Requirement Valid Contract Is An Agreement Essay

Question:

Discuss About The Requirement Valid Contract Is An Agreement?

Answer:

Introducation

Law: the first requirement of valid contract is an agreement, and agreement for this purpose includes offer and acceptance. However, it also includes intention to create legal relations between the parties and consideration.

It must be noted that there are various ways through which offer given by the party can be terminated, and one of the most important way through which offer can be terminated is rejection of offer. It must be noted that once an offer is rejected by the offeree then it is not possible for offeree to accept the offer. There are two forms of rejection that are direct refusal and counter offer. Counter offer means acceptance of offer but on different terms, even though different terms are not material then also counter offer is considered as rejection of old offer. Counter offer is considered as new offer. Therefore, it is important to differ between the counter offer and mere request for further information (Financial ACL, n.d.).

Application: In the present case, valid offer is made by Ben to Ian. After receiving the offer, Ian rejects the offer by stating that he is busy on that day because of some other commitments because of which he is not able to speak in the class of Ben. He further stated that he will inform Ben if any changes occurred in the plan.

Later, Ian send mail to Ben for speaking on 1st June in his class, but it is considered as counter offer because Ian directly refuse the offer made by Ben. Ian communicates his rejection to the Ben, which make the rejection effective. This can be understood through case law Hyde v Wrench, (1840) Beav 334. In this case, court stated that for effective rejection it is necessary that rejection must be communicated, and postal rule does not apply on letters of rejection.

Rejection of original offer stated that there is no valid contract between the parties.

Conclusion: in this case, there is no valid contract between Ian and Ben, and Ian cannot file claim against Ben for breach of contract.

Issue: whether Sharon can file claim against Ben for breach of contract, and whether any defenses can be used by Ben against this claim?

Law: Mistake is considered as complex area of contract law, and any mistake related to the terms of the contract not allowed the parties to terminate the contract, even though such mistake is fundamental in nature (ACL, n.d.).

Sometimes, parties to the contract are under mistaken belief related to the fundamental terms of the contract. This can be understood through case law Smith v Hughes, Court of Queen's Bench [1871] LR 6 QB 597. In this case, court held that there was contract between the parties. In this Court did not consider the difference in subjective intention of the parties that was Smith intended to sell new oats, but Hughes intended to buy old oats.

Discussion in case Smith V Hughes does not provide Proper result. However, similar matter was discussed in case law Taylor v Johnson. In this case, court stated that those parties who entered into contract on the basis of unilateral mistake will be entitled to seek rescission in equity (Make contract voidable) if other party acted in in an unconscionable way.

Application: in this case, both the parties that are Ben and Sharon entered into contract on the basis of unilateral mistake. In this case, contract exists between the parties because Ben hire Sharon for given lecture in the class, and Sharon agreed to give lecture in the class. Difference between subjective intentions is not considered. In case smith v Hughes, Cockburn CJ on the issue of 'consensus ad idem' stated: Defendant intends to buy old oats, but plaintiff intends to sell new oats, which means there was no meeting of minds and there was no contract between the parties. Both the parties agreed to sell and buy particular parcel of the oats, and defendant believe that sample of oats were old, which induce him to buy the oats. Because of this believe defendant fails to present the condition regarding the age of the oats. Therefore, Court stated that minds of the parties were not ad idem on the age of the oats but minds were ad idem on the sale and purchase of oats (ACL, n.d.).

Therefore, contract exists between the parties, and Sharon can claim for breach of contract, but this claim can be defended by Ben by using the defense of unilateral mistake. Under this defense Ben can seek remedies of rescission or rectification, business conduct of the Sharon was also improper as she fails to read the terms of the contract.

Conclusion: in this case, Sharon can claim for breach of contract because contract exists between the parties, but Ben can cancel the contract by using the defense of unilateral mistake.

Issue: Whether Gordon has right to rescind the contract on the basis of misrepresentation, and who has better claim to the car Cheng or Gordon?

Law: misrepresentation is considered as false statement, which is made by representator related to any fact or law for the purpose of induces the representee to enter into contract. Misrepresentation occurs when three essential elements are present:

  • Representation must be related to present or future fact.
  • Representation made by representee must be false.
  • Representee must enter into contract on the basis of such representation.

In case contract entered between the parties is affected from misrepresentation, then innocent party has right to make the contract void. In other words, contract can be set aside by the representee. Usually, availability of remedy is depends on the type of misrepresentation, but generally it includes termination of contract and claim for damages.

It must be noted that right to rescind the contract is not available in some particular situations, such as party loose the right to cancel the contract if third party acquires the right if conract was affirmed by the representee because of lapse of time or restitution in integrum impossible (ACL, n.d.).

Application- in the present case, contract between Gordon and Mary was entered on the basis of misrepresentation, but Gordon cannot rescind the contract because his right to rescind the contract is no more available. His right to cancel the contract is no more available because third party (Cheng) acquires the right in the contract and Gordon fails to take reasonable steps which show that he does not intend to bind with the terms of the contract. This can be understood through case law Car & Universal Credit v Caldwell [1964] 2 WLR 600. In this case, Court held that right of Mr. Caldwell to rescind the contract was available, even though third party acquires the right. Mr. Caldwell took all steps to show that he does not intend to be bound by the terms of the contract.

Therefore, Gordon cannot rescind the contract, but only claim for damages from the Mary.

Conclusion- in this case, Cheng has better claim to the Car, because Gordon’s right to cancel the contract is no more available after the acquisition of rights in the contract by third party (Cheng) and Gordon fails to take reasonable steps which show that he does not intend to bind with the terms of the contra

References:

ACL. Agreement. Viewed at: business-law on 12th September 2017.

ACL. Misleading or Deceptive Conduct. Viewed at: Accessed on 12th September 2017.

ACL. Mistake. Viewed at: Accessed on 12th September 2017.

ACL. Smith v Hughes, Court of Queen's Bench [1871] LR 6 QB 597. Viewed at: Accessed on 12th September 2017.

Car & Universal Credit v Caldwell [1964] 2 WLR 600

Hyde v Wrench, (1840) Beav management.

Smith v Hughes, Court of Queen's Bench [1871] LR 6 QB 597
Taylor v Johnson (1983) 151 CLR 422

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