Business Law The Contractual Relations

Question: Describe about the Business Law for The Contractual Relations. Answer: 1. Issue: Whether contractual relations can be established with any of the three tenders, or not? Rule: A tender, like contract, where one party offers or promises to do something to, which is done by the other party, in exchange for some consideration (Farlex, 2016). Since both tender and contract need an offer and acceptance, similar postal rules apply in both cases. When an offer is made to one party, the other party has to accept the offer, in order to formulate a contract. Such an acceptance has to be communicated and a mere mental decision is not sufficient (Carter, 2011). The general rule regarding acceptance is that when the communication of acceptance is received, only then it is deemed as an acceptance (OBrien, 2007). But the postal rules are an exception to this rule. When the acceptance for any offer is communicated through the post, the date of acceptance is taken as the date of posting of such an acceptance. The postal rules are only applicable in such cases when the post is acknowledged as a means of acceptance. It is irrespective if such post was received by the other party (Latimer, 2012). In the case of Tallerman Co Pty Ltd v Nathan's Merchandise (1957) 98 CLR 93, the judge held that the acceptance by post cannot be justified, unless the offer has reasons to believe that the offer can be accepted by doing such act (Jade, 2016). In the case of Byrne v Van Tienhoven (1880) LR 5 CPD 344, the judges held that the delivery to the post office is to be considered as the delivery to the other party, as the post office acts as an agent for such purposes (Thomson Reuters, 2016). Application: In the given case, the acceptance in three cases has to be analyzed. For Greenland, the acceptance was hand-delivered and so the date of such delivery is the date of acceptance, i.e., May 29. For Enviro, the acceptance was posted on May 15 and hence, this will be the date of acceptance as per the postal rules. For Plan Forever, the acceptance was posted on May 30, and so, this will be the date of acceptance. To consider the contractual position, the acceptance of such tenders by the University has to be considered. Since, the administrative assistance forgot the tender of Enviro, it was the fault on part of University. And so, no contract was formed in this case. The legal tender of Greenland was not considered due to unreliability rumors, but there was no breach of laws. Here also, no contract was formed as the tender was not considered. The University had accepted Plant Forevers tender and this was communicated through post. Applying the case laws here, as Plant Forever had accepted the tender through post, it had reasons to believe that the University would accept their offer through post. Also, as the post office is the agent of Plant Forever in this case, the destruction of post by the postal worker is not the fault of the University. And so, Plant Forever was in breach of a contract, as the contract was awarded to it by the university through the post. Conclusion: From the above analysis, it can be concluded that no contract was formed in the first two cases. But, in the case of Plant Forever, a contract was formed, and there was a breach of contract. So, the university can initiate actions against them for a breach of contract. 2. Issue: Whether there is a legal effect to the communication between Footloose, Famous Footwear and Jamess Shoes that took place between 1 October and 10 October, or not? Rule: A contract is formed when one party offers to do something for the other party and the other party accepts this offer, in exchange of a consideration. An offer is a willingness to enter into a contract, on the basis of certain conditions (Beatty, 2009). An advertisement in the newspaper which indicates the willingness of a person to bargain the terms of a contract is an invitation to treat (Abbott, Pendlebury and Wardman, 2007). In the case of Harvey v Facey [1893] AC 552, the judges held that an indication by the owner of the property, as regards to an interest to sell the property, at some price, is not an offer and is rather an invitation to treat (E-Law Resources, 2016). When the offer is accepted by the party to which the offer is made, it becomes an acceptance. The general rule for acceptance is that the offer has to be accepted as it has been made. If any changes are made in the offer at the time of acceptance, it is deemed as a counter-offer and not an acceptance. In the matter of Hyde v Wrench (1840) Beav 334, the judges held that a counter offer kills the original offer and such original offer cannot be accepted on a future time period (Australian Contract Law, 2014). Once all the elements of a contract, namely offer, acceptance, consideration, intent, capacity, and clarity regarding the terms of a contract, are completed, a contract is formed (Furmston and Tolhurst, 2010). Application: Applying the above rules to the correspondence between Footloose, Famous Footwear and Jamess Shoes that took place between 1 October and 10 October: 1 October: The advertisement in the newspaper was an invitation to treat, as per the case of Harvey v Facey, as it indicated an interest to sell the product at a certain price. Moreover, a particular product was not identified, so clarity was absent. 