Contract Law: A Study of the Tom and Hannah Case

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The analysis has been developed using the IRAC method. On a Monday, Hannah called Tom and expressed interest in buying glasses on condition that they were quite sturdy. In reply, Tom affirmed they were sturdy and so Hannah offered to buy them at £55. Tom emailed Hanna indicating that the best offer would be £60 and if agreeable should collect the glasses from his office. Hanna through a letter wrote to Tom agreeing to buy them at the stated price of £60 hence posted a letter on Tuesday afternoon. Due to a postal strike the letter did not get to Tom till Thursday morning.

Analysis of Relevant Law

The first consideration for Hannah and Tom is to prove that a contract existed between them by looking at the elements of a valid contract as prescribed in English Contract Law. Common law affirms that there are three essential components that lead to the formation of a valid contract namely: (a) agreement (b) consideration and (c) contractual intention (Austen-Baker, 2017). For instance, it is crucial that the parties should react at an agreement and this is when one of the contracting parties makes an offer and the other accepts it (Cartwright, 2014). The requirement is that there be an objective manifestation in terms of intent by an offeror to be bound after an offer has been made by the other party. An offer can be made in an express manner through words or through conduct (Cartwright, 2014). However, it is vital to distinguish between an offer and invitation to treat whereby an individual fail to make an offer although invites the other contracting party to do so (Austen-Baker, 2017). In the case involving Carlill v Carbolic Smoke Ball Company [1893] a medical enterprise advertised its new drug and stated that in the event it failed to cure flu, the buyer would be compensated £100. The Court of Appeal ruled that the advertisement tendered by the defendant consisted of an offer; the intention to be bound was enforceable on the grounds that the advertisers had committed an amount worth £1,000 in the bank. In Partridge v Crittenden [1968] it was ruled that an advertisement consisted of an invitation to treat thus invited negotiations from anyone reading and responding to it. Exemption would be applicable where there are clear words showing intention to be bound and certainty of all the terms; in such case, an advert would not be considered as an invitation to treat. In Harvey v Facey [1893] statement of price is an invitation to treat; however, it would become binding where the shop accepts the price by the customer going to the counter i.e. to pay for the commodity.

On the other hand, acceptance served as an expression to be bound by the terms within the offer; the requirement is that acceptance ought to precisely match the offer including all terms therewith (Rusell and Cohn, 2012). In the case of Tom and Hannah, the acceptance of the offer would be traced where the offer to buy glasses was accepted through an act of sending them to (Hannah). But, acceptance lacks legal effect since it has to be communicated to the other contracting party (offeror). For instance, in the case of postal rule, acceptance takes place at the time a letter of acceptance has been posted notwithstanding where the letter is either lost, destroyed or delayed (Austen-Baker, 2017). Postal rule would not be enforceable if it is expressly excluded in the terms of the offer. For instance, an offer requiring acceptance to be communicated in a given manner can only be accepted in that way. If acceptance takes place through an email, then it would take effect when the other party receives it (Cartwright, 2014).

Common law grounds that in a contract a promise is not enforceable unless it can be supported by consideration (Cartwright, 2014). Consideration takes the form of something of value in order to make the promise binding in law. A good example in the case of Hannah and Tom would be the former making a payment and the latter expected to deliver the glasses on that account. In common law it is required that there be contractual intention; for instance, an agreement which is not supported by legal relations even when there is consideration may not be enforceable or legally binding (Rusell and Cohn, 2012).

