The issue is to comment whether there is an enforceable agreement enacted between Mojo Beverage and Ben and to offer an advice to Mojo Beverage about the legal liability towards the claim made by Ben.
There are some of the pivotal elements that must be present between two parties in order to enact an enforceable contract. These elements are as highlighted below (Pendleton & Vickery, 2005).
- Valid offer from the offeror
- Valid and unconditional acceptance from the offeree
- Lawful consideration
- Capacity and intention on the part of the parties to enter into a legal relationship and so forth.
When the above mentioned elements are present, then an enforceable contract is enacted and the parties are legally bounded to fulfil the contractual liabilities (Carter, 2012).
One party who extends the offer is termed as offeror and the party who receives the offer is termed as offeree. The parties enter into a contract, when the offeree accepts the offer without any further conditions. The Carlill v Carbolic Smoke Ball Co (1893) case is the evidence to this argument. Any acceptance with additional conditions is termed as counter offer and in this scenario the original offer gets destroyed (Gibson & Fraser, 2014). However, when the other party does not communicate the offeror regarding the acceptance and at the mental level accepts the offer then in such cases, the acceptance is not valid as per the verdict of Powell v Lee (1908) case. Hence, it is essential that the offeree must communicate the acceptance by suitable mode of communication (Latimer, 2005).
It is pivotal to note that when the offeror has directed the offer to the multiple offerees, then it is not essential that these offerees communicate the acceptance towards the offer. This type of offer is termed as unilateral offer and the contract based on the unilateral offer is known as unilateral contract (Carter, 2012). In this type of contract, the acceptance is not imperative. Any person who performs the activity enacts a valid contract with the offeror and thus, the offeror is liable to fulfil the contractual obligations. The decision of the Great Northern Railway Company v Witham (1873) case is the evidence of this argument of contract law. Additionally, when the offeror makes any change in the consideration amount or in the offer then, it is the essential that it must be communicated to the offeree before the time period when the course of action has been performed by the offeree. The Gibson v Manchester City Council - CA (1978) case is the testimony of this aspect of contract (Pathinayake, 2014).
According to the given case, it is mentioned that Mojo Beverage (offeror) extended an offer by placing an advertisement in the local newspaper on 25 January that anyone who catches Lord Harry would be awarded with a consideration amount of $100,000. It is apparent that it is a unilateral offer made by Mojo Beverage. Therefore, the acceptance through the communication is not required and thus, anyone who can get success to find the Lord Harry would be eligible for the price amount. Further, it was announced by Mojo Beverage that the price amount would be $1,000 in place of $100,000. Mojo Beverage representative was also present on the place in order to certify the catch. However, he did not declare anything regarding the decrease in the price amount.
There was a person named Ben who was involved in the process of searching for Lord Harry. When he was about to catch Lord Harry, he heard the rumour that the price money had reduced from $100,000 to $1,000. However, he did not confirm the price amount from the officer and later found the Lord Harry. As the act of catching Lord Harry is performed by Ben without any condition, which leads to enactment of an enforceable contract between Ben and Mojo Beverage.
Further, Ben demanded for $100,000 from Mojo Beverage. It is apparent that the change in the offer was made before the catch of Lord Harry and same had been communicated by Mojo Beverage. Hence, he cannot demand for $100,000. Additionally, if Ben has any question regarding the price then he should have clarified from the representative of Mojo Beverage but he did not clarify, which means he accepted the offer with a consideration of $1,000.
According to the contract law, it can be concluded that Ben and Mojo Beverage are entered into an enforceable contract. Moreover, there is liability present on the part of the Mojo Beverage to pay $1,000 to Ben. Hence, the company would extend the price amount of $1,000 to Ben.
The main issue in the present case is to comment whether an enforceable contract is enacted between Dorpoer Sheep Sellers Pty and Livestock Brokers. Further, offer an advice to Livestock Brokers about their legal rights.
A valid enforceable contract would be enacted between the parties when the given conditions are satisfied:
- Lawful offer from the offeror
- Lawful and unconditional acceptance from the offeree
- Presence of legal consideration
- Capacity of the parties
- Intention on behalf of the parties to enter into a contract
The person who extends the offer is known as offeror and the person who receives the offer is known as offeree. The parties are entered into a contract, when the offeree accepts the offer without any condition. The Carlill v Carbolic Smoke Ball Co (1893) case is the testimony of this aspect. Any acceptance with conditions is termed as counter offer against the original offer and in this scenario the original offer gets terminated (Gibson & Fraser, 2014). Further, when the offeree sends the letter for any enquiries or ask for additional information then in such cases, it would not be considered as counter offer and thus, the original offer would not get cancelled. The Stevenson v. McLean (1880) case is the evidence of this aspect of contract law.
It is essential that the offeree must communicate the acceptance towards the offer with an appropriate mode of communication (Pathinayake, 2014). If the acceptance is not communicated to the offeror, then this would not be considered a valid acceptance and thus, no contract is enacted. One of the most common modes of communication is through postal media. According to the postal media rule, acceptance for the offer becomes valid exactly when the offeree has sent the letter to the offeror and a valid contract is enacted between the offeror and offeree. Further, any lag in the receipts of the confirmation letter due to any reason like strike, holidays, and technical issues would not cause any impact on the enactment of the contract. Hence, in postal communication the date of receiving of the acceptance letter would also not affect the contract (Davenport & Parker, 2014). It is critical to note that when electronics mode such as fax, rmail is used as a communication media for the acceptance letter. In such cases, it is essential that the offeror must receive the offer letter and then only the acceptance become valid. The Entores Ltd v Miles Far East Corporation (1955) case is the witness of this aspect of mode of communication of acceptance letter (Latimer, 2005).
