Replying to a newspaper advertisement to order specific goods by post can be compared with stepping into the unknown. Not only is the customer required to pay for the goods advertised up front, but also an element of good faith is required in order to receive the correct goods ordered. Compared to anyone entering a shop who has the opportunity to inspect & review the goods on show before happily handing over the money to purchase them. This essay will concentrate on a particular purchase of goods between Lisa and M.J. Electrical.
Having advertised a top of the range video recorder in a newspaper, Lisa took up the offer and duly sent a cheque for the money stated in exchange for the video advertised. However, instead of receiving the model advertised, she actually received a model that was not up to the same specification.To advise Lisa as to the best course of action to take it is necessary to examine the Law of Contract. This essay will attempt to examine the various options available, although in doing so the legal implications over the dispute between Lisa and M.J.
Electrical require the relevant rules on formation of contract to be explained to fully assess the situation. Also relevant information on past law cases will be quoted if seen to be relevant to give examples to support them. The reference material used will be stated within the Bibliography, however most of the cases provided for example will have been referenced from the course work notes provided by the Course Tutor Julie Cross.There are four essential, though basic elements to be considered in order to establish formation of contract. Any simple contract must fulfill the following:i. An agreement between both parties,ii. Intention to be legally bound by that agreement,iii. Certainty of terms of agreement,iv.
Consideration provided by each of the parties.In order for any contract to exist one party must make an offer and the other must accept it. The person or group making the offer is known as the offeror and the person or group whom the offer is made is the offeree. An offer may be expressed or implied, Thornton v Shoe Lane Parking Ltd (1971) (1), the customer at the entrance to an automatic car park put money into a machine, which issued a ticket to him, this is deemed as acceptance of the offer.It is important to establish the difference between an offer and an invitation to treat, basically if there is no promise, there is no offer. Gibson v Manchester City Council (1979) (2), A council tenant interested in purchasing their house completed an application form and in turn received a letter from the council stating that it ‘ may be prepared to sell the house to you’ for ï¿½2,180. Mr. Gibson, after ironing out a few queries sent a letter asking the council to ‘carry on with the purchase as per my application.
Following a change in political control of the council in May 1971, it decided to stop selling Council houses to tenants, and Mr. Gibson was duly informed that the council could not proceed with the sale of the house.Mr. Gibson brought legal proceedings claiming that the letter he had received, stating the purchase price was an offer which he had accepted on 18th March 1971. However, the House of Lords, ruled that the Council had not made an offer, the letter giving the purchase price was merely a step in the negotiations for the contract and amounted only to an invitation to treat.
Its purpose was simply to invite the making of a ‘formal application’, amounting to an offer, from the tenant.It is essential that an offer must be communicated before it can be accepted and an offer may be to a particular person or to the world at large. The offer must be clear, complete and final in order for the offer to be contractually bound in the event of a proper acceptance being made. Once the acceptance has been agreed the terms of the offer now become the terms of the contract, made by that acceptance.There are generally two types of offer, known as bilateral and unilateral contract. Bilateral contract requires an acceptance in the form of an unqualified promise to perform according to the terms contained within the offer.
An example of this being an advertisement for specified goods at a certain price, such as those found in a shop window or in the classified section of a newspaper. The other, Unilateral contract requires an act to be performed, e.g. the return of specific lost property.
Carlill v Carbolic Smoke Ball Co (1893) (3), published advertisements stating anyone who used their smoke ball for a specified time and still caught influenza, they would pay that person ï¿½100. Mrs. Carlill bought and used the smokeball as specified but still ending up catching the flu. It was contended that the advertisement could not give rise to a contract, since it was impossible to make a contract with the world, and therefore were not legally bound to pay the money. The court stated that the advertisement did constitute an offer to the world at large, which became a contract when Mrs. Carlill accepted it by using the smokeball and getting flu. She was therefore entitled to the money.
An offer remains open until it’s either:(a) Accepted,(b) Rejected, rejection terminates the offer, as does a counter offer. This was the case in Hyde v Wrench (1846) (4), where the defendant offered to sell his farm for ï¿½1,000, and the plaintiff responded by offering to buy it at ï¿½950 – this is seen as making a counter offer. The farm owner refused to sell at that price and when the plaintiff later tried to accept the offer to buy at ï¿½1,000, it was held that this offer was no longer available; it had been terminated by the counter offer.
(c) Revocation by the offeror, Lapse of time or death of the offeror, the offer may be withdrawn (revoked), even if the offeror has promised to keep the offer open for a specified time. Payne v Cave (1789) (5), Cave made the highest bid for Payne’s goods at an auction sale, however he withdrew his bid before the fall of the hammer. Payne contended that Cave was bound by the sale. The Court of Appeal held that Cave’s bid was an offer and could be revoked before acceptance, i.e. before the fall of the hammer.
There was an effective revocation by Cave.(d) Lapse of time, where the offeror states the offer is only open for a specified time, i.e. it lapses when the time is up.(e) Death of the offeror or the offeror leads to termination especially when the contract is for personal services.Acceptance of an offer requires both parties involved to have reached an absolute and unconditional acceptance of the terms offered by that offer.
