Principles of Law Certain Elements †Free Samples to Students

Question: Discuss about the Principles of Law Certain Elements. Answer: Introduction: On account of the facts that have been supplied in this problem, the issue raises a valid contract exists between Josie and Sam. The reason behind this issue is that Sam visited Josie's studio and particularly like a painting for sunflowers. The price of the painting was mentioned as $900, but Sam made an offer t purchase it for $700. However Josie said he will not accept anything less than $800. Sam was ready to pay this price, but he asked Josie, if he could hold the painting for some time so that his wife may also approve the decision. Under these circumstances, Josie made an offer to sell the painting at a price of $800, and also agreed that the offer will remain open till midnight on Tuesday. However, on Monday, an art enthusiast visited the studio and offered to purchase the painting for $900. Therefore, Josie, sold the painting to Wendy and left a message at the answering machine of Sam. However, the answering machine was not working for last few days. On Tuesday, Sam finally decided to purchase the painting at the price of $800, and his wife also approved it. Therefore he made a phone call to Josie but the call disconnected before Sam could accept the offer. After one hour, Sam decided to post a letter to Josie in which he had accepted the offer made by Josie. Therefore the issue is if Sam as a legally enforceable contract with Josie. In order to decide the present issue, the principles of the law of contract need to be applied. In this context, it is worth mentioning that there are certain elements that are considered as being essential for the formation of a valid contract. If any of these essential elements is not present, the agreement between the parties is not considered as legally binding. The first such essential element is that of an offer. An offer or a promise of agreement should be present in a valid contract. The reason is that if there is no further, there can be no contract. Therefore, the first essential element is an offer. For the purpose of creating a valid contract, it is very significant that a party to the agreement should have made an offer (Sweeney, OReilly and Coleman, 2013). In order to make an offer, there should be at least two parties to the agreement. However, the law provides that an offer can also be made to world at large. This happened in Carlill v Carbolic Smoke Ball Co (1892), where the offer made by the company was considered to be an offer made to the whole world. In such a case, the offer can be accepted by any person who performs the conditions mentioned in the offer. In this way, and offer can be described as an invitation that has been communicated by one party to the agreement and the other, inviting the party to enter into a legally enforceable contract on the specified terms. In order to be considered as an offer under the contract law, it is required to be established that the offeror intended to bound by the offer (Harvey v Facey, 1893). At the same time, it is also very significant to distinguish an offer from a mere invitation to treat. The reason is that in case of an invitation to treat, offers are invited from the other party. Therefore, while the acceptance of an offer results in the creation of a binding contract, according to law an invitation to treat is not capable of being accepted as it is only an request for offers. An example of an invitation to deal can be given in the form of an advertisement (Graw, 2011). In the same way, the goods that have been displayed in the shops are also an invitation to treat even if a price tag accompanies the goods. The reason is that in such cases, the offer can be made by the buyer, who is willing to buy the goods. Therefore in such a case it is for the trader t o make a decision if he wants to accept the offer or not. This was held in (Pharmaceutical Society v Boots, 1953. On these grounds, the court stated in Fisher v Bell (1961) that the display of flick knives in the shop window along with their price does not amount to the violation of a law, which prohibited the sale of such knifes. Likewise, generally advertisements are also treated to be invitations to treat (Partridge v Crittenden, 1968), however, there can be certain cases where even an advertisement may be considered as an offer (Carlill v Carbolic Smoke Ball co, 1893). In the present case also, the paintings displayed in the studio of Josie, along with their price tag does not amount to an offer, but there will merely an invitation to treat. In this scenario, while making the offer to sell the painting to Sam at a price of $800, Josie had also written that the offer will remain open until Tuesday. However, he sold the painting to Wendy on Monday itself. Under these circumstances, the issue arises if the promise made by Josie to give offer open till Tuesday was legally enforceable or not. In this regard, the law provides that a promise to keep the offer open, cannot be enforced by the other party unless such promise is supported by consideration. In the present case, no consideration was supplied by Sam to support the promise made by Josie that he will not sell the painting till Tuesday. The relevant decision in this regard is that of Dickinson v Dodds (1876). In this case, an offer was made by the defendant to sell his house to the plaintiff. In this regard, the defendant made a promise that the offer will remain open until Friday. However, on Thursday, a third party made an offer to purchase the house and this offer was accepted by the defendant. Then the defendant requested his friend to go and tell the plaintiff that the offer was revoked. After hearing this, the plaintiff brings to the defendant's house