Discuss the Way on How an Offer Can Be Terminated

Introduction

The requirement of intention to create legal relations in contract law is aimed at sifting out cases which are not really appropriate for court action. Not every agreement leads to a binding contract which can be enforced through the courts. For example you may have an agreement to meet a friend at a pub. You may have a moral duty to honour that agreement but not a legal duty to do so. This is because in general the parties to such agreement do not intend to be legally bound and the law seeks to mirror the party’s wishes. In order to determine which agreements are legally binding and have an intention to create legal relationship, the law draws a distinction between social and domestic agreements and agreements made in a commercial context.

(page 153) as per Sukys explanation “ he says an offer is proposal made by one party (offeror) to another (offered) indicating a willingness to enter a contract, and Jenety Says an refrain from performing some specified act in the future (page 201)

While Elliott and Quinn Agnes that a communication will be treated as an offer if it indicates the terms on which the offeror is prepared to make a contract e.g. such as the prices of goods for sales and gives a clear indication that the offeror intends to bound by those terms if they are accepted by the offeree an offer can also be implied from a conduct e.g. taking goods to the cash desk is a super market which is implied to buy those goods.

(Page 9)

Summary

An offer is an indication / proposal indicating the terms from one person (offeror) communicated to a another person (offeree) that is willing to do accept or refrain from doing a specified act, as per above mentioned authors.

An offer can be terminated due to the following factors

Offer can be terminated when offeree rejects and expresses refusal to accept offer rejections take place when offeree communicated (Brown & Sukys page 144-146)

Offer can also be terminated through revocation the offer can call back of the offer before the offer is accepted.

Offer can also be automatic revocated when offer had definite time limit expires before the acceptance.

An offer can revocate by passing of time limit set passes due to reasonable length of time, time element is determined through surrounds and circumstances, perishable goods, price fluctuation, supply and demand factors.

Death or insanity can also revoke an offer that has not been accepted, these two incidents preclude the possibility of a meeting of the mind.

Destruction of a subject matter related to an offer can also automatically revokes the offer can also automatically revokes the offer subsequent illegality restrictive legislation that would make performing an anticipate agreement illegal revocates an existing offer, any attempt of page (144-146) acceptance of such offers would be unenforceable.

Offer can be terminated by the action of the parties in any of the ways by revocation by rejection or counter offer. Offeror can reject the offer before accepted while inference can revoke original offer by simultaneous making new offer. Offers requires common law (the micro image rule) (Jentz page 201-220)

Failure of a precondition some offer are subjected to conditions if such conditions are in place (fulfilled) the offer lapsed e.g. I may offer to rent my house if I build the second house at the end of month (Eliott & Quinn (page 9-18).

Withdrawal of offer sometimes described as the revocation of an offer, both offeror and offeree can change their minds and withdraw of the offer or revoke (Elliott & Quinn page 9-18)

Counter offer also terminates the offer, interfering with the original offer the offeror might refuse. (Elliott & Quinn page 9-18) The JENTS Elliott, Quinn Brown and Sukys, “Offer can be terminated through the ways, the revocation, rejection and counter offer of the offer”

An offer does not stay valid forever. There are number of events in our daily life and as for as principles of contract are concerned, whose effect is to end the offer.

Termination of and offer is referred to by section 6 of the law of contract Act which reads as follows.

A proposal is revoked

a) By the communication of notice of revocation by the propose to the other party

b) By the lapse of time prescribed in such proposal for its acceptance.

c) By failure of the acceptor to fulfill a condition precedent to acceptance.

d) By death or insanity of the propose, if the fact of his death / insanity comes to the knowledge of the acceptor before acceptance 5.6 (d) of LCA.

REMSGATE VICTORIA HOTEL V MONTE FIORE(1866)

e) Death

If the contract is a personal service or artistic performance with a particular individual involved, it comes to an end if that person dies.

If it is not an offer of a personal nature it may continue BRADBURY V MORGAN (1862)

f) Revocation

An offer can be revoked/ withdrawn at anytime before acceptance the offeror must tell the offeree as soon as the withdrawl has taken place CONFETTI RECORDS V WARNER MUSIC UK (2003)

It is important to note that an offer must be revoked by the person who has made it or it may also be revoked by the person who is authorized to act on his / her behalf.

