Contracts Essay

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The purpose of the law of contract is to ensure that where an agreement has been made between parties, any and all obligations are met. In the event it cannot be found an agreement was reached, no contract can be argued . In order for there to be an agreement, and therefore an enforceable contract between James (“J”) and Humphrey (“H”) the following elements must be met:

(i)Offer

In order for there to be an enforceable contract at law, there first must be a valid offer. As discussed in Gibson v Manchester City Council, if it can be found that the parties intended to be legally bound upon the acceptance of a proposal, the proposition can be considered an offer. If the parties wish to prove this intention, the offer must be made in ‘clear and unequivocal terms’.

The offer in question relates to the promise to keep the opportunity to purchase J’s property open to H until 1 May. In these particular circumstances, as the promise to keep the offer open is supported by consideration (discussed in paragraph (iii)) it becomes a valid option . This option is in essence a guaranteed opportunity for H to purchase the land.

As found in Henthorn v Fraser , in order for an offer to be effective, it must be communicated to the offeree and received by same. As the letter of offer was sent directly from J to H, this requirement has been met.

The final requisite element relevant to the given facts is discussed in Thornton v Shoe Lane Parking . It was found that the terms of the contract must be stipulated to the offeree at the time the offer is made. As J stipulated within the letter of offer the sale price and the time frame during which the offer would be open to H, the essential terms of the contract were expressed to H at the time of the proposition.

Based on the above, a valid offer was made.

It should also be noted that once this offer is exercised another contract would come into being – the contract for sale of the subject property.
(ii)Acceptance

In order for there to be a valid contract, there must be an unambiguous acceptance of the offer.

As set out in Brinkibon Ltd v Stahag Stahl , in situations where it is reasonably contemplated by the parties, either by implication or expressly, that acceptance will be made by post, the postal acceptance rule applies.

Adams v Lindsell stipulates that in relation to acceptance, when the postal acceptance rule is established, acceptance occurs at the time of posting, not at the time of receipt.

It should also be noted at this time that despite the fact J stipulated a timeframe by which acceptance must be communicated, that does not necessarily exclude the postal acceptance rule. While it is true that Bressan v Squires found if the offeror stipulates that the offer can be accepted by notice in writing on or before a particular date the rule is excluded, reading on it is stated that if the offeror simply states that an offer can be accepted on or before a particular time, and does not further stipulate that a requirement of writing is in force, there are no grounds to exclude the postal acceptance rule.

Due to the fact J simply stipulated that the offer was open until 1 May and made no mention of notice in writing being required, the rule is in force and acceptance is valid and occurred on 29 April, at the time of posting.

(iii)Consideration

Consideration is defined as the benefit obtained or detriment suffered for the promise. All promises supported by consideration are legally enforceable. If it is found that there is no valid consideration, there will be no grounds for a contract at law.

Consideration in these circumstances can be found to be the $10,000.00 in expenses H incurred in the process of obtaining the correct approvals to ensure the premises were able to be used in the manner he had expressed to J.

As found in Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd , it is necessary for...
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