n University of Appliod Sclances and Arts Northwestern Switzerand Schoolof Susiness SOLUTION Contract Formation Caution: The mini cases focus exclusively on contract related claims. Of course ifthere ione of the parties involved causes damage to the other one by his or her actions, there might always be claims on tort or other legal reasons. But there is rarely enough facts in the cases to come to a final conclusion about such claims, nor are they usually referred to in the solution, Nevertheless: in real world cases of course ALL possible claims would be checked, not just claims from contractual relations. “The use of rea-ife companies in the example below is fictitious It only serves the purpose to enable the students to decide, whether capacity to consent i given 1 The service contract ‘Ais running the company ‘A word apart’ which offers localisation’ of brochures and websites. He is the ‘owner and director —and the only employee. The services are being listed on the company's website. The USP: for specific countries localisation is being done with a fixed-price agreement, for example for UK. The ‘countries and the respective prices ae listed on the website. Mt Erich Gisler, Baer AG Kissnacht SZ, writes an ‘email on 3.8.20 stating that ,On behalf of Baer AG | would lke to express our interest in localizing our website for UK consumers". ‘sends back a standard contract by mail, already signed from his part, together with a letter stating that the conditions and terms of the contract are valid until end of August. The letter arrives at Baer AG 5.8.20. 410% of September he receives the contract back, signed by Erich Gwerder and Valeria Gall. They apologize in aletter for the delay because of Covid-19 related shifted priorities. A sends back an email to Erich Gisler the same day, stating ,No problem, we fully understand, Thank you for the signed contract, we will start immediately” {After not hearing back from Erich Gisler A calls Baer AG on the 1* of October to speak directly with Mr. Gisler. ‘During this telephone call he learns that Mr. Gisler left Baer AG end of August. He then asks to speak to Mrs. Galli, Mrs. Gal is surprised to receive his phone call and informs A, that Baer AG based on the fact that they «did not hear back from A~meanurhile gave the mandate to a competitor of ‘A word apart’ and is no longer interested in cooperating with A. a) List the full sequence of offers and counter-offers Offer: Letter of Ato Baer AG arriving 5.8.20 Counter-offer: Letter of 10.9. (signed contract but after expiration of the offer > new offer or counter-offer) Acceptance: email on 14.9. to Erich Gisler ‘The case does not mention any functionality on A's webpage to directly order his services, therefore the information on the webpage is just an advertisement The email of Gisler on 3.8.20 is not an offer, asit does not contain essential points lke price and time of performance. Meaning: translation but also adaption to cultural differences etc,University of Applied Sciences and Arts Northwestern Switzerland: ‘Sthocl of Business b) Does “A word apart’ and Baer AG have a contract? Check all the necessary requirements for a successful formation! No. The acceptance did not reach Baer AG. Nothing in the case suggest, that the email was, forwarded to representatives of Baer AG, ©) How do you assess the fact that A was negotiating with Mr. Gisler from the point of view of Good faith’? The case does not say anything about E. Gisler's standing within the company. We can therefore not assume that he had capacity to consent. However this is not a problem for the duration of the negotiations — A could in good faith assume that Gisler was acting under instructions from a person ‘with the capacity to consent. But after receiving the counter-offer signed by Galli/Gwerder, A.can no longer claim to have acted in good faith, when he still treated Gisler as the representative.n University of Appiod Sctoncos and Arts Northwestern Switzerland School of usiness 2 The administrative mistake Qis.a young and ambitious junior manager in the company R-AG. He passed the internal High Potential Programme of the company successfully and was recently granted signatory power ,joint signature at two". His next step is the procurement department, where he acts as the vice director of procurement. {In this capacity he negotiates a contract with a supplier regarding face masks for the personnel working at the factory. The current face masks were made for dust protection, the new ones should additionally provide virus protection, The supplier asks for the specifications. Q orders mask ,Type i". Q also informs the supplier of his signatory power ,at two”. After the successful negotiations and after the contract was duly signed on both sides — 0's boss, the director of procurement signing too - and after the first batch of the new masks were being delivered, Q gets aware of ‘two mistakes: His assignment was to procure masks type ,FFP2". Although very similar in pronouncing, ,Type 2" commonly refers to the simple, medical mask Il and not the FFP2, the latter also protecting against pollution and dust ‘And he sees that the R-AG's administration did nat yet publish his new signatory power in the commercial register, therefore declares the contract as void and sends back the masks on the grounds that the contract was not duly signed from R-AG and therefore was never formed. + DOR-AG and the supplier have a contract? Hint: go through the ,Contract Formation” steps ina systematic way, including the rules for interpreting ‘ambiguous content. ‘As the negotiations are called , successful“ inthe case, we can conclude that at the end there was a (counter-joffer and a corresponding acceptance, both declared by persons with capacity to consent. The fact that was not yet listed in the commercial register is irelevant. 50, from a formal point of view, a contract was formed. But we also see a clear mistake in declaration: Q had no real intention to buy the mask type he declared in the contract. The crucial question therefore is: is this a material error? Depending on the details of the case, the court might decide as follows: 1. Ifthe supplier knew the intended purpose of the mask (pollution and virus protection) then the error might be ruled as material and the contract as void, Reason: the supplier knew (or should have known) that the declaration of Q was erroneous ~ and therefore knew that in fact no mutual, corresponding declaration of intent took place. 2. Ifthe supplier did not know the intended purpase, then the court not material and declare the contract as valid tnt decide that the error was From a non-legal point of view: in such a situation the rational course of action is — of course — not to go to court but to negotiate an alternative contract by simply fixing the mistake: the supplier takes back the Type 2 ‘and sends the FFP2, And R-AG covers the additional costs of the supplier caused by the mistake.