To form a contract, it is necessary that two or more capable persons must intent to bind themselves into a contractual relationship and must make valid offers and acceptances which must be supported by valid consideration. When all these elements are joined together then a valid contract is established amid the parties. (ABL Phang, 2012)
So, the basic contract elements that are required in any contract formation are:
An offer is the first step in any contract formation and the person who makes an offer is called an offeror. In order to make an offer, an offeror must communicate his intentions to another person (who is called an offeree) which he desires to be approved by an offeree. This convey of the offeror intention in law is called an offer (Carlill v Carbolic Smoke Ball Co . (McKendrick, 2014)
The offers which are made by an offeror can be bilateral in nature, that is when an offer is made and is approved by an offeree by making an acceptance, then, such is an act of bilateral promises. But, when an offer is made but is approved by an offeree only by conduct then such offers are unilateral in nature. Booth the forms of offers results in making a valid contract amid the parties. (Phang & Chui , 2004)
When the person does not make any offer but do make statements or acts in such a manner by which he desires to receive offers from people then such an act is called intention to offer or treat. The person who is making the statements in the form of advertisements, auctions, and tenders is not an offeror but acts like an offeree who receives offers from the public (who acts like an offeror) and when such an offer is approved by the offeree, then a valid contract is established amid the parties (Chwee Kin Keong v Digilandmall.com Pte Ltd .
The person to whom the offeror communicates his intention is called an offeree. An offeree has an obligation to reject the offer or approve the same. When the offeree approves the offer without bringing in any variations or changes, then, such an act is called an acceptance in law.
In Mondial Shipping and Chartering BV v Astarte Shipping Ltd (1995), it was held that when an offer is made to some person who is specified by an offeror while making an offer, then, it is necessary that the acceptance must be made by such person only in order to consider such an acceptance is valid.
Further, knowledge plays an important role while making an acceptance. It is necessary that the offeree must be aware of the offer when an acceptance is made by him. Any approval of the offer without any knowledge of the same is not a valid acceptance in law and thus will not make a valid contract amid the parties. (Furmston & Tolhurst, 2010)
Normally, an acceptance made by the offeree to an offeror is valid but, when the offeror desires that the acceptance so made by the offeree should be made in a particular form then it is necessary that the offeree must comply with such specified mode of acceptance in order to make such an acceptance valid in law Adams v Lindsell (1818).
Now, as already discussed, an acceptance when made to an offer without bringing any variations, then, it is called a valid acceptance, but, when the offeree does not make an acceptance as desired by law but approves the offer by bringing changes to it, then, such an acceptance is not valid and is called counter offer which cancels that original offer. The counter offer is then the new offer which is the only valid offer which is left which when approved results in valid contract (Hyde v Wrench (1840).
The offeror and the offeree when making the offers and acceptance must legally intent to abide by the promises so exchanged amid them. If wither of the parties while making the promises does not intent to abide by such promises legally, then, such exchange of promises has no legal validity and is discussed in (Balfour v Balfour .
Also, both the parties should be major in age and must be of sound mind when the promises are exchanged amid them in order to make a valid contract.
The offer and acceptance so exchanged should be supported by a benefit which is called consideration in law and which makes the contract enforceable in law. Thus consideration is also a very important element to make a contract enforceable.
Now, all these elements are applied to the raised concerns above.
As per the facts, Alan wants to sell his books, so, on 1st November 2015 he post an advertisement on his facebook page through which he specifies to all his friends that he is selling his book and notes for $200 and whosoever is interested must specify him by 5th November 2015.
Now, Alan posted an advertisement and as per Carlill case, an advertisement by a person is an invitation to treat and not an offer. So, Alan is not an offeror but is an offeree who must react to the offers received to him. Also, as per Chwee Kin Keong, the invitation is only to the friend of Alan and thus no offer should be made to him by any person who is not his friend.
1.Yes a contract is formed amid Alan and Damien.
Now, Damien is also willing to buy the book of Alan. He is not on the facebook friend page of Alan. So, the invitation that is made by Alan is not for Damien. Still he messaged Alan that he wish to buy the book and intent to pass the money by 4th November 2015.
But, Damien has no right to buy the book as he is not on Alan friends face book. But, in the evening of 4th November he met Alan and offered Alan money to buy the book which wa duly accepted by Alan.
So at this stage there is a valid contract amid the two.
2.Bernard reacted to the invitation of Alan. He is the friend of Alan and is thus eligible to make an offer to the invitation of Alan. He offered to buy the books and notes for $150. Thus, an offer is made to Alan for $150. But, the offer made by Bernard is declined by Alan. It makes no difference whether any money is sent by Bernard on 4th which is received by Alan on 5th because there was only an offer which was never approved by Alan.
