Advertisement On The Internet
On Monday, David, the manager of White Halls Ltd came across an advertisement on the internet belonging to a firm called Golden Antiques. The advertisement was regarding three Victorian style beds retailing at £5000 each. In terms of law an advertisement is recognised as an invitation to treat which from a technical perspective expresses the creator's readiness to obtain proposals. Such statements are formed to also endeavour in generating attention, requesting the supply of data, or any supplementary phase in the sometimes extensive development to settlement. The case of Carlill v Carbolic Smoke Ball Co outlines comprehensively the essential elements of a unilateral contract presenting a party (the promisor Carbolic Smoke Ball Co) binding itself to perform a stated promise upon performance of the requested act or condition by the promisee (Carlill). The manufacturer of the smoke ball claimed that the product will protect users from contracting influenza and in order to demonstrate their sincerity in the matter £1000 was deposited with the Alliance Bank. The general rule is that advertisements amount merely to an invitation to treat, in the establishment of such rule Partridge v Crittenden represents this as the defendant's conviction was suppressed due to the content of the advertisement, which consisted of certain wild birds for sale. It was offensive to offer those birds for sale. In the words of Lord Parker, there was ‘business sense' in treating such an advertisement as no more than an invitation to treat.
Upon viewing this advertisement interest is generated on David (the offeror's) part, hence he contacts Golden Antiques Ltd (the offeree) and places an offer at £4,500 each, via instantaneous method of communication (e-mail). In addition he also requests further information in relation to the availability of credit facility. Examining the use of language communicated by David further provides us with a distinct factor of that he has placed an initial offer not a counter offer and is also requesting information as in the case of Stevenson, Jacques & Co. v Mclean concerning negotiations for the sale of a quantity of iron. The defendant offers to sell at 40's net cash per ton. The plaintiffs reply asking whether the defendant would accept 40 for delivery over 2 months, or alternatively the longest limit they could give. Ultimately the reply did not function in terms of rejecting the defendant's offer but was only a query in order to ascertain whether flexibility was present in the terms of the offer. Therefore, the possibility of acceptance for the plaintiff's remained existent.
Having received David's offer, Tuesday morning Golden Antiques respond with a counter offer whereby stating that they ‘are not prepared to sell for less than £5000 each'. However they are willing to provide credit facility given that the guarantor is acceptable. Furthermore, in condition, David must register his acceptance by the close of business day.
Acceptances are required to be unrestricted and equate to the precise terminology used by the offeror (David) in the proposal. Golden Antiques's reaction in the law of contract is referred to as a counter-offer. Golden Antiques are declaring to accept but actually functioning to decline the initial proposal and instruct David to supply details of his guarantor (Black Halls Ltd.). A counter-offer is formed here onwards, causing David's offer to lapse, as Golden Antiques alter the original terms of the offer by requesting a guarantor. This terminates the preceding offer brought by David. The effect of this is evidently demonstrated in the case of Hyde v Wrench, where the claimant made an offer to buy a farm for £950 whereas the defendant offered to sell it for £1000. Offering a lesser amount to the defendant is termed as a counter-offer. Moreover, when the claimant attempted to purchase the land at the original offer of £1000, it was held that there was an absence of a contract throughout. The denial of a contract on Hyde's part was agreed by the court. Revival of Hyde's offer was not open to Wrench, unless Hyde was agreeing to regress to the terms but was not obliged to.
In response to Golden Antiques counter offer David attempts to communicate his acceptance by means of fax on Tuesday afternoon, however the fax is improperly transmitted as indicated by the status report. Instantaneous means of communication is not prescribed by Golden Antiques but is preferred as prior to this stage this was the method of connection between the parties and is considered as appropriate.
Generally, the onus is on David's side to communicate his message through effectively. As the offeree, David must ensure that the message is received by the recipient. The approach taken in telex communication was similar in Enstores Ltd v Miles Far East Corporation. The receipt rule applied throughout instantaneous messaging; Golden Antiques was completely unaware that the offeree was communicating his acceptance via fax.
David is yet to confirm his acceptance, currently there is no contract and David is at fault. Golden Antiques have detailed a timeframe they are expecting a response by business closure. If the parties had negotiated to a conclusion in each other's presence there is minor problem.
