The Process of Making a Contract - Essay Example

? Offer and Acceptance fer and Acceptance The Process of Making a Contract A contract is said to take place when two parties voluntarily agrees to create a legal obligation in the form of writing or just orally concluded. When two parties signs a contract, they are obliged both morally and lawfully to keep the agreement which is due for compensation in case one side of the agreement fails to honor the agreement as stipulated in the agreement. In that regard, a contract can be defined as a promise or an undertaking that is legally enforceable depending on the agreement of the contact whether something will take place or not (Elliott, and Frances, 1999). Any person who feels that the partner has failed to honor a promise can always seek a legal compensation for the breach. For a contract to occur, there must be other preludes that come in the first place, a contract can only be construed following successful offer advanced by the offeror to the offeree and the offeree responds by agreeing with the terms set by the offeror. The offers made by the offeror to the offeree in most cases are time bound and without communication from the offeree within the specified time, the offeror may consider the offer not considered by the intended person (Elliott, and Frances, 1999). The other important factor in contracts is the mode of communication, if it is determined by the offeror to the offeree, then he/she is bound to use the same means of communication when accepting the offer. If the stated means is not used, then the offeree may not claim breach of contract by the offeror incase there is no response. To understand the formation of a contract in commercial law, it is important that we understand into details the components of what makes a contract enforceable legally. In this reference, we are going to look into details what constitutes an offer and acceptance in the formation of a contract, the distinguishing factor between an offer and invitation to treat with reference to presence or absence of an offer to warrant acceptance communication. Offer It is normally made by the offeror to the offeree, it stipulates the terms of the contract and in this sense, the recipient who is the offeree should examine all the factors relating to the terms of the offer and make a judgment to accept or not (Emerson, 2004). Once the offerer has made the acceptance, the contract becomes legally binding. This states that any breach of the terms from the either parties can be determined in the court of law for compensation. Offer can be made orally, faxed, emailed, or written and sometimes the offeror may insist on specific means of communication to be used by the offeror when making return communication. This must be adhered to and in the case of non-compliance and the offeree uses another means, contract is said not to have occurred (Emerson, 2004). Invitation to treat is sometimes confused for offer; it simply denotes the willingness of an individual to negotiate a contract with an interested party. Circumstances under which invitation to treat are considered includes, auctions, exhibitions, window displays, and advertisements (Keenan, Denis, and Sarah, 2007). They do not form part of a contract since they are not considered as offer. After the communication of an offer to the intended recipient, the offeree is expected to internalize the offer before making acceptance. The offer should be accepted by the offeree as it reads and any alteration on the offer will be considered counter attack on the offer and kills the spirit of the offer in culminating into a contract. If the offeree considers any change of the terms as communicated by the offeror, they should make up for an add which along with the unaltered initial offer should be communicated to the offeror for consideration (Keenan, Denis, and Sarah, 2007). It is important to note that the communication of the offer can be revoked before the offeree makes the acceptance. This communication will have to be addressed to the offeree individually depending on the initial form of communication. For instance, if the initial offer was made worldwide through general means of communication, then it will follow that the cancelation of the offer can be made via the same means without breaching any contract. Acceptance It can be defined as the final assent that the offeree advance towards the offer made by the offeror. The communication of acceptance informs the offeror that the content of the offer has been read and construed (McKendrick, 2007). It also further declares that the offeree has yielded to the terms stipulated and is willing to enter into a contract with the offeror in the current state of the offer and that legal action be taken in case the contract is breached by either party. When communicating the acceptance to the offeror, the offeree should take note of some of the important factors about the offer; the offer should not be modified in any way and should only be accepted in its current state. This is to mean that even if the offeror bothers not to read the acceptance and that it contains altered information, the clause inserted will not be legally binding in case it is contested. The offeree should also take not of the means of communication prescribed by the offeror. This is important since if the communication of acceptance is made in any other means, it may not be drawn to the attention of the offeror while the offeree may be assuming that it is considered for contract. Even if the mode of communication is not specified by the offeror, it is prudent that the offeree considers using the means used to communicate the offer while making the acceptance (Willmott, Lindy, and Sharon, 2005). The last and the most important factor to be considered in this case is time, normally in the offer, there is a period given by the offeror within which he/she expects the acceptance communication to be made, any communication made outside this time bracket is considered null and void before the law. Once the acceptance communication is made and reaches the offeror, the contract become legal and enforceable before the law in case of a breach by any of the parties involved. It is important to note that silence cannot be construed for acceptance and that no one is