Principles of Business Governance

Issue(s)

  • If there are legal consequences of all the communication between the different parties in this case.
  • If Alice has a contractual relationship existing with Susan out of all the communication and letters.
  • If Alice can prohibit Susan from selling the painting to other parties.
  • If Andy Warhorse was not an art dealer and expert but a neighbour met in art opening, will it change the position of the contractual relationship of Alice and Susan in the case.

Rule(s)

Commonwealth Law

Application

Since Susan Hirose has put an advertisement for selling the painting, it is basically an invitation to offer as provided in the case of Pharmaceutical Society (GB) v Boots Cash Chemists (Southern) Ltd. In this case, it was pointed out by the court that the items displayed are an invitation to offer and not the offer itself[1]. Considering the communication between Alice and Susan, Susan counter offered to convey the response for buying the painting with the frame at the original price of $350,000 till June 15 on the offer of Alice to buy the same without frame and reduction of price as well. As provided in the case of Hayden v Wrench[2], the counteroffer is actually equivalent to rejection of the offer and thus lead to no contractual liability as no contract has been bonded by the parties. On the other hand, Alice offered in the letter to buy the painting for $350,000 for frame and painting on June 15 only. Both of their letters reached the other party on 8 June exactly to which none of them further responded. Also, in the case of R v Clarke[3], it has been provided that information which is given in response to offer is not equivalent to acceptance and does it does not form a legally enforceable agreement. Similarly, in the case of Alice and Susan, Alice has provided information but it was in response to the invitation to offer and it does not form a legally enforceable agreement as there is no communication of acceptance as per the rules provided for such contracts. Thus, clearly, there is no acceptance by any of the party but only offer and counter offers and no contractual liability arises out of the whole communication of the two parties of the case, Alice and Susan.

The consensus is basically the concept of "meeting of minds" which provides for the offer and acceptance of the offer on the same terms with no alteration as it will amount to counteroffer and is the rejection of the earlier offer[4]. For the binding of a contract, there must be acceptance of the offer and that must be communicated to the offeror with an intention to have legal relation of contracts[5]. Moreover, Alice wrote a letter but it was not as an acceptance to the letter of counter offer sent by Susan on June 5 as she was not aware of the offer at that time. It has been provided in the case of Henthorn v Fraser[6], the offer is ineffective and cannot be accepted until it has been communicated to the promise and Alice was not aware of that offer till June 8 and thus the letter sent by Alice dies nota mount to the communication of acceptance of such offer. Also, the United Nations convention provided with the assistance of Contracts for the International Sale of Goods that an acceptance which you have modified the earlier offer is actually at the counter offer. As provided in the case of Gibson v Manchester City Council[7], it was clearly provided that if there are two offers which are identical in terms and are made at the same time or they crossed the path of each other in the post will still not create a contractual relation as there was the neither of the offer made by the parties count as an informed acceptance to the other.

On the other hand, as provided by Susan in her letter that she wants to have a reply from the counter offered on June 15. The same has been made by Alice unintentionally and without knowledge as she provided the letter stating that she is accepting the painting along with the frame at the said original price. Susan can have a contractual relationship developed considering the fact that Alice has posted a letter which reached her on June 8 and Susan has demanded for the reply of the letter stating the counter offer till June 15. The case of Adams v Lindsell[8]provided that the rule of acceptance via post is effective from the time it has been posted and not from the time it has been delivered. Alice cannot enforce the contractual relationship legally as she has not acknowledged the letter send to her by Susan in which the counter offer was made by Susan providing the fact that she can have the painting along with the frame at the original price. Thus, there is no consensus ad idem. The reply of the Alice was not acknowledging the letter of Susan sent on June 5 as she was not at all aware of the offer and one who is not aware of the offer cannot effectively communicate the acceptance of that offer and have a contractual relationship with the other party.

Considering the involvement of Andy, the contractual relationship does not get affected by the presence of this art dealer since Alice and Susan are not in any contractual relationship because of lack of proposal and acceptance with consensus ad idem as provided in the facts of the case. The position of the contractual relationship between Susan and Alice would not have altered even if Andy would have been a neighbour only who met in the art opening as it is up to Susan to consider the advice and with no contractual relationship with Alice, she is free to do as per her wish.

Conclusion

The facts of the case suggest that there is no contractual relationship between Alice and Susan since both of them do not agree on the same terms and Alice was not aware of the offer made by Susan at the time of writing to Susan regarding her wish to buy the painting on the original price. The contracts require to have acceptance of an offer once it has been effectively conveyed to the offeree. This clearly provided that an agreement cannot be reached without the effective communication of the offer by the offeror to the offeree. The facts of the case have provided the lack of effective communication with respect to contracts. Also, the role of Andy does not affect the same as there is no legal agreement enforceable between the two of the parties of the case.

References for Principles of Business Governance

Douglas Michael and Loadsman Nichola, "The impact of the Hague Principles on choice of Law in international commercial contracts”, Melbourne Journal of International Law 19, 1, (2018), 1-23.

[1] Pharmaceutical Society (GB) v Boots Cash Chemists (Southern) Ltd [1952].

[2] Hyde v Wrench [1840] EWHC Ch J90.

[3] R v Clarke (1927) 40 CLR 227.

[4] Michael Douglas and Nichola Loadsman, "The impact of the Hague Principles on choice of Law in international commercial contracts”, Melbourne Journal of International Law 19, 1, (2018),

[5] Taylor v Johnson [1983] HCA 5, (1983) 151 CLR; Banks v Williams [1912] NSWStRp 55.

[6] Henthorn v Fraser [1892] 2 Ch 27

[7] Gibson v Manchester City Council [1979] 1 WLR 294

[8] Adams v Lindsell 106 ER 250

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