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Contract Scenario - Article Example

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Contract Scenario

One of the first requirements in order to a valid contract to exists is that there must be an offer and an acceptance of that offer.1 A contract will be deemed to exist when an offer has been made by one party which has been accepted by the other party for a mutually agreed consideration, and the acceptance has been communicated to the offerer. In this scenario, at the outset, a distinction needs to be made between an offer and an invitation to treat. An offer is an indication of the willingness to contract, with the intent to be bound by it as soon as the offer is accepted, whereas an invitation to treat is when offers are being solicitor which the offeree is then free to accept or receive.
The consideration in this case is the amount of 4000 plus pounds which is the sum payable for receiving the contract in exchange. In the case of Currie v Lisa2 consideration has been defined as "' some right, interest, profit or benefit accruing to one party, or some forebearance, detriment, loss or responsibility given, suffered or undertaken by the other." In this case, the question of consideration can be fairly easily established since Andrea is receiving a sum of cash to compensate her for the detriment she is suffering through the loss of her caravan. Therefore there is scope for formation of contract on the basis of consideration, to show that contracts can be formed, if other terms apply, such as offer and acceptance and the communication of that acceptance.
Andrea has placed the notice about her caravan which states her terms of sale clearly, i.e, the price of 4750 pounds and her telephone number. The first question that arises is whether this in effect, constitutes an offer or whether it is more likely to be considered to be an invitation to treat. Andrea's note on her caravan will not strictly constitute an offer. Merely displaying the goods with a price ticket on them is not an offer; it is only an invitation being extended to potential buyers to make an offer to buy. An invitation to treat, as in an advertisement, is different from an offer in the sense that it does not bind the one making the offer. In the case of Fisher v Bell 3 the display of a flick knife with a price tag in a window was held to be an invitation to treat and not an offer. In PSGB v Boots4 the Court clarified that it is only after the offer is accepted and communicated that a contract will come into being. Hence, Andrea's display of the note on her caravan does not mean that she has is bound to it as soon as her offer is accepted, she is merely inviting potential buyers to make an offer so that she can consider whether or not she wants to accept it.
For a contract to be valid, "there must be a definite offer mirrored by a definite acceptance."5 An acceptance will be said to occur when the offeree's words or conduct can give rise to an objective reference that he/she has assented to the terms offered.6 If the offeree has some queries or tries to change the terms in any way, the original offer, therefore it will be rejected and a counter offer will take its place, based upon the new terms that constitute the counter offer. For example, in the case of Hyde v Wrench7 the plaintiffs sent a telegram to the defendant on the price of the product but the defendants responded with their own offer, which was held to be a counter offer and therefore did not constitute acceptance.
Bernice has contacted Andrea but instead of accepting Andrea's offer, ...Show more

Summary

This Scenario raises the issues of (a) offer and invitation to treat (b) acceptance of offer and communication of acceptance (c) consideration (d) instantaneous communication. These are the issues that must be taken into consideration in assessing whether or not a contract has come into existence…
Author : roelstokes
Contract Scenario essay example
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