Contract Law Paper

In order for a contract to be made, it requires an offer, an acceptance, consideration and an intention to create legal relations. Colin is a wine merchant and so advertises in a trade publication. Being an advert it is not regarded as an offer to sell those goods advertised. In the case of Grainger & Sons v Gough (1896) the seller is not normally bound to supply the goods to a person who has seen the product so advertised. Because Colin does not want to be bound to sell more the 500 bottles of Australian Chablis in his possession, he has no intention of creating legal relations at this time.

When Ralph telephones Colin on the 1st November, he is making an offer to buy the wine from him at £2.50 per bottle as advertised. Having changed his mind since placing the advert in the publication, Colin informs Ralph that the price has risen to £2.75 per bottle, thus being a counter-offer. As a counter-offer it changes some of the terms of the original offer and therefore invalidates it. This can be seen from the case of Jones v Daniel (1894) whereby an ostensible acceptance introduces new terms or varies those previously enclosed and therefore is not acknowledged as being an acceptance but a counter-offer, itself open to acceptance or rejection.

However, Colin does only say that he “may be prepared to sell” at £2.75 but in following it up with information suggesting that the offer is only open until 5pm on 5th November he is intending to create legal relations. Ralph replies that he will think about it and so no contract has been made at this time.

When Colin sells the wine to Alex, he is obliged to communicate his withdrawal of the offer to Ralph. Colin has every right to revoke the offer even though it was expressly stated that the offer would remain open for a stated period of time. This is because there was no consideration by the offeree to support the offer being left open. This is illustrated in Routledge v Grant (1928) where the plaintiff was given six weeks to make up his mind but three weeks in, the offer was withdrawn. “If six weeks are given to one side to accept an offer, the other side has six weeks to put an end to it”.

Ralph however needs to be made aware that the offer has been withdrawn. This can be done in any number of ways including that of being informed by a reliable third person but it must reach the offeree before acceptance has taken place. In the case of Dickinson v Dodd (1876) the plaintiff was made aware of the revocation of his offer via a third person and so there was no longer any leeway for a contract. This communication must however come from a reliable source and it is up to the offeree to decide whether the source is trustworthy or not.

In this case, Ralph is made aware by a friend, Edward who conversely is unsure as to whether it is the same wine sold to Alex that Ralph is interested in. Therefore, it can be seen that there is no valid withdrawal of the offer and so, in theory, Ralph is still able to accept it. When Ralph accepts the offer by post, he could be considered unreasonable in that, he used the telephone during previous communications but has now switched to post. Because there is a stipulation concerning time scale for when acceptance should be received by, the “postal rule” does not apply. This would have also been invalidated by Ralph’s inability to correctly address the envelope. Therefore it would only count as an acceptance if and when it arrived, this being the 8th November and therefore after the time scale presented by Colin.

Nevertheless, upon hearing that the wine might have been sold to someone else, Ralph tries to enforce his acceptance by sending another message, this time via telex. Telex however is counted as an instantaneous form of communique and so any acceptance by this method is valid upon arrival at the offeror’s machine. If it received outside of office hours, it is valid again as soon as office hours commence the following morning. In this case, the telex was received within office hours and within the allotted time limit. Yet, for whatever reason, everyone at Colin’s office had left early for the weekend and so the acceptance was not received. This is seen to be similar to the case of Entores whereby according to Lord Denning, “the offeror in such circumstances is clearly bound because he will be estopped from saying that he did not receive the message of acceptance. It is his own fault that he did not get it.”

Therefore, by leaving early on that Friday afternoon, it is Colin’s “own fault” that he did not receive Ralph’s telex of acceptance.

From all this it can be seen that there were a number of factors present that could potentially form a contract between the two parties.

Colin offered for sale 500 bottles of Australian Chablis at £2.75 per bottle with the intention to be drawn into legal relations with Ralph. Ralph eventually accepts the offer via telex at half past four on Friday 8th November, within the specified time scale allowed for acceptance. No withdrawal of the offer was communicated to Ralph although Colin had sold the wine to someone else, notably Alex. There was also consideration for the offer, in the form of the wine and the promise to pay for that said Australian Chablis.

Therefore it can be seen that all the necessary ingredients are present for the formation of a contract and so Colin has been incorporated into the aforementioned contract with Ralph via his conduct and behaviour, even though, by this time he was no longer in possession of the wine but in no way was this fact notified to Ralph. Colin should now be obliged to sell Ralph 500 bottles of the Australian Chablis at just £2.75 per bottle.