INTRODUCTION

A legally binding agreement between at least two parties constitutes a contract according to Beatty and Samuelson [2009, p.137][1].

For a contract to be enforceable it must contain certain elements which include; the parties to the contract that is and must be competent according to the law, the subject matter of the contract must be legal, there has to be an offer by one of the parties to the contract, there has to be acceptance by the party to the contract and the finally contract has to have consideration Beatty and Samuelson [2009, p.137][2].

Simon a shop owner dealing with electrical goods ordered twenty coffee machines last Thursday from a wholesaler, the following week on Tuesday he sends a fax to cancel the order after he purchased cheaper coffee machines but the wholesaler had already sent an invoice confirming the order which Simon received the following day on Wednesday.

Simon is dealing with law of contract and to establish the number of contracts we have to evaluate the legality of the agreements he entered into.

NUMBER OF CONTRACTS CREATED BY SIMON

The parties to the contact

As put in Miller and Jentz [2010, p.162][3] for contract to be legally binding the parties to the contract must be competent that is, they have to be of the legal age that is eighteen years and above, they should be sane and not bankrupt.

Simon the shop owner, the seller of the cheap and the wholesalers are of legal age. They are both not bankrupt and insane.  This makes all parties competent according to the law.

Subject matter of the contract

Every contract must have a legal subject matter as put in Beatty and Samuelson (2009, p.137)[4]. This means the goods and services in question should be legal to trade. In this situation both agreements made by Simon the subject matter is the twenty coffee machines.

Offer

Every contract begins with an offer according to Beatty and Samuelson [2009, p.137][5]. The offer permits the parties to establish the terms of the contract and also identify the obligations that must be performed by each of the parties. This is done through bargaining until the parties to the contract reach an agreement on the terms of the contract. According to Beatty and Samuelson [2009, p.137][6] there should be no vagueness in the terms of an offer, they must be definite otherwise that does not constitute an offer.

Simon had made an offer to the wholesaler for the purchase of twenty coffee machines on a Thursday. He also made an offer to the seller of the cheaper coffee machines in the advertisement on Tuesday the following week. This constitutes two legally binding offers.

Acceptance

The mirror image rule of acceptance states that for acceptance to be binding in the law of contract the terms accepted should be the same as the terms in the offer as put in Beatty and Samuelson [2009, p.140][7] . As put in William [2006, p.3][8] any deviation from the terms in the acceptance makes the contract voidable.

In the agreement between Simon and the seller of the cheaper coffee machines there is acceptance because the contract is already executed. When acceptance is done by mail acceptance of the offer is said to have occurred the  moment the mail has been posted as long as that was prescribe means f acceptance between the two parties in the agreement and the mail was correctly addressed as put in Adams v Lindsell [1818][9] . In the agreement between Simon and the wholesaler the acceptance was signified by the letter sent to Simon confirming the order.

Consideration

Consideration in law of contract is anything with value promised to the other party in exchange for goods or services according to Miller and Jentz [2010, p.162][10]. In the agreement with the seller of the cheap coffee machines the consideration had already been paid because it is an executed contact.

In the agreement between Simon and the wholesaler the consideration had not yet been paid because the contract had not been fully performed. Miller and Jentz [2010, p.166][11] argue that a contract where the parties to the contract have not performed all their legal obligations is an executor contract

Simon entered into contracts two contracts. The contract with the seller of cheap coffee machines was already executed on the other hand the agreement between Simon and the wholesaler is legally binding as all the elements of a legally binding contract are satisfied. If the wholesaler agrees to forfeit the agreement then Simon does not have to purchase the twenty coffee machines otherwise he is obligated by law to perform his part of the contract.

Simon has a sign on the inside of his door indicating he will not be liable for any injuries to persons or damage to property occurring in his shop. However all summer he advises his staff to leave the door open to encourage trade, a staff member leaves a pile of books on the floor and a customer is injured and his watch damaged. The customer demanded for compensation and is threatening to sue Simon.

As put in Adams and Adams [2011] [12]the Unfair Contract Terms Act 1977 a defendant is considered to have been negligent if he or she is not careful and his or her actions causes him to  breach his  or her duty of care which results to injury or loss.

When customers visits a store the owners or management should exercise the duty of care from to protect them injury or loss from factors that are in their control.

