Contract Law Offeror And Offeree - Click To Get Solution

Question: Describe about the Contract Law for Offeror and Offeree. Answer: 1. Issue The central issue in the given case is to comment on the existence of lawful consideration and to conclude whether Jack has an enforceable agreement for the given case scenarios Jane offers her vehicle to Jack for free because she was going overseas Jane offers to sell her vehicle to Jack for $25,000 Jane offers to sell her vehicle to Jack for $2,500 Relevant law Valid agreement Valid offer and valid acceptance are the crucial aspects in regards to enactment of a valid agreement between the offeror and offeree. The person who makes the offer is named as offeror and the person who receives the offer and may accept or reject the offer is recognised as offeree as per the common law. It is essential that both the parties must have mutuality of obligations without any suspicion and must be competent enough to enact an agreement. A lawful acceptance from the offeree must be without any demand or condition against the offer. Any acceptance by the offeree covered with other conditions or demand is referred as counteroffer against the original offer (Andrews, 2011). Consideration Consideration is a pivotal component of any enforceable agreement. Consideration is expected by the offeror to the offeree with respect to the exchange of the offer. Consideration can be expressed as something in return against the promise/offer. Additionally, when the offeror does not mention any consideration value of the offer, in such cases the offer/promise is designated as gratuitous promise and results in null agreement (Carter, 2012). The Dunlop Pneumatic Tyre Co Ltd v Selfridge Co Ltd (1915), case is the testimony of the above aspect of the consideration. Any particular activity or favour performed by the offeree in the past would not be considered as an appropriate present consideration (Harvey, 2009). Adequacy of the consideration value is not essential in the enactment of the enforceable agreement. According to the contract law, any agreement becomes enforceable between the parties, when the offeror made a consideration value against the offer and it is noteworthy that t he worth of the consideration is not essential to be comparable with respect to the actual commercial worth of the offer (Latimer, 2005). This can be viewed under the verdict of Chappell Co Ltd v Nestl Co Ltd (1960) case. A piece of paper/ empty wrappers of the chocolates or even a peppercorn can be taken as a valid consideration as may be the discretion of the parties entering the contract. However, in some law cases where the unconscionable activity is incurred, then the adequacy of the consideration amount will be open to the scrutiny and judgement of the court (Lindgren, 2011). Application (Jane Offeror and Jack Offeree) (a) Jane offers her vehicle to Jack as free because she was going overseas Jane is going to reside in foreign land and thus, offers her Lotus Super 7 Sports car to Jack without asking for any return amount against the car. Jack has willingly accepted the offer without asking for the compensation. The commercial value of similar type of vehicle is nearly $25,000. According to the contract law, Jack does not have any enforceable agreement with Jane. The offer/promise formed by Jane is an example of gratuitous promise because of absence of consideration for Jane. The absence of consideration amount against the car results in the agreement being non-enforceable. (b) Jane offers to sell her vehicle to Jack for $25,000 In this case, Jane has offered her Lotus Super 7 Sports car with the compensation price of $25,000 to Jack. This offer and the compensation amount are unconditionally agreed by Jack . The compensation price of the car is same as the commercial price of the car in the market. In this case, all the three essential elements of enforceable agreement are present and enact the enforceable agreement for Jack. This can be viewed from the following facts Offer to sell the car (lawful offer) Accepted the offer without any further term and conditions (lawful acceptance) Compensation in return to the car i.e. $25,000 (valid consideration) This showed that the presence of valid consideration which results in an enforceable agreement between Jane and Jack in this case. (C) Jane offers to sell her vehicle to Jack for $2,500 Jane decides to sell her Lotus Super 7 Sports car to Jack. Hence, she offers her car to Jack with the reimbursement amount of $2,500. However, both the parties are aware that the commercial worth of similar kind car in good condition is nearly $25,000. Despite, this factor she offers her car at $ 2,500. There is a huge difference between the compensation and actual worth of the car. Moreover, Jack has confirmed to pay $2,500 against the car which is a lawful acceptance. The issue that arises in the present case is with regards to adequacy of consideration. Jane has clearly declared the consideration of $2,500 in the exchange of car to Jack but this amount is not same as the actual worth of the car. Moreover, there is no indication of any unconscionable action performed by the parties during the contractual phase, which means the adequacy of the consideration is required only to the satisfaction of the parties which is already present. Hence, the offered value of the car $2,500 is lab elled as valid consideration irrespective of the adequacy. The argument given in Chappell Co Ltd v Nestl Co Ltd (1960) case is the evidence of this fact. Therefore, Jack has an enforceable agreement with the consideration value of $2,500. Conclusion There is no enforceable agreement enacted in the first case due to the absence of valid consideration. In the second and third case Jack has an enforceable agreement with Jane due to presence of valid consideration amount. 