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Discussion of Contract Formation

Jen is organising a surprise party for her grandparents’ 50th wedding anniversary. She looks online and finds ‘Tiny Tim’, a professional DJ who is just 17 years old. She emails Tim and asks him what he charges for his DJ services. Tim emails back the next day, providing a brochure listing different kinds of services he provides, at different rates. Jen then replies, saying:

‘I am interested in booking a DJ for my grandparents’ anniversary celebrations on 2rd April. Would you be available on that date? It looks like your ‘weekend special’ package would be most appropriate, because I expect the party to last about 4 hours. But what if we go beyond that time limit? And do you have a good collection of Cuban music? That is their favourite style of music.’ Tim emails back: ‘Yes, I have plenty of Cuban music, and I’m available on 2nd April. If you want me to stay longer than 4 hours, then I charge $30 per extra hour.’

Jen does not reply to Tim, because she hears from a friend who is willing to provide DJ services forfree. Jen wants to know whether she can change her mind about hiring Tim.

Jen also wants to arrange a cake for the party. On Sunday she goes into Delish Cakes, a local cake store, and speaks to the owner, Simon. Jen explains that the party is for her grandparents, and will have a Cuban theme. Simon suggests a particular style of cake, and Jen agrees that it would be

perfect for the party. Simon says that he can specially make some Cuban-style fondant cake decorations. Jen is about to catch a train, so she doesn’t have time to finish filling out the order form. She gives Simon her details and takes the order form with her, saying that she will return it to Simon in the next couple of days.

On Tuesday, Simon calls Jen. She doesn’t answer, so he leaves a message, asking for the order form to be submitted. He also says that he will begin making the Cuban cake decorations. Jen listens to the message but doesn’t call Simon back. Over the next couple of days she is too busy to complete the form and give it to Simon. By the end of the week, Jen is starting to worry that Simon’s cake will be too expensive. On Friday she decides that she will simply make a cake herself. She calls Simon and tells him this. Simon is furious – not only has he spent hours making the Cuban decorations, but because they are unusual he will not be able to use them for any other customers’ orders. Finally, Jen wants help in setting up the venue for the party. She sends a text message to her cousin: ‘Hey Adam! I need you to spend a few hours helping me put up balloons and streamers for the party on Saturday.’

Adam replies ‘Ok, I’ll help you – but what’s in it for me? What will you give me in return?’ Jen texts him again: ‘Remember how I helped you with your college assignment last month? That’s the payment. It’s time to return the favour.’

Adam is not convinced. Jen texts her other cousins, in case Adam doesn’t turn up: ‘Calling all cousins! If you come and help me prepare for the party on Saturday, I’ll pay you $20.’ Jen’s uncle Bill sees the text message on his daughter’s phone. He decides to help Jen set up for the party on Saturday, so he can get $20.

1. Is there an enforceable contract between Tim and Jen? 
2. Is promissory estoppel relevant to Jen’s dispute with Simon from Delish Cakes? 
3. Is there an enforceable contract between Jen and Adam?
4. Is Bill entitled to the $20 if he helps Jen set up for the party?

Discussion of Contract Formation

Whether there is an enforceable contract between Tim and Jen, or not?

A contract can be defined as an exchange of promise, for doing or not doing a specified thing, in exchange of a consideration. It can either be drawn verbally or in a written manner. In order to form a contract, it needs to have the requisite elements of the contract, which include offer and acceptance, a consideration, intent, capacity and clarity.

The beginning of a contract is from an offer being made. This has to be clearly differentiated from an invitation to treat, which highlights the readiness of the parties to negotiate upon the contractual terms. The offer on the other hand denotes the keenness of the parties to create lawful relations. The advertisements given in the newspaper, internet or magazines are not deemed as offer and instead, are considered as an invitation to treat, as was established in Partridge v Crittenden. In such situations, the advertising party is not obligated to go through with the sale.

The next element is that of acceptance. Upon an offer being made successfully, it has to be accepted by the party to which the offer was made. If any other party accepts such offer, it would not be deemed as acceptance. Also, the offer has to be accepted as it was made and any changes in the same would make it a counter offer, as was held in the matter of Hyde v Wrench.

Another element in contract relates to the contractual capacity of the parties. So, the parties have to have a legal age, of over 18 years and sound mind, to be contractual capable. However, there are situations where the minors are permitted to enter into the contracts, and these include the contract for supplying goods or services, which is suitable for the life of the minor.

There also has to be a clarity regarding the terms on which the contract is being drawn. Moreover, the parties need to have the intention of creating legal relationship, which would bind them lawfully. Consideration is another crucial element, which is described in the third part of this discussion.

In the given case study, Jen came across Tiny Tim over the internet, while looking for a professional DJ. This display of information about Tiny Tim over the internet would be deemed as an invitation to treat, where by the terms had to be discussed with Tiny Tim for the details regarding the contract. The communication is exchanged through email, where by the discussion is carried on regarding what Jen wants and what Tim can offer. The reply of Jen would be deemed as the offer in this case as this contains the terms upon which she is willing to form a contract. However, on this offer, instead of giving an acceptance, a counter offer was made by Tiny Tim. On this counter offer, an acceptance was never gained. Hence, due to absence of elements of contract, a contract was not formed.