2 October: As soon as an invitation to treat is accepted by a party, it becomes an offer. And so, this was an offer, as the invitation was accepted by Famous Footwear. 4 October: Here, upon acceptance of an invitation to treat, the offer was made for 2000 pairs by James at a price of $30,000 including GST and delivery. 6 October: Footloose, laid down a counter offer in this case, as it set the price for 2000 pairs at $30,000, excluding delivery. As the terms of this date were different from the date of offer, it will be treated as a counter offer and not an acceptance, as per the Hyde v Wrench case. 8 October: The acceptance of James was received on this date, as they accepted the offer made by Simone on 6th October. But a contract was not formed till this time period, as the clarity regarding the terms of the contract, pertaining to the delivery date was not clear. 10 October: The final terms of the contract were finalized on this day, as the delivery date was agreed to be 1st November. And so, a contract was formed on 10th October, following an invitation to treat, an offer, acceptance and the clarity regarding the terms of the contract. On this day, as the contract was formed, the legal effects were started. This is because until this stage, no legal document was formed and only when a contract is formed, can the legal effects rise regarding the offer, acceptance, consideration and the other terms of the contract. Conclusion: From the above analysis, it can be concluded that the communication that took place between Footloose, Famous Footwear and Jamess Shoes between 1 October and 10 October, covered the aspects of an invitation to treat, an offer, an acceptance and the clarity regarding the terms of a contract. But the actual contract, which gave rise to legal effects, was formed only on the 10th October. And accordingly, this communication gave rise to the legality of the entire ten day communication. 3. Issue: Whether Richard has any claims against Cube, or not? Rule: As highlighted in the previous segments, in order to form a contract, certain elements are to be present. This includes an offer, an acceptance, consideration, intent, capacity, and clarity regarding the terms of a contract. When an offer is made by one party, it has to be accepted by the other party to the contract (McKendrick and Liu, 2015). Offer and acceptance play a key role in a contract. An offer is a clear statement regarding the terms of the contract, which the other party has the option to accept or reject. An offer presents the intention to be contractually bound by the contract, with stated and defined terms, which are communicated to the other party (Paterson, Robertson and Duke 2012). Whether or not the parties have reached the terms of the contract is determined by the objective test, established in the case of Smith v. Hughes (1871) LR 6 QB 597 (Swarb, 2015). In this case, the judges held that in order to determine if a valid offer has been made, instead of viewing the intentions of the parties, the view of a reasonable person in similar situation, should be taken. Moreover, to use the objective test, the two conditions should be satisfied. Firstly, the conduct of the said offering party should be in a manner, which would induce a prudent person in believing that an offer was made to them. Secondly, the party to which the offer was made should have actually believed in the offer and that the offer was a genuine one (Moles and Sangha, 2016). To formulate a valid contract, the contracting parties have to express themselves in such a manner that a reasonable degree of certainty can be determined. And unless, the parties had the same intentions, it would merely be an assumption. In the case of G Scammell and Nephew Ltd v HCJG Ouston [1941] 1 AC 251, it was established by the court that in case the terms are too vague, the contract cannot be enforced (Cooley (UK) LLP, 2010). Application: In the given case study, Richard had a discussion with Cube, who was the chief chemist at Cube, where he acknowledged that the offer made by rival