Agreements rights and responsibilities

To advise Lucas on his legal position is to look at whether any contracts had been formed. Concentrating on the offers and acceptance and to consider if any intention to create legal relations exists.

When an individual has dealings with a business intention to create legal relations is assumed. However when an individual has dealings with another individual intention to create legal relations is not always assumed. However it depends if the arrangements are of a domestic nature (Balfour v. Balfour [1919] 2 KB 571) or of a commercial nature.

The exchanges between Lucas and Oscar would therefore be of a commercial nature and therefore intention to create legal relations is likely to be presumed.

For there to be a valid contract there must be an offer, acceptance and consideration. For there to be a valid offer there must be a meeting of minds -that is an offer must be made so that the other party can accept the offer without the need for any further negotiations. Professor Treitel defines an offer as ‘an expression of willingness to contract on specific terms, made with the intention that it is to become binding as soon as it is accepted by the person to whom it is addressed’. (G. H. Treitel, The Law of Contract, 12th edn, P.9).

A contract does not need to be in any set form (Branca v. Cobarro [1947] 2 All ER101), so a contract can be verbal or written. Furthermore in Smith v. Hughes (1871) LR 6 QB 597 it was determined that an objective test would be applied as to whether a contract had been reached.

Looking at the facts Lucas telephoned his friend Oscar asking if he was interested in buying the football for £800. This would constitute an offer as Oscar would have been able to accept and there would have been a meeting of minds, that is to contract on specific terms, and to become binding as soon as it is accepted. However Oscar says he did not think that the football is worth £800 and offered to pay £700. This constitutes an implied rejection of Lucas's offer and a counter offer from Oscar. The original offer was destroyed by the counter offer (Hyde v. Wrench (1840) 3 Beav 334). The original offer can no longer be accepted.

Subsequently Lucas telephoned Oscar stating that he would not accept less than £750 for the football. As Oscar could not accept that outright without further negotiations it cannot be treated as an offer and following the facts of Harvey v. Facey [1893] AC 552 a statement of minimum selling price is not a legally binding offer, but an invitation to treat (ITT) further defined in Partridge v. Crittenden [1968] 2 All ER 421. There was also a requirement that the reply will be received by 15th January.

Oscar’s letter to Lucas agreeing to pay £750 for the football would be treated as an offer and not an ITT as the offer can be accepted without the need for any further negotiations. The question as to whether that included the cost of delivery would be treated as merely a request for additional information rather than further negotiations (Stevenson, Jacques and Co v. McLean (1880) 5 QBD 346) which also keeps the offer open.

However an offer can be withdrawn at any time before it is accepted (Byrne v. Van Tienhoven (1880) 5 CPD 344), but should be accepted within a reasonable time (Ramsgate Victoria Hotel Ltd v. Monte Fiore 1866 LR 1 Ex 109). However the response to that information could influence whether Oscar proceeded or withdrew the offer. An offer can be withdrawn at any point before it is accepted (Routledge v. Grant (1828) 4 Bing 653) so long as there is no consideration (Mountford v. Scott [1975] 1 All ER 198).

The fact that Oscar posted his offer is not affected by the postal rule as set out in Adams v. Lindsell (1818) 1 B&A 681 as it’s only an offer, only acceptance is effected by the postal rule. Following Household Fire Insurance v. Grant (1879) 4 Ex D 216 the offeror can also displace the postal rule.

Oscar’s letter was posted and received before the deadline given had expired. It only arrived the day before despite being posted some time earlier. This may cast a doubt over whether the letter was posted within the terms of the postal rule (correctly addressed and postage paid).

However as this was merely an offer from Oscar to Lucas it would therefore be up to Lucas whether he would accept or reject the offer. Acceptance would need to be communicated by Lucas (Entores v. Miles Far East Corp. [1955] 2 QB 327) or a third-party to Oscar as this would be a bilateral agreement (between two parties) rather than a unilateral agreement (open to the world at large) which would not need acceptance communicated (Carlill v Carbolic Smoke Ball [1893] 1 QB 256). Silence on the part of Lucas would not indicate acceptance of Oscar's offer (Felthouse v. Bindley (1862) 11 CB (NS) 869).

If Oscar requires that the acceptance be in any particular method (writing, fax, e-mail or telephone) then Oscar could stipulate that in the offer. It is not clear that is the case. Following Yates Building Co. Ltd v. R. J. Pulleyn & Son (York) Ltd (1975) 237 EG 183 any equally effective method will be binding.

Oscar received a telephone call from Gunchit who explains that Lucas had sold the ball. This could be said to have been notification of a rejection of Oscar's offer to purchase the ball communicated by a third person (Powell v. Lee (1908) 99 LT 284).

In Scammell v. Ouston [1941] AC 251 it was found that if the terms are too vague it won’t constitute any form of contract, but this is unlikely in this case.

However should the facts of Harvey v. Facey [1893] AC 552 not be followed then the telephone call could be treated as an offer and the letter posted as acceptance, the post rule applying, then a contract would have been formed.

In this case it is my opinion there is no contact between either parties as no offer has been accepted. There has been several ITT and an offer, but no acceptance.

Lucas saw a tennis racket advertised for sale at a local auction. The sale was to be without reserve. When an individual has dealings with a business intention to create legal relations is assumed.

Section 57 of the Sale of Goods Act 1979 covers sales at auction. The bids at an auction are treated as offers so each new bid or offer destroys the older offer or bid. Section 57(2) sets out that the fall of the hammer performs the acceptance. Section 57(3) refers to with reserve price bidding.

An auction sale with reserve can be withdrawn if the reserve price is not meet. However without reserve must be sold to the highest bidder and it cannot be withdrawn from sale. The advert would be an offer of a promise by the auctioneer to sell to the highest bona fide bidder.

Following Warlow v. Harrison (1859) 1 E & E 309 the advertisement auction will be treated as a unilateral (open to all) offer (a promised in return for an act). In this case to sell the tennis rackets in return for any bid. The auctioneer has bound himself to sell to the highest bidder (without reserve); Lucas by performing a required act i.e. making the highest bid had completed the unilateral contract.

The sale of the tennis racket failed to attract many bids and therefore the auctioneer withdrew it from sale. Consideration does not to be adequate that is it does not have to reflect the real value. Consideration has to be sufficient that is it must be something being capable of amounting to consideration. This was outlined in the case of Chappell & Co. Ltd v. Nestlé Co. Ltd [1960] AC 87.

The auctioneer's actions therefore caused a breach of contract. As Lucas had made the highest bid albeit at a relatively low price. The hammer had not fallen there was no contract for the actual sale of the racket. Lucas would be able to sue the auctioneer for the loss of the opportunity to buy. Lucas would be able to claim for contractual damages, which are to compensate the innocent party for the loss of bargain, which is to put Lucas in a financial position he would have expected to be in should the contract have been performed properly. This was upheld by the Court of Appeal in Barry v. Davies [2000] 1 WLR 1962

The contracts would have been between Lucas and the auctioneer not the owner of the racket as the owner of the racket would not have privity of contract between Lucas and the auctioneer.