An Essay On Contract And Dispute Resolution Methods.

i. Whether a contract was formed. If so, when was it formed and who were the contracting parties?

ii. Bernard's legal position and remedies

iii. Charleen's legal position and remedies

iv. Damien's legal position and remedies v. The various alternative dispute resolution options available and the pros/ cons with these options.

Evaluation of the Formation of Valid Contracts

A contract creates a binding relationship between parties under which they can be legally enforced to comply with its terms. In this paper, a case study will be evaluated by using different laws relating to contract and its key elements. The objective is to evaluate the legal position of different parties in the case by applying relevant laws and cases. Moreover, various alternative dispute resolution methods will be analysed which include mediation, arbitration and litigation and their advantages and disadvantages will be discussed as well.

Whether a contract has formed between Alan and Bernard? If yes, then whether any remedies are available for Bernard?

Offer and acceptance are key elements without which a valid contract is not formed between parties. The offer is referred to the willingness of a person to form a contractual relationship with third parties based on specific conditions. In Harvey v Facey [1893] UKPC 1 case, it was held that a valid offer must have the authority to bind the offeror into a legal relationship (Hough & Kuhnel-Fitchen, 2017). This relationship is formed after a valid acceptance is received by the party. The acceptance in a contract must be communicated without which it cannot be constituted as valid as given in Entores v Miles Far East [1955] 2 QB 327 case. It is also important that the acceptance matches the terms of the offer unless a counter offer is made which terminates the original offer. In Hyde v Wrench (1840) 49 ER 132 case, this element was established by the court. In this case, the claimant did not accept the offer made by the defendant to sell his land for £1,000; instead, a counter offer of £950 was made. This offer was terminated by the defendant. Later, the claimant decided to accept the original offer, but the defendant denied the same. A lawsuit was filed in which the court provided that the counteroffer resulted in terminating the original offer which cannot be accepted by the claimant (Turner, 2013).

In the given case study, the counteroffer was made by Bernard to purchase the book for $150 rather than $200. Alan told Bernard that he did not want to sell the book for $200 and that he already has an offer. Since the counter offer was rejected, no contract is formed between the parties. Bernard did not have the right to accept the original offer of Alan (Hyde v Wrench). However, Bernard decided to pay $200 for the book, and he sent his money through the mail to Alan that was received by him on 5^th November. Bernard has complied with the term of Alan in which he specified that he should receive the money before 5^th November. Alan kept the money given by Bernard, and he also provided him his book, therefore, a contract was formed between the parties.

Remedies for Breach of Contract

The remedies which are available in case of termination of a contract include damages, rescission, repudiation, specific performance and injunction. In this case, the contractual obligation is violated by Alan since an exercise book is not given separately by him. Thus, Bernard has the right to sue Alan, and claim remedies include damages and termination of the contract.

Conclusion

To conclude, a contract is formed between Alan and Bernard and Bernard has the legal remedies against Alan since he has violated the contract.

Whether a contract formed between Alan and Charleen? If yes, then what remedies are available for her?

The competence of parties is a key element of a contract. It means that not all parties have the right to form a legal relationship by signing a contract. Certain parties including minor, insolvent and unsound mind person did not have the capacity to sign a legal contract. A minor is a person who is below 18 years old; due to lack of knowledge and understanding of the consequences, a minor cannot form a legal relationship. In Nash v Inman [1908] 2 KB 1 case, this element was explained by the court. In this case, the court provided that a minor can form a contract for necessities which include food, clothes, transport, and others (Monaghan & Monaghan, 2013). Moreover, the acceptance in a contract must be communicated clearly by the offeree. In the case of Felthouse v Bindley [1862] EWHC CP J35, the court provided a landmark judgement. In this case, it was held that silence of a party did not amount to a valid acceptance.