It is essential that an acceptance to an offer must be communicated to the offeror, either by word, written or spoken or by conduct. Brogden v Metropolitan Railway (1877) (6), coal was being supplied, without any formal agreement. A formal contract had been made, however was returned with an amendment. The coal was still being supplied even though the supplier tried to claim that the amendment was actually a counter offer, this was held in the Court of Appeal as acceptance by conduct.Where post is used to be the means of communicating acceptance, the acceptance takes effect from the moment the letter of acceptance is properly posted. This rule applies where the acceptance is delayed or lost in the post, as was the case in Adams v Lindsell (1818) (7), where an acceptance letter sent by post was wrongly addressed. This resulted in the wool fleeces being sold to a third party, the court held that a contract was concluded as soon as the acceptance was posted and had therefore breached the contract by selling the wool to a third party.Where there is intention to create legal relations, there is a general rule that a social agreement is not usually legally binding, whilst a business agreement is usually binding.
In the case of Jones v Padavatton (1969) (8), a mother agreed to finance and house her daughter during her studies. Later, after a quarrel the mother went back on her agreement, the matter was held that it was not legally binding as it was regarded as a social or domestic arrangement.Consideration is the final part of any legal agreement to consider. The English law of contract is concerned with the presence of and not the fairness of the bargain.
The law requires that in all contracts other than those by deed, both parties bring something, i.e. provide consideration to the bargain. Consideration must move from the promisee, therefore the person who wants to enforce the promise must have given consideration. In the case between Tweedle v Atkinson (1861) (9), Guy and Tweedle agreed that they would each give a sum of money to Tweedle’s son William, who was about to marry Guy’s daughter.
When Gary died without paying, William sued his executors for the money. His action failed on the grounds that no consideration had moved from him – as he himself had given nothing in return for Gary’s promise. Consideration must be sufficient although it does not have to amount to a great deal. The courts will not inquire as to the adequacy of the consideration so long as there is some.To summarise a legal agreement requires an offer and agreement, an acceptance, intent to create legal relations and the presence of consideration.In relation to the newspaper advertisement placed by M.J.
Electrical selling a Video Recorder for ï¿½280 by mail order, it must be considered whether the advertisement was an offer or an invitation to treat. The offer was communicated when the advertisement ‘offering’ the VX48 Video Recorder for sale at ï¿½280 was read. Also the fact that the offer was placed in a newspaper for anyone ; everyone to read, it could be argued that the video advertised was an offer, similar to that mentioned earlier in the case between Carlill v Carbolic Smoke Ball Co. As the offer was open to the world on a whole then it can be deemed that Lisa had established a Unilateral Contract, upon acceptance.The similarities are very much there between the two cases as the item advertised along with the price ; description can be viewed as an offer that Lisa wished to take up with M.
J. Electrical. A contract was then established when the offer was accepted, ruling out that the advertisement was an offer and not an invitation to treat, refer to the case between Gibson v Manchester City Council (1979), stated earlier. The distinction being that an offer may be accepted so as to become a contract while an invitation to treat may not.So now that it has been recognised that the advertisement was an offer that M.J. Electrical made, Lisa accepted this offer by sending off the cheque for the amount advertised of ï¿½280, hence making the contract.
As explained earlier regarding acceptance by post, the moment the letter/order is properly posted, effectively it can be deemed that acceptance has been made, as was the case explained earlier between Adams v Lindsell (1818). In return for her money she expected to receive the VX48 Video advertised, although the machine that was sent was the VX47 and not the VX48 she actually ordered.The following day she received correspondence indicating that the VX48 was out of stock, also that M.J. Electrical would refund ï¿½50 being the difference between the two machines, although only giving her two weeks to either accept or reject and make her decision. On returning from her two week holiday it became apparent to Lisa that the VX47 did not perform to the same expectations as the VX48, which were stated in the advertisement that she agreed to. Also due to her associate examining the recorder heads, M.
J Electrical stipulated that due to unauthorized examination they reserved the right to accept no liability for the quality of the goods.There are a few points to consider, firstly M.J. Electrical offering the VX47 in the place of the VX48 can be construed as a counter-offer, as was the case in the afore-mentioned case between Hyde v Wrench (1846). As M.J.
Electrical are deemed to have made a counter offer, the original offer and contract that was made initially is now terminated, also as a condition they stated that Lisa only had two weeks to respond to their counter offer. It was pointed out the fact that in any dispute as to the quality of the goods, they reserved the right to repair or replace the goods at its discretion. Finally, accepting no liability for the quality of the goods if any unauthorized repair or inspection of the goods had been made.All these conditions made by M.J. Electrical were in fact part of the counter-offer and as Lisa did not agree to the offer of the replacement model then no contract actually existed between them. The Sale of Goods Act also questions whether the video sent was of satisfactory quality and fit for the purpose it was bought for. The fact that the VX47 sent in replacement, did not produce quality recordings as she expected, evidently M.
J. Electrical broke these terms by sending the VX47 video machine as a replacementIt could be argued that Lisa did in fact consider the counter offer by actually using the VX47 video recorder, as she would not have been able to know whether the machine provided inadequate quality recordings. Although it is apparent she originally ordered the VX48 she understandably would have to view the machine in operation before making her ultimate decision. After doing so it was inevitable that she would respond by rejecting the counter offer, another point highlighted earlier as to the termination of any contract.
In the final analysis it has become apparent that Lisa would be entitled to her money back although M.J. Electrical have already contested this, Lisa would have no option but to take the dispute to the small claims court. However an easier option would be for Lisa to wait until the VX48 Video recorder becomes available again, this may be an inconvenience for the time being but remains the only other alternative. However, if Lisa brings the dispute to the Small Claims Court she could contest that M.J. Electrical did in fact break the conditions of the original contract that she entered in which case would be entitled to a full refund.Furthermore to this she could raise the fact that a breach of contract had taken place, likewise adding that the Sale of Goods Act states the goods must be of satisfactory quality and equally fit for the purpose they were bought for.
The VX47 as proved by the inadequacy to record sufficiently was not.