Law of Contract Far East Corporation

Question: Describe about the Law of Contract of Far East Corporation. Answer: Issue The major issue in the given case is the establishment of a contract between Mojo Beverages and Ben. It is only when a contract exists between the two that the next issue of whether Ben can claim anything from Mojo Beverages arises. Law The law of contract is a very important piece of legislation that is required in any governed society. To make a valid contract, it is necessary that all the contract elements should be met lawfully. The main contract elements that are required are offer, acceptance, consideration, capacity and intention of the parties. (Small Business Development 2016) An offer is an element with the help of which a contract can be initialed. An offeror is the person who makes a contract to an offeree. Through an offer, an offeror basically communicates his desire to an offeree which he expects to be performed or acted upon by him (Smith v Hughes (1871). When an offer is made, then it must reach an offeree to be effective, thus, communication of offer is very necessary to make such an offer valid (Carlill v Carbolic Smoke Ball Co (1893)) (Moles R 1998). When no offer is made by a person, but when offers are invited through advertisements, auctions, tenders, etc, then, such actions are invitation to offers and the person who relies on such invitation can make an offer to the inviter Partridge v Crittenden (1968). Thus, in invitation to treat, an inviter acts like an offeree and the person who makes an offer based on an advertisement is an offeror. (Moles 1998) Also, an offer can be unilateral or bilateral. A unilateral offer is an offer under which when an offer is made by an offeror to people then such an offer is an open offer and does not requires any formal, written or oral acceptance to make a binding contract. In unilateral offers, it is an action of the offeree which can be regarded as deem acceptance ( an acceptance by way of conduct) and if the offeree has acted as per the desired wish of the offeror, then, a contract stands concluded as soon as such desired actions is undertaken by an offeree (Great Northern Railway Company v Witham (1873). (Gibson Fraser 2014) Also, in law, when a valid offer is made by an offeror, then, such an offer must be validly accepted by an offer to make a binding contract with an offeror. An acceptance should be made as per the desired requirements of an offeror Brogden v Metropolitan Railway Co. (1877). In order to make an acceptance valid it is necessary that the same must be communicated to an offer and the acceptance must not bring any changes in the terms of the offer (Powell v Lee (1908). (The Law Teacher 2016) However, in unilateral offers, an acceptance by way of conduct is considered to be a deem acceptance and a valid contract does exits amid the parties (Carlill v Carbolic Smoke Ball Co (1893). Application As per the given facts, Mojo Beverages has issued an advertisement through which it has invites people to catch Lord Harry, a trout, against a price of $100,000. Thus, can the action of Mojo Beverages can be regarded as an invitation to treat or offer by relying on the leading case of Pharmaceutical Society v Boots Chemists (1953). The answer is no, because an offer at times can be unilateral or bilateral. In the given situation, Mojo Beverages has made a unilateral offer through an advertisement and any person who will act as per the requirements of Mojo Beverages will make a binding contract with it. So a valid offer is made by Mojo Beverages to the world at large or the offer can be regarded as an open offer. Further, the true prize that was promised by Mojo Beverages is $1,000 and not $100,000. Ben after knowing the correct offer acted as per the requirements of the advertisement. He is fully aware of the rectified offer and has given his acceptance by acting as per the desires of Mojo Beverages as the offer which was made was a unilateral offer. So, it is the actions of Ben which must be considered as deem acceptance by relying on (Carlill v Carbolic Smoke Ball Co (1893)). Conclusion Thus, a valid offer is made by Mojo Beverages which is duly accepted by Ben against a valid consideration of $1,000 and the parties are capable and legally intent to abide by the contract. Since, a valid contract exists amid Mojo Beverages and Ben, thus, Ben has right to sue Mojo Beverages for the claim of prize money. Issue The main issue that requires analysis is whether the commercial interactions that took place amid Livestock Brokers (Brokers) and Dorper Sheep Sellers Pty Ltd (Sellers) results in the establishment of any contractual relationship. Also, the scope of relationship is also evaluated when the communication was made by fax which was never reached by Dorper Sheep Sellers Pty Ltd. Law To make a valid contract, it is necessary that all the contract elements should be met lawfully. The main contract elements that are required are offer, acceptance, consideration, capacity and intention of the parties. (Small Business Development 2016) Now, an offer is the communication which is made by an offeror to an offeree. In an offer an offeror sends his expectations and desires to an offeree which he believes to be comply with by an offeree (Gibson v Manchester City Council - CA (1978). An offeree must receive the offer to make an offer legal and effective (Carlill v Carbolic Smoke Ball Co (1893)). Now, whenever an offer is made by an offeror, then, it is the responsibility of an offeree that he must confirm such an offer, this confirmation of offer is called acceptance in law. When an acceptance is made, then a binding contract is made amid the parties but such an acceptance must reach the offeror in order to be effective. In the law of contract, an acceptance is complete only when it reaches the offeror. But, when an acceptance is made by post, then, acceptance is complete as soon as the letter is posted Brinkibon v Stahag Stahl und Stahlwarenhandelsgessellschaft mbH (1983). There is no requirement of further communication, but, the rule is not applicable when an acceptance is made by fax and is held in EntoresLtd v Miles Far East Corporation (1955) Mendelson-Zeller Co Inc v T C Providores Pty Ltd(1981). (Hill S 2001) Further, an acceptance must correspond the offer and if any deviation is made in the terms of offer then it is not acceptance and the offer lapses. But, in Hyde v Wrench ((1840)) it was held that requesting information is not counter offer or acceptance and does not terminate an offer (Stevenson v. McLean(1880). (The Law Teacher 2016) Application In the given scenario, when Sellers sends a letter