In the given case study, Charleen wanted to purchase the book from Alan by accepting his offer. She is a minor and taking her “O” levels this year. Charleen cannot form a legal contract since the competence of the parties is a key element in a contract. However, as discussed in Nash v Inman case, a contract can be formed by minors for necessities. Since Charleen will give her “O” levels this year, purchasing the book of Commercial Law is not a necessity for her. It would be considered as a necessity if Charleen was in the class of Commercial Law, therefore, it was not valid. Additionally, Alan did not give a valid acceptance to Charleen when she made the offer. He was thinking about his favourite football team’ performance based on which he nodded. The silence of Alan did not consider as a valid acceptance as given in the case of Felthouse v Bindley. Therefore, parties did not enter into a valid contract.

Alternative Dispute Resolution Methods

Alan did not give a valid acceptance because he was not completely aware regarding the offer of Charleen. Charleen is also a minor who could not form a legal relationship. Thus, a valid contract is not formed between the parties based on which there are no remedies available for Charleen against Alan.

Conclusion

To conclude, a valid contract is not constructed between Alan and Charleen because Charleen is a minor and a valid acceptance was not given by Alan. Thus, there are no remedies available for Charleen against Alan as well.

Whether a legally binding contract has formed between Alan and Damien? If yes, then what remedies are available for Damien against Alan?

It is important that parties differentiate between an offer and an invitation to treat. A legal relationship did not form between parties after acceptance of an invitation to treat. In Fisher v Bell [1961] 1 QB 394 case, the court provided that giving an acceptance on an invitation to treat did not form a legally binding contract between parties. Partridge v Crittenden (1968) 1 All ER 425 is a relevant case on this topic. In this case, the court provided that generally the advertisement posted by parties are considered as an invitation to treat rather than a valid offer which can be accepted by third parties to form a legal relationship (Bender & Do, 2014). However, an exception of this rule was established by the court in Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256 case. This is a relevant case in which the court provided that advertisement can be considered as a valid offer. The advertisement can be considered as a unilateral offer which can make to the whole world. In these contracts, the acceptance of the party is not necessary to be communicated; instead, it is provided by the actions of the parties by complying with the instruction given in the advertisement (Jones, 2016).

In the given case study, an advertisement is posted by Alan to sell his book along with handwritten notes. In the advertisement, Alan clearly mentioned that anyone who wanted to purchase his book should send him $200 before 5^th November 2015. Damien accepted this offer because he gave the money to Alan in person on 4^th November 2015. Alan accepted the money given by Damien. Since Damien has complied with the instructions given in the advertisement, a valid contract is formed between him and Alan.

Mediation

A contract is constructed between the parties in this scenario. Alan purchased a new book from the bookstore and gave it to Damien. He misrepresented to Damien because he posted on the advertisement that he will give his book along with handwritten notes which are written in a separate exercise book. Alan did not comply by the terms of the advertisement based on which Damien can file a lawsuit against him for breach of the contract, and he can claim a remedy for the same. The remedies include payment of damages and repudiation of the contract.

Conclusion

To conclude, a valid contract is constructed between Alan and Damien. Alan has not complied with the terms of the contract based on which Damien has the right to file a suit for breach of contract to claim a remedy.

While resolving a dispute, the parties have three ways in which they can resolve their dispute which include mediation, arbitration and litigation. In the given case study, the selection of mediation is the best choice for resolving the issue.

Mediation is referred to a process in which the parties try to resolve the dispute between them by helping the two sides to talk about the issue in order to find and agree on a solution. It is a voluntary process in which parties did not have to selection litigation. In this process, the disputing parties sit with a mediator to discuss the issue and reach a mutual agreement. The mediator can be from legal field or any other professional field which can help the parties to reach a solution (Blake, Browne & Sime, 2016). The mediator encouraged the parties to accept the findings of the case and reach a solution; however, it is not mandatory for parties that they will have to reach a mutual agreement. The parties have the right to proceed to the court if the mediation process fails.

