Rules of proposal and acceptance

This issue involves the rules of proposal and acceptance in the law of contract. In order that, the courts may decide whether a legally binding contract exists, rules have been evolved to help identify an offer by which the offeror is willing to be bound and an unconditional acceptance by the offeree. Where both exist there is sufficient agreement for a legally binding contract to exist. An examination of some of these rules will reveal whether or not James had made a contract with any of the three people involved.

First of all, we have to decided whether the advertisement is an offer or only an invitation to treat. Offer or proposal is necessary for the formation of an agreement. According to Section 2(a) of the Contracts Act 1950 states that when one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other to the act or abstinence, he is said to make a proposal. Promisor or offeror must have declared his readiness to undertake an obligation upon certain terms. However, it is important to distinguish an offer from an invitation to treat. The invitation to treat is in law only an effort to invite people to make an offer. Moreover, an invitation to treat is not capable of being accepted as to form a binding agreement. In addition, in the case of Partridge v. Crittenden, [1] Rooke v. Dawson, [2] and Grainger & Sons v. Gough, [3] those are advertisements of bilateral contracts are held not to be offers. In the case of Partridge v. Crittenden, where wild birds were advertised for sale in a newspaper classified advertisement column. At the end it was held that the advertisement was not an offer but an invitation to treat (Lee Mei Pheng, 2004).

On the other hand, in the case of Carlill v. Carbolic Smoke Ball Co. Ltd., [4] the advertisement of an unilateral contract was held to be an offer. Carbolic Smoke Ball Co. Ltd. advertised that they would offer £1,000 to anyone who still influenza after using a certain remedy for a fixed period. The plaintiff duly used it but, nevertheless, contracted influenza. The plaintiff then sued for the money. The court of appeal held that the plaintiff was entitled to the £1,000 as she accepted the offer made to the world at large (Lee Mei Pheng, 2004).

In this case, James advertised his car Fiat Punto for sale in the Morning Gazette, which is a national newspaper. Thus, in this point of view we can assume that James’s advertisement is an invitation to treat, which means that James is inviting people to make offers and he is not bound by the terms of the advertisement.

Zakaria’s claim to the Fiat Punto can now be considered. According to the circumstances, Zakaria telephones James and told him that he would pay the amount of £55,000 to buy over the car from James. But unfortunately the telephone line stopped working before Zakaria could hear James say, “ I accept your offer". According to Section 2(b) Contract Act 1950 provides that when the person to whom the proposal is made signifies his assent thereto, the proposal is said to have been accepted. A proposal, when accepted, becomes a promise. Also see Section 4(2)(b) Contract Act 1950 provides that the communication of an acceptance is complete as against the acceptor, when it comes to the knowledge of the proposer. In this point, Zakaria didn't have the knowledge from James due to the telephone line break down. However, Zakaria forward a text message to James to confirming his offer but this was misdirected and went to another number. This issue is dealt with in the case of Ignatius v. Bell [5] where it was held that there can still be an agreement because the offeror, though having no knowledge of the acceptance, is bound whilst the acceptor, due to his acceptance had not come to the knowledge of the proposer is not bound(Lee Mei Pheng, 2004). Although there was a postal rule but at the end James didn't receive any text message from Zakaria. The postal rule only take effect at the place where the they are received. Therefore, the court held that there was no contract as the acceptance due to the communication has not been completed. Zakaria has no contract and is not entitle to the Fiat Punto.

The other point to be considered is whether Cynthia is entitled to the Fiat Punto. James offered the Fiat Punto to Cynthia for £55,000 but Cynthia thought about the offer for a few days, which means Cynthia is seeking for more information