In the case involving Adams v Lindsell

[1818] it was noted that a posted acceptance overrides a posted withdrawal in the past that had not yet got to the offeree at the time of posting the acceptance. Secondly, it was noted that acceptance takes effect on posting notwithstanding the letter failing to reach the offeror due to delay. Lastly, a contract occurs when it is posted and takes priority over any other contractual obligation made after positing of the original acceptance. But, the decision in this case would not be applicable where acceptance is expressed through post in responding to an offer tendered through telephone, email or telex. Household Fire Insurance v Grant [1879] also adds insight to postal rule where the court ruled that acceptance is enforceable at the time it is emailed not considering where the letter never arrives to the other party; however, such is as long as the parties expressly considered the post to be the acceptable form of communication. As noted by Lord Justice Thesiger posting acceptance led to a binding contract since it creates meeting of minds. On the contrary, Lord Justice Bramwell had dissented stating that postal rule should only take effect when the letter arrives. The decision held in the case between Quenerduaine v Cole [1883] had the facts that the defendant had made the offer by telegram which led the plaintiff to accept by letter. The issue was whether it was reasonable to use letter to accept the offer yet it had been made using telegram. The held decision was that postal rule failed to apply since an offer tendered through a telegram implied that an equally faster mode of acceptance was required. Also, the decision held in Re London & Northern Bank, EX P. Jones [1990] indicated that postal rule would not apply where a letter posted is inappropriately stamped and based on wrong address. In other words, postal rule would not be applicable as a result of incorrect posting.

Applications of Law

The case of Tom and Hannah refer the decision makers on postal rule principles Foremost, the first instance would be to affirm that the advert by Tom in the local newspaper was an invitation to treat. The court may accuse Tom for not honouring the contract basing on postal rule that whenever a letter is posted that automatically makes the contract binding; here, the court may be persuaded by the decision in Household Fire Insurance v Grant by Lord Thesiger and other supporting law in that whenever a letter is posted as a show of acceptance it becomes binding even if it is delayed for whatever reasons. However, Tom may appeal the decision relying on the decision held in the case involving Quenerduaine v Cole [1883] where existence of a contract was dismissed upon the use of a letter yet a telegram was used to express the offer. The decision was that an equally faster mode of communication should have been considered. In the similar context, Tom would argue that he used email to communicate the offer and Hannah needed not use post to send a letter expressing acceptance. In fact, on this case decision Tom would go free of any charges for breach of contract. Tom may further demonstrate to the court that a valid contract needed to have consideration i.e. at least a payment from Hannah and since this had not been effected made the arrangement between them a voidable contract.

Conclusion

In conclusion, the case between Tom and Hannah would depend so much on how each of the parties proved their affidavits; if Tom failed to convince the court along postal rule and quote the decision in the case of Quenerduaine v Cole then he would be held culpable of acting in breach of contract. In the case where Hannah could convince the court and quote Household Fire Insurance v Grant then she would win the case and have Tom compensate her for acting in breach of contract. Thus, the context of the case would much depend on the manner in which the parties argued it in court. Also, Tom could win the case on grounds that there existed no expressed terms in the forthcoming contract that they would use post as a means of communication; in fact, the use of email and posting of letter were both random and preferred by the parties themselves in communicating to each other. By this the position would be that there are less strengths indicating a breach of contract by Tom towards Hannah. As noted, Tom would defend himself by saying no consideration existed in their contractual process.

Bibliography

Books

Rusell, J. and Cohn, R. 2012. English Contract Law. VLEG Press

Cartwright, J. 2014. Contract Law: An Introduction to the English Law of Contracts for the

Civil Lawyer. A&C Black

Austen-Baker, R. 2017. Implied Terms in English Contract Law. 2nd Edition. Edward Elgar

Publishing

Case Laws

Adams v Lindsell [1818] 1 B & Ald 681

Carlill v Carbolic Smoke Ball Company [1893] 2 QB 256

Harvey v Facey [1893] UKPC 1, [1893] AC 552

Household Fire Insurance v Grant

[1879] 4 Ex D 216

Partridge v Crittenden [1968] 2 All ER 421.

Re London & Northern Bank, EX P. Jones [1990] 1 CH 220

June 16, 2024
Category:

Business Law

Subject area:

Contract Contract Law

Number of pages

6

Number of words

1569

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