Later that evening at 5pm, although being aware of the postal strike, David then decides to select a non-instantaneous method of communication and posts his acceptance. As the parties are not in each other's presence, communication becomes a crucial issue. As well as instantaneous means of communication, acceptance can also be communicated non-instantaneously. The prime issue with contract negotiation by post is that letters may either be delayed or lost. David, when posting his letter, should have taken into account these risks which are inherent in the use of the post. The real question here is that who should be bearing that risk? Usual circumstances would dictate that the appropriate method of acceptance will depend on the fact of each situation. The offeree may find themselves faced with two types of situations. Firstly the offer may command a method of acceptance. It may indicate or imply that acceptance should be sent certain method of communication which in Golden Antiques's case is instantaneous.
A good example of this is the case of Adams v Lindsell, where the defendants were offering to sell wool to the plaintiffs requesting that the reply is ‘in course of post'.
The defendant's letter was addressed incorrectly leading to a misdirection which caused a delay beyond the normal course of post. In this instance, the wool was sold to a third party although the plaintiffs had accepted by post on the very same day of the offers arrival hence demanded that there was an enforceable contract which was legally correct.
Another scenario to this may be where there the indication of an appropriate method of acceptance is absent in the offer. In general, the offeree follows the same or an equally practical manner as implemented for the creation of such propasal. Ignorance of the fact of acceptance is clearly addressed in the case of Household Fire and Carriage Accident Insurance Co. Ltd v Grant the postal acceptance letter here never arrived but the court of appeal held there to be a binding contract on posting. The postal therefore as outlined in this case places the risk of loss or delay solely on the offeror's part since the main principle is that the offeror is legally bound despite the non-receipt sent by post. David's decision in selecting the postal method does not qualify for any of the situations mentioned above. Logically David is expected to communicate his acceptance instantaneously as Golden Antiques requires the acceptance within a specified timescale. Under the legislation of this subject matter, the acceptance is deemed to be effective immediately when the letter is posted, regardless as to when it reaches the offeror or whether it reaches him at all as construed in Household Fire v Grant.
Taking on the assumption, that the postal messaging was an agreed method of communication or was deemed to be appropriate David and Golden Antiques, at present, would have been legally bound (a contract is formed instantly). From Golden Antiques perspective, they are presumably expecting David's reply by original means of communication which is appropriate and implied prior to this stage. Postal rule here most certainly may not apply for David as it is unreasonable as well as unforeseeable by the offeror unless otherwise stated. In Henthorn v Fraser's case it is alternatively arguable that the use of post is permissible, as the offer itself was sent by post and was made clear that the postal rule was applicable only where it was reasonable in all the circumstances for the offeree to have used the post.
On Wednesday morning, Roger, the accountant of Golden Antiques telephones. He delivers his interest in purchasing all of the Victorian beds (offer). On the basis that he had prepared the financial accounts of Golden Antiques the previous year for half of the fee of what he normally charges. Under this condition, Golden Antiques are persuaded to sell to Roger (acceptance occurs instantly) at this stage a legally binding agreement is in existence between the two parties. Performing such agreement is impliedly revoking Golden Antiques's offer to sell to David. Terminations of offers have a variety of characteristics; between Golden Antiques and David only two apply but one (revocation occurs on two separate occasions, the very first is an implication when Golden Antiques expresses a counter-offer revoking the original and when they decide to communicate their revocation) these are made up of the following lapse of time and revocation. In order for the capability of an acceptance to arise, preciseness and the intention of becoming legally bound is not sufficient, it is also essential for it to be current. Acceptance of an offer made after it has been ceased is deemed to invalidate the offer.
Initial revocation occurs through lapse of time where Golden Antiques imply that day are to be informed of David's acceptance before close of business day, however the offeree David fails to communicate his acceptance. A relative case to this is Ramsgate Victoria Hotel Co. Ltd v Montefiore where an application for shares belonging to the defendant is submitted to the plaintiff in early June 1864. However, shares in request were allotted to the defendant after approximately four to five months. Although the application of the defendant had not been withdrawn he refused to pay. From the laws perspective, he was not obliged to go through with the purchase due to the unreasonable arrival of the offer. Examining lapse of time further provides us with the mere fact that no offer is indefinitely open.
After an agreement between the parties was concluded, Golden Antiques decided to contact David via fax on Wednesday evening stating that the beds were no longer available for sale. Whether instantaneous or not, actual communication of revocation is absolutely essential otherwise it is still open to acceptance. This takes effect when received by the recipient not read. The postal rule of acceptances, however is invalid when revoking, it does not constitute revocation.
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