However exclusion from liability is possible if the injured party was aware of an exclusion clause and this constitutes acceptance of the risk as put in Adams and Adams [2011][13] the Unfair Contract Terms Act 1977 S(3).

In the case of Simon he had advised his staff to leave the door open to encourage trade and the warning sigh was on the inside of his door. The customer was not aware of any exclusion clause because it was not placed in a position visible to persons coming into the shop. Simon is liable for the injury and damage to the wrist watch.

Simon hand placed an advertisement in the local paper for second hand dish washer and the asking price was two hundred dollars. Mary calls and says she will purchase the dish washer at one hundred and eighty dollars and Simon agrees. However before she gets to the shop Simon sells the dishwasher to another customer at two hundred dollars. Mary has threatened to sue.

According to Farlex [2011][14] the covenant of good faith dictates that in a contract for sale of goods even the contract is not in writing the parties to the contract should not breach the terms of the contract. Simon had an implied contract with Mary. Mary has a right to sue Simon because he deliberately breached a binding contract where the terms of sale had been expressly agreed on.

Simon displays a new exciting design of vacuum cleaner that just been released in the market on his shop window.  A customer requests to purchase it but Simon tells the customer he has to wait for the vacuum cleaner to be ordered and vacuum cleaner on display is not for sale. The customer gets angry and threatens to sue Simon.

Kreitner (2009, p.1533)[15] argues that in common to identify breach they would establish if the defendant did something that damaged the plaintiff while today we seek to establish whether the defendant  is blameworthy.

Simon was advertising the vacuum cleaner by displaying it by the window. According to McHale and Pittman [2004, p.3][16] sellers have to ensure they avoid misrepresentation and misleading advertisement. The advertisement by Simon was neither misrepresenting nor misleading so there was no legal obligation regarding the advertisement.

As put in Law school [2011][17] an invitation to treat may appear as an offer but it is an invitation to make an offer. The advertisement is just a mere invitation to treat as put in Law of contract (2011)[18] and does not constitute an offer.

According to Beatty and Samuelson (2009, p.137)[19] an offer is the start of any contract. The advertisement was just an indication by Simon that he was willing to trade and hence there was no breach of contract.

 As put in Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd (1953)[20] the judge held  display of goods in a
store is does not constitute an offer its a mere invitation to treat therefore there was  no breach of contract.

 

 

 

 

 

Reference

Adams and Adams, ‘Unfair Terms – Regulation by statute – Unfair Contract Terms Act 1977and Unfair Terms in Consumer Contract Regulations 1999’ <http://www.e-lawresources.co.uk/Unfair-Terms—Regulation-by-statute.php> [2009] < accessed 9^th May 2011.*

Beatty FJ, & Samuelson SS, Introduction to Business Law [Thompson Corporation, 2009].

B  Mc-Hale, & S Pittman, ‘Advertising Laws and Regulations’ [2004] HBJ [3]

Law of Contract, ‘Invitation to treat vs. offer in contract law’ <http://www.lawofcontract.co.uk/formation/invitation-to-treat.php> [2011] < accessed 9^th May 2011.*

Law school, ‘Invitation to Treat’ <http://www.4lawschool.com/contracts101/invitation.htm>[2011] < accessed 9^th May 2011.*

Moles, N. R. & Sangha, B. ‘Networked Knowledge Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd (1953)’ < http://netk.net.au/LTG/TOC.asp> [2011] < accessed 9^th May 2011.*

Miller LR, & Jentz GA, Fundamental of Business law: Excerpted Cases. [South Western CENGAGE Learning 2010]

Farlex, ‘Implied covenant of good faith and fair dealing’ < http://legal-dictionary.thefreedictionary.com/implied+covenant+of+good+faith+and+fair+dealing> [2011] < accessed 9^th May 2011.*

R Kreitner, ‘Fault at the contract-Tort interference’ Michigan Law Review [United States June 2009] 1533

The Law essay Professional. ‘Adams v Lindsell | Contract Law’<http://www.lawteacher.net/order/?banner_id=4OrderEssayPage> [2011] < accessed 9^th May 2011.*

W William, THE LAW: Relating to Contract of sale of goods. [Elibron Classics 2006]