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Published: Fri, 02 Feb 2018

The creation of a legally binding contract

The most important issue on this scenario is based around contract law. The current situation of Julie and Ron brings rise many important legal issues. The most important questions are whether there are all key requirements for the creation of a legally binding contract and are both parties bound by a legally enforceable contract? From this point of view, Ron and Julie are in tricky situation, because it can be explored from various viewpoints. Initially it can be argued that Ron and Julie have no contract because there has been no offer. In order for a contract to be proper and legally enforceable it must have the following key elements: offer, acceptance, consideration, intention to create the legal relation and certainty. To addition to this it’s very difficult to evaluate whether this type offer and acceptance and can create legally binding consequences or lack of certainty can lead to enforceable contract. The general rule is that, if the terms of an agreement are so vague or indefinite that it can’t be ascertained with reasonable certainty what is the intention of the parties, there’s no contract enforceable at law. I will look at each of these elements and the arguments surrounding them in relation to the Ron and Julie scenario.

Offer – “An expression of willingness to contract on certain terms, made with the intention that it shall become binding as soon as it is accepted by the person to whom it is addressed” Offer is one of the most important contract terms: one party makes an offer for an arrangement that another accepts.

Acceptance of an offer means unconditional agreement to all the terms of that offer or a final and unqualified expression of assent to the terms of offer. Acceptance will often be oral or in writing, but in some cases offeree may accept an offer by doing something (From our scenario Acceptance can be identified as Ron answering these questions to fulfill the game obligations or Julies performance answering all quiz questions to participate in quiz game). In our scenario I can identify two types of acceptance. The first one is Ron when he decided to participate in this type of survey to win the game. His acceptance was expressed orally and clearly. The second one is more complicated because of Julie status. Julie decided participate in quiz game during promotional event, from one point of view, her acceptation was trying to answer all questions or by doing performance. According to Sally, who is trying to convince that Julie wasn’t invited to this party so her acceptance is mere puff. From the reasonable point of view, Sally verbally expressed that the quiz game is for people who are here. It characterizes Sally as legally equal quiz player. In Brogden v Metropolitan Railway Company case Lord Blackburn pointed out that: “I have always believed the law to be this, that when an offer is made to another party, and in that offer there is a request express or implied that he must signify his acceptance by doing some particular thing, then as soon as he does that thing, he is bound”

For the Acceptance, the essential requirement is that the parties have each from a subjective perspective engaged in conduct manifesting their assent. This can be called a concurrence of wills or ad idem (meeting of the minds) of two or more parties. Sally, who represented marketing company, called Ron to typical survey about her promoting product. She promised, that if answered few questions his name would put in draw for two free return tickets to holiday and also invited to promotional event. Ron spent his time answering these questions.

This element of the contract is necessary to form legally binding contract. Sally invited Ron to promotional event and Ron accepted invitation. In order to advice Ron and Julie, it is essential to identify whether parties intended to be legally bound. Sally represented marketing company and worked under commercial company authority. There is presumption that all commercial agreements are legally bound. In Kleinwort Benson Ltd v Malaysia Mining Corp. Judges stated, that business parties is all the time in position to intend create legal relations. Moreover, it is easier to compare commercial agreement and domestic agreement, which usually are not legally binding using leading case Balfour v Balfour. The key feature of these cases is that partners did not tend to create legal obligations in domestic affairs. It is obvious that Sally and Ron relations were not domestic.

From objective approach point, Sally invited Ron, but from the reasonable point of and Sally having all the background knowledge which would reasonably have been available to her as she was working in marketing company she intended to invite his wife too. In this situation in which Julie is Ron wife so it’s obvious that usually invitations are for two persons (specially, when they are married). During the event Sally conducted a quiz amongst the people who were there, promising ate outset anyone who got all the answers correct would get a free vacuum cleaner. It is very important to determine whether this promise is legally binding or just Mere Puff which meant nothing. Sally all the time was representing marketing company so it means the same as it has been alleged by the company. It has to cause legal consequences of the promise. From this point of view it is not clear, how many vacuum cleaners she has, because there were about fifty people who participated in this quiz. The contract terms and conditions should be clear otherwise it cannot be enforced by law. From my point of view, quantity of vacuum cleaners in this situation cannot be identified as key issue and it cannot fail this contract. In this situation we can use objective test —whether a reasonable person would see the contract standing even without the exact quantity clauses.