responsible for accepting an offer on behalf of the other without express authority of the intended person, any communication to that effect will be considered null and void (Wishart, 2005). Advice as to Whether Di has made a Binding Contract Whether Di made a binding contract between her and the two clients can only be ascertained by carefully examining the chronology of the events and the communication she made with the service providers in the context of offer and acceptance. The two contracts will be looked into independent and a decision made as to whether the contract was binding legally or not. A contract will only exist between the two is there is a valid offer followed by a valid acceptance. Anything short of this will not be treated as a binding contract and will not be legally enforceable. Di Engagaement with Whizzo Following Di communication with the director of Whizzo there is no binding communication that was reached. This is because in the conversation, Di considered another company and realized that the actual cost of doing the work in the company is more than what is being offered by Whizzo. In the meantime, he did not communicate any position to Whizzo who in the first place gave an ultimatum of one week given the cost he offered Di. Within the week Di made a call that was not answered and left a message for Whizzo about the consent to seal the deal but in a short while, Di make another call which is now received by the receptionist. Di is informed the message he left has not been read by the expected recipient and that he will soon read it. In this call, Di terminates the contract. Legal Interpretation of the Communication Whizzo made an offer to Di that would last a week for a certain price (?3,000), Di was then to make an Acceptance communication which must have reached the targeted recipient for the contract to be sealed. Before the acceptance communication could reach the recipient for the contract to be considered sealed, Di terminates the acceptance. This interprets that there was no binding agreement reached in this case and no one is liable for breach of contract. This is a perfect case of an offeree cancelling an offer before the acceptance communication is received. The situation would have been different if the recipient (offeror) had read the acceptance communication and prepared to act on the delivery of the said services. Just as the offeror has the potential of cancelling an offer, the offeree equally enjoys the same privilege. An offer can be regarded as terminated by the offeree is the acceptance communication was time bound and no communication has been realized until the time lapsed. Termination can also be construed for other reasons known by the offeree and this is the situation in this case. Consideration of the ivitation to treat can always be mistaken for an offer but it should be noted that they are not legally binding since there is no offer given in such cases. Di engagement with EasyWidget There was no any binding contract between Di and the service provider EasyWidget, this is because in the first place DI did not consider an offer from the company’s representative. It was an invitation to treat, the information Di considered in the first place was in the form of advert, which does not qualify to be an offer. An invitation to treat simply denotes the willingness of a person to take part in a negotiated contract. In some cases it can be considered to be a precursor to an offer but cannot be used interchangeably to mean an offer in the legal view of low of contract. In the communication between Di and EasyWidget, the cost of the service went up during the discussion and Di decided to withdraw from sealing the contract. In the first place, there was no offer and when offer was made; Di did not make the acceptance hence making the contract not binding. This argument is hinged on the premise that there must be an offer from the offeror and a corresponding acceptance from the offeree. Failure of this to happen will be considered no binding contract reached. Example of the Case Law Gibson v Manchester City Council This was an English contract law in which there was an assertion by the House of Lords a contract can only exist if there was a prior unequivocal offer complimented by another unequivocal acceptance. In the case, Manchester City Council was in the management of the Conservative party which was then engaged in selling to the occupant the council houses. In 1971, Mr Gibson made application for the house details and the terms stipulated by the mortgage in a form issued by the council. The council on the other hand made the communication that they will be prepared to make the sales of the house at ?2,725 with a 20 % less reducing the initial price to ?2,180 (Beale and Denis, 2002). They also asserted that the letter was not to be considered a mortgage offer and that any interested party in purchasing the house should fill the application form and submit it back in the earliest opportunity possible. Gibson complied and believed he secured the building. Unfortunately, when Labour party ascended to power, they revoked the provisions citing no legal binding in the contract and asked Gibson to halt remitting the payments meant to complete the cost of the building. Gibson then went ahead and sued the council for breaching a contract he believed was legally binding. In the determination of the case, the House of Lords determined that there was no binding contract and Gibson lost the suit on grounds that even the council’s communication read in extract….’the council may be prepared to allocate the house’ (Beale and Denis, 2002). References Beale, H. G., and Denis Tallon. Contract law. Oxford [England: Hart Pub., 2002. Elliott, Catherine, and Frances Quinn. Contract law. 2nd ed. Harlow: Longman, 1999. Emerson, Robert W.. Business law. 4th ed. Hauppauge, N.Y.: Barron's, 2004. Keenan, Denis J., and Sarah Riches. Business law. 8th ed. Harlow: Pearson Longman, 2007. McKendrick, Ewan. Contract law. 7th ed. Basingstoke: Palgrave Macmillan, 2007. Willmott, Lindy, and Sharon Christensen. Contract law. 2nd ed. South Melbourne, Victoria, Australia: Oxford University Press, 2005. Wishart, Mindy. Contract law. Oxford [UK: Oxford University Press, 2005. 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