Essay - Commercial Law
Scenario One
The issue between Brian and Amy is if there was an enforceable contract and if after Brian verbally offered to sell the car for $10,500, was Amy’s response was a mere inquiry or a counter-offer?
While Amy and Brian were negotiating terms a contract was not in place. As per Hyde v Wrench (1840), a counter-offer does not amount to acceptance but is a rejection of the original offer, which then lapses. However, a mere inquiry is not an acceptance or a rejection, therefore the option of either accepting or rejection is still available as per Stevenson, Jacques & Co v McLean (1880).
Amy’s response included ‘but I will need a roadworthy’ indicates that she is only prepared to agree to the terms that are different to Brian’s original offer. To determine if a response is a counter-offer or a mere inquiry a reasonable person test is undertaken. As per Poweiga V Daley (1985) ‘the effect (of the response) on a reasonable person standing in the offeror’s shoes’.
As per the postal rule indicated in Adams V Lindsell (1818), the acceptance of the offer is deemed to have occurred when correspondence is properly posted, not when received by the other party. In Brian and Amy’s scenario, Amy made a counter-offer as soon as she posted a letter to Brian (which negated his original offer of $10,500). In turn, Brian posted his new offer on the same day. As both letters were sent in ignorance of one another’s offers, there can be no acceptance of either offer. With no acceptance, there is no enforceable contract.
As indicated in Tinn V Hoffman & Co (1873), ‘There was no contract. Neither letter amounted to an acceptance because both had been sent in ignorance of the other parties offer and, therefore, could not be an acceptance of it.’
However had the communication been via an instantaneous or near instantaneous method (email or fax), the offer/counter offer/acceptance or refusal is deemed to have occurred at the time of receipt of correspondence, not when it was
The issue between Brian and Amy is if there was an enforceable contract and if after Brian verbally offered to sell the car for $10,500, was Amy’s response was a mere inquiry or a counter-offer?
While Amy and Brian were negotiating terms a contract was not in place. As per Hyde v Wrench (1840), a counter-offer does not amount to acceptance but is a rejection of the original offer, which then lapses. However, a mere inquiry is not an acceptance or a rejection, therefore the option of either accepting or rejection is still available as per Stevenson, Jacques & Co v McLean (1880).
Amy’s response included ‘but I will need a roadworthy’ indicates that she is only prepared to agree to the terms that are different to Brian’s original offer. To determine if a response is a counter-offer or a mere inquiry a reasonable person test is undertaken. As per Poweiga V Daley (1985) ‘the effect (of the response) on a reasonable person standing in the offeror’s shoes’.
As per the postal rule indicated in Adams V Lindsell (1818), the acceptance of the offer is deemed to have occurred when correspondence is properly posted, not when received by the other party. In Brian and Amy’s scenario, Amy made a counter-offer as soon as she posted a letter to Brian (which negated his original offer of $10,500). In turn, Brian posted his new offer on the same day. As both letters were sent in ignorance of one another’s offers, there can be no acceptance of either offer. With no acceptance, there is no enforceable contract.
As indicated in Tinn V Hoffman & Co (1873), ‘There was no contract. Neither letter amounted to an acceptance because both had been sent in ignorance of the other parties offer and, therefore, could not be an acceptance of it.’
However had the communication been via an instantaneous or near instantaneous method (email or fax), the offer/counter offer/acceptance or refusal is deemed to have occurred at the time of receipt of correspondence, not when it was
References: - Hyde v Wrench (1840) - Stevenson, Jacques & Co v McLean (1880) - Poweiga V Daley (1985) - Adams V Lindsell (1818) - Tinn V Hoffman & Co (1873) - Entores Ltd V Miles Far East Corp (1955) - Grainger & Sons V Gough (1896) - Pharmaceuticals Society (GB) V Boots Cash Chemists (1952) - Dickinson V Dodds - Masters V Cameron (1954) - Veivers V Cordingley (1989) - Niesmann V Collingridge (1921) - Geebung Investments Pty Ltd V Varga Group Investments (No 8) Pty Ltd (1995) - Hall V Busst (1960) - Ballas V Theophilos (No 2) (1957) - Commercial Bank of Australia Ltd V GH Dean & Co Pty Ltd (1983)