This problem question revolves around the legal issues of offer and acceptance as laid down in contract law. However, before analyzing the legal issues and offer advice accordingly, it is imperative to examine the facts of the particular case.
Anthony has recently been hired as a sales manager for a company called Rocco Limited which is a trend fashion house that deals in selling of clothes. Eager to impress his bosses at work, Anthony goes on an expedition to secure new business deals for Rocco Limited. As a consequence, on Monday, he visits the House of Style Department store where he meets Joyce and discusses with her the prospect of delivering her clothes. In particular, Anthony discusses with Joyce an offer of supplying them with a full range of ladies evening wear from Rocco’s new collection “Midnight”. It is also the case that the garments from the Midnight would retail at a range of around 1000 pounds upwards. Anthony was anxious to secure a deal of supplying the garments for at least 500 pounds per piece. In an act of desperation and a desire to make a deal with the large department store buyer, he offered to supply the first 100 pieces of garments at just 350 pounds per piece. Anthony further gives Joyce until the midday of Wednesday to respond to the offer. In the midst of this ecstasy of the morning meeting, Anthony then visits another high street boutique named Jewels. There he agrees with the owner of the Jewels named Taz that he would supply Jewels with 20 garments from the Midnight collection at a price of 500 pounds per piece which would be delivered the following Monday. Upon returning to his office, Anthony looks at Rocco’s sales targets and finds unsure of himself and regrets having made the offer to supply the House of Style with 100 pieces of garments at the low price of 350 pounds apiece. He then decides to contact Joyce by telephone but Joyce has already left the office for the evening. As a result, Anthony decides to withdraw the offer given to Joyce by letter at once and as a result, he posts a withdrawal letter by first class post on Monday evening. The following morning, when Joyce arrives at her desk at work, she types the acceptance letter of Anthony’s offer after realizing the profit prospects of the deal. Consequently, Joyce asks her secretary to type the letter and post it immediately. Upon returning to her desk, Joyce finds an unopened letter from Rocco purportedly withdrawing the offer which she opens immediately. Joyce then immediately telephones Anthony and informs her that she had already posted her acceptance letter by the time she opened the withdrawal letter and that as far she was concerned, they had entered into a valid deal. Upset by the situation that he found himself in, Anthony immediately calls Taz and informs him that he would not be able to supply the 20 garments at a price of 500 pounds per piece as had been earlier agreed. Instead, Anthony tells Taz that he would now have to pay 900 pounds per piece if he wanted the garments. Taz is angry with the news as he had already taken 3 orders to sell the dresses at 1500 pounds per item from very loyal customers. Taz had considered that the deal would have been a quick hit and would have earned him immense profits.
The first issue that arises is to advise Anthony as to whether he has reached any valid and legally binding contract with Joyce for the supply of the garments. In order to understand the legal position, we need set out at first the key elements of a valid and legally enforceable contract. A valid contract should have an offer, acceptance, consideration, intention to be legally bound and not tainted by any of the vitiating factors. The first issue that turns on this case is whether there was any offer, and if it were, whether the same offer was valid. It is clear from the facts that Anthony offers to supply Joyce with 100 pieces of the garments at a price of 350 pounds with the offer open till midday on the following Wednesday. In relation to rules regarding the formation of contracts as stipulated in contract law, an offer may either be oral, written or even implied from the conduct of the offeror. In our case here, this offer by Anthony was oral and as such valid. Further, an offer becomes effective only when it is communicated to the offeree. Again, from the facts, it is clear that the same offer was expressly communicated to Joyce. In addition, the offer must be free from vagueness and ambiguity as laid down in the case of Scammel and Nephew Ltd v Ouston where it was stated that an offer must be both clear and definite. Again, the offer in this case is clear and definite and is not tainted with ambiguity. It is also the case that an offeror may prescribe the duration until when such an offer shall be open as stated in the case of Dickinson v Dodds. From the facts of the case, Anthony gave Joyce till the midday of the following Wednesday to respond to the offer. It is important to note that the offeror can withdraw his offer within this duration before such an offer is accepted by the offeree as held in the case of Routledge v Grant. Given this position, we can safely conclude that a valid offer was made by Anthony of which Joyce had the option of either rejecting or accepting.
We then examine the issue of acceptance. Acceptance is the outward manifestation of assent by the offerree which gives rise to an agreement as between the parties. We need mention that acceptance is more of a subjective matter on the part of the offerree though this subjectivity must be manifested to the offeror. An acceptance of an offer may either be oral, written or implied from conduct. In this case, Joyce wrote an acceptance letter and posted the same on Tuesday morning after Anthony has sent a withdrawal letter by post on the previous Monday evening. It also a rule in contract law that an acceptance must be made in a prescribed manner or method or in an equally expeditious manner. It is clear from the facts that Anthony did not prescribe any method of acceptance. In such events where there is no prescribed method of acceptance, the method to be sued majorly depends on the circumstances of the case and the particular offer. As such, we are of the view that the acceptance by Joyce through post is proper. We then consider whether the acceptance by Joyce was valid as to give rise to a binding agreement. It was so held in Bryne v Van Tienhoven Co Ltd that where an acceptance by post is either expressly or impliedly authorized, then the such acceptance is deemed complete at the time of posting of such letter (Adams v Lindsell). It is clear that there was no express authorization to use post as a method of acceptance. Neither was there an implied authorization to use post as a method of acceptance since the offer was made orally. Nonetheless, as we cited above, we are of the view that acceptance by post was proper since no method was prescribed and Joyce can always argue that his method was the most convenient and proper in her circumstances. This being the case, we examine whether the acceptance of the offer by post as made by Joyce is valid. Anthony purportedly sent a letter by post on Monday evening withdrawing the offer. It is however important to note that the postal rule does not apply to revocation of offers but only to acceptance of offers. It is a settled rule of law in the law of contracts that a revocation of an offer only becomes effective when it is communicated to the offerree. Though the letter was posted on Monday evening, it had not reached Joyce by Tuesday evening when she posted the acceptance letter. Her acceptance became effective the moment the letter was posted (Adams v Lindsell). As such, we are of the considered opinion that a valid and legally binding agreement arose between Anthony and Joyce. The facts of this case are substantially similar to those in the case of Henthorn v Fraser. In this case, X made an offer to Y to take up a lease which X subsequently withdrew the following day between noon and 1 pm by way of post. On the same day, Y posted an acceptance letter at 3.50 pm and received the revocation letter at 5 pm on that day. X read the acceptance letter n the following day. It was held that a legally binding agreement had arisen at 3.50 pm when the acceptance letter was posted and that the purported revocation was ineffective as it had not reached or been communicated to the offerree by the time she accepted the offer. Similarly, Anthony is advised that he has entered into a legally binding agreement with Joyce for the supply of garments.
With regards to the second issue and assuming that Anthony and Taz had agreed a binding contract, the telephone call by Anthony purportedly cancelling the offer amounts to a breach of a contract. The offer by Anthony to supply the garments at a price of 900 pounds is therefore ineffective and a nullity in law and should be disregarded by Taz. Since they had entered into a valid agreement, the refusal to supply the garments gives rise to legal remedies for Taz. Taz may therefore sue for specific performance to make Anthony supply the garments as required. Alternatively, Taz may sue for damages incurred for the loss that he has undergone as well as the goodwill and the possible loss of it that would be suffered in the event that he fails to deliver to his longstanding customers as promised. It may also be good if Taz made efforts at acquiring the same garments from other suppliers so as to mitigate the loss that they would otherwise incur as stated in the case of Harris v Edmonds.
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