DISCUSS THE CONCEPT OF AGREEMENTS Agreements are usually shown by the unconditional acceptance of a firm offer.

It marks
the termination of negotiations and thereafter any withdrawal will constitute a breach of the contract. There are two type of agreements recognized in todays world Formal agreement- such as the transfer of land where the agreement is made under seal and proof. Example: If A agrees too sell her car to B for $100, the agreement gives rise to a legal obligation on the following parts Part of A to deliver the car to B, and Part of B to pay $100 to A. The agreement is a contract so therefore if A does not deliver the car, then B can go to court and file a suit against A for not performing her part of the contract. Likewise, if A had given the car to B and B refuses to pay, then A can sue B for not providing the promised cash payments. Informal agreement- these are more commonly made in the environment by individuals such as through orally, thereby hard to make proof of. Example: A promises his daughter to give pocket money of $10 per month. If A fails or refuses to give his daughter the promised amount, his daughter has no remedy against her father. In the above example, promises are not enforceable by law since there was no intention to create legal obligations. These agreements are recognized as social agreements which do not give rise to legal considerations.

Agreements are made up of offers and acceptance terms which will be discuss below.

OFFER
An offer could be defined as

- An act, or - Omission of the party proposing by which he/she intends to communicate a particular
proposal or has the effect of communicating it to the other party. An offer can be made by an act in the following ways

- By words (written or oral) - such as letters, telegrams, advertisements etc. Oral

messages could be sent by telephone or in person. Example: A proposes by letter to sell a house to B by A at $10000. This is an offer by an act by written words such as in form of a letter.

- By conduct- the offer can be made by positive acts or signs so that the personal
acting or making the signs means to say or convey a message. But it must be kept in mind that silence of either party can in no case amount to an offer by contact. An offer can be made either

- To a definite person or group of people (specific offer) - To the public at large (general offer)
Example: Carlill V. Carbolic Smoke Ball Co (1813) Case A patent company advertised that they would provide a reward of $100 to anyone if 0the individual contracted influenza after using the smoke balls provided by the company, for a certain period of time. Mrs. Carlill purchased the smoke ball and after using it as directed, caught influenza. She claimed for the reward of $100. The company turned down the reward on the backgrounds that the offer was not made to her and that she had not communicated the acceptance of the offer. Adjudged- Mrs. Carlill could not recover the reward on the basis that she had accepted the offer by complying with the terms of the offer.

Essential Requirements for a Validation of an Offer

1) The offer must be made with a view to obtain acceptance. 2) The offer must be made with the intention of creating legal relations Example: Balfour V. Balfour (1919) Case Mr. Balfour (D) and Mrs. Balfour (P) lived in Ceylon and visited England on a vacation. The plaintiff remained in England for medical treatment and the defendant agreed to send her a specific amount of money each month until she could return. The defendant later asked to remain separated and Mrs. Balfour sued for restitution of her conjugal rights and for alimony equal to the amount her husband had agreed to send. Mrs. Balfour obtained a decree nisi and five months later was granted an order for alimony. The lower court entered judgment in favor of the plaintiff and held that the defendants promise to send money was enforceable. The court held that Mrs. Balfours consent was sufficient consideration to render the contract enforceable and the defendant appealed. Issues a) Is it necessary for both parties to engage in an agreement which should be legally binding in order to be called a contract? b) Under what circumstances will a court decline to enforce an agreement between spouses? Rule a) Yes. Both parties must intend that an agreement be legally binding in order to be an enforceable contract. b) The court will not enforce agreements between spouses that involve daily life. Judgment Agreements between husband and wife over matters that affect their daily lives are not subject to contractual interpretation, even when consideration is present. Spouses normally intend that the terms of their agreements can be varied as situations develop. The court held that it was presumed that the parties made the agreement as husband and

wife and did not intend that it could be sued upon. The court held that as a matter of public policy it could not resolve disputes between spouses. Disposition Judgment for plaintiff Mrs. Balfour reversed. Note Contracts related to the social aspect of marriage will not be enforced by the courts. Contracts between spouses related to business relationships can be enforced, however. Courts are willing to support negotiated divorce settlements and written statements of support. (Source: http://www.lawnix.com/cases/balfour-balfour.html) 3) The Terms of the Offer must have the following Facts

- Definite - Unambiguous - Certain or capable of being certain

Example: A offers to sell B, 100 quintals of oil. This offer is not definite as it does not state what kind of oil is offered by A. So therefore, this offer is not capable of being accepted for the necessity of been certain. 4) 2 Forms of Offers A mere declaration of intention- this is where a person make a statement without any intention of creating a binding obligation. It may be a mere declaration of intention, not a proposal. Example: Harris v Nickerson (1873) Case This case took place at an auction, where the defendant placed an advertisement in the papers that certain items such as brewing equipment and office furniture would be put over at the auction for three days. The Plaintiff obtains a commission to purchase the office furniture and thereby spending time and expenses to travel to the auction to bid for the office furniture. But on the third day, the office furniture was withdrawn. The Plaintiff sues for the loss of time and expenses.

