UNIVERSITY TON 3 tev Vole Wa OF LONDON IL, AWS Formative Assessment Contract law Answer and Feedback Indicative Classification: First STUDENT ANSWER The issues identified in this scenario are if there is an intention to create legal relations given that Bella and Adele are sisters, if Bella's statement about selling her car to Adele constituted an offer or if it was merely an invitation to treat, if Adele's offer was accepted, and if Adele is in breach of a contract. This scenario also raises the issue of counter offer and the rule of acceptance by silence. Intention to create legal relations Firstly, it is worth considering if there is an intention to create legal relations in reference to Bella's statement about selling her car to Adele “on a business basis" given that they are sisters. The general rule as established in the courts is that domestic arrangements between family members are not intendedto be legally binding as seen in the case of Balfour v Balfour [1919] 2 KB 571 (CA), where it was held in the Court of Appeal that the agreement between a husband and wife was not an enforceable contract because it was a domestic agreement. However, this presumption can be rebutted if there was clear evidence that the agreement was intended to create legal relations between the parties involved as seen in the case of Merritt v Merritt [1970]1 WLR 1211 (CA), where the Court of Appeal held that the written agreement between the husband and wife was intended to create legal relations and the presumption against such an intention does not apply since the husband had left the wife. Looking at the facts in this scenario and the application of the case stated above, it will be reasonable to suggest that Bella saying she wants to sell the car to Adele “on a business basis” demonstrates that her intention was to create legal relations which would have been legally binding. Was there an offer or In tion to treat? ‘The question here is if Bella made an offer to Adele or an invitation to treat. An offeris an expression of willingness to enter into a legally binding contract on certain terms and the offer must be accepted by the person it is made to. An offer can be made in writing, orally or by conduct. it must be clear and certain, communicated, and must show an intention to create legal relations. it must not include any further discussions or negotiations and if it does, then itis not an offer but an invitation totreat. An invitation to treat is the expression of willingness to make an offer or start a negotiation which may lead to a binding contract. As seen in the case of Gibson v Manchester City Council [1979] 1 WLR 294 (HL), where the House of Lords considered that the statements written in a letter to Mr Gibson did not constitute an offer, hence, there was no binding contract. On the other hand, looking at the case of Storer v Manchester City Council [1974] 1 WLR 1403, where the Court of Appeal considered the actions of the council and the communication sent to Mr Storer and held that there was a binding contract. In Lord Denning's judgement, he said “In contracts you do not look into the Page 1 of 3Formative Assessment 2019 actual intent in a man’s mind. You look at what he said and did. A contract is formed when there is, to all outward appearances, a contract”. Looking at the facts and applying the cases stated above, Bella saying she wants “about £100,000" for the car would suggest that Bella's statement only constituted an invitation to treat and not an offer as using the word “about” is vague and presents an opportunity for further negotiations. However, when Adele sent an email to Bella on 1st February, saying she would accept to buy the car for a £100,000 and would transfer the money in a few days, Adele becomes the person actually making an offer which would have led to a legally binding contract if Bella accepted the offer. Counter Offer and Acceptance The next issue to cor \dele's offer was accepted by Bella. Bella responded to Adele's email on 3rd February saying she won't sell the car for £100,000 and that she wants £125,000. For an acceptance to be valid, it must be a mirror image of the offer and should not include further terms or negotiations as seen in the case of Hyde v Wrench [1840] 3 Beav 334, where it was held that there was no binding contract as the claimant's offer was a counter-offer which killed off the original offer made by the plaintiff. In this scenario, Bella renegotiated the original offer of £100,000 made by Adele by quoting a different price thereby terminating the original offer; hence, this isa counter offer from Bella and not an acceptance. A counter offer can also be accepted or rejected and Adele has the right to reject Bella's offer (Hyde v Wrench) ‘Acceptance by Silence Another issue identifie scenario is Bella's request that Adele should not respond to her email unless she does not want the car at the quoted price of £125,000. The general rule is that acceptance is not effective until itis communicated to the offeror and that silence does not amount to a valid acceptance. There is also the rule that the offeror cannot impose 2 contractual obligation on the offeree to accept an offer. This is seen in the case of Felthouse v Bindley (1862), where it was held that an uncle had no right to impose the sale of his horse on his nephew where the nephew did not accept the offer and that silence did not amount to acceptance so there was no binding contract. Looking at the facts in this scenario and the application of the case stated above, it will be reasonable to suggest that Bella's statement “To avoid any further misunderstanding, do not email me again unless you do not want the car at this price.” demonstrates that Bella was imposing the sale of her car on Adele and her request for silence would not amount toa valid acceptance, therefore, there is. no binding contract between Bella and Adele. Advice to Adele Itis clear that Adele was unaware of the terms of the counteroffer made by Bella because she did not read the email further; hence, she did not accept or reject the offer which she should have clearly communicated to Bella since her conduct clearly shows that she was not going to accept the counteroffer. However, Adele can demonstrate that there was no intention to create legal relations between Bella and herself given that they are sisters. The general ruleis that arrangements between family members are not intended to be legally binding (Balfour v Balfour [1919] 2 KB 571 (CA)) She can also demonstrate that Bella's request for silence of the acceptance of Bella's offer does not constitute a valid acceptance and Bella cannot impose the sale of the car on her, hence, Adele is not legally bound to pay for the car (Felthouse v Bindley (1862)). Page 2 of 3Formative Assessment 2019 What if Adele decided to purchase the car for £125,000 and Bella now refuses to deliver it? For a contract to be valid there must be an offer and acceptance by both parties. Bella made a counteroffer which requires an acceptance and she requested a silence acceptance from Adele which makes Bella bound by the terms of selling the car. Adele's silence in this scenario constitutes a valid acceptance as seen in the case of Rust v Abbey Life Assurance Co Ltd, an exceptional case where the Court of Appeal held that the failure by the proposed insured to reject the insurance policy offered to her for seven months was enough to justify a presumption that she had accepted the policy so a binding contract had been concluded. Looking at the facts in this scenario and applying the case stated above, itis reasonable to suggest that a binding contract has been concluded between Bella and Adele, hence, Bella is legally bound to deliver the car to Adele. EXAMINER FEEDBACK COMMENTS Good clear introduction to the main points. You summarise the issue of ICLR well, close reference to case law. You move on nicely to the next issue, you summarise the facts of relevant cases and then reach a reasonable conclusion. You could be more concise on the summary of the facts of the case. Your handling of the series of events is good, and you use case law to support your arguments well You explain the issue of silence as acceptance well, but you do not need to have a long summary of your advice as your conclusions were quite clear. This will help in you managing your time. In the alternative you explain the issues well. A very good response and my only concern is being able to write this much in exam conditions, hence my comments on where to cut back. Page 3 of 3