May 2007 (Zone A)
When advising Arnold we must first examine if a valid contract exists between him and Bob. For a valid contract to be in existence, it must consist intention to create legal relations, agreement, consideration, and no vitiating factors according to Lord Wilberforce in the Eurymedon. Before we look at whether the contract is formed, a valid agreement must be formed. A valid agreement is a promise of set of promises that is binding by law. An agreement consists of an offer that is followed by an acceptance resulting in (consensus as idem). An offer an expression of willingness to be bound seen in the case of Storer v Manchester city council where there mortgage details were included should always be contrasted from an invitation to treat, an expression of willingness to negotiate seen in Gibson v Manchester city council where precatory words such as ‘may be’ are used. The courts would objectively look at the advertisement in the morning gazette and derive whether it is an offer or invitation to treat and because advertisements, auctions, tenders and display of goods are stereotypically invitations to treat, the advertisement by Arnold would be considered a invitation to treat. Advertisments are also divded into unilateral and bilateral transactions. A Unilateral transaction is an offer of a promise in exchange for an act while a bilateral offer is an exchange of a promise for another promise. Therefore following the case of Patridge v Crittenden, where Lord Land said that advertisements have a ‘business sense’ and would if considered an offer would possibly be contracting with more than the stock that the offeror has. However there exists a contrasting authority, the American case of Leofkovitz v Great Minneapolis store, where the terms in the advertisement were so specific including the amount available that it was found to be an offer. Looking at the facts, we find that the words ‘asking price’ show intent to negotiate and because...
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