The Plaintiff submitted the advertisement and pointed out that they ha created a contract between themselves as the Defendant would sell the furniture according to the conditions stated in the advertisement, and that the withdrawal of the furniture would be a breach of contract. But the Defendant submitted the advertisement of the sales that it did not constitute a contract that any particular class of items would be put up for sale. Judgment The court held that in favor of the Defendant as the advertisement did not constitute an offer but rather a mere declaration of intention of sale. It was quoted the Blackburn, J founded his judgment on public policy grounds, calling it a startling proposition that anyone who advertises a sale by publishing an advertisement would be responsible to everyone who attends the sale for his cab hire or travelling expenses. (Source: http://en.wikipedia.org/wiki/Harris_v_Nickerson) Invitation to offer- an offer must be eminent from invitation to offer. For instance- a prospectus issued by a school for admission to the courses available at the school is not an offer. It is an invitation to offer. But the student is making an offer by filling up the application form attached to the prospectus. Ex: Pharmaceutical Society of Great Britain V. Boots Cash Chemists (1953) Case The case involves Boots Cash Chemists that sold drugs where the customer could choose the drug and put it into the basket, than the traditional method of asking pharmacists. After the customer has taken the required drugs, he/she would take the basket to the registered pharmacists to complete the transaction. The Pharmaceutical Society of Great Britain, a society representing the pharmacist profession, had an issue with this new method of purchasing drugs and filed a case against Boots Cash Chemists. The case was enforced under the Pharmacy and Poison Act 1933, where it was made illegal to sell a listed poison without the supervision of a registered pharmacist.

Argument Their point of view was that the display of the good was an offer to sell by which the customer accepted the offer by placing the drugs in the basket, where, that moment a contract was formed. So therefore, they argued that under the provision of the Act of prohibiting the sale of poison, without adequate supervision was violation. Judgment The case was weighted towards Boots as they held that the display of the drugs was not an offer but an invitation to offer. The customer made the decision to make accept the offer by placing the goods into the basket. The customer could have either accepted or rejected at the cash desk. The contract was completed at the cash desk, in the presence of the supervising pharmacist so therefore there was no violation of the Act. 5) Communication of Offers Whenever a firm offers an offer, the offer must be communicated to the other party in order to be effective action. Until the other party is aware of the offer, he/she cannot accept it. Example: if A sends B, an investigator, to find a lost mobile phone. And at the same time, A announced the reward of $100 for anyone who finds his mobile phone. If the investigator found the phone without the knowledge about the announcement of the reward and informed to A about the phone, the investigator is not entitled to the reward as he did not accept the offer unless he had the knowledge of the reward been offered. An offer can be made to one individual or the world at large (Carlill V. Carbolic Smoke Ball Co (1813). 6) Revocation- is when an offer comes to an end. It may end in number of ways so that it cannot be accepted. The offeror may revoke or withdraw before the offeree has accepted it but he must make communicate clearly about the revocation of the offer. Revocation is possible if the one party clearly shows his/her intention to revoke, such as by selling the goods elsewhere and whereupon the other party gets to know about it.

Example: Dickinson V. Dodds (1876) Case On Wednesday, Dodds sent Dickinson a proposal in which he agreed to sell a piece of land for 800, with the offer been held till the following Friday till 9am. Dickinson decided to accept the offer but didnt contact Dodds as he had the deadline till Friday morning. Dodds learned that Dickinson has also offered to sell the same piece of land to a third party. Dickinson than wrote a note accepting the offer where he left it with his mother-in-law, who neglected to give it to Dodds. On Friday, Dickinson have a reply to Dodds a written acceptance of the offer but Dodds had declined it as he ha sold the land to another party. Dickinson sued for specific performance. Issue Been whether a promise to hold an offer open is binding where the other party does not accept until after he learns that the offeror has already conveyed the property? Judgment No. An open offer to sell terminates when the offeree learns that the offeror has already agreed to sell to someone else The court stated that Dickinson knew that Dodds offer was obviously been withdrawn when he stated that he had sold the property to another party since there was no communication at the time of acceptance, so thereby no binding contract was formed. Option- revocation is possible at any time even though there has been a promise to keep the offer open for a certain period of time. However, an early withdrawal of the offer will be a breach if an option is bought forward by another party and given consideration to keep the offer open for a specific time. Rejection- it is possible for the offeree to reject an offer provided that the offeror is aware of the rejection in order to be effective. Rejection can be in form of a counter offer or by introductions of new terms into the offer. It is important to note that, once the offeree rejects the offer, he/she cannot later revive and accept it.