on Friday morning with a view to accept the offer. Under these circumstances, plaintiff brought an action against the defendant seeking the specific performance of the contract. However, the court arrived at the conclusion that in this case the offer has been effectively revoked. The result is that no contract has been created between the parties. As a result, the court stated that there was no obligation to present on part of the defendant to keep the offer open until Friday. The reason given by the court in support of this finding was that no consideration has been provided by the claimant in exchange of this promise. Under these circumstances, the law of contract provides that the offeror can withdraw the offer at any time before the offer is accepted by the other party unless consideration h as been provided to keep the offer open (Latimer, 2016). Another issue present in this case is if the postal rule of acceptance is applicable in the present case, and it can be said that the offer needs to be accepted when Sam had posted the letter containing acceptance in the mailbox. As mentioned above, offer and acceptance are considered as the most fundamental parts in contract law on which depends the existence of the contract between the parties. However, the postal rule has been introduced as an exception to the universal rule related offer and acceptance. According to the general rule, the law of contract provides that an offer can be withdrawn at any time prior to its acceptance by the other party. Therefore, the general rule is that acceptance is considered to be communicated when it has been received by the offeror. However, the exception to the general rule is present in the form of the postal rule. In Adams v Lindsell (1818), the court came up with this rule. The question in this case was to decide when was the moment of the formation of the contract by post? As a result of the delay in the communication by post, the parties cannot be aware of the fact if the communication of the acceptance has been made or not. This resulted in a number of problems, a nd hence the court came up with this rule. This rule provides that when post has been contemplative as the means of sending the acceptance, the communication of the acceptance of the offers will be considered to be complete as soon as the letter containing acceptance has been posted. While in case of face-to-face communication, there is no uncertainty regarding the exact moment of the formation of the contract. In the same way, when instantaneous modes of communication have been used, this problem is not present. However in the present case, the postal rule cannot be applied and it cannot be said that the communication of the acceptance of offer made by Josie is complete the moment the letter carrying the acceptance of the offer was placed in the mailbox by Sam. The reason is that in the present case, before Sam could have accepted the offer, the same was withdrawn by Josie. He had already sold the painting to Wendy on Monday itself and left a message for Sam on his answering machine. Although Sam had not heard the message left by Josie, but in the present case, it was not available to Sam to accept the offer made by Josie to purchase the painting at a price of $800 on Tuesday. The reason is that the painting has been sold by Josie on Monday itself. In this question, the issue is if there has been a breach of contract, what other remedies that may be available to the other party. Damages and liquidated claims are the remedies available to an innocent party in the common law for a breach of contract. The damages awarded for a breach of contract and considered as a substitute for performance. As a result, they are intended to place the plaintiff in the same position in which he or she would have been if the contract was properly perform. Generally punitive damages are not awarded. It is also required that the loss should not be too remote from the breach and the non-breaching party should have done everything that we could reasonably do to reduce the damage suffered by it. Liquidated damages are available when there is a clause present in the contract, which provides that a particular amount of money have to be paid in case of a breach of contract, provided such sum does not amount to a penalty. Therefore in such a case the innocent party may claim this liquidated amount instead of the unliquidated damages. Equitable remedies: The main equitable remedies that may be available in case of breach are specific performance and injunctions. The remedy of specific performance can be described as an order directing the breaching party to perform the contract in a particular way. However such an order will be made only if adequate compensation cannot be provided by damages. Similarly, the remedy of specific performance is not available in case of the contracts related with personal service. Similarly, injunctions are the orders that direct the party not to do something, for example not to continue with the breach. It has often been stated that the application of the rule provided in Pinnel's case has resulted in hardships. Therefore, there can be certain circumstances where it may appear to the courts as unfair to apply this rule. For this purpose, it becomes important to examine the rule provided in Pinnel's case and also the impact it has caused on the notion of consideration. Therefore it has to evaluate the troubles associated with the application of this rule, the subsequent exceptions that were developed to deal with these problems and discuss the most important exception to this rule, promising estoppel and how it can solve the problems that may arise as a result of the application of Pinnel's Rule. According to the rule provided in Pinnel's case, it has been