CONTRACT LAW, FORMATIVE ASSESSMENT 1
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Name: Mohammad Ibrahim Raza Tutorial Group: 04
Number: Z06344
Word count: 1244 Tutorial Time: Thursday 11-12
Particular aspects about which I would like feedback (if any): Referencing, writing style, and structure
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The given proposition is one which revolves around the issues of offer and acceptance. For a valid contract to be formed, there must be an unequivocal offer by one party, and a definite acceptance of that offer by the other party. In order to determine the contractual liability of each of the parties, it is important to identify the different legal issues; whether Alain’s announcement was a valid offer with contractual intent and also whether it is possible to make a general offer to a group of individuals. Other problems which need to be examined are as to whether it was necessary for the acceptance to be communicated and if the breach of the race rules had any effect on the performance of the contract.
An offer is an intimation, by words or conduct, of a willingness to enter into a legally binding contract.1 An Invitation to Treat is a preliminary stage, in which one party invites the other to make an offer.2 An offer must be unequivocal and definite, with a clear indication that the offeror intends to be bound by the offer, if it is accepted by the offeree. The rationale underlying this distinction is that an invitation to treat is usually followed by negotiations, whereas for an offer, there is nothing further to be done. To determine whether a communication is an offer, the objective test is applied by the courts.3 It seems probable that any reasonable person in the position of the offeree, would have construed Alain’s announcement to be an offer. A contrasting argument may be that there was no conduct certifying the intent to create legal relations. In the case of Carllil, the courts found the act of depositing £1000 in the bank as demonstrating legal intent.4 There was no such demonstration in the proposition before us. Nevertheless, without knowing the exact words of the offer, it is difficult to certainly conclude whether there was intent to create legal relations.
An offer need not be directed towards a particular person and may be addressed to the general public or groups of individuals, as affirmed in the case of Carllil v Carbolic Smoke Ball Co, where an offer was made to the world at large.5 Presuming it was a valid offer, the announcement made by Alain was an example of what is known as a ‘general offer’. This offer was made to a group of people, but this does not mean that a contract was formed with all of them. A contract will only arise, once the offer has been accepted by any of the individuals to whom it was addressed, which can be done by performance of the stated condition.
Where an offer is extremely vague, or clearly not intended to be taken seriously, it is usually not given contractual effect.6 The fact that the offer is an extravagant one does not necessarily make the offer a ‘mere puff’, as long as the words of the offer suggest a clear willingness to be legally bound by the contract. Bearing in mind the fact that Alain is a successful businessman who had commissioned an expensive yacht, it seems probable that he intended the announcement to be taken seriously and any reasonable person would have seen it as an offer. However, once again, the specific outcome with regards to Alain’s contractual intent depends on the exact wording and context of the offer, which isn’t given in the information.
In a situation where one of the party is suffering from drunkenness at the time of the making of the contract, and is incapable of understanding the nature of the transaction, the party suffering from such a condition can terminate the contract, provided that the other party is aware of the condition.7 The possibility that Alain was drunk at the time of making the offer does not mean that the offer and therefore the contract is invalid as Alain did not revoke the offer.
The case of Brogden v Metropolitan Railway Co shows that acceptance need not always be by words, but conduct can also amount to acceptance, as explained by Lord Blackburn is his judgement: “….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.”8 Hence, in the proposition before us, Bell Raider and Mon Amour’s act of contesting the race, that too in response to Alain's announcement the previous night, can be seen as an acceptance of the offer by conduct.
The next issue to examine is whether there was a need for the acceptance to be communicated. Although the general rule is that acceptance must be communicated to the offeror, the offeror may impliedly waive this requirement when the offer is for a unilateral contract. The case of Carlill establishes that sometimes, the language used and the nature of the transaction indicates that there is no need to communicate acceptance. This was explained by Bowen LJ in Carlill: “….and the offer is one which in its character dispenses with notification of the acceptance, then according to the intimation of the very person proposing the contract, performance of the condition is a sufficient acceptance without notification.”9 The case of Carlill shows that for general offers giving rise to unilateral contracts, the performance is what constitutes acceptance, not the notification. The given proposition is an example of a unilateral contract involving a promise in return for an act. The nature of the offer suggests that there is no need for communication of acceptance, and performance can constitute sufficient acceptance.
Consideration is another essential of a valid contract i.e. each party must either incur a determent or confer a benefit upon the other party. For unilateral contracts, as in the given proposition, the requested act is both acceptance of the offer and consideration for the promise. Hence, it can be stated that Bell Raider and Mon Amour’s act of participating in the race was sufficient consideration for Alain’s promise to pay £10,000.
The last issue to consider is whether Mon Amour is entitled to claim the £10,000, bearing in mind the fact that it was in breach of the race rules. One argument may be, that, although not said specifically, there was an implied term in the offer made by Alain, that the finish line must be crossed during the race and in line with the race rules. Furthermore, when Mon Amour decided to contest the race, it was bound to abide by the race rules and impliedly consented to them. A contrasting argument may be that since Alain’s offer did not lay down any condition for performance to be as per the rules, Mon Amour is entitled to claim. Although the precise outcome depends on the interpretation of the courts, it seems reasonable to conclude that Mon Amour should not be entitled to claim for being in breach of the race rules.
In conclusion, within the information given, it is difficult to certainly conclude whether the announcement was a valid ‘general’ offer with contractual intent. Presuming it was a valid offer, it was accepted (by conduct) by Bell Raider and Mon Amour by participating in the race. While Bell Raider should be able to claim for the £10,000 as it did not breach any rules, Alain should not be bound to pay the amount to Mon Amour, as its lurid sail design was in breach of the race rules.