Abdul’s offer – offer or invitation to offer

Introduction

Before going to the determination whether the other parties are under any contractual obligation to buy Abdul’s car, there is a need to determine whether Abdul, in his advertisement, is putting forward an offer or an invitation to offer or negotiation. In most cases, this advertisement would have been considered as an invitation to offer whereupon there would have been a negotiation between the parties to determine the price and other terms of the contract. However, this advertisement has definite terms written down as can be seen from the language of the advertisement. Abdul is very clear on his terms about selling his car for the definite and non-negotiable price. This is further proven by his mentioning the deadline of 12th Mar 2017 and he shows willingness to sell the car to the first person who would notify him. Thus, the advertisement is not an invitation to offer but an offer by itself.[1] Take the case of Lefkowitz v Great Minneapolis Surplus Stores Inc.,[2] where the court held that an advertisement to the effect that the goods will be sold at a particular price, constitutes an offer. Having determined this, the subsequent situations can be dealt with in context of different parties.

Mr. Castro

As seen earlier, the advertisement of Abdul constitutes an offer, and Mr. Castro’s offer of £12,000, which is less that the offer price, constitutes a counter offer. Such counter offer does not constitute an acceptance in the law of contract. It implies a rejection of the terms of the original offer of Abdul and instead creates a new offer associated with new terms. In order to form a contract, acceptance shall match with the terms of the offer and the offeree shall not introduce fresh terms in the acceptance.[3] This legal principle was laid down in Hyde v Wrench.[4] It was held that agreement subject to a condition is not binding. Further, a counter offer does not constitute acceptance and thereby cannot create contractual relationship. There is no binding agreement between Castro and Abdul.

Mr. Trump and Ms. Merkel

In situations where there are general inquiries that do not show any intention of entering into a contract, they do not constitute an acceptance of the offer. For an acceptance to be valid and binding there has to be an unequivocal agreement to the offer with intention to enter into a contract. Where there is not clarity as such, it does not amount to acceptance.[5] Regarding Mr. Trump and Madam Merkel, they had instituted general inquiries about the subject matter and their communications do not suffice the fulfillment of a valid acceptance.

In RTS Flexible Systems Ltd v Molkerei Alois Muller GmbH & Co.,[6] the court held that there should be an intention behind the acceptance, to legally bind the parties. Intention to legally bind into legal relations is one of the important components of a contract.

However, such requests or inquiry as made by Trump and Merkel, do not amount to rejection of the offer and thereby the offer can remain open for acceptance. This was held in Stevenson, Jacques and Co. v McLean. Mr. Xi, by offering part payment of the price, did not accept the offer in its original form and therefore there is no acceptance by Xi to the offer made by Abdul. In Neale v Merrett,[9] the court held that the offeree had not accepted the original offer when he purported to accept the offer by advancing an initial payment and further promised to pay the rest of the amount in installments. This type of purporting acceptance was ineffective and does not bind the parties. Therefore, based upon that principle of law, there is no binding agreement between Xi and Abdul.

Madam May

It is stated that where the offer is open for acceptance until a stipulated time, the expiration of that time leads to termination of the offer. Even if Madam May has shown her willingness to buy the car and pay the offer price, her acceptance is further subjected to acceptance of her partner Mr. Shinzo, making the acceptance incomplete and uncertain. Therefore, though there seems to be sufficient communication around the offer and acceptance, the contract is still not enforceable because it expressly anticipates a further need, i.e. acceptance from Mr. Shinzo and leaves a doubt of certainty. [10] In Foley v Classique Coaches Ltd,[11] the court held that until the time the material terms are agreed, there is no binding contract. In this current scenario, there is a waiting period of acceptance that may render the lapse of the offer as well as the acceptance is subjected to another level of acceptance. Therefore, Abdul can only enforce the contract if and when he receives a complete acceptance from both Madam May and Mr. Shinzo within the stipulated time.

