Business Law Essay Covers The Postal Rule And Its States.

Describe the Business Law For Postal Rule States. 

Case Study: Contractual Relations between a University and Various Tender Applicants

The Millennia University called for tenders with closing date on 1 June and Greenland delivered the tender on 29 May; Enviro has posted tender on 15 May and Plant has submitted tender on 30 May.

Whether contractual relation existed between the university and Greenland, Enviro and Plant forever

A contract may be defined as an agreement that is enforceable by law. When two parties enter into an agreement with the intention to perform the contractual obligations and be legally bound by the agreement, such agreement is said to be a contract enforceable by law. The parties to a contract are entitled to challenge each other in the event of a breach of the contractual obligations. In order to enter into a contract, it is necessary for one party to make an offer to the other party and the other party must communicate acceptance of such offer as was observed in Australian Woollen Mills Pty Ltd v The Commonwealth [1954].

An offer may be made to a particular person or to a group of persons. An offer differs from an invitation to treat in that an offer is a proposal whereas an invitation to offer (treat) implies inviting someone to make proposal. An offer is made with the intention to enter into a contract with the offeree, thus it implies certainty. On the other hand, an invitation to offer is an offer that is made with the objective of negotiating or inducing the contractual terms as was defined in Carlill v Carbollic Smoke Ball Co [1893].

In the given scenario, as per AGC (Advance) Ltd v McWhirter [1977]  tenders cannot be considered as an offer in the event they are not complete and shall be considered as an invitation to treat. A tender shall be considered as an offer only if it includes specific terms like mode of delivery, completion date, price and other contractual terms that are relevant to the agreement (McKendrick 2014). It is not mandatory on the part of the offeree to accept a tender offer unless the same has been specifically stated such as tender that offers the lowest price shall be accepted. However, if the offeree rejects the offer once it cannot be accepted again as was stated in Byrne v Van Tienhoven [1880].

In the postal rule of acceptance, it was stated in Adam v Lindsay [1881] that as soon as the letter is posted by the sender and sent through post, the offer is said to have been accepted the moment when the letter is posted and is beyond control of the sender. However, such letter must bear correct address of the addressee.

In the given scenario, Greenland responded to the tender invitation on 29 March, which was way before the last date on which the tender could be submitted to the University. Greenland had offered second lowest price tender to the University but the tender was not accepted by the University as there were rumors regarding the unreliability of the company in the market. Moreover, it is not compulsory for a person to whom a tender offer is made to accept the offer; hence, the university does not have any legal obligation towards Greenland. Furthermore, since the university has once rejected the offer made by Greenland, it cannot accept the offer anymore.The rejection implied University’s acceptance of the tender Offered by plant forever. The university expressly communicated the rejection of tender to Greenland. There was no further contact created between Greenland and the University.

Issue: Is there any legal effect of each correspondence between James’s Shoes, Famous Footwear, and Footloose?

Enviro- In the given scenario, Enviro shall offer the tender on 15 May by post and the offer reached the university on 17 May. However, Enviro did not put the tender offer in the box. As discussed above, the University only made an invitation to an offer and hence, the university was not liable to accept the offer made by Enviro. Therefore, no contractual relation arose between the University and Enviro as the offer was not available but it could be accepted as the offer was discovered after the decision was made and the same had not been rejected by the university.

Plant forever- Plant posted the order on 30 May, which reached the University on 2 June, which was past the stipulated time prescribed by the University for tender invitation. However, as per the principles of the postal rule, the tender shall be considered effective on 30 May, which was prior to the date specified by the University and hence, was considered valid. The University posted the letter of acceptance of the tender but the letter did not reach plant forever. Further, plant forever did not receive the letter as a post worker destroyed it. Nevertheless, the postal rule states that as soon as the letter was posted, a contract was created between the Plant Forever and the university. There was proper offer and acceptance between the parties to a contract, which is essential to form a valid contract. Hence, the University of Millennia is entitled to claim compensation from Plant forever as it committed its full stock in some other place.

Conclusion

There was no contractual relation between the University in relation to Greenland and Enviro but a contractual relation exist between Plant Forever and University where Plant has committed a breach of the contract. 

Is there any legal effect of each correspondence between James’s shoes, Famous footwear and Footloose?

An offer cannot be considered to be legally binding unless it includes primary terms as was held in Ermogenous v Greek Orthodox Community of SA Inc [2002]. The primary terms of a contract includes delivery date, price of the goods, payment mode details, date of payment, description of the goods, etc which must be present in an offer to be enforceable by law.

The courts usually determine whether a valid offer has been made between the parties to the contract by applying the objective test. The court applies the test to determine whether any reasonable person shall view the contract as a valid contract as was observed in Smith v Huges [1871]. An offer becomes an invitation to offer if it is not complete and does not bind the parties to the contract legally (Andrews 2015). In case of an acceptance of an offer, it must be made according to the terms of the offer and there must not be any acceptance in respect of alternative terms. Acceptance for alternative terms shall invalidate the original offer and shall be considered as counter offer that does not have legal effect. When a counter offer is made, it invalidates the original offer. As per the decision in Hyde v Wrench [1840], a contract is valid only when all the essential ingredients of the contract is fulfilled.

Footloose gave an advertisement in a daily newspaper on 1 October and an offer is regarded as an invitation to offer if it is not complete. In the given case, the advertisement does not mention clearly about the transfer as it merely stated the starting price of flies worth $2000 for hundred days and did not even specify styles and the rate of the different styles. Further, there was no clear mention about the quantity of goods and the delivery, thus, it constituted an invitation to treat.

Famous footwear sent a letter on 2 October accepting the offer made in the advertisement and wish to buy 500 pairs at 2000 per 100 pairs, further stating the delivery date shall be followed. The acceptance as not valid as the advertisement was an invitation to treat and it did not mention anything about delivery date or mode of payment.

James shoes sent an offer on 4 October, in response to the invitation to offer made by Footloose stating they would like to purchase 2000 pair of sling bag sandals at 30000 including GST and delivery. The offer made was considered as valid offer as any prudent person shall be induced to enter into the contract.

Footloose made an offer on 6 October to James shoes stating that they want to send back the 2000 pair of sandals at 30000 excluding GST price. Footloose stated the payment mode to be cheque or cash but the offer was considered as counteroffer as it was not accepted on the terms of the original offer made on 4 October, which included GST. On 8 October James sent a letter to Footloose regarding the counter offer made on 6 October stating gents footwear are ready to accept the terms of the offer but the delivery date is required to be decided for proper acceptance.

The contract was created on 10 October where Ms Simeone discussed that sandal delivery shall be collected by James on 1 November from famous Footloose Sydney warehouse. This would amount to a valid contract as it includes all essentials of a valid contract.

Conclusion

A valid contract was formed on 10 October between James’s shoes and Footloose. The communication between three companies from 1 to 8 October, constituted invitation to treat, offer and counter offers. 

References

Australian Woollen Mills Pty Ltd v The Commonwealth [1954] 92 CLR 424.

Carlill v Carbollic Smoke Ball Co [1893].

AGC (Advance) Ltd v McWhirter [1977] 1 BLR 9454  

Byrne v Van Tienhoven [1880] LR 5 CPD 344.

Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8.

Smith v Huges [1871] LR 6 QB 597

McKendrick, E., 2014. Contract law: text, cases, and materials. Oxford University Press (UK).

Andrews, N., 2015. Contract law. Cambridge University Press.

Hyde v Wrench [1840] Beav 334