MBA 6163 Business Law|
Wan Chin HuiMBA-CUCST/F/12//03/0005(2792 Words)|
Table of Contents
Mrs. Turner has decided to start her own business running a private day nursery. It is necessary for her to find appropriate premises. She sees a detached house, which would be appropriate, on the market for £200.000. After having viewed the property she decides to make a bid for the property for £150,000. The sellers state clearly however that they will only accept £180,000.
Mrs. Turner then sees another property on the market for £250,000. She offers the asking price for this and it is accepted ‘subject to contract.’
However a week later the sellers of the first property contact Mrs. Turner again stating that they have reconsidered are now happy to accept her bid for £150,000.
Your supervisor has requested that you research the relevant issues and compile a report for her attention which, outlines your findings.
Prior to examine whether Mrs Turner has entered into two contracts, we started with the definition of “Contract”. A contract is defined in Section 2(h) of the Contracts Act 1950 as “an agreement enforceable by law.” In other words, a contract is an agreement which is legally binding between the parties. A legally enforceable contract requires: 1. An Offer
2. An Acceptance
3. An intention to Create legal relations
If any of the above is missing, then there is no contract to speak of.
Section 7 of the Contracts Act 1950 states that:
7.In order to convert a proposal into a promise the acceptance must: a. Be absolute and unqualified;
b. Be expressed in some usual and reasonable manner, unless the proposal prescribes the manner in which it is to be accepted. If the proposal prescribes a manner in which it is to be accepted, and the acceptance is not made in that manner, the proposer may, within a reasonable time after the acceptance is communicated to him, insists that his proposal shall be accepted in the prescribed manner, and not otherwise; but, if he fails to do so, he accepts the acceptance.
For the first property (market price of 200,000) that Mrs. Turner had viewed and offered a bid price of £150,000, the seller had rejected the offered and state clearly that they will only accept £180,000. From Contracts Act 1950, acceptance must be absolute and unqualified so that there is complete consensus. If the parties are still negotiating, an agreement is not yet formed. However a week later the sellers of the first property contact Mrs. Turner again stating that they have reconsidered and are now happy to accept her bid for £150,000.
From the case of <<Hyde v Wrench  3 BEAV 344-49 ER 132>>: The defendant offered to sell his estate to the plaintiff on 6 Jun for £1000. On 8 Jun, in reply, the plaintiff made a counter-proposal to purchase at £950. When the defendant refused to accept this offer on 27 June, the plaintiff wrote again that he was prepared to pay the original sum demanded. The court held that no contract existed between them. The plaintiff had rejected the original proposal on 8 Jun so that he was no longer capable of accepting it later.
Draw from the case above, the seller of the first property has no longer capable to accept Mrs Turner bid for £150,000. Mrs. Turner is eligible to view the property again if she suspects there is a hindered defect on that property where cause the seller willing to drop the price after a weeks. Hence, Mrs. Turner may counter-proposal to purchase at a lower price than £150,000.
For the second property (market price of 250,000), Mrs. Turner offered the same bid price of 150,000 and seller accepted the offer but “subject to contract”. Where acceptance is qualified by words such as “subject to contract”, the courts would be inclined to hold in the absence of strong and exceptional...