Madam May

It is stated that where the offer is open for acceptance until a stipulated time, the expiration of that time leads to termination of the offer. Even if Madam May has shown her willingness to buy the car and pay the offer price, her acceptance is further subjected to acceptance of her partner Mr. Shinzo, making the acceptance incomplete and uncertain. Therefore, though there seems to be sufficient communication around the offer and acceptance, the contract is still not enforceable because it expressly anticipates a further need, i.e. acceptance from Mr. Shinzo and leaves a doubt of certainty. [10] In Foley v Classique Coaches Ltd,[11] the court held that until the time the material terms are agreed, there is no binding contract. In this current scenario, there is a waiting period of acceptance that may render the lapse of the offer as well as the acceptance is subjected to another level of acceptance. Therefore, Abdul can only enforce the contract if and when he receives a complete acceptance from both Madam May and Mr. Shinzo within the stipulated time.

Mr. Hollande

In Adams v Lindsell,[12] the court held that even if letter of acceptance gets misdirected and delayed, the acceptance is still valid. An acceptance through post is a legal and acceptable means of communicating a valid acceptance and concluding a contract. It completes as soon as the letter properly addressed and stamped, is posted. In the case of Lefkowitz v Great Minneapolis Surplus Stores Inc.,[13] the offeror can be held for breach of contract if he refuses to sell to the offeree a certain fur piece that the offeror offered for sale in a newspaper advertisement, when the offeree expressed his willingness to pay the price. The offeror is obligated even before he knows of the acceptance letter (Household Fire & Carriage Accident Insurance Co. Ltd. v Grant[14]), and he cannot revoke the offer once the letter is posted.

Lord Denning stated that “when a contract is made by post, the acceptance is complete as soon as the letter is received by the offeror.”[15] Thus, Abdul can enforce the contract and oblige Hollande to purchase the price at the agreed price.

Mr. Putin

As mentioned earlier, any acceptance with terms and conditions varied from the original offer is counted as a counter offer.[16] In this case, Mr. Putin shows willingness to buy the car, but subjects the offer to a condition of future receipt of money that would pay off the offer price. This does not amount to complete and unequivocal acceptance.

Mr. Corbyn

This particular situation has all the elements of a valid offer and a valid acceptance that will bind the parties to conclude a contract. Mr. Corbyn has unequivocally accepted the offer and both Abdul and he concluded the contract. This is a case of creation of a valid acceptance though email acceptance. If one applies the globally recognized test of receipt rule whereby in contracts made through exchange of email, the responsibility for getting across the message to the recipient falls on the sender.

Contribution of Lord Denning to law on un-liquidated damages

Introduction

Lord Denning defined and expanded the scope of damages by applying the principle of fair justice and compensation to the law on unliquidated damages. This essay demonstrates this contribution by Lord Denning through two cases decided by him, i.e., Phillips v Ward and Jarvis v Swan Tours Ltd.

Phillips v Ward

The case involves claim of damages arising out of expenses incurred by the plaintiff on repair of Elizabethan property and land bought by the plaintiff relying on a negligent survey. It was held by the court of first instance that “the proper measure of damages was the difference in money between the value of the property in the condition described and its value as it should have been described.” However, at the Court of Appeal, Lord Denning laid down the appropriate measure of damages. He touched upon the doctrine of fair compensation to party incurring loss or injury and laid down appropriate measure of damages.

Lord Denning stated that the proper measure of damages shall be the amount of money that places the plaintiff in as good as a position as if the survey was properly satisfied. He cited the principle laid down by Lord Haldane L.C. in British Westinghouse Electric and Manufacturing Co. Ltd. v. Underground Electric Railways Co.[19] Lord Haldane had stated that measurement of damages depends on the facts and laid down a broad principle regarding the same. He stated that an injured party shall be provided with what he contracted “as far as money can do it, in as good a situation as if the contract had been performed”.[20] He stated that the fundamental principle to be compensated for financial loss is subject to the mitigation principle where the plaintiff has duty to undertake “all reasonable steps to mitigate the loss consequent on the breach.”

In furtherance of these principles, Lord Denning broke down the situation and deduced the proper measure of damages from the following scenarios. He stated that assuming the survey was proper and it reported the correct state of the property, the plaintiff would either have not conducted any repair work and incurred expenses, or would have paid a price and purchased the property based on the fair value that was lesser and corresponding to the bad condition. Therefore, he laid down that the measurement of the compensation is the “difference between the value in its assumed good condition and the value in the bad condition which should have been reported to the client.