The law of contract Act S.3 provides that Revocation of an offer must be done subject to the following rules.

It must be communicated act, this means that it must come to the knowledge of the offeree, otherwise it is ineffective.

Revocation must be done before offer is accepted (S.5 (1) of the (LCA of 2002)

Likewise, an offer can be terminated if it is rejected by the offeree by any of the following acts;

If he twins down the offer

If he/she makes a counter offer – by stating new terms which are different from those which are contained in the original offer. (Refer to the case of Hyde Vs Wrench (1840).

Simple facts of this case

Wrench offered to sell a from to Hyde at 1000

Hyde in his purposed acceptance was willing to buy it at 950. Wrench rejected

Then Hyde accepted to buy at 1000

Wrench rejected: Hyde sued him

Held: Hyde’s acceptance was a counter offer and wrench was not obliged to accept it

Another case of Brogden V Metropolitan.

Lapse of time

An offer may lapse due to the passage of time. This can occur when

It is stated in the offer that it is open for a specific time e.g. “you have until Friday to let me known’ your decision” If acceptance, refusal or revocation do not take place before Friday the offer will lapse on that day.

If there is no specific time given” reasonable time” will be assessed by the courts. This will depend of goods concerned.

Examples

This contracts with the case of BROGDEN V METROPOLITAN RAIL CO (1877) where both parties acted as though a valid contract existed and behaved accordingly.

The following more recent case shows an interesting variation of a typical counter – offer situation PICKFORDS V CELESTICA (2003)

Battle of the Forms – This is an extension of the counter offer scenario and occurs when both parties have their own “standard form” stationery and it has to be established on whose terms the final contract operates.

BUTLER MACHINE TOOL CO V EXCELL O CORP LTD (1979)

Request for further information. This needs to be distinguished from a counter offer because it does not terminate the original offer and it leaves the original offer open until withdraw by the offeror STEVENDON V MC LEAN (1886).

A counter offer must be definite enough to accept (as an original offer is) and it must incorporate a change of terms.

Question 2

Discuss as the weather an intention to create legal relation is an essential in Tanzania law of contract.

In order for there to be a valid acceptance there must be an offer to which that acceptance is a response. This principle requires not only that an offer has been made but that it is in existence at the time of the acceptance. An offer may come to an end in a number of ways.

It is essential to note that not all agreements are contract, but all contracts are agreements. An intention to enter legal relation is one of the elements that make it to become a binding contract one which is enforceable by law. That’s why all arrangements/agreement usually done by family members and extend to friends. The common Law under S.10 of the LCA presumed these sorts of arrangements or agreement between parties there is no intention to make a binding contract. To become a contract, an agreement must be made with the intent that it be legally enforceable.

Refer to Balfour V. Balgour (1919) 2 K.b 571 (Eng.C.A)

There was husband and wife. The husband promises the wife an allowance (in anity) in his absence to Ceylon (Sri. Lanka). When the wife divorced the husband, he stopped effecting further payment and the wife sued him.

Held: Promises between wife and husband alongside others are not intended to result into the contract, even though they may constitute consideration because the parties did not intend that they be attended by legal.

Consequences

But it must be noted that unlike in social and domestic arrangements the Law generally pressures all commercial arrangements are intended to create legal relationship.

All in all, it is usually the duty of the offere and offeree to pro in court beyond as a reasonable doubt that the sort of agreement entered between them aimed to establish a legal relationship. That’s why in the law of contract Act S.3.4 establish the test of contractual intention. The intention of the parties must be ascertained from the terms of the arrangement and the surrounding circumstances. Thus, it is for the court in each case to find out whether the parties must have intended to enter into legal relationship.

Therefore, the court employs an objective test not a subjective one. What is important is not what was in the minds of the parties rather what a reasonable person would say, in the circumstances, their intention was.

According to Singh, A (1980). Since a contract is a freely negotiated agreement then the parties have a right to say that although it is their agreement they do not want it to be subjected to the court’s jurisdiction should anything go wrong”

As ll said early in the introduction part, it can be stated that the element of intention to create legal relationship is an essential ingredient in a contract. But in the Tanzania Law of Contract Act it is not expressly stated.

