Validity of the Contract Importance in Doing Business Essay

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Introduction

The gist of this legal scenario is a determination of whether a valid contract existed between Becky and Andrew before Cameron was sold the lounge suite or if the agreement between them was just an offer to sell which had not been accepted by Andrew. If it was a valid contract the question then becomes if that contract was breached by Becky in the process. Alternatively if it was a mere offer, was the revocation done within the specified time before the offer was accepted as is required by law; to do this it is essential to determine when exactly the law will deem that such contract was revoked by Becky, if it was indeed ever revoked on time.

Relevant laws

As in all contract cases the validity of a contract is one of the essential legal principles that must first be established since a court of law cannot enforce the terms of an invalid contract, neither can there be a breach of contract that was not valid in the first place (Fafinski and Finch, 2009; Yovel, 2008). Once the validity of the contract has been certified the next step will be determination of whether the agreement between Becky and Andrew constituted just a mere offer or if it was a valid contract. This is necessary since determination of whether valid contract existed or if this was just an offer will inform the resulting conclusion; in determining this, the Postal Rule will apply as well.

Discussion

Based on the facts of the case it will appear that the essential elements of a valid contract are present since Becky actions of advertising the lounge suite for sale constitutes an offer that was accepted by Andrew through conduct.

This can be inferred from the wording of the telephone conversation where Becky concludes “Ok then I’ll assume you want to go ahead unless you get back to me before 1 pm Friday” from which we determine an acceptance to have taken place and therefore a valid contract to have taken place, at least until it was expressly not accepted before Friday 1 pm. In any case Andrew by conduct appears to have concurred by this arrangement since he never suggested otherwise after Becky stated the above; in contract law an offer “must be communicated by appropriate words or conduct” (Graw, 2008). In this case communication of acceptance appears to have been by conduct and it appears that as far as the two parties are concerned an agreement has been arrived at since even the final price (consideration) has been agreed upon. Thus, a valid contract was formed between Becky and Andrew since the “two basic steps to a contract” have been met (Turner, 2008; Fafinski, and Finch, 2009).

But the validity of this contract was also subject to another condition of Andrew not avoiding the contract before Friday 1 pm. This condition to the agreement implied that a valid contract existed between the parties until it was revoked within the specified time by Andrew. Consequently, it also meant that Becky was legally bound by that contract until, and if it was revoked by Andrew within the window of the time given. This is because according to law there are two forms of terms in contracts that are legally enforceable; these are implied terms and express terms (LectricLaw.com. 2008); in this case the fact that Andrew is given the option of avoiding the contract before Friday 1 pm constitutes express terms that can be enforced.

Of important to note in this scenario is the fact that it was only Andrew who was permissible under the contractual terms to avoid it within the specified time and not Becky, in any case once an acceptance has taken place a contract cannot be revoked by the offeror. This implies that Becky decision to take a new acceptance while another valid contract was in place constituted a breach of the earlier contract between her and Andrew. The law is very clear on the instances under which an offer can be revoked by the offeror and states “an offer can be revoked anytime before acceptance but revocation must be communicated” and there is no exception to this (Graw, 2008). So on this first analysis, it will appear that Becky did indeed breach the contract that was in every way valid.

This takes us to the second issue of this legal matter, that of Postal rule; this legal principle will not be applicable in this case if a valid contract is determined to have been the case. This is because Postal rule only applies where it is necessary to determine the order in which offer, acceptance and revocation took place as was the in case of Byrne & Co v Van Tienhoven & Co (1880) where the court ruled that revocation cannot be undertaken once an acceptance of an offer has taken place (Graw, 2008).

But determination of whether a valid contract existed or just a mere offer is not a clear cut matter since the law also states that “acceptance must be communicated expressly or implied by conduct; silence or mere mental resolve is not a valid form of acceptance” (Graw, 2008). This legal principle was exemplified in the case of Felthouse v Bindley (1892) where the court held that “silence or no action (mere mental resolve) is not a valid form of acceptance” (Graw, 2008). This also appears to be the case in this matter since Andrew did not expressly concur to this arrangement as suggested by Becky, and there are not enough actions to suggest acceptance by conduct as is required by law where express acceptance is missing (Benzvi, 2009).

This will mean that no acceptance took place and the agreement was merely an offer; it is in this case that the Postal rule will apply.

Conclusion

Based on the circumstances of the case it is almost impossible to determine if the agreement of sale between Becky and Andrew after the telephone conversation constitutes a valid contract or just a mere offer. As we have seen determination of either of these positions will lead to a different ruling and it will appear that there is more evidence to support the latter. Without a clear acceptance from Andrew that was expressly communicated or implied a court will be hesitant in determining existence of a valid contract. This will therefore mean no breach of contract occurred and that Becky acted legally by revoking the contract before it could be accepted.

References

Benzvi, K. 2009. Contract Law 101 (Part IV): Breach of Contract and Remedies. Web.

Fafinski, S. & Finch, E. 2009. Law Express, Contract. London: Longman.

Graw, S. 2008. An Introduction to the Law of Contract. 6th edn. Sydney: Thomson Lawbook Co.

LectricLaw.com. 2008. .

Turner, C. 2008. Australian Commercial Law, 27th edn. Sydney: Thomson Reuters, Yovel, J. 2008. .

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IvyPanda. (2022, April 23). Validity of the Contract Importance in Doing Business. https://ivypanda.com/essays/validity-of-the-contract-importance-in-doing-business/

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"Validity of the Contract Importance in Doing Business." IvyPanda, 23 Apr. 2022, ivypanda.com/essays/validity-of-the-contract-importance-in-doing-business/.

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IvyPanda. (2022) 'Validity of the Contract Importance in Doing Business'. 23 April.

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IvyPanda. 2022. "Validity of the Contract Importance in Doing Business." April 23, 2022. https://ivypanda.com/essays/validity-of-the-contract-importance-in-doing-business/.

1. IvyPanda. "Validity of the Contract Importance in Doing Business." April 23, 2022. https://ivypanda.com/essays/validity-of-the-contract-importance-in-doing-business/.


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IvyPanda. "Validity of the Contract Importance in Doing Business." April 23, 2022. https://ivypanda.com/essays/validity-of-the-contract-importance-in-doing-business/.

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