Example: Hyde V. Wrench (1840) Case Wrench offered to sell his estate to Hyde for 1200 pounds and Hyde declined. Then Wrench then made a final offer to sell the farm for 1000 pounds. Hyde in turn offered to purchase the property for 950 pounds and Wrench replied that he would consider the offer and give an answer within approximately two weeks. Wrench ultimately rejected the offer and Hyde immediately replied that he accepted Wrenchs earlier offer to sell the real estate for 1000 pounds. Wrench refused and Hyde sued for breach of contract and sought specific performance, contending that Wenchs offer had not been withdrawn prior to acceptance. Issue If one party makes an offer and the offeree makes a counteroffer, does the original offer remain open? Judgment The answer been no as counteroffer negates the original offer. In order to have a valid contract, there must be a simple acceptance of the terms and conditions by the two parties. Hyde rejected Wenchs first offer to sell and then made a counter offer which terminated the original proposal. So therefore, the offer was never accepted and thereby cannot be revived. 7) Termination of Offers- offers may come to a closure when it is accepted by the other party. But there are other ways offers could be terminated. Time taken- such as

- The time set for the deadline has passed. - It would be impractical to keep an offer indefinite of the termination
deadline for such goods such as perishable goods like food items. By failing to support the conditions set such as the set standards for an employee about their health condition. Death of either party- such as

- Death of either party will bring a closure on the offer when the other party
gets to know about it.

- But on the other hand, if the offeree agrees to carry out the offer in
ignorance on the death of the offeror, then a contract is formed.

 The offer may be terminate if the original condition and circumstance are changed. For instance: if A decides to purchase a vehicle from B, the vehicle must remain in substantial state when first viewed by B. B may terminate the offer if the vehicle is badly damage. An offer can be valid if it meets the following requirements. Must be made with a view to obtain acceptance Must be made with the intention of creating legal relations Terms of the offer must be definite, unambiguous, certain or capable of been certain It must be distinguished from mere declaration of intention or an invitation to offer It must be communicated to the offeree Two identical cross offers do not make a contract

ACCEPTANCE

While the offer is still open, an acceptance will complete the contract. An acceptance becomes legal when a valid acceptance is followed by a valid offer, where a contract is formed that moment. How can an Acceptance be made? It is deemed to have accepted the offer, when the offeree gives his assent to the proposal. Assent means an agreement with the statement or proposal to do something. The assent can be expressed or implied. Expressed can happen

- When the acceptance have been defined either in writing or by word of mouth.
This kind of acceptance is known as self explanatory.

- Performing of some required act. Acceptance by performing the required act is

exemplified, such as in the case of Carlill V. Carbolic Smoke Ball Co (1813) (Page 2). Example: A supplier receives an order from a customer and executes it by sending the goods to the customer. The customers order for the goods forms an offer, which was accepted by the supplier when he sends the goods to the customer. It is

the case of acceptance by conduct. performing the act. Implied can happen

Here the trader accepted the offer by

- When the acceptance is done by gathering from the surrounding environment and
situation or by the conduct of other parties. Example: A enters into a bus to go a certain destination and takes a seat. From the obvious nature of the situation/ circumstance, the law will imply that A has accepted the offer. Under what circumstance can an offer be Accepted? In case of specific offer, the offer can be accepted only by that person whom the offer is intended to. For instance, If A wants to enter into a contract with B, then C cannot substitute himself for B without As concern. Example: Boulton V. Jones Case The facts of this case were as follows. B, who was a manager with X, purchased his business. J, to whom, X owed a debt, place an order with X for the supply of certain goods. B supplied the goods even though the order was not addressed to him. J refused to pay B for the goods because he, by entering into contract with X, intended to set off his debt against X. Judgment The offer was made to X and it was not in the power of B to have accepted the same. In the case of a general offer, it can be accepted by anyone by complying with the terms and conditions addressed in the offer. Example: Refer Case- Carlill V. Carbolic Smoke Ball Co (Page 2)