Mediation is not a complicated process in which the parties did not have to hire lawyers. It keeps the dispute private since it did not involve a judge or jury. Parties have the option to hear the arguments of each party without fighting, and they can mutually reach an agreement which benefits them both. If not agreement is reached, then parties can go to the court.

Both parties have to give their acceptance for mediation. It is up to parties whether they want to accept the agreement or not. An inexperienced mediator can adversely impact the situation, and there are concerns regarding enforceability of the mediation agreement.

Arbitration

It is referred to a way to settle disputes in which the dispute is submitted to one or more arbitrators who give a binding judgement after hearing both parties and evaluating the facts of the case. A hearing is conducted by the arbitrator where both parties bring evidence and give testimony regarding the case (Ali & Da Roza, 2012).

It is way cheaper than litigation, and it is not time-consuming as well. It is a flexible option than compared to litigation. It also keeps the dispute private between the parties since the court and jury is not involved.

The judgement of arbitrator is binding which creates a situation of “take it or leave it”. Due to lack of transparency, there is a risk of biases in the decision of the arbitrator. The arbitrator can give an unfair or illogical decision and disputing parties will be stuck with such decision. Parties are not allowed to go the court against the order of the arbitrator.

Litigation is referred to resolution of the dispute by the court. It is an expensive and time-consuming option to resolve a dispute. The parties can present their case in from of the court or a jury who evaluates the facts and evidence to provide a judgement (Wang, 2014). Parties can make an appeal against the offer in higher court after which it is legally binding on parties.

There is transparency in the process, and the decision of the court is free from biases. The parties cannot run away from the punishment for their crimes, and the court enforces the judgement on the parties.

It is an expensive procedure in which both parties have to invest huge resources. It is a time-consuming process, and it becomes longer in case parties appeal. Parties did not have privacy in this option.

Conclusion

In conclusion, the parties who sign a contract are bound by the contractual obligations, and there are various remedies available for them in case the contractual terms are violated. Moreover, in case a dispute arises between parties, then they can choose different alternative resolution methods. Mediation is an effective procedure which enables parties to resolve their dispute without incurring huge costs, within appropriate time frame and it maintains the privacy. Arbitration is another good example; however, its decision is enforceable on the parties, and the arbitrator can give a biased judgement. There are both advantages and disadvantages of alternative dispute resolution methods than compared to litigation; therefore, parties should choose them carefully.

References

Ali, S. F., & Da Roza, A. (2012). Alternative dispute resolution design in financial markets-some more equal than others: Hong Kong's proposed financial dispute resolution center in the context of the experience in the United Kingdom, United States, Australia, and Singapore. Pac. Rim L. & Pol'y J., 21, 485.

Bender, M., & Do, C. (2014). How to Pass Business Law. North Ryde: CCH Australia Limited.

Blake, S. H., Browne, J., & Sime, S. (2016). A practical approach to alternative dispute resolution. Oxford: Oxford University Press.

Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256

Entores v Miles Far East [1955] 2 QB 327

Felthouse v Bindley [1862] EWHC CP J35

Fisher v Bell [1961] 1 QB 394

Harvey v Facey [1893] UKPC 1

Hough, T., & Kuhnel-Fitchen, K. (2017). Optimize Contract Law. Abingdon: Routledge.

Hyde v Wrench (1840) 49 ER 132

Jones, E. (2016). Richard Stone and James Devenney, Texts, Cases and Materials on Contract Law. The Law Teacher, 50(3), 393-396.

Monaghan, C., & Monaghan, N. (2013). Beginning Contract Law. Abingdon: Routledge.

Nash v Inman [1908] 2 KB 1

Partridge v Crittenden (1968) 1 All ER 425

Turner, C. (2013). Contract law. Abingdon: Routledge.

Wang, M. (2014). Are alternative dispute resolution methods superior to litigation in resolving disputes in international commerce?. Arbitration International, 16(2), 189-212.