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Published: Fri, 02 Feb 2018

An agreement which is enforceable by law

In Gibson v Manchester City Council, [1] ‘the House of Lords examined the language of the correspondence to determine whether there was intention to be bound’. In Storer v Manchester City Council, [2] ‘where the court held that a contract had been concluded where the negotiations had advanced beyond the stage reached in Gibson but had not resulted in an exchange of contract’. A further illustration is provided by the decision in Harvey v Facey. [3] 

In our given problem, the type of contract can be identified as a bilateral contract, where at first we have to identify at what stage the offer was made and by who. As from the fact ‘Spike offered Tom his collection of ‘Tiger Woods’ golf clubs for £1000. He would keep the offer open for 10 days’. ‘An offer can be revoked at any time before in basis of Routledge v Grant’ [4] . In the absence of considered Spike’s promise to keep the offer open could not be enforced.

The general rule is that an acceptance must be unconditional and correspond with the exact terms proposed by the offeror. In the given problem Tom tried to communicate his acceptance by way of an instantaneous method where the general rule is that the acceptance is only validly communicated when it is actually brought to the attention of the offeror. In this fact given scenario it clearly an offer. However, ‘this offer does not take effect unless and until it is actually communicated to Spike but Spike replied that he could not accept less than £1000. He would consider £800’. This can be treated as a counter offer which as a general rule destroys the original offer, Hyde v Wrench. [5] However, it can be argued that Tom reply is counter offer with conditional acceptance, it could well be that the query ‘as recent revelations about ‘Tiger Woods’ love life had tarnished the brand name of the clubs’ is no more than a request for information which proved by Stevenson v Mclean [6] 

‘The courts adopt in deciding whether or not the parties have reached agreement is provided by the case of Butler v Ex-Cell-O Corporation (England) Ltd.’ [7] ‘The general tendency of the court is to consider objectively in order to justify the dispute in front of them’. Professor Atiyah has argued (1995) that the courts could take either ‘reason forwards’ or ‘reasons backwards methods’ in deciding cases. In order to make a contract to be enforced legally by the court we need to identify a valid agreement has been reached unambiguously between the parties of the contract. So between Tom and Spike position of the contract was unclear.

In the view of the above discussion we can say that Tom reply can be treated as counter offer and destroys Spike offer, which expecting acceptance from Spike. The general rule is that acceptance is not effective until it is communicated to the offeror in basis of Felthouse v Bindly [8] . ‘This problem does not specify that Spike accept Tom’s counter offer’. As fact is indicate Spike still stand by his own offer. The fact does not say when Spike promptly sold to Jerry. ‘We can assume that it was made when he would the offer open for ten days for Tom. The general rule is that the offeror may set a time limit for acceptance’ once this time has passed the offer lapses, which proved by Offord v Davies [9] .

In Ramsgate Victoria Hotel Co. Ltd v Montefiore [10] held that, ‘he was not obliged to go through with the purchase of the shares. The company’s response to the defendant’s offer had not been made within a reasonable time’.

When Tom realising that the 10 days were finished and Spike did not communicated with him than he was decided to send a letter for accepting the offer. The letter crossed in the post with a letter from Spike telling Tom that the clubs had been sold.

In Adams v Lindsell [11] held that, ‘the general rule has been that where acceptance is communicated by post the contract is formed as soon as the letter is sent, without need for it ever to reach the offeror’.

In Household Fire and Carriage Accident Insurance Co. Ltd v Grant [12] held that, ‘there to be no binding contract on posting. The postal rule therefore places the risk of loss or delay squarely on the offeror since it follows that the offeror will be bound by a contract despite the non-receipt of an acceptance sent by post’.

The operation of this rule was illustrated by Denning LJ in Entores v. Miles Far East Corp. [13] ‘he said that if an oral acceptance is drowned out by an overflying aircraft, such that the offeror cannot hear the acceptance, then there is no contract unless the acceptor repeats his acceptance once the aircraft has passed over’. Similarly, where two people make a contract by telephone and the line goes ‘dead’ so that the acceptance is incomplete, then the acceptor must telephone the offeror to make sure that he has heard the acceptance. Where, however, the acceptance is made clearly and audibly, but the offeror does not hear what is said, a contract is nevertheless concluded unless the offeror makes clear to the acceptor that he has heard what was said. In the case of instantaneous communication, such as telephone and telex, the acceptance takes place at the moment the acceptance is received by the offeror and at the place at which the offeror happens to be: Brinkibon Ltd v. Stahag Stahl. [14] In Entores Denning LJ ‘recognised that if no-one is at fault (i.e. the offeree believes the message got through and the offer does not know that any message was being sent), then the acceptance will not have been communicated and there will be no contract’.

In above discussion the court will decide whether Spike will bind to continue his contract and Tom legal position. But my submission is that to advice Tom whether or not he has a contract with Spike, it can be said that Spike’s offer to him had become no effect since the stipulated time period was over and Spike was free to make contract with anybody else.

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