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  • Internal Code :
  • Subject Code :
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  • Subject Name : Law

Contract Law

Issue

  • Whether there was a valid agreement between Michael and Ralph and/or Jack?

Rule

  • Australian Contract Law.
  • Common Law.

Acceptance

As per the provided facts and circumstances of the case, the post made my Michael on the webpage forum was not an offer but an invitation to treat. The reason being that, Michael mentioned in the post made on the webpage forum clearly, the sale is reluctant but, he will sell it as soon as possible. This was an invitation to treat rather than an offer. An invitation to treat is technically an offer made to negotiate or to receive offers from the people, as specifically mentioned by Michael in the post. However, there is a difference between an invitation to treat and an offer and the basic difference between an invitation to treat to receive offers and an offer was explained for the first time by the Privy Council in the case of Harvey v Facey.[1]In this case, a telegraph was sent by the plaintiffs to the defendants mentioning “Will you sell us the Bumper Hall Pen? Telegraph lowest cash price”, to which the defendants too replied through a telegraph stating: “Lowest price for Bumper Hall Pen is € 900”. In return to which the plaintiff confirmed via telegraph stating “We agree to buy Bumper Hall Pen for € 900 asked by you”, to which the defendants refused to sell the item on the said price. The court in this case decided that even though the plaintiff asked two questions regarding the willingness to sell and about the price of the item in the first telegraph and the defendant answered with just the price of the item, they had the willingness to not to sell but just answered the enquiry being made by the plaintiff. However, according to the council, the third telegraph was actually an offer to buy the item made by the plaintiff to which the defendant denied. The justification behind this decision given by the council was that mere statement of the price against the inquiry didn’t compel the defendant to sell the item as this doesn’t amount to the formation of any implied contract thus the offer made by the plaintiffs could be denied by the defendants.

If closely observed there is almost same situation here where Michael made the post on the webpage forum mentioning that reasonable offers are considered via email to which Ralph replied and enquired about the price of the car. However, the intention to sell was already made clear by Michael in the forum post itself therefore the only point to be answered was the price of the car against the inquiry made by Ralph, which he did answer to which Ralph replied not to sell the car to anyone else and that he will contact Michael again. The statement so made by Ralph shows a certainty about buying the interest in the deal but is uncertain about the time period during which he will execute the contract. However, he wanted to be sure of his financial stabilities but he could have mentioned the same to Michael so that his intention to buy the car could be of more surety. On the other hand, when Michael commented about selling the car on Jack’s post he made an offer to Jack, to which he replied by commenting about the price and sending an email. Although he made a counter offer followed by a series of negotiations between them to which the final acceptance to sell the car for $ 32,500 to which, Michael agreed unlike the case of Hyde v Wrench,[2]in which the counter proposal made by the defendant about the price of the farm was rejected by the plaintiff but later on agreed under the dame offered price to which then the offeror refused. It was decided in the case that once a counter proposal has been accepted or rejected, the original offer stands to be void and so was applicable here in the case of Michael and Jack where the initial offer of $34,000 was countered by Michael with an amount of $33,000 which was further countered by Jack to a final amount of $32,500 which was finally accepted by Michael.

Although, an additional issue involved in the case study is regarding the validity of such acceptance made by Michael against the offer of Jack and the email from Ralph. According to the Postal Acceptance Rule created in the case of Adam v Lindsell,[3] it was decided by the court that the acceptance would be considered once the mail has been sent from the acceptor and not then, when it will be received by the offeror. So, here once Ralph sent the email on 13 February, the offer to sell the car for $31,000 made by Michael was accepted once he sent the email. Now, the point that Michael read the email after he confirmed his deal with Jack stands void and thus the agreement to sell the car between Michael and Jack stands void and Michael can’t be held liable to sell the car to Jack as a matter of fact that the acceptance made by Ralph was prior to that the acceptance done between Michael and Jack. Also, article 11 of the Electronic Transaction Act 1999,[4] discusses about the formation and validity of contracts and it clearly mentions that the validity or the enforceability of the contract cannot be challenged on the mere ground that a data message was use for the said purpose.

Conclusion

Therefore, after considering all the facts, precedents and legislations mentioned above, it can be evidently concluded that Michael could be held liable by Ralph against not selling the car to him, since the acceptance received by Michael on 13 February from both Ralph and Jack could be considered and are valid but since the previous offer to sell the car was with Ralph, the acceptance made by him would be considered prior to that made by Jack despite of the fact that the agreement with Ralph initiated through invitation to treat and the agreement through Jack was a direct offer made by Michael to sell his car.

References for Contract Law

Cases

Adam v Lindsell (1818) B & Ald 681

Harvey v Facey (1893) AC 552

Hyde v Wrench (1840) 3 Beav 334

Legislations

Electronic Transaction Act 1999 (Cth)

[1] Harvey v Facey (1893) AC 552

[2] Hyde v Wrench (1840) 3 Beav 334

[3] Adam v Lindsell (1818) B & Ald 681

[4] Electronic Transaction Act 1999 (Cth)

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