So, there is no contract amid the two and there are no remedies that are available to Bernard.
3.Charleen also wish to buy the books of Alan and so she made an offer to buy the same at $200. This offer was accepted by Alan. So there can be a valid contract between the two. But, there is no contract because when Alan has given his acceptance at that time he is not intending to sell his book but is thinking of something else. Thus, as per Balfour case lack of legal intention will not make a binding contract amid the parties.
So there is no contract with Charleen and she has no remedies.
4.Even though the contract was not initially made with Damien but a valid contract is made amid Alan and Damien in the evening of 4th November hen an offer and acceptance took place amid them instantaneously. Since there is a valid contract that is made amid Damien and Alan, so, Damien has the right to sue Alan for the book and notes and Alan must comply with his obligations and must supply the same to Damien.
Now, it is important to analyze the various Alternative Dispute Resolution techniques and the various advantages and disadvantages that are associated with them.
When the parties to the contract wish to resolve the disputes without going through a formal legal proceeding, that is, court proceedings, then one such method of resolving disputes is called Alternative Dispute Resolution method. In law, the two best kinds of techniques of Alternative Dispute Resolution are Arbitration and Mediation. (Jones & Pexton, 2015)
When the parties to the contract decides a neutral person (arbitrator) to resolve their disputes and intent to abide by his decision, then, such a technique of dispute resolution is called arbitration. There is no involvement of the parties to decide their dispute but are relying on the arbitrator fully and intent to follow his decision. This is one of the best techniques that is available to the parties, but, it has its own set of pros and cons. (Jones & Pexton, 2015)
Pros – The arbitration as an Alternative Dispute Resolution method is a very cheap techniques and is thus easily affordable by the parties. Also, the length and duration which is taken by an arbitrator to resolve the dispute is not very lengthy specifically when the same is compared with the court proceedings and thus is a quick process to resolve disputes. Also the arbitrator is the person who is selected by the parties to the dispute so there is no question on the authenticity of the decision of the arbitrator. Also, the parties wish to abide by the decisions of the arbitrator and thus there are fewer chances of conflicts. Further, there is presence of confidentiality as the dispute is not resolved in an open room.
Cons- But, there are few disadvantages that are also associated with arbitration. The parties to the disputes have untimely had to take the help of the court if not satisfied with the decision of the arbitrator thereby making the dispute resolution a costly affair. Many a times, the place where the dispute has to be resolved is very far away thus making it very troublesome for the parties. The parties has to abide by the decision even when are not in favor of the same.
The person who resolves the dispute through mediation is called a mediator. When the mediator does not goes into the technicalities of the disputes and tries to resolve the same only by providing guidance or cancelling, then, such kind of technique is called the process of mediation. The parties are not bound to follow the decision of the mediator. (Jones & Pexton, 2015)
Pros – The process of mediation is not very expensive and also does not take much time to resolve the disputes. Further, the decision is not forced on the parties and the parties are free to choose with the outcome or not. it helps in preserving the relationship of the parties as the mediation intent to provide counseling to the parties. Further, there is presence of confidentiality as the dispute is not resolved in an open room.
Cons – The parties are free to not to bind by the decision of the mediator thereby making the process of mediation less effective. Parties are not very keen to resolve their dispute through mediation because it only provides cancelling and does not looks into the evidence laid down by the parties.
These are the two techniques to resolve disputes which can be adopted by the parties in order to resolve their disputes.
So the only contract that is established is with Damien and Alan must comply with his contractual obligations.
Also, there are two ADR techniques, that is, arbitration and mediation and can be used to resolve disputes.
ABL Phang (2012) The law of contract in Singapore, Academy Pub.
Furmston & Tolhurst (2010) Contract Formation: Law and Practice, OUP Oxford.
Jones & Pexton (2015) ADR and Trusts: An international guide to arbitration and mediation of trustsisputes, Spiramus Press Ltd.
McKendrick (2014) Contract Law: Text, Cases, and Materials, Oxford University Press.
Phang & Chui (2004) Basic principles of Singapore business law, Thomson Learning.
Adams v Lindsell (1818) 106 ER 250.
Balfour v Balfour  2 KB 571
Carlill v Carbolic Smoke Ball Co 
Chwee Kin Keong v Digilandmall.com Pte Ltd  1 SLR 502
Hyde v Wrench (1840).
Mondial Shipping and Chartering BV v Astarte Shipping Ltd (1995)
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