mentioned that the payment of a smaller amount does not totally discharged the debt obligation. The reason is that in such a case the promise made by the creditor not to sue for the balance amount is not supported by consideration and consequently, it is not enforceable by the debtor (Re Pinnel's Case, 1602). The court was of the opinion in Pinnels case that the payment of smaller amount on due date as the satisfaction of a larger amount cannot be treated as the satisfaction of the entire debt. However the court said that gifting a horse, hawk or a robe can be good satisfaction. The reason is that in such cases it can be planned that the horse, hawk or robe can be more beneficial for the petitioner as compared to cash. Under certain circumstances or otherwise it would not be accepted by the plaintiff in satisfaction of the debt. It was also stated by the court that the paying and accepting a smaller amount on a date before the specified date mentioned in the original agreement may also be treated as valid consideration, because the early repayment of debt is something more than the required under the original agreement. Sometimes, this rule is also known as the rule stated in Foakes v Beer (1884). Here a judgment was obtained against Foakes for debt and costs. It was settled by Foakes that the debt will be settled by paying 500 pounds and 150 pounds in half yearly installments. On the other hand, Beer, agreed that we will not take further action on the judgment. Ultimately, the amount of the debt was paid by Foakes, but Beer, tried to claim interest on the judgment debt that had accumulated as a result of the statues. Therefore the court stated that interest can be recovered by Beer due to the reason that the payment of a smaller sum cannot be treated as consideration for the assurance that further action will not be taken on the judgment. However, the rule provided in Pinnel's case has faced criticism for many years. These rules allow the creditors to revert on their promise and still assert the remaining amount. For example, in Couldery v Bartrum (1881), Jessel MR has stated that under the common law, a creditor can accept whatever thing as the satisfaction of the debt other than a smaller amount. Therefore, the creditor can accept the horse, a canary but as a result of an strange peculiarity of the common law, he is not allowed to take 19 shillings and 6 pence in the pound. The result is that the rule provided by the court in Pinnel's case has faced much criticism from the judges because it allows the creditor to retract from their promise to discharge the debt and claim the rest of the amount. As a result of this unpopularity of the rule, a number of exceptions were developed to this rule. These exceptions can be described as follows: When the creditor had agreed to allow a lesser amount along with something in kind, it is conceded that the debt is released; The payment of a smaller amount before the due date of the repayment of the debt provides a legally enforceable discharge to the debtor, provided the payment was made at the request of the creditor; Payment of a smaller amount at a different place, or indifferent currency can also act as a legally enforceable discharge if done at the request of the creditor; Any other act that is not required to be done by the debtor under the contract may also result in legally enforceable discharge of the debt; The defense of promissory estoppel As a result of the inconvenience created by this rule, which provided that the part payment of debt is not a valid consideration in return for a promise to forgo the whole debt, resulted in the creation of promissory estoppels doctrine. According to this doctrine, a person is not allowed to go back upon a promise that such person will not enforce strict contractual rights when the promisee had acted by relying on such a promise and will suffer a detriment in the promisor is allowed to go back on the promise. Such a case happened in Central London Property v High Trees (1947). In this case, Central London had let a block of flats in London to High Trees Ltd. During the war, it was difficult to fill all the flats. Therefore, Central London agreed that it will decrease the rent to 1250 pounds during the war. After the war, the building was fully let. Therefore, Central London was successful in claiming the rent at original rate for the last two quarters of 1945. However Dening J stated that if Central London would have claimed the rent at the original rate during 1942 to 1945, it would fail. The reason is that in such a case, it would be estopped from claiming their strict legal right for the full payment of rent by their promise to accept the lesser amount. In this way, although the rule provided in Pinnel's case is correct, but it has this much criticism from the judges. And as a result, several exceptions were developed to the application of this rule. References Graw, Parker, Whitford, Sangkuhl, 2015, Understanding Business Law 7th ed LexisNexis Butterworths Latimer, P, 2016, Australian Business Law CC, 2016 Edition. Stephen Graw, 2011, An Introduction to the Law of Contract, 7th Ed., Thomson Reuters. Sweeney, OReilly Coleman, 2013, Law in Commerce, 5th Ed., LexisNexis. Vermeesch,R B, Lindgren, K E, 2011, Business Law of Australia Butterworths, 12th Edition,. Adams v Lindsell ([1818] 1 B Carlill v Carbolic Smoke Ball co [1893] 1 QB 25 Carlill v Carbolic Smoke Ball Company [1892] EWCA Civ 1 Central London Property Trust Ltd v High Trees House Ltd. (1947) KB 130 Couldery v Bartrum (1881) 19 ChD 394 at 399 Fisher v Bell [1961] 1 QB 394 Foakes v Beer (1884) 9 App Cas 605 Harvey v Facey [1893] UKPC 1 Partridge v Crittenden (1968) 2 All ER 425 Pharmaceutical Society of Great Britain v Boots [1953] 1 QB 401 Pinnel's case (1602) 77 ER 237