Application of Contract Law in the Case of Jen and Tim

Conclusion

To conclude, an enforceable contract was not formed between Tim and Jen.

Whether there is a relevance of dispute of Jen with Simon, or not?

The principle of estoppels stops the people from relying upon the rights based on the facts, which are different from the earlier drawn facts. A defensive principle is equitable estoppel, which restricts the individuals from taking any kind of unfair advantage from the other individual, through a false language or conduct. This doctrine restricts the individuals from acting in a manner which would induce another person, in acting in a particular manner. In short, the individual is stopped from being in a position which would be different from the previous time, when such a different individual would injure the other party.

Promissory estoppel, under the contract law, prevents the parties from acting out in a manner, due to the promise of the first party of not to. There is also a need for reliance on the second party on the promise and the acting upon the same.

In the given case, the principle of promissory estoppel is applicable on the dispute of Jen with Simon. Simon waited on the signing of the order form by Jen, and as per the promise made to Jen he started making the Cuban Cake decorations. This decoration was a specification made by Jen, and as per the discussion, he kept his end of the bargain. Apart from the applicability of a verbal contract in this case, Jen would be estopped from denying the cake order to Simon due to the applicability of promissory estoppels. And in case, she does that, she would be liable for damages, which would be payable by her to Simon.

Conclusion

To conclude, Jen would be stopped due to the applicability of promissory estoppels due to the reliance of Simon on her promise.

Whether there is an enforceable contract between Jen and Adam, or not?

One of the essential elements of a contract is consideration. The amount of consideration is mutually decided upon by the parties; however, it is crucial that the same has an economic value. In the matter of Chappell & Co Ltd v Nestle Co Ltd, three wrappers were considered as sufficient and adequate consideration, as they had the required economic value. Moreover, the consideration has to be current or present, and it cannot be past. In short, the consideration has to be made when the task is being performed, and a consideration paid in the past is not valid. In the matter of Re McArdle, there was past consideration, due to which, it was held as invalid. The promise of making the payment, as per the Court of Appeals, has to be subsequent to the performance of consideration for the promise made.

In this case, the consideration of helping Adam in the past, in the college assignment would be deemed as past consideration. And as a result of this, the consideration would be held as invalid. Even though there was an offer, and an acceptance on the same, but due to the absence of valid consideration, a contract cannot be held to have been made between the two.

Conclusion

To conclude, an enforceable contract was not formed between Jen and Adam due to the lack of valid consideration.

Whether Bill is entitled to the consideration of $ 20, in case he helps Jen in setting up the party or not?

As has been highlighted through the rules, the offer can only be accepted by the party to which the same was made. In this case, the offer was made to the cousins of Jen and the same was sent on the phones of the cousins of Jen. The offer was never made to Bill, who is an uncle of Jen and so, he could not accept the offer. Even if he accepts the offer, the same would not be binding on Jen and she would not have to pay the consideration of $20 to Bill.

Conclusion

Bill is not entitled to the consideration of $ 20, even if he helps Jen in setting up the party, due to lack of an offer being made to him.

References

Abbott K, Pendlebury N and Wardman K, Business law (Thompson Learning, 8th ed, 2007)

Andrews N, Contract Law (Cambridge University Press, 2nd ed, 2015)

Blum BA, Contracts: Examples & Explanations (Aspen Publishers Online, 4th ed, 2007)

Carter JW, Elisabeth Peden and Greg Tolhurst, Contract Law in Australia (LexisNexis Butterworths, 5th ed, 2007)

Elliott C and Quinn F, Contract Law (Pearson Education Limited, 9th ed, 2013)

Furmston M and Tolhurst GJ, Contract Formation: Law and Practice (Oxford University Press, 2010)

Latimer P, Australian Business Law 2012 (CCH Australia Limited, 31st ed, 2012)

Macdonald E, and Atkins R, Koffman & Macdonald's Law of Contract (Oxford University Press, 8th ed, 2014)

Poole J, Casebook on Contract Law (Oxford University Press, 2016)

Chappell & Co Ltd v Nestle Co Ltd [1959] UKHL 1

Hyde v Wrench [1840] 49 ER 132

Partridge v Crittenden [1968] 1 WLR 1204

Re McArdle (1951) Ch 669

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My Assignment Help (2021) Analysis Of Contract And Estoppel In A Case Study Essay. [Online]. Available from: https://myassignmenthelp.com/free-samples/lst2bsl-introduction-to-business-law-and-ethics/consideration-intent-capacity-and-clarity-in-business-law.html
[Accessed 25 February 2024].

My Assignment Help. 'Analysis Of Contract And Estoppel In A Case Study Essay.' (My Assignment Help, 2021) <https://myassignmenthelp.com/free-samples/lst2bsl-introduction-to-business-law-and-ethics/consideration-intent-capacity-and-clarity-in-business-law.html> accessed 25 February 2024.

My Assignment Help. Analysis Of Contract And Estoppel In A Case Study Essay. [Internet]. My Assignment Help. 2021 [cited 25 February 2024]. Available from: https://myassignmenthelp.com/free-samples/lst2bsl-introduction-to-business-law-and-ethics/consideration-intent-capacity-and-clarity-in-business-law.html.

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