Intention to create legal relations

The principle

As we have seen there is no provision in the Law of Contract Ordinance requiring that an offer or its acceptance should be made with the intention to create legal relations. However in English law it is a settled principle that to create a contract there must be a common intention of the parties to enter into legal relations. The rationale behind this principles is that contracts should not be the sports of an idle hour, mere matters of pleasantry and badinage, never intended by the parties to have any serious effect whatsoever. As such despite the fact that there may be evidence of an offer that has been accepted the courts ay not recognize the agreement as a legally binding contract if they feel that there was no intention on the part of the persons involve that a contract should result from their dealings. In other words the parties must be shown to have intended that legal consequences should result in their contractual dealings.

Intention in domestic arrangements

You know that in everyday life people enter into many types of agreement. Of the many types two division of agreement can be made. The first division is of agreements which are social or domestic in nature. These include arrangements between husband and wife, family members and friends. The second division covers arrangements which are commercial in nature.

The is a presumption that social or domestic arrangements do not give rise to legally enforceable contracts even though they may have the outward appearance of a contract.

The case of Balfour v. Balfour illustrates the position. The facts are simple. H went to work in India leaving W in England for health reasons. H promised to pay W £30 per month for her maintenance. W late divorced H. H then refused to pay the £ 30 per month for her maintenance. W later divorced H. H then refused to pay the £ 30 W, the wife sued and failed.

One of the judges explained:

There are agreements between parties which do not result in contract within the meaning of that term in our law. The ordinary example is where two parties agree to take a walk together, or where there is an offer and acceptance of hospitality. Nobody would suggest in ordinary circumstances that these arrangements result in what we know as contracts, and one of the most usual forms of agreement which does not constitute a contract appears to be the arrangements which does not constitute a contract appears to be the arrangements which are made between husband and wife. The arrangements do not result in a contract at all, even though there may be what would constitute consideration for the agreement. They are not contracts because parties did not intend that they shall be attended by legal consequences.

Another Law Lord was of the view that the agreement was a contract as the parties intended that legal consequences should follow. He, however, decided in favour of the mother on the ground that the agreement could last only for a period reasonably sufficient for the daughter to complete her education and the period of five years was more than sufficient for the purpose. His lordship said that the daughter could not have expected her mother to support her son and husband in perpetuity.

Let us consider another case. It is Merrit v. Merrity. H had left W and was living with another woman. He agreed to pay W 40 a month and signed a written agreement that, in transfer it to her sole ownership. W paid off the mortgage. H refused to transfer the house to W. She sued H who argued that there was no contract between himself and W because the arrangement was a social one and not intended to be attended by legal consequences. The Court decided that the presumption that agreements between husband and wife are not intended to create legal relations does not apply when they are not living in amity but are separated or about to separate. So given the circumstances of this case the presumption was rebutted.

In addition to the surrounding circumstances the words used must be clear in order for the presumption to be invoked. In Gould v. Gould in deciding whether there was an intent to create legal relations the court had regard to the uncertainty of the words. He on leaving W promised orally to pay her 15 per week “as long as he had it” or “as long as business was O.K. or “as long as I can manage it”. The uncertainty of the words used made the court to conclude that there was no intent to create legal relations.

Before we wind up this part let us have a look at one case which was decided by the high court of Tanzania. The case is Bi Khadija Kilumanga V.Bi Peris Misso.

The Plaintiff and the defendant were close friends. They had exchanged various gifts and other valuables to consolidate their friendship. In the course of their friendship the plaintiff promised to buy a car and give it to the defendant. The defendant incurred expenses in clearing the car from the port. Before actual physical delivery of the car by the plaintiff to the defendant the former revoked her offer of gift of the car.

VOIDABLE CONTRACTS AND VOID AGREEMENTS

All agreements are contracts if they are made by the free consent of parties comment to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void.

Provided that nothing herein contained shall affect any law in force, and not hereby expressly repealed or disapplied, by which any contract is required to be made in writing or in the presence of witnesses, or any law relating to the registration of documents.

Therefore, one may conclude that in Tanzania this element is not expressly stated in the contract ordinance. Hence, a person who makes a proposal signifies his/her willingness to be bound according to the acceptance terms. Otherwise, the parties involved in the agreement must put their proposal in writing to make it enforceable whenever issues of discrepancies, arise.