This case study explores contract formation challenges, including offer, acceptance, and revocation under UK contract law. It highlights legal issues arising from negotiations and effective communication in agreements.
In the diverse field of business and commerce, the processes involving formation of contractual relations seem to be rather complex than the contracts seem to be. The case study of Lola and Gizelle present several negotiation scenarios that demonstrate challenges which by necessity of time occur in agreements with offers and their acceptances. Gizelle offered a Prada black leather handbag for sales with the price of £5,500 or any offer. Lola brought up an offer of £4, 000 which Gizelle declined and set own offer at £4,750. Lola agreed but did not send an email of acceptance until then, Lola accepted on the phone when Lola called Gizelle on Wednesday. Before this call, Gizelle posted a letter that withdraw the offer, which Lola came to receive the following morning. Gizelle declined to sell on the basis of the offer being withdrawn[1]. Lola’s presentation of the exception is thus based on the fact that Lola claims that Lola had taken the offer before revocation occurred. Even though it looks like a plain advertisement where a woman is holding a Prada black leather handbag the ad contains several legal issues worth exploring. Therefore, the issues that can be discussed concerning this case include formation of a contract, being an offer revocation, and effective communication in accordance with the “UK contract laws”.
10 Years | LLB
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Discussion
The main issues between the cases of Lola Gizelle is discussed as follows.
Under the “UK contract law”, the essential requisites to form a contract include offer acceptance, consideration, and the intention to be legally bound as the “Carlill v Carbolic Smoke Ball Company (1983) case”. The advertisement placed by Gizelle on the “Fleet Advertiser” is an invitation to treat and not an invitation to offer as the case of “Partridge v Crittenden (1968)”[3]. Nevertheless, the subsequent negotiation between Gizelle and Lola with the response that Gizelle offers as a counter brings in the intention to create legal relations into play.
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According to the “Contracts Act 1950” and the case law, every offer can be withdrawn before the acceptance of such an offer without entrance of the Contract of the contract is communication with the offer holder. Gizelle sent a revocation letter on Tuesday while Lola received it on Wednesday. Of course, Lola accepted this offer by the phone on Wednesday afternoon before she read the letter. In the case of “Entores Limited Vs Miles Far East Corporation of 1955”, it was decided that the communication of the acceptance is efficient, thus, Lola’s acceptance was valid as it was communicated to Glover prior to the revocation of the offer.
The acceptance was done through the telephone and this was done by informing Gizelle. Although it applies to written communications, it has been regarded that the principle, under the mailbox rule, applies the same to oral communications where passed immediately[4]. In the case of “Brimnes (1975)” the court stated that communication is as effective when received and this means that Lola’s telephone acceptance of the message was valid because Gizelle received it in real time. The “Consumer Contracts Regulations 2013” also make it clear that messages through any instantaneous means allow the formation of a contract where the acceptance is also given.
In the case of “Curries v Misa (1875)”, consideration is another essential element that should be taken into consideration. Payment of four thousand seven hundred fifty pounds by Lola as a matter of consideration since it was for something from which Lola has desired something in return[5]. The last element that meets the consideration requirement is the modification of the offer where Lola varied the offer of four thousand five hundred pounds to four thousand seven hundred fifty pounds, this is true under the pre-existing duty rule in “Stilk v Myrick (1809)” whereby such variation in terms was voluntary.
The following cases of “UK contract law” in support to this argument can be used for the case of Lola and Gizelle. The case laws like “Carlill v Carbolic Smoke Ball Company (1893)", “Partridge v Crittenden (1968)”, and “Entores Ltd v Miles Far East Corporation (1955)” are some evidence that describe the situation under the contract law. There is also additional statutory context comprising the “Contracts (Rights of Third Parties) Act 1999”, the “Electronic Communication Act 2000”, and the “Law of property (Miscellaneous Provisions) Act 1989”. The following sources provide clear example of offer, acceptance, consideration, and contract formation to give a lawful understanding.
Gizelle’s advertisement is essentially an invitation to treat and therefore not to be classified as a contract offer. The subsequent counter-offer of £4,750 by Gizelle constituted a counter-offer which was accepted by the offer or Lola through telephone. In the case of “Entores Ltd v Miles Far East Corporation”, the decision reached. was that acceptance occurs upon communication. It was evidenced that the revocation made by Gizelle was invalid because Lola had already accepted the offer before receipt of the revocation letter.
There is consideration since Lola increased the offer to £4,750 as this was that for which Lola agreed[8]. The following are the basic legal rules which include the “Common Law rule” to offer and acceptance, communication of acceptance and consideration[9]. This complies with the provision of the law that came into force through that requires that consideration must be proper but need not be reasonable.
According to the formation of the contract, Lola agreed to buy the handbag for a certain price and before receiving the revocation from Gizelle, the contract has to be honored so as to avoid breaching contractual terms. If the contract is refused by Gizelle, then Lola can take the legal actions for the damages under the “Sales of Goods Act 1979”.
Conclusion
From the above analysis it is identified that there exist a legal bound for Gizelle for selling the handbag for £4,750 because this contract was done before receiving of the revocation offer from Gizelle. Application of the “UK Contract Law” provides the support. Gizelle also need to meet this contact to avoid any type of legal issues otherwise Gizelle have to face the legal challenges under “Sales of Goods Act 1979”.
Reference List
Journals
Website
“Carlill v Carbolic Smoke Ball Company (1983) case
“Contracts (Rights of Third Parties) Act 1999”
“Partridge v Crittenden (1968)”
“Sales of Goods Act 1979”
“Curries v Misa (1875)”
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