Law Of Contract Essay

1318 words - 5 pages

Law of Contract

Michelle is at University, studying to be a veterinary surgeon. David,
a close family friend is also a veterinary surgeon. Whilst away at
University, Michelle received a letter from David, saying that he was
due to retire in a few weeks' time and that he wondered whether she
would be interested in buying his veterinary equipment for the bargain
price of 500 pounds. His letter asked for a prompt reply as a junior
partner in his veterinary practice was also interested in buying the
equipment, albeit at a higher price.

Upon receipt of David's letter, Michelle decided that she would like
to buy, but she would need to borrow the money. In order to speed
matters up, she then wrote to David expressing a firm interest, but
asking if he would be prepared to accept payment by instalments. Her
letter got lost in the post and was never received by David

Not having heard from David, Michelle arranged a bank loan and then
posted a second letter, enclosing a cheque for 500 pounds. This letter
did arrive, but by this time, David had assumed that she was not
interested in the equipment and had already sold it to his junior
partner instead.

With reference to the case situation above, discuss, using decided
cases to support your arguments, the contractual implications and the
remedies, if any, that Michelle might be able to pursue against,
David.

Answer

In discussing the situation amidst Michelle and David, it is critical
to establish whether an actual contract has come into existence
between the two parties. It is therefore necessary to examine, in
relation to the scenario, the presence of the three chief elements of
agreement-offer, acceptance and intention to create legal relations.

In law, the term offer is defined as an undertaking by the offeror
that he will be bound in contract by the offer if there is a proper
acceptance of it. The offer cannot be vague or indefinite; it must be
precise and express a clear intent to contract. The use of the terms
'wondered' and 'whether' in describing David's 'proposal', implies
vagueness and lacks clarity. In his supposed offer, David fails to be
sufficiently definite in his terms suggesting that there was no clear
intent to contract. What Michelle may have perceived to be an offer
may have, in fact, been on the part of David, a mere invitation to
treat.

An Invitation to Treat is an expression of intent to negotiate; it is
not in itself an offer and cannot bind the parties into legal
relations. David's letter may be regarded as an advertisement
informing Michelle of his merchandise. The 'bargain price' of £500 may
be perceived by the court as a mere reserve price, thereby nullifying
any claim by Michelle of breach of contract. One could refer to the
case of Harvey v Facey of 1893 where, similarly, a salesman...

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