City and State
Offer and Acceptance
Individuals may enter into binding contracts without their knowledge. As such, it is important for people to acquire knowledge about contracts before committing themselves. When two or more people or entities agree on something either in writing or through speaking, they enter into a binding contract (O’Sullivan and Hilliard, 2016). The law has the right to take action if one party fails to fulfill its promises as defined in the settlement. This paper will analyze the provided case study and advice Maria, Lottie, Sam, and Fred on whether they entered into any binding contracts.
Fred and Lottie
To start with, the agreement between Fred and Lottie is legally binding. One of the main reasons behind this inference is that the settlement contains the two main elements of a contract, offer, and acceptance. An offer is made by an offeror to the offeree. It may be spoken or in writing and it contains a proposal for exchange and the terms which the offeree rejects or declined. Typically, offers are precise and they also include a time frame as to when they will expire. In the provided case, Fred used an advertisement as his offer which he posted in his Saturday newsletter. It indicated that he was selling 20 iPhone mobile phones at £1200 each. However, Fred did not enter into a binding contract with Lottie until she accepted the offer. Acceptance is the unconditional agreement of the terms and conditions indicated in the offer which is communicated to the offeror by the offeree (Bayern, 2015.). Lottie’s acceptance was in form of a massage which she left on Fred’s voicemail as she could not reach him through the telephone. Regardless of whether or not Fred received the acceptance message from Lottie, he is should adhere to the contract as it is legally enforceable. As such, it is appropriate to conclude that Fred and Lottie entered into a legally binding contract since there was an offer which was accepted.
Fred and Sam
As for Fred and Sam’s case, their agreement was also binding as it consisted of the main elements of a contract. Sam saw Fred’s offer which has been posted on Saturday and responded to it on Tuesday. Sam’s acceptance of the offer took the form of a phone call which Fred received. He said that he has accepted Fred’s proposal and would buy the phones at £1200 each as indicated in the advertisement. However, complications arose when Fred told Sam that he had changed his mind and that he was now selling the devices at £2000 each. Sam got angry and threatened that he would sue Fred. In binding contracts, the offerees should accept the terms and conditions as proposed by the offeror. As for Sam’s case, he complied with what was dictated in the settlement and did not argue. In addition, contract law requires that a proposal should be considered as a counter offer which may be accepted or declined if new terms are introduced before an agreement between two or more individuals or entities is reached upon (O’Sullivan and Hilliard, 2016). In other words, any changes to an offer should be made prior to the acceptance stage. As such, Fred’s decision to increase the price of the mobile phones from £1200 to £2000 each was a breach of the contract and Sam has a right to seek Court’s intervention. Fred should have posted the changes in his offer soon enough. It is the responsibility of Fred to ensure that all the phones are availed to Sam at £1200 each.
Fred and Maria
Also, Fred and Maria entered into a binding contract even though it was difficult to make this inference based on their circumstances. Apart from the two main elements of an agreement, an offer, and an acceptance, the settlement between Fred and Maria included a counter offer. After learning that the price for the iPhone mobile devices was no longer £1200 each but instead, £2000 each, Maria proposed to buy the 20 pieces of phones from Fred at £1750 each which was her top price. Generally, offers should be accepted unconditionally. However, that was not the case between Fred and Maria. Fred changed the terms of the initial offer by increasing the cost of mobile gadgets while Maria made a counter-suggestion on the new terms. Based on the contract law, if a counter-offer is proposed by the offeree, then, the original offer is deemed irrelevant. What is more, if the new suggestion is accepted, the contract becomes valid (Peel, 2015). As such, the fact that Fred accepted the counter-proposal made by Maria means that they both entered into a binding contract.
Nevertheless, their contract was questionable due to communication issues. Whenever there is a counter-offer, it is necessary that the offeror should receive information regarding its acceptance to make the contract effective (McKendrick, 2014). Given that Fred wrote a letter on Thursday indicating that he had accepted Maria’s counter-proposal also made the contract binding. Maria had given Fred until the following Monday to provide feedback about the offer and he sent the response letter on the right time. Even though the letter never arrived due to a postal strike, the agreement was legal. Based on the postal rule, a contract becomes effective when a letter of acceptance of an offer is posted but not when it is received. This further supports the inference of the legally binding nature of the contract between Fred and Maria. Even though Maria eventually revoked the offer, her contract is still binding. Based on the contract law, any termination of an offer made before the expiration time of the proposal is regarded as ineffective.
Conclusions, suggestions, and recommendations
Overall, Fred, Sam, Lottie, and Maria entered into a binding contract. The agreement between Fred and Lottie is justified by the fact that it contains the two main elements of a contract, an offer, and an acceptance. As for Sam and Fred, a counter offer was suggested but after Sam’s acceptance. As such, their settlement was legally binding. Also, Maria’s counter-proposal to Fred’s initial offer made their contract legally binding. Even though there were communications barriers related to the postal strike, Maria and Fred’s contract is justified by the acceptance of the counter-suggestion as well as the postal rule.
Fred is accountable to Lottie, Sam, and Maria. It is recommendable that he should distribute the 20 pieces of iPhone to Lottie and Sam since Maria already terminated the counter-proposal she had raised. More so, Fred should sell the devices at the original price of £1200 each or even lower. Fred may also ask for more supplies of the devices and sell them to Sam and Lottie. Else, they could both sue him and he would be heavily penalized for breaching their contracts.
Bayern, S., 2015. Offer and Acceptance in Modern Contract Law: A Needles Concept. Cal. L. Rev., 103, p.67.
McKendrick, E., 2014. Contract law: text, cases, and materials. Oxford University Press (UK).
O’Sullivan, J. and Hilliard, J., 2016. The law of contract. Oxford University Press.
Peel, E., 2015. Treitel on the Law of Contract (Vol. 414). London: Sweet & maxwell.