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Published: Fri, 02 Feb 2018

Whether a bilateral or unilateral contract

When a contract is formed it must be established whether it is a bilateral or unilateral contract. A bilateral contract can be defined as a situation where both parties share the same duties, rights and consideration. Whereas a unilateral contract is a contract in which there is an agreement to pay, in exchange for performance. Therefore a bilateral contract has been formed in respect to this scenario as a sale of goods is on offer.

In relation to offer and acceptance within a contract it can be established that advertisements can be mere invitations to treat rather than offers, as in Partridge v Crittenden 1968 [1] . However it could be considered as an offer if made clear in an advert as in Carlill v Carbolic Smoke Ball Co 1893 [2] . The problems raised in this scenario are issues based on whether Mahmood was in fact in breach of a subsidiary promise.

Mahmood placed an advertisement based on an invitation to treat and the conditions where to call him on his mobile phone if interested. Hence acceptance can usually be communicated orally, in writing or by the conduct the advertiser prefers. Acceptance therefore results in the formation of a contract where both parties are bound and neither can withdraw without incurring liability to the other.

The mirror image rule states that in order for acceptance to occur, correspondents must conform to the exact terms proposed by the offeror therefore no added qualifications or conditions may vary from the terms in the original offer.

A letter is regarded as posted when in the possession of the Post Office as in Re London and Northern Bank 1900 [3] , however it is not considered posted if handed to an agent such as a courier or postman and when not properly addressed. Whereas in Holwell Securities v Hughes 1974 [4] there is exceptions to the Postal Rule which state, the rule does not apply if it leads to evidence of illogicality or inconvenience.

An invitation to treat may be revoked by the offeror at any time until it is accepted and where an invitation is communicated to the offeree, if not it becomes ineffective unless there is consideration. However in this event Clarissa was not made aware of any revocations meaning Mahmood could be in breach, as in Byrne v Van Tienhoven 1880 [5] . On the contrary Mahmood could revoke Clarissa’s acceptance based on the grounds mentioned in the postal rule which state that Clarissa should have followed the necessary means of communication by calling Mahmood on his mobile phone, as in Tinn v Hoffman & co 1873 [6] . Another case he could use in his defence is Manchester Diocesan Council of Education v Commercial and General Investments Ltd 1970 [7] .

In advising Mahmood in his obligations to the contract concerning Clarissa it can be said that he has breached the contract by accepting Tasnim’s offer, despite the letter being delivered on Saturday due to the strike. Clarissa had dispatched the acceptance on Tuesday and according to the postal rule acceptance was made, seeing that she replied in writing refer to Adams v Lindsell 1818 [8] . The rule states, an offer within a bilateral contract becomes effective once received in the similar means of communication. Meaning the moment the letter drops into the mailbox a contract is formed.

In relation to Tasnim it can be recognised that she had accepted the invitation to treat and met all the conditions stated in the advertisement, by calling Mahmood. Considering he thought Clarissa was no longer interested in purchasing the TV he formed a binding contract with Tasnim.

According to the mirror image rule a counteroffer cannot be made once rejected as the offer cannot be revived, therefore Mahmood could revoke Tasnim’s offer based on this, bearing in mind that he cannot merely reject it because Clarissa wants to accept his invitation to treat, as in Hyde v Wrench 1840 [9] .

Therefore in advising Mahmood on his legal obligations I would point out that a contract cannot be formed due to the absence of acceptance by performance.

Although in his defence there could be an exception to the mailbox rule limiting the nature of acceptance as the offeror must receive acceptance in order to be bound. However he could be in breach for accepting Tasnim’s offer without hearing or confirming that Clarrisa was no longer interested. The courts will therefore upload the reasonable expectations of the parties as determined by their factual situations and Adams v Lindsell [1818] can be used as reference.

(754 words)

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