Rules of Acceptance
There are some legal considerations which makes the acceptance effective so as to give rise to a contract. They are Essential Requirements for a Validation of an Acceptance 1) Acceptance must be absolute and unqualified In order for acceptance to be valid and effective, it must be absolute and unqualified and according to exact terms of the offer. A variation in the acceptance will not be valid and also a mere counter offer from the original offer may terminate the contract. Example: A offers to sell his land to B for $10000. B replies, I can pay only $8500 for it. The offer of A is rejected by B as the acceptance is not qualified. But, however, B subsequently changes his mind and is prepared by buy the land for the original amount of $10000. This will also be treated as a counter offer and its up to B to decide whether to accept the same or not. 2) Acceptance must be communicated to the offeror The communication of the acceptance can be expressed or implied. A mere mental acceptance is not valid. This means the offeree is assenting to the offer in his mind only and has not communicated to the offeror. Example: A, a supplier, sent a draft agreement regarding the supply of tea to the manager of the tea company for his acceptance. The manager wrote approved on the same day and put the draft in his drawer with the intention of sending it to the companys solicitors to draw a formal contract. But by an oversight, the draft agreement remained in the drawer. Judgment There was no contract as the manager had not communicated his acceptance to the offeror. The acceptance of an offer cannot be valid from the silence of the offeree or his/her failure to answer it.

 Example: Felthouse V Bindley (1862) Case F offered by letter to buy his nephews horse for 30, saying If I hear no more about it, I shall consider the horse is mine at 30. The nephew did not reply at all, but he told an auctioneer who was selling his horses, not to sell that particular horse as he had sold it to his uncle. By mistake, the auctioneer sold the horse. F sues the auctioneer for conversion. Judgment F could not succeed as his nephew had not communicated acceptance so therefore, there was no contract. However, if the offeree has indicated in his pervious conduct that his silence is a note of acceptance, then the acceptance of the offer can be implied from the silence of the offeree. In the case of a general offer, by the terms of acting upon the terms of the offer indicates the form of acceptance such as in the case of Carlill V Carbolic Smoke Ball Co. (Page 2) 3) Acceptance must be according to the mode prescribed Acceptance can be in form of 2 modes

- Acceptance by post- the postal rule is that the acceptance of the offer will be valid
only at the time the offeror post the letter and not at the time the offeree receives the letter.

- Acceptance through instant mode of communication such as e-mail, telephone,

fax, telex, SMS etc- this rule state that, when a, for instance, telephone call is made to the offeree by the offeror, and there will be an acceptance only when the message is understood by the offeree. When the offerer prescribes a particular mode of acceptance, then the acceptor must follow that mode and no other mode. But in case, if no mode is prescribed by the proposer, then the acceptance must be according to some usual and reasonable mode. In some situations, acceptance takes place before the offeror receives notification of it-this is the postal rule.

Examples: a) A sends an offer to B through post in the usual course. B should make the acceptance in the usual and reasonable manner as no mode of acceptance is prescribed. He may accept the offer by sending a letter, through post, in the ordinary course, within a reasonable time. b) A sends an offer to B through post in the usual course and asks for an acceptance by wire. B should accept the order by wire. However, if B accepts the offer by a letter, then A may insist that the acceptance should be in the prescribed mode. But if the proposer does not insist within a reasonable time then the proposer is bound by the acceptance, though not made in the prescribed mode. c) The acceptance must be given within the time specified, if any, otherwise it must be given within a reasonable time. What is a reasonable time is a question of fact and would depend upon the circumstances of each case. d) The acceptance must be made before the offer lapses or is terminated, revoked or withdrawn. If the offer lapses, then there is nothing to accept. e) Acceptance can be given by the person to whom the offer is made. However, in the case of a general offer, acceptance can be given by any member of the public. 4) Agreements to agree in the future Law does not recognize the making of any agreements to agree in the future. The parties must agree on the agreement that they either define or capable of being made definite with out further agreement of the parties concerned.

An acceptance can be valid if it meets the following requirements. Acceptance must be absolute and unqualified It must be communicated It must be according to the mode prescribed It must be given within the time specific or within reasonable time It must be made before the deadline lapse It must be given by the person to whom the offer is made