The case and the measurement adopted cannot be placed at the same par with damages arising out of a property being damaged or destroyed because of the fault of a tortfeasor. Lord Denning cited the cases of Lukin v. Godsall[23] and Hide v. Thornborough[24] where in the event the injured person incurs expenses in repairing the house, the tortfeasor may be held liable only for payment of the cost of repair without an allowance. Further, in another case Moss v. Christchurch Rural District Council,[25] the court held that the tortfeasor may only be liable for the value of the property. Ultimately, it is the circumstances surrounding the case that lead to adoption of appropriate measures of damages, as was held in Murphy v. The County Council of Wexford.

In order that the injured person receives fair (neither more nor less) compensation, Lord Denning stated that courts should measure damages at the date of damage, which is generally the same date as the cause of action. He further pointed out that changes in the value of money will not impact the amount of damages as the currency is constant in value.

Jarvis v Swan’s Tours Ltd

The case involves deducing the amount of damages arising out of misrepresentation of facts and breach of warranty. For both of these actions the Misrepresentation Act 1967 provides damages. However, in this case, Lord Denning extended his views and conclusion on deciding the amount of damages. He was of the opinion that the lower court strictly decided the damages as being the “difference in value between what he paid for and what he got”. The plaintiff appealed against this principle and appealed for higher form of damages.

Lord Denning in laying down legal principles in this case went for removing such limitation and expanded the scope of measuring damages by including the factor of mental distress. He cited certain cases that did not consider the factor of mental distress. He placed an outdated tag to limitations set out in cases such as Hamlin v Great Northern Railway Co Pollock CB that denied damages for “for the disappointment of mind occasioned by the breach of contract” and Hobbs v London & South Western Railway Co that conveniently tagged mental distress such as annoyance and loss of temper, or vexation, or for being disappointed as mere inconvenience. He stated that in those days, the plaintiffs were only entitled to recover damages in the event he went through physical inconvenience. Similarly, in Bailey v. Bullock, [28] that involves an action against a firm of solicitors, the court held that plaintiff was entitled to damages only for inconvenience and discomfort and not for annoyance and mental distress. Lord Denning stated inappropriateness in awarding a single sum as damages and that there should be apportionment. He cautioned that the case with awarding damages for mental injury has to be treated more carefully. He cited Addis v. Gramophone Co. Ltd.

Lord Denning also reiterated the principle laid down by Lord Justice Edmund Davies in this case, who stated that a person is entitled to damages for disappointment and for loss of entertainment that he should have had. Lord Davies deduced this principle from the following illustration. A man with a ticket for Glyndbourne booked a car. The car did not turn up and he was disappointed because that was the only night he could have got to Glyndbourne. His disappointment and loss of entertainment could not be compensated with merely awarding the cost of the ticket, and he should be entitled to a higher form of damages.

Lord Denning accepted that there would be difficulty in assessing mental distress in terms of money, but he emphasised that the assessment of personal injury cases for loss of amenities is even more difficult. He stated that damages could be recovered for mental distress and placed this on same footing with the law of tort that is implemented to recover damages for shock in the same footing. Such kind of damages could be recovered from distress, frustration, or disappointment arising from breach of contract to provide entertainment, for a holiday or to provide enjoyment. The same situation had occurred with the plaintiff in this case and he states that the plaintiff was entitled to the damages for experiencing mental distress.

Lord Denning also referred to Stedman v Swan's Tours[30] to point out the flaw in the decision that ignored the mental distress element in coming to the measurement of damages. He stated that the county court awarded damages only for physical inconvenience that the plaintiff incurred when he was not provided with accommodation that the defendant promised. Lord Denning pointed out that the judge committed an error in assessing the damages and that the appropriate measure should have been to take into account the level of disappointment in loosing enjoyment and entertainment as promised by the defendant and should have compensated for the loss arising out of non delivery of promise.

Conclusion

In both of the cases, Lord Denning defined and expanded the scope of damages by applying the principle of fair justice and compensation. The principle of liquidated damages is not sufficient to cover for situation that goes beyond pecuniary loss. This fundamental rule, however, cannot fairly deal with cases as discussed above. Due recognition is given to the injured party in such a way as to compensate as far as possible with monetary damages in order to place such party at a position as if all contractual obligations had been performed. The best measurement of damages is not only to consider the physical loss a person incurred, but also to assess a fair value and compensate for the amount of mental distress and frustration arising out of breach of a contract.

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