to Brokers through which he sets out the number of sheep flock for sale at a particular price, then, it is an offer which is made by Sellers to Brokers. Seller has given 14 days time to Seller to accept the offer so made. Now, it is submitted that a valid open offer was made by Sellers to Brokers and Brokers must accept such an offer within 14 days. However, before that, Brokers has made few inquiries regarding the offer which was made by Seller. But, as per Stevenson case, mere seeking information or requesting information regarding the offer is not a counter offer and does not lapse the offer. Broker has asked for information on 6th June, such letter of request is not a counter offer and the offer of Seller is still valid. Also, on 14th Broker sent a fax to Seller accepting the offer, the same was received by Seller on the same day. Thus, since no postal rule is applicable when acceptance is made by fax, thus, the acceptance must receive the offeror it orders to make an acceptance valid. The acceptance by Broker was validly received by Seller so the communication of acceptance is compete and is valid. Now, when Broker has sent his acceptance by way of fax on 14tth June, then it was considered as valid as the same was duly received by Sellers on the same day. However, if the same is not received by Seller on 14th itself dues to transmission error then the acceptance would not have been said complete in the eyes of law as no postal rule is applicable when an acceptance is sent by fax. So it is necessary that the same must be communicated to an offeror in order to be complete. Since, the same is not communicated because of transmission error, so the acceptance is incomplete resulting in no acceptance by Broker. So there is no contract between Broker and Seller. Conclusion So, there is a valid contract that is established amid Seller and Brokers as there is a valid offer which is made by seller and a valid acceptance is also communicated back by Brokers resulting in a valid contract amid the two. Also, if the fax is delayed then there is no acceptance and thus no contract. III Issue The basic problem that revolves around the given case study is Can the owners of Prince Mall, Westphalia Marts Pty Ltd, force Stuart to pay the full amount along with short fall? Law This issue requires analysis of some of the basic principles of the law of contract. Whenever, any two persons wishes to make a contract between themselves, then, one party must always make an offer which is duly accepted by an offeree and such parties must have legal intention and are capable to make a contract. Also, the promises so exchanged amid them must be supported by consideration in order to make a valid contract. (Small Business Development 2016) Every contract comprises of terms and conditions which are very important and the same must be fulfilled by the parties to the contract. If any party to the contract does not comply with the terms and conditions of the contract then the contract is said to be violated. Generally, the contractual terms are divided into two broad categories. When the terms are expressly made part of the contract by the contractual parties then such terms are express terms. Bu when the terms are made part of the contract not by the contractual parties but by law, custom, etc, then such are called implied terms. Both the terms are very important and must be fulfilled by the parties. These terms are normally added by the parties when the contract is formulated and not afterwards (Legal Service Commission 2016) But, in contract law, when a contract is already made by the parties and terms are also incorporated by them, then generally it is not prevalent to bring changes or additions to such terms of the contract. However, at times situations do occur under which it become necessary to bring modification in the already existed contract. The modifications can be made by the parties either orally or in written form. Both the forms are valid provided both the parties intend to do same. If the changes are made on written form the parties must sign the same otherwise oral changes are also valid in law. (Hubble 2016) Application Now, a five year written lease was entered amid Stuart and Prince Mall. As per the terms of the agreement, Stuart has to pay a lease of $1000 per week at the end of 2010. Thus, it is an express term of the contract and the parties must abide by the same. In 2013, both Stuart and Prince Mall intend to bring variation in the written lease agreement. The rent of Stuart was reduced to $700 per week. However, soon after the owners of the prince Mall persuaded Stuart to pay not only the full amount but also the shortfall that has been faced by them because of the reduced rent. It is submitted that the terms of the written lease agreement was varied by the parties intentionally. So the new terms are binding upon them until the business of Stuart improves and thus the owners of Prince Mall cannot force Stuart to pay the extra amount. Conclusion The terms are binding and Prince Mall cannot force Stuart to pay the extra amount. Reference List Brogden v Metropolitan Railway Co. (1877). Brinkibon v Stahag Stahl und Stahlwarenhandelsgessellschaft mbH (1983). Carlill v Carbolic Smoke Ball Co (1893). EntoresLtd v Miles Far East Corporation (1955). Gibson v Manchester City Council - CA (1978). Great Northern Railway Company v Witham (1873). Gibson Fraser, 2014, Business Law 2014, Pearson Higher Education AU,11-Oct-2013. Hill S, 2001, "Email Contracts - When is the Contract Formed?" https://www.austlii.edu.au/au/journals/JlLawInfoSci/2001/4.html#fn8. Accessed on 16th August 2016. Hyde v Wrench ((1840). Legal Service Commission, 2016, Express and implied terms of the contract, https://www.lawhandbook.sa.gov.au/ch18s02s01.php. Accessed on 16th August 2016. M Hubble, 2016, Contract Modification, https://contracts.lawyers.com/contracts-basics/contract-modification.html. Accessed on 16th August 2016. Mendelson-Zeller Co Inc v T C Providores Pty Ltd(1981). Moles R, 1998, Contract Law Lecture - Formation of Contract - Offer and Acceptance https://netk.net.au/Contract/02Formation.asp. Accessed on 16th August 2016. Powell v Lee (1908). Pharmaceutical Society v Boots Chemists (1953). Partridge v Crittenden (1968). Stevenson v. McLean(1880). Smith v Hughes (1871)). Small Business Development, 2016, Business contracts https://www.smallbusiness.wa.gov.au/business-topics/money-tax-and-legal/legal-matters/business-contracts/. Accessed on 16th August 2016. The Law Teacher, 2016, Cases On formation a Contract Offer https://www.lawteacher.net/cases/contract-law/agreement-cases.php. Accessed on 16th August 2016.