- According to the given facts, it is apparent that on June 1, Dorper Sheep Sellers Pty Ltd has extended an offer through letter to Livestock Brokers to sell the Dorper sheep flock. The letter comprises the factors regarding the number of sheep flock along with the respective prices. The offer letter also comprises the information that the acceptance letter must be received (by offeror) within a period of 14 days. Livestock Brokers has sent a letter in the reply of the offer, which contains queries related to the more information about the offer from offeror. This does not result in a counter offer because Livestock was asking for some information and according to the decision made in Stevenson v. McLean(1880) case, the letter containing the inquiries would not be termed as counter offer. This means the original offer is still valid as per the common law. Further, Livestock has sent an acceptance letter against the original offer through fax. This fax is received by the offeror within the time limit, which results in the validation of the acceptance. Therefore, an enforceable contract is enacted between the parties.
- In this case, when the fax has not received by the Dorper Sheep Sellers Pty Ltd within the given time of 14 days then no enforceable contract is enacted between the parties. Therefore, there would be no any legal liability present on behalf of the parties.
It can be concluded that in the first case an enforceable contract is enacted between the parties and thus, Livestock Brokers has the legal right to ask Dorper Sheep Sellers to perform the contractual obligations because the fax was timely received by the offeror. In the second case the fax was received after the acceptance period is over and thus, this would not lead to the enactment of the valid contract.
To offer an advice to Stuart about his legal rights as per common law and to comment whether he has to pay the rent amount ($1000) along with the shortfall to Westphalia Marts.
When the two parties have enacted enforceable contract, then they have the legal liability to perform the contractual obligations. Further, if any party is found violating the contractual obligation, then the contract is breached and the innocent party can sue the other party for breaching the contract (Pendleton & Vickery, 2005). However, the parties can alter or modify the existing contractual terms and condition with mutual consent. In this regards, it is essential that both the parties have made the amendment either by the oral agreement or by written agreement. In such case, the new agreed contract is applicable and the previous agreed terms and conditions are superseded. Moreover, one party cannot demand the other party to fulfil the original (past) obligation and the other party is not liable to perform the initial obligations (Latimer, 2005).
According to the given case facts, it is apparent that Stuart had leased a music shop in the Price Mall for five year. In this regards, he enacted a written agreement with Westphalia Marts Pty Ltd. It is highlighted in the lease agreement that Stuart has to pay a rent amount of $1000 per week. In the initial year, the music shop earned significant profits for Stuart and thus, he made the payment of agreed amount to Westphalia Marts Pty Ltd without any shortfall. However, after two and a half year, the music shop business took a fall and thus, Stuart had extended an offer to Westphalia Marts Pty Ltd that he would be able to pay an amount of $700 instead of $1000 till the time his business gets improved. This offer is accepted by the Westphalia Marts Pty Ltd without any condition. Therefore, an oral legal agreement is enacted between them. This is considered as the modification of the original contract and therefore, both the parties are legally bound by the new terms and regulation of the contract. It is imperative to note that when both the concerned parties have modified a contract with sound mind and mutual acceptance, then such modifications are legally enforceable under common law. Therefore, Stuart is not liable to pay past consideration amount i.e. $1000 along with the shortfall to Westphalia Marts Pty Ltd.
In can be said that Stuart and Westphalia Marts Pty Ltd has modified the original contract with the help of an oral agreement and thus, the Westphalia Marts Pty Ltd could not force Stuart to pay $1000 and the shortfall amount under the common law.
Carter, J 2012, Contract Act in Australia, 3rd eds., LexisNexis Publications, Sydney
Davenport, S & Parker, D 2014, Business and Law in Australia, 2nd eds., LexisNexis Publications, Sydney
Gibson, A & Fraser, D 2014. Business Law, 8th eds., Pearson Publications, Sydney
Latimer, P 2005. Australian business law, 24th eds., CCH Australia Ltd. Sydney
Lindgren, KE 2011, Vermeesch and Lindgren's Business Law of Australia, 12th eds., LexisNexis Publications, Sydney
Pendleton, W & Vickery, N 2005. Australian business law: principles and applications, 5th eds., Pearson Publications, Sydney
Pathinayake, A 2014, Commercial and Corporations Law, 2nd eds., Thomson-Reuters, Sydney
Brogden v Metropolitan Railway Co. (1877).
Carlill v Carbolic Smoke Ball Co (1893).
Entores Ltd v Miles Far East Corporation (1955).
Felthouse v Bindley (1862)
Gibson v Manchester City Council - CA (1978).
Great Northern Railway Company v Witham (1873).
Hyde v Wrench((1840).
Mendelson-Zeller Co Inc v T & C Providores Pty Ltd(1981).
Powell v Lee (1908).
Stevenson v. McLean (1880)