The Legal Framework

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Introduction

  1. An offer
  2. An invitation to treat
  3. A counter – offer
  • According to Un Convention on contracts for the International Sale of Goods applies, explanation for the rights and liabilities of the parties that involved

Contract is an agreement of a two parties especially once it is written its enforced law. An agreement refers to a “meeting of the minds”. There is no magic language necessary to inform an agreement. However, there is an offer must be made by a person to another and so acceptance. In other words, the sides (parties) of a contract must agree given basic terms in order to avoid any misunderstandings which come up after making contract. There are few factors for the existence of a contract. One of the basics is an offer and an acceptance of that offer. https://www.rothlawgroup.com

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An offer

An offer can basically be illustrated as a clear statement of the terms on which a party (the offeror) is prepared to make a business with other party (the offeree). In other words making (by offeror) an offer is promising to do or not to do something which is depending on acceptance by other person (by offeree). An offer is perfomered by an offeror to an offeree. In contract, offer can be bilateral or unilateral; bilateral offer – means two sides’ promise to each other, therefore contract made by agreement with respect of two sides (offeror and offeree) in other words, type of contract which requires agreement and performance from both sides (parties) to the contract. One party promises to do A and the other party promises to do B. Unsimilarly, unilateral contract occurs when only one side (party) makes an offer to another party and the other party might accept by action instead of by offering something back. For example, (bilateral offer situation) if somebody offers £20 to a person who will bring him a hotdog, a unilateral contract is formed when a person performs the condition and supplies him with a hotdog. https://uk.answers.yahoo.com To ensure that made offer is legal, it must include all 3 points shown below:

  • Stated terms must be shown clearly
  • Intention to make a business
  • Communication of that intention

Once an offer is made by the party, it might:

  1. Lapse;
  2. Rejected;
  3. A counter-offer may be made, which automatically rejects the offer preceding it.

These events are important in the context of contract disputes as it is the order of events that determines the extent of any contractual relationship between the parties in the circumstances.

An invitation to treat

An invitation to treat is an action calling or inviting other parties to make an offer to form a contract. Its sometimes might be a bit difficult to determine that invitation to treat may appear as an offer itself. Invitation to treat can include advertisements, which allows sellers to refuse to sell products at prices mistakenly marked. In some specific ways, advertisements can also be considered offers. Sometimes auctions can be invitations to treat as it gives seller choice of choosing the offer and accept the bid that is offered. However, if the seller notices that the price has not reached up to a price that was expected, auction accepts the offer with the highest price. An invitation to treat is not exactly an offer but a suggestion of a consumer’s willingness to make a contract. In Harvey v Facey case, suggestion by the landlord of property that he or she might be curious about selling her or his property at a certain price, for example, has been focused as an invitation to treat. The courts have tended to take a consistent approach to the identification of invitations to treat, as compared with offer and acceptance, in common transactions. The display of goods for sale, whether in a shop window or on the shelves of a self-service store, is ordinarily treated as an invitation to treat and not an offer. The holding of a public auction will also usually be regarded as an invitation to treat.

A counter-offer

If an offer is rejected is ceases to exist. If offerees then change their minds and try to accept, they will in contractual terms be making a new offer. The same result is achieved by a counter – offer. This is an attempt to vary the terms of the existing offer to get more favourable terms, like a price reduction. Hyde vs. Wrench (1840) The defendant offered to sell his farm for £50000. The claimant at first said that he would pay only £45000, but after a few days said he would pay the full price. He heard nothing from the defendant. It was held that there was no contract between the parties: the defendant had not accepted the offer from the claimant, who had destroyed the defendant’s original offer by his counter – offer of a reduced price. The claimant’s subsequent statement that he would pay the asking price could not revive the original offer. It was a new offer which the defendant never accepted. If the offeree, while not accepting an offer, asks for further information, or tests out the ground to see if further negotiation is possible, this is not treated as a counter – offer; it, thus, does not destroy the offer. “Law for business students” Alix Adams; fourth edition; p53, 2006 An offer made in response to a previous offer by the other party during negotiations for a final contract. Making a counter offer automatically rejects the prior offer, and requires an acceptance under the terms of the counter offer or there is no contract. According to United Nations Convention on contracts for the International Sale of Goods there are factors about contracting between seller and buyer at Part 2 articles between articles 14 and 24 which are shown below: An offer to contract must be addressed to a person, be sufficiently definite – that is, describe the goods, quantity and price – and indicate an intention for the offeror to be bound on acceptance.Note that the CISG does not appear to recognise common law unilateral contracts but, subject to clear indication by the offeror, treats any proposal not addressed to a specific person as only an invitation to make an offer.Further, where there is no explicit price or procedure to implicitly determine price then the parties are assumed to have agreed upon a price based upon that ‘generally charged at the time of the conclusion of the contract for such goods sold under comparable circumstances’. Generally, an offer may be revoked provided the withdrawal reaches the offeree before or at the same time as the offer or before the offeree has sent an acceptance. Some offers may not be revoked, for example when the offeree reasonably relied upon the offer as being irrevocable.The CISG requires a positive act to indicate acceptance; silence or inactivity are not an acceptance. The CISG attempts to resolve the common situation where an offeree’s reply to an offer accepts the original offer but attempts to change the conditions. The CISG says that any change to the original conditions is a rejection of the offer – it is a counter-offer – unless the modified terms do not materially alter the terms of the offer. Changes to price, payment, quality, quantity, delivery, liability of the parties and arbitration conditions may all materially alter the terms of the offer.

References:

  • https://www.rothlawgroup.com
  • https://uk.answers.yahoo.com
  • “Law for business students” Alix Adams; fourth edition; p46, 2006
  • https://www.4lawschool.com/
  • “Law for business students” Alix Adams; fourth edition; p53, 2006
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