2. Issue Considering the facts of the given contract and situational factors, opine on the likely chances of success that North Ocean Tankers stands in the recovery of $ 3 million payment. Rule For the execution of a contract that is legally enforceable and safeguards the interests of the parties, there are a host of requirements that need to be complied with. One factor that is essentially critical is the presence of free will and consent to the various terms that are detailed in the contract. Typically this would be case, when mutual consideration is present for the involved parties and also the terms are fair Carter, 2012). For contracts that seek to serve the interest of the dominant party, consent may not be granted by the other party and hence threat may be used in order to produce consent. The application of threat so as to ensure compliance on the contract terms is defined as duress (Andrews, 2011). As is apparent from the case verdict extended in the Generation Corporation t/as Verve Energy v. Woordside Energy Ltd. [2013] WA SCA 36 case, contracts that have elements of duress can be declared void if the aggrieved party demands so. Further, the aggrieved party id successful in establishing the presence of duress could also ensure recovery of losses on account of entering into the contract that was served to serve the interests of the dominant party (Paterson, Robertson Duke, 2015). The duress concept .has increasingly gained popularity in the recent times as its purview has been expanded from physical duress to also include economic duress which has a high incidence in the modern day transactions driven by commercial interests. In such transactions, the pressure tactics are indirect and physical force is rarely used in a direct manner (Pathinayake, 2014). In order to prove the presence of economic duress, there needs to be an abuse of economic power which typically includes threats regarding breach of contract so as to intentionally delay the contractual obligations fulfilment, Under such circumstances, it is imperative that the aggrieved party should be cornered and in order to safeguard the commercial interest not left with any choice but to comply with the unreasonable demand put up by the dominant party (Taylor Taylor, 2015). While proving that duress was indeed involved in the contract is one aspect, another pivotal aspect that demand discussion is the time during which such incidents should be reported in the court and relief sought through judicial intervention. It is ideal if such claims are filed with minimal delay after contractual duties have been taken care of (Davnport Parker, 2014). However, in case the same is not feasible, then the claim must be field before reasonable time passes by. The reasonable time is specific to every case and is decided by the court by taking into cognizance the specific circumstances and the reasons for delay (Lindgren, 2011). The case verdict of North Ocean Shipping v Hyundai Construction (The Atlantic Baron)[1979] QB 705 stands testimony to the significance of timing in the claim filing. Based on the above case facts, the court did establish that the aggrieved party had the right to claim damages caused due to the usage of economic duress by the party in economically superior position. However, the claims were denied since the aggrieved party brought the matter after reasonable time had already been passed since the delivery of the tanker. This delay was of eight months and amounted to automatic approval being given to the unreasonable demand (Harvey, 2009). Application Based on the given situation, an enforceable contract has been entered into with regards to building a tanker. The buyer of the tanker further finds a buyer for the same taking into consideration the expected delivery date promised by the seller. But due to devaluation in the value of USD, the seller approaches the buyer with additional payment request to the tune of $ 3million which is denied as the contract does not provide for any such payment. Later, when the seller threatens with stoppage in the building of tanker, the buyer agrees to pay as it cannot afford delays in delivery. Nine months post the tanker delivery, the buyer now wants to reclaim the $ 3 million extracted under duress. From the case facts, there is no denial that the seller abuses the superior bargaining position to its advantage since delay cannot be affordable for the buyer. Faced by the threat of possible delay and loss of customer, no viable option remained with the buyer but to make the aforesaid payment. It is noteworthy that there was initial denial and reluctance in making payment but later under duress it was made. Hence, economic duress is present which presents an opportunity to the buyer to claim the payment made at the time of the tanker building. However, in bringing this claim, the delay of nine months after delivery seems beyond reasonable time as viewed in the arguments of the North Ocean Shipping v Hyundai Construction (The Atlantic Baron)[1979] QB 705 case. Due to this delay, the right to claim does not exist and hence the buyer would not be successful in the recovery of money. Conclusion The claim for a refund of $ 3 million payment would not be successful in this case. References Andrews, N. (2011), Contract Law, Cambridge: Cambridge University Press, Carter, J. (2012), Contract Act in Australia, Sydney: LexisNexis Publications, Davenport, S. and Parker, D. (2014), Business and Law in Australia, Sydney: LexisNexis Publications Harvey, C. (2009), Foundations of Australian law. Victoria: Tilde University Press Latimer, P. (2005), Australian business law, Sydney: CCH Australia Ltd. Lindgren, K.E. (2011), Vermeesch and Lindgren's Business Law of Australia, Sydney: LexisNexis Publications Paterson, J., Robertson, A. and Duke, A. (2015), Principles of Contract Law, Sydney: Thomson Reuters Pathinayake, A. (2014), Commercial and Corporations Law, Sydney: Thomson-Reuters, Taylor, R. and Taylor, D. (2015), Contract Law, London: Oxford University Press