It is very important to indicate whether our contract is unilateral or bilateral. In Unilateral contract only one party make promises a second party something if the second party will act. In our first scenario Sally promised to put Ron’s name in a draw for two free return air tickets and invitation to promotional event if he answered few questions about Sally product.

A bilateral contract is distinguishable from a unilateral contract, a promise made by one party in exchange for the performance of some act by the other party. Both parties make promises in bilateral contract. A bilateral contract is one in which there are duties on both sides, rights on both sides, and consideration on both sides. This situation is complicated, because Ron didn’t promise to answer all these questions but Ron answers all these questions, but Ron doesn’t make generally an express promise and is not obligated to act in any way. Ron is not legally obligated to do so. Despite this fact, it is obvious that this scenario is bilateral contract. A bilateral contract is one in which there are duties on both sides (Ron has duty answer all questions, when he agreed to do) and rights on both sides, and consideration (holiday ticket and ticket to special event and Ron’s time, which he decided to spent on answering these questions) on both sides.

The second situation is different. The main difference in this scenario there is unilateral contract and promise is made to all these people, who are there: Sally promises vacuum cleaners to all people who are there if they answer all questions. Unilateral contacts are made when there is no defined second party or it is offered to many at a time. It illustrates Sally example. All these people are not bound to answer these questions as Ron did. Of course, if you don’t try to answer the questions you will not get vacuum cleaner. In Carlill v Carbolic Smoke Ball Company leading judges pointed out: anybody who will perform these conditions and the performance of the conditions is the acceptance of the offer. So in this scenario only one person is responsible to full fill the conditions set in that contract. Unilateral contacts are made when there is no defined second party or it is offered to many at a time. In a bilateral contract, the parties each promise one another something. A bilateral contract is distinguishable from a unilateral contract, a promise made by one party in exchange for the performance of some act by the other party. The party to a unilateral contract whose performance is sought is not obligated to act, but if he or she does, the party that made the promise is bound to comply with the terms of the agreement. In a bilateral contract both parties are bound by their exchange of promises.

In Smith v Hughes case judge Blackburn stated that: “If, whatever a man’s real intention may be, he so conducts himself that a reasonable man would believe that he was assenting to the terms proposed by the other party, and that other party upon that belief enters into the contract with him, the man thus conducting himself would be equally bound as if he had intended to agree to the other party’s terms.”

According to the judge Lush J, in Currie v Misa case definition of consideration is A valuable consideration, in the sense of the law, may consist either in some right, interest, profit, or benefit accruing to the one party, or some forbearance, detriment, loss, or responsibility, given, suffered, or undertaken by the other. It must be established that consideration was provided by both parties in the contract (In our scenario between Sally and Ron and Julie). Consideration is legally sufficient benefit, right, interest, or even or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the other party. Legally binding contract is only when each party to a contract has agreed to give something of economic value in return for what is gained from the other party. From one point of view, in our scenario there is clearly indentified one sided consideration – vacuum cleaner and holiday tickets but at the same time Sally promised to give vacuum cleaner and holiday ticket if Ron and Julie by performing her special conditions (answering questions about marketing product and answering quiz questions).

In conclusion, In relation to Ron, Sally and Julie scenario, it can be explored from various viewpoints, but Ron and Sally gave their acceptance to the offer and fulfilled all necessary obligations. Moreover all key elements are identified all key in this contract. Julie is responsible to full fill the conditions set in that contract – to share all vacuum cleaners. There is cannot any additional explanations about Sally and Ron status during the game, because this contract is legally binding. The most complicated term is the quantity of the vacuum cleaners, which causes additional problems – how to share all vacuum cleaners. Quantity in this scenario cannot be identified as a vague term. Reasonable person test can help to find best solution to this situation how to share three vacuum cleaners.

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