Contract Essay

CONTRACT LAW

PRACTICE ESSAY 1

Gertie places a notice in the trade journal 'Mung Monthly' saying that she would pay Ј2000 against a 'wood nymph' Mung vase with its authenticity certificate.

The question is to know whether Gertie's proposal is an offer and could lead to a contract .

The notice in the trade journal stays a proposal to the public. This proposal could amount to an offer if it is intended to result in a contract, if the other party accepts it, and if it contains sufficiently definite terms to form a contract. Gertie's notice is sufficiently definite (there is the price and the vase design) to be treated as an offer.

But is her proposal could be regarded as an invitation to treat?

Two arguments show that Gertie's notice does not have to be treated as an invitation to treat. First, the notice specifies that Gertie will pay a particular sum of money against a particular type of vase . This kind of proposal excludes the idea of negotiations . Second, Gertie's proposal is an advertisement in a trade journal . And it was held in the case of Carbolic Smoke Ball Co (1893) that the advertisement was not an invitation to treat but an offer to the whole world.

Furthermore, Gertie may wish prospective suppliers to know that they will be able to deliver the vase by accepting the proposal and that they do not risk refusal of their 'acceptance'. Thus, Gertie's proposal is to be treated as an offer.

Both Maurice and Fred have seen the notice in the trade journal and they have a 'wood nymph' Mung vase.

It is interesting to see how Maurice has tried to make a new proposal in asking to Gertie whether a 'tree frog' vase would do.

Is this kind of proposal a counter-offer?

To my mind, Maurice has just asked to Gertie whether she was interested in the 'tree frog' vase. It is not a real counter-offer. A counter-offer would have been in that case a purported acceptance which would have change the price, like it was in the case of Hyde v. Wrench (1840). For instance, Maurice would have suggested to Gertie a higher price for the 'wood nymph' vase.

Both Maurice and Fred have obtained the Mung Monthly authenticity certificate .

Maurice posts it to Gertie by a private letter delivery service on 6th March . His letter arrives at 9am on the 8th March .

Fred decides to email Gertie on the 7th March with a scanned copy of his authenticity certificate. But it arrives at 11pm due to a problem with the network Gertie subscribes to. Gertie does not read her email till 10am.

The problem is that both Maurice and Fred say that Gertie should buy their vase.

The question is to know whether Gertie should choose Fred or Maurice. Which choice would be more profitable for Gertie? Gertie must take the safer solution in order to avoid a contractual dispute.

Should Gertie buy Maurice's or Fred's vase?

The general rule is that an acceptance must be communicated to the offeror. The acceptance is generally communicated when it is actually brought to the attention of the offeror. But this rule is not an absolute one and knows an exception which concerns acceptances sent through the post. The postal rule of acceptance has been introduced with the Adams v. Lindsell case (1818). It was held that the acceptance takes place when the letter of acceptance is posted by the offeree. The acceptance takes effect when it is posted and not when it reaches the offeror.

Does the postal rule of acceptance apply to Maurice's acceptance?

Indeed, that is the situation of Maurice's letter. By posting to Gertie the authenticity certificate of the 'wood nymph' Mung vase, Maurice has expressed his willingness to sell his vase against the sum of Ј2000. Thus, Maurice has accepted the offer made by Gertie and his acceptance has been effective as soon as he posted it. Maurice's letter arrives at 9am on the 8th March. But the contract is concluded and is effective when the letter of acceptance is posted. So if Gertie decides to refuse Maurice's acceptance on the 8th March it would be appear as a breach of