TUTORIAL WEEK 4

MEMORANDUM OF ADVICE

To: Myra and Eric

From: AP
Date: 03 August 2017
RE: Agreement between Myra, Eric and Freida- for purchase of Freida’s house

Introduction

With reference to the above, the material facts provided by you are as follows.

Material Facts

On 14/01/13, an advertisement was placed in the Fiji Times by Freida. She sought to sell her
house for sale at $200,000.00. The advertisement further stated that “the seller was willing to
consider an offer close to $200,000.”

You offered to buy Freida’s house at $180,000. Freida’s response to your offer was that “It is far
too low than what I expected. I will sell the house to you for $190,000”. Freida informs you that
you could discuss this at home and let her know.

On 18/01/13, you meet Cathy at MHCC. Cathy informs you that she bought a house from
$190,000 from Freida.

Issues

The main issue for determination is whether a contract or a binding agreement existed
between you and Freida. In order to ascertain the validity of the said agreement, a number of
elements ought to be considered here:

i. would the exchange of words and the conduct between you and Freida lead a reasonable
person to conclude that you intended to be legally bound?
ii. was a valid offer made?
iii. was the said offer subsequently accepted?
iv. was sufficient consideration provided by both parties.
Rules

The relevant rules can be succinctly summarized as follows:

 Under common law many advertisements are invitations to treat which are not legally
binding and this is illustrated in Carlill v Carbolic Smoke ball Company1.

 In addition to this, in some instances the two presumptions relating to intention may be
rebutted and this is seen in Balfour v Balfour2.

 In Hyde v Wrench3 it was stressed that acceptance must be unconditional and a counter
offer is a rejection of an offer.

 Felthouse v Bindley4 illustrates that an acceptance on the basis of silence is not valid.

Application

Freida’s advertisement is an invitation to treat. In Carlill v Carbolic Smoke Ball, the court was
quick to point out that an invitation to treat is not an offer. However it is to be noted that the
Carbolic Smoke Ball was an exceptional case and in it the Court of Appeal held that by virtue of
depositing money in the bank to meet any prospective claim the company showed willingness to
be bound by the terms of the contract.

Your situation is different. In response to Freida’s invitation for the sale of her house, you made
an offer to purchase it at $180,000. Freida had rejected your offer the minute you made it and she
made the counter-offer. In Hyde v Wrench5, Wrench made an offer to Hyde to sell a farm for
£1,000. Hyde in reply offered £950 which Wrench refused. Later Hyde tried to accept the
original offer of £1,000. Wrench refused to sell and Hyde brought an action for specific
performance. The court held that there was no contract. The court further specified that where a
counter offer is made this destroys the original offer so that it is no longer open to the offeree to
accept.

As far as your and Freida’s legal intentions are concerned, your words and conduct seem to be
very casual and there does not seem to be any real intention to be legally bound. This seems to be
a semi- commercial transaction but nothing substantial eventuated between the two of you.

You did not follow up on this with Freida and you did not communicate your acceptance to her
in reply to her counter-offer. In Felthouse v Bindley6 (1862) it was held that an acceptance on the
basis of silence is not valid.

1
[1893] 1 QB 256.
2
2 K.B. 571 (Court of Appeal 1919)
3
[1840] EWHC
4
[1862] EWHC CP J35
5
Ibid3.
6
Ibid4.
Conclusion

Based on the foregoing, it can be concluded that you and Freida did not enter into a binding
agreement. As per the conduct of the parties an implied agreement is not there too. You cannot
enforce your rights and obligations.