Business Law-Case Study Analysis

Business Law-Case Study Analysis