 WS Karoulias v The Drambuie Liqueur Company Ltd (2005) SLT 813 Wylie and Lochead v McElroy and Sons (1873) 1 R 41 Read More