A contract is an agreement between two or more persons which is enforceable by law. There must be an intention to create legal obligations amongst the parties and the elements of offer, acceptance and consideration. The validity of a contract can be restricted by the capacity of the parties, whether they are of legal age, within the right state of mind, intoxicated or insane and whether they have the ability to understand the terms of the contract itself.
Generally, public advertisements do not constitute an offer merely an invitation to treat (invitation to make an offer) as in Partridge v Crittenden (1968), except in reward cases where an advertisement is specific as to what terms must be fulfilled in order to claim the reward, since there can be no contract where an offer is apparently vague as in Gunthing v Lynn (1831).
In the case Carlill v Carbolic Smoke Ball Company (1893), the Carbolic Smoke Ball Company stipulated in an advertisement that they would reward a sum of one hundred pounds to anyone who used their smoke ball as directed for a specified period and still contracted influenza. The court decided that although the offer was made to the world at large and Mrs Carlill did not give any notification as to her acceptance of the offer, through her actions she fulfilled the stipulated terms, therefore a valid contract existed and she was entitled to the reward.
The case above is an example of a unilateral contract, where the offeror promises something in return for the offeree to perform an act and where the right of communication of acceptance is waived.
Andy’s advertisement placed on Monday in the East Anglia Mail, a local newspaper, was an offer to enter into a unilateral contract. The advertisement was specific as to what terms had to be fulfilled in order to claim the reward. There was no room left for negotiations in that the offeror and the offeree knew exactly what their contractual obligations were.
On Tuesday, Stan found the dog attacking his sheep; he captured it and on Friday brought it to the town of Oldcastle where he was then told about the reward. Although he did not see the advertisement first hand his knowledge of the offer via a third party is valid as in Gibbons v Proctor (1891).
The argument that silence cannot amount to acceptance as in Felthouse v Bindley (1862), does not hold true in a unilateral contract so Stan’s actions could have been considered acceptance of Andy’s offer had he been aware of it, however, acceptance cannot occur unless there is knowledge of the offer as in R v Clarke (1927).
In William v Carwadine (1883) although the plaintiff was aware of the offer it was not the sole reason for her actions in fulfilling the terms but more so to ease her dying conscience, however her acceptance was still valid because she had knowledge of the offer. Therefore although Stan’s motive for capturing the dog was to prevent further attack to his sheep, had he been aware of the offer at the time of capture and completed the contract (returning Cassey to Andy) he would have still been able to claim the reward.
On Thursday, Andy placed a notice in a local shop stating that the reward was no longer on offer.
Revocation of an offer can take place any time before acceptance as in Routledge v Grant (1828) where the offeror withdrew his offer before the time limit he gave offeree to accept expired. In unilateral contracts there is no compulsion placed on the party undertaking the action but it would be unfair if the promiser, was entitled to revoke his offer before the offeree has completed their part of the contract as in Errington v Errington (1953) where the court decided that there is an implied promise not to revoke once performance has commenced.
In this case although communication of acceptance was not required by Bolam he cannot claim the reward because he did not complete the contract. We still need to consider when acceptance actually takes place, If Bolam were to claim that he had already started performance and therefore Andy could not withdraw his offer as in Errington v Errington (1953), Andy can argue that in a unilateral contract (especially reward cases) acceptance takes place upon completion therefore non completion means no acceptance of the offer and he was free to withdraw his offer as in Routledge v Grant (1828).
Whilst an offer may be revoked at any time prior to acceptance, for revocation to be effective it actually has to be received by the offeree as in Byrne v Van Tienhoven (1880) where a letter of revocation sent by the offeror via post could not take effect until received by the offeree. In the case of unilateral contracts made to the world at large the same publicity should be given to the revocation as to the offer, for communication to be effective as in Shuey v United States (1875) where it was held that once the same publicity is given to the revocation as to the offer, the offer is withdrawn regardless of whether or not a particular person sees the notice.
Stan, as we noted previously had no knowledge of the offer until after the revocation notice was posted, therefore the offer did not exist on Friday for acceptance. However, Stan can argue that Andy did not do his best to communicate his withdrawal of the offer to the general public as he advertised the offer in a local newspaper and he attempted to revoke it by only a notice in a local shop.
In a contract, consideration is the price paid for a promise, in unilateral contracts consideration is executed, and the promise of the offeror is only enforceable when the task has actually been completed by the offeree. Additionally consideration cannot be past, it cannot be given or performed before the promise was made but must be given in return for the promise as in Re McArdle 1951 where at the time the promise was made the work that constituted executed consideration had already been completed. Even if Stan’s argument above that the offer was not suitably revoked was successful, Andy can argue that despite the offer being placed on Monday, when Stan captured Cassey on Tuesday he had no knowledge of the offer so consideration was past, as in Fitch vs Snedaker 1868 the offer was not present in his mind at the time of his actions.
In cases involving social, domestic and family arrangements where there is no express statement of whether legal relations were intended the courts apply the rebuttable assumption that family arrangements are not usually intended to be binding, as in Balfour v Balfour (1919) where it was determined that an informal arrangement between a husband and wife who were still together at the time was not intended to be legally binding. This is in contrast to Merritt v Merritt (1970) where based on the circumstances the court inferred that there was intention to create legal relations by the parties and the case of Simpkins v Pays (1955) where it was determined that there was a ‘mutuality in the arrangements between the parties’, resulting in a contract. If Sam was Andy’s younger brother it must be determined if there was intention by both parties to enter into legal relations or if assistance rendered on Sam’s part was meant to be a brotherly act.
A person cannot enter into a contract where performance is impossible. If performance becomes impossible (due to no fault of either party) after the contract has been entered into as in Taylor v Caldwell (1863) where a hall that was rented for a series of concerts was destroyed by fire before the first concert, the parties will be excused from performance owing to the fact that it would be an impossibility. When an offer is dependent on a condition, if the condition is not satisfied the offer is not capable of acceptance as in Financings Ltd v Stimson (1962) where there was an implied condition that the car to be purchased by the defendant would be in a reasonable condition this was not met so the defendant was not bound to take the car.
If the dog dies before he could be returned to Andy the contract would be frustrated, it would be impossible for him to answer to the name Cassey as indicated in the advertisement. Literal performance might still be possible as the dog’s body could be delivered but that it would not fulfill the original intention of the contract. Although this contract would still be frustrated, depending on the cause, time of death and in whose custody the dog was in when he died, Andy may be able to take additional legal action.
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