Law Case Study Wholesome Vegetables Ltd

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INTRODUCTION

A contract has been defined as a legally binding agreement or, in the words of Sir Frederick Pollock: ‘A promise or set of promises which the law will enforce’. However, not all promises or agreements give rise to contracts. According to the case study, Andrew, who works as a salesman at Wholesome Vegetables Ltd, offering to sell Ben 100 bags of potatoes at £10 per bag. At first Ben accepted Andrew’s offer but when he heard the news about a slump in the price of potatoes which has fallen to £7 per bag, he refuses to accept delivery of Andrew’s pricey potatoes. Therefore there are some issues discussed based on this situation. The discussion includes the requirements that must be met for a contract to exist between Andrew and Ben, the legal effect of Andrew’s fax and Ben’s letter and the explanation of Ben’s text message.

QUESTION 1

A contract has many definitions, but one of the simplest definitions for a contract is a “promise enforceable by law” (Michael.H, 2010). The promise may be to do something or to refrain from doing something. The making of a contract requires the mutual assent (agreement) of two or more person, one of them normally making an offer and the other accepting it. If one of the parties (persons) fails to keep his or her promise, the other is entitled to legal recourse against that person. There are seven requirements necessary for a contract to be valid (Riches.S,2009):

1. Agreement
The first requisite of any contract is an agreement. At least two parties are required; one of them, the offeror, makes an offer which the other, the offeree, accepts. In this case, Andrew is the offeror and the offeree is Ben.

2.1 Offer
An offer is an expression of willingness to contract made with an intention that it shall become binding on the offeror as soon as it is accepted by the offeree. A genuine offer is different from what is known as an “invitation to treat”, i.e. where a party is merely inviting offers, which he is then free to accept or reject. The following are examples of invitation to treat: auction, display of goods, advertisements, mere statements of price and tenders. An offer can be terminated by acceptance, rejection, revocation, counter offer, lapse of time, failure of a condition and death.

2.2 Acceptance
Once the presence of a valid offer has been established, the next stage in the information of an agreement is to find an acceptance of that offer. The acceptance must be made while the offer is still open. It must be absolute and unqualified.

2. Consideration
The mere fact of agreement alone does not make a contract. Both parties to the contract must provide consideration if they wish to sue on the contract. This means that each side must promise to give or do something for the other.

3.3 Executory consideration
Consideration is called "executory" where there is an exchange of promises to perform acts in the future, eg a bilateral contract for the supply of goods whereby A promises to deliver goods to B at a future date and B promises to pay on delivery. If A does not deliver them, this is a breach of contract and B can sue. If A delivers the goods his consideration then becomes executed.

3.4 Executed consideration
If one party makes a promise in exchange for an act by the other party, when that act is completed, it is executed consideration, eg in a unilateral contract where A offers £50 reward for the return of her lost handbag, if B finds the bag and returns it, B's consideration is executed. There are some rules governed in consideration. Consideration must not be in the past. If one party voluntarily performs an act, and the other party then makes a promise, the consideration for the promise is said to be in the past. Past consideration is regarded as no consideration at all. Consideration must move from the promise. If A (the promisor) makes a promise to B (the promise), the promise will only be...
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