Contracts Assignment
Q1: Legal Liabilities or Obligations Between Adam and Tony
Legal Issue:
The legal issue is whether Tony’s offer had been validly revoked before it had been accepted by Adam. However, if Adam had given consideration for the offer, then the issue becomes whether there is an option contract existing between the parties, thereby limiting the offeror from revoking their offer.
The Law:
In Routledge v Grant[footnoteRef:1], an offer can be withdrawn by the offeror at any time before it is accepted. This is even so if the offeror has stated that the offer is to remain open for a specified period of time.[footnoteRef:2] In such a case, the statement or promise to keep the offer open is unenforceable because the offeree has not given consideration for it. In order for the revocation of an offer to be effective, it must be communicated to the offeree[footnoteRef:3] from a reliable source.[footnoteRef:4] [1: Routledge v Grant (1828) 130 ER 920 at 924.] [2: Dickinson v Dodds (1876) 2 Ch D 463. ] [3: Financings Ltd v Stimson [1962] 3 All ER 386.] [4: Dickinson v Dodds (1876) 2 Ch D 463.]
However, if consideration is given for the promise to keep the offer open, an option contract is created. In Balfour v Balfour,[footnoteRef:5] consideration may consist either in some right, interest, profit or benefit accruing to one’s party, or some forbearance, detriment, loss of responsibility given, suffered or undertaken by the other. [5: Balfour v Balfour [1919] 2 KB 571 at 578. ]
Application:
Whether the parties’ negotiation was an offer or an option contract depends on the existence of consideration. In Balfour,[footnoteRef:6] consideration outlined a benefit and a detriment for each party. In applying this wording to the current problem, it is evident that while there is a monetary benefit for Tony, the offeror, there is no evidence of a detriment to Adam, the offeree, and therefore demonstrates no consideration on his part. As such, an option contract was not formed, making Tony’s negotiation with Adam an offer, which can be withdrawn at any time before it is accepted.[footnoteRef:7] [6: Balfour v Balfour [1919] 2 KB 571 at 578. ] [7: Routledge v Grant (1828) 130 ER 920 at 924.]
In Dickinson,[footnoteRef:8] there was no contract between the parties because Dickinson knew of the revocation of the contract before he accepted it. While it can be argued that Adam knew that Tony had sold the vehicle prior to his acceptance of the offer, he was not formally notified by Tony or an agent of his revocation, making his acceptance within the week given valid. However, if Adam had not checked Tony’s website, he would not have known if the vehicle had been sold and Tony’s selling of the vehicle to another person would have been valid. [8: Dickinson v Dodds (1876) 2 Ch D 463.]
Conclusion
Because Tony did not give reasonable communication of his revocation to Adam prior to Adam’s acceptance of his offer, Adam’s acceptance is valid. The adv...