job was not very attractive and proved more to be a hassle. Upon this Warren recognized importance of Richard in the team and that they were eager to continue doing so. This was taken up as an offer by Richard, upon which he rejected the offer of the rival company. Here, to determine if this statement of Warren was an offer, the objective test should be applied. The second condition of the objective test is clearly satisfied, as Richard did believe that this was a valid offer and had rejected the rival companys on basis of this alleged offer of Warren. But when it comes to the first condition, the perception of a reasonable person would have to be applied. When an offer is made, the terms of the offer are clearly stated. Moreover, as was held in the case of G Scammell and Nephew Ltd v HCJG Ouston, if the terms are vague, the contract cannot be enforced. Also, a reasonable degree of certainty is required to establish a contract. Here, the terms of offer were never stated. Moreover, the reply of Warren was very vague and did not conclude any term for a contract. And so, there was no certainty regarding the terms of the contract. Accordingly, a reasonable person in similar circumstances would not deem this reply of Warren as an offer and rather, it would just be treated as a statement. So, this offer fails on the first condition of the objectivity test, and hence, it is not an offer. As no offer was made in this case, there are no grounds available with Richard to initiate any kind of actions against Warren or Cube. Conclusion: From the above analysis, it can be concluded that Richard has no claims against Cube. This is because the statement made by Warren was just a statement and not an offer. This can be established as the statement failed on the first condition of the objectivity test, even though the second condition of this test was satisfied. And as an offer was not made, no contractual obligation could arise. Also, as no offer was made, Richard cannot blame Cube or Warren for his rejection of the rival companys offer, as well as, for the lower paying job that he now has. To summarize, Richard cannot initiate any action against Warren or Cube. References Abbott, K., Pendlebury, N., and Wardman, K. (2007) Business law. 8th ed. London: Thompson Learning, pp. 98-99. Australian Contract Law. (2014) Hyde v Wrench (1840) Beav 334. [Online] Australian Contract Law. Available from: https://www.australiancontractlaw.com/cases/hyde.html [Accessed on: 07/12/16] Beatty, J.F. (2009) Introduction to Business Law: Law, Business law. 3rd ed. Boston: South-Western Cenage Learning. Carter, J.W. (2011) Carter's Guide to Australian Contract Law. 2nd ed. Chastwood, NSW: LexisNexis Butterworth. Cooley (UK) LLP. (2010) Contractual certainty: does Court of Appeal decision signal new approach?. [Online] The In-House Lawyer. Available from: https://theinhouselawyer.co.uk/index.php/contract/8073-contractual-certainty-does-court-of-appeal-decision-signal-new-approach [Accessed on: 07/12/16] E-Law Resources. (2016) Harvey v Facey [1893] AC 552 Privy Council. [Online] E-Law Resources. Available from: https://www.e-lawresources.co.uk/Harvey-v-Facey.php [Accessed on: 07/12/16] Farlex. (2016) Tender. [Online] The Free Dictionary. Available from: https://legal-dictionary.thefreedictionary.com/tender [Accessed on: 07/12/16] Furmston, M., and Tolhurst, G.J. (2010) Contract Formation: Law and Practice. Oxford: Oxford University Press. Jade. (2016) Tallerman and Co Pty Ltd v Nathan's Merchandise (Vic) Pty Ltd [1957] HCA 10; 98 CLR 93. [Online] Jade. Available from: https://jade.io/article/65197 [Accessed on: 07/12/16] Latimer, P. (2012) Australian Business Law 2012. 31st ed. Sydney, NSW: CCH Australia Limited. McKendrick, W., and Liu, Q. (2015) Contract Law: Australian Edition. London: Palgrave Macmillan. Moles, R.N., and Sangha, B. (2016) Contract Law Lecture - Formation of Contract - Offer and Acceptance. [Online] Networked Knowledge. Available from: https://netk.net.au/Contract/02Formation.asp [Accessed on: 07/12/16] OBrien, R. (2007) Analysis of the Postal Rule. Cork Online Law Review, 13, pp. 152-155. Available from: https://corkonlinelawreview.com/editions/2007/COLR%202007%2013%20O'Brien.pdf Paterson, J.M., Robertson, A., and Duke A. (2012) Principles of Contract Law. 4th ed. Pyrmont, NSW :Thomson Reuters (Professional) Australia. Swarb. (2015) Smith v Hughes; QBD 1871. [Online] Swarb. Available from: https://swarb.co.uk/smith-v-hughes-qbd-1871/ [Accessed on: 07/12/16] Thomson Reuters. (2016) Byrne Co. v. Leon Van Tienhoven Co. [Online] Thomson Reuters. Available from: https://legal.thomsonreuters.com.au/product/AU/files/720502512/contract_p1_byrne_v_vantienhoven.pdf [Accessed on: 07/12/16]