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The Law of Contract can be defined as the ‘agreement between two or more parties, in relation to a particular subject, forms a contract. Contracts can cover an extremely broad range of matters, including the sale of goods or real property, the terms of employment or of an independent contractor relationship, the settlement of a dispute, and ownership of intellectual property developed as part of a work for hire.'(Aaron Larson,2003)
Furthermore, the element of the contract law includes Offer and Acceptance which is the law relates to this question. In the contract law, when one party makes an offer and another party accepts the offer include its terms and conditions involving the valid consideration, the contract between the parties is valid.
In order to advise David, it is necessary to consider the law relating to offer and acceptance.
The first issue to be considered is whether the letter dated 22 May wrote by David to Robert and jenny is an offer or invitation to treat. An invitation to treat can be defined as ‘an indication that a person is prepared to receive offers with a view to entering into a binding contract, for example, and advertisement of goods for sale or a company prospectus inviting offers for shares.’ (ACCA Corporate and Business Law,2010)
David wrote to Robert and Jenny asking about the sole distributor for the scanner where in a certain circumstances the letter maybe considered to be an invitation to treat because he is inviting both of them to become the sole distributor but not offer them to become sole distributor. (Fisher v Bell 1961)
In this case, letter dated 24 May by David is an offer because he expressly stated in the letter to offer Robert to become sole distributor at the basic of 10% commission. An offer can be defined as ‘the express or implied statement of the terms on which the maker is prepared to be contractually bound if it is accepted unconditionally’. (ACCA Corporate and Business Law,2010)
However, David mentioned that if he heard nothing from Robert by 31st May, he will assume that the offer is acceptable to Robert. Therefore it is necessary to consider whether the acceptance by silence applied. (Felthouse v Bindley 1862)
Yet, the acceptance by silence is generally not considered as a binding contract if Robert does not intend to accept the offer even though David is making the offer specifically says that Robert’s silence is considered as an acceptance.
Robert posted a letter to David to receive his offer. It is necessary to consider that postal rule applied. Postal rule might be the worst communication through the post anticipated by the party. It can be defined as ‘the acceptance by post has been requested or where it is an appropriate and reasonable means of communication between the parties, then acceptance is complete as soon as the letter of acceptance is posted, even if the letter is delayed, destroyed or lost in the post so that it never reaches the offeror’. (Contact Law Page)
However, since Robert incorrectly addressed the letter and consequently the letter did not arrive until 2nd June, the postal rule did not operate to form a contract between David and him. In such case, the acceptance doesn’t take place until the letter of acceptance is received and read by David by 31st May. (Eliason v. Henshaw 4 Wheat 225)
Therefore, there is no any binding contract between David and Robert because there is no acceptance in this case, silence is not an acceptance and since the letter with wrong address, the postal rule didn’t take place.
On 20th May, Jenny posted a letter to David in which she offered to become David’s sole distributor for a 5% commission since she heard nothing from David. In this case, the act of Jenny to offer become David’s sole distributor is an offer. David can either accept or reject the offer.
On 1st June, David received Jenny’s letter and posted a letter to accept her offer. Thus, it is necessary to consider the postal rule applied. There is an acceptance when David posted the letter to Jenny.
As a conclusion, there is binding contract between David and Robert as there is no acceptance in the case. However, there is a binding contract between David and jenny as there is an offer and acceptance. This is because Jenny has agreed with the agreement which involves the valid consideration; the contract between the parties is valid.
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