The Rules on Formation of Contracts - Essay Example

Kevin was in business as a motorcycle courier. He had discussed buying a motorcycle from a friend, Jack, and was very pleased when Jack sent him a text message saying that he could have the motorcycle for £2000. The message also said that Jack wanted a reply by 10 am the next day because others were interested. The same evening, Kevin left a message on Jack’s answer phone saying that he would take the motorcycle, and adding, “Does that include the leathers [leather suit]? Obviously, I want the leathers.” Later that night, he heard from another friend that Jack had already sold the motorcycle to someone else. The first thing next morning, Kevin went round to Jack’s house and, as soon as Jack opened the door, told him that he would pay £2000 for the motorcycle alone. Jack said that he already sold it to someone else. Taking into account the rules on formation of contract, consider whether Kevin has any rights and remedies against Jack in connection with his attempts to buy the motorcycle. The formation of a legally binding contract requires a valid offer, a valid acceptance, an intention to create legal obligations and consideration. An offer is a valid offer when it is legal, clear, and communicated to the offeree. It must be clear and without any ambiguities. Acceptance also needs to be properly communicated. The person to whom an offer is made must accept the exact terms of the offer. Once an offer is accepted, it becomes a promise. The parties must have an intention to be legally bound under the terms of their agreement. When an agreement becomes enforceable by law, it becomes a contract. There a must be a consideration for both the parties involved. There must be something for something for both the parties. If these elements are present in the given scenario, the dealing between Kevin and Jack would be regarded as an agreement and, being enforceable by law, a contract. The formation of a contract initiates through an offer which is “an expression of willingness to contract on certain terms, made with the intention that it shall become binding as soon as it is accepted by the person to whom it is addressed”1. In the given case, Jack sent a text message to Kevin in which he offered him a motorcycle for the price of £2000. He communicated his offer to the addressee, Kevin, through a proper mode of communication. Also, there was no ambiguity in his offer since the subject matter was stated clearly. Therefore, Jack made a valid offer to Kevin. Jack had told Kevin that his offer was open for acceptance till 10am on the next day. Kevin sent a reply to Jack in which he accepted Jack’s offer and asked if the price included a leather suit. Kevin had accepted Jack’s offer in the first part of his text message. The second part of his message is a mere inquiry for more information. If Kevin had made an inquiry for more information before communicating his acceptance, then his inquiry would have had an impact on their agreement. Since Kevin made his acceptance within the stipulated time and communicated his acceptance to Jack in a valid mode of communication, Kevin made a valid acceptance. Kevin went to Jack’s house the next morning and informed him personally that he wanted the motorcycle alone. Since Kevin had already accepted Jack’s offer the previous day via text message, his personal was visit was redundant. There was an offer, an acceptance, an intention to create legal obligations and consideration. A legally binding contract had formed between Kevin and Jack and Jack was bound to sell the motorcycle only to Kevin and not to anybody else. There is, however, a little confusion as to whether Kevin’s acceptance is qualified. There is a possibility that the parties are not agreeing to the same thing in the same sense i.e. there is no consensus ad idem. A qualified acceptance is tantamount to a counter-offer which rejects the original offer. If the counter-offer is accepted, a fresh contract is formed and the original offer has nothing to do with it. In Stevenson v McLean (1880), the defendant offered the claimant to sell iron and promised to keep his offer open for a certain time limit. The claimant asked for more information but he did not get a reply. However, he communicated his acceptance within the stipulated time anyway. It was held that a query for more information does not reject the offer. The defendant’s offer was open for acceptance despite the claimant’s query and its acceptance had resulted in a legally binding contract. Therefore, it is better to be suggested that Kevin’s query about the inclusion of leather suit was not a counter-offer and he had already made a valid acceptance. Another important element is the existence of an intention to create legal obligations. If there is no such intention, there is no contract but just a social agreement. In Jones v Padavatton (1968), there was an agreement between a mother and daughter. The mother had promised to support her daughter during her studies if she returned from USA to live in England. The daughter returned and after some time, the mother attempted to back out of the agreement. It was held that it had not been intended to be legally binding, so it was a domestic agreement. In Simpkins v Pays (1955), a landlady and her tenant had intended to be legally bound by jointly entering a competition and share any prize won, it was a contract. In the given case, the parties are friends but Kevin is in the business of motorcycles. It can easily be assumed that Kevin wanted the motorcycle for his business and had an intention to create legal relations. Therefore, the agreement between Kevin and Jack is a contract. There is also a valid consideration in this contract. For Kevin, the consideration is the motorcycle which is real, tangible and is of some value. For Jack, the consideration is £2000 which is also real and of value. According to the law, the consideration is not necessarily required to be adequate. Therefore, it would be a futile debate whether both the considerations were an equal match for each other. Since it has been established that there was a legally binding contract between the two parties, Kevin has legal rights against Jack to enforce the contractual obligations. Jack is in the breach of the contract since he had lost the right to sell the motorcycle to anybody other than Kevin when Kevin made a valid acceptance of the offer. This case has an importance because it touches on the problematic aspects of offer and acceptance. If either of the two is not made in a proper manner, there can be no contract. When they are made in a valid manner, the parties become bound under the contract. The parties are then required by law to fulfill their obligations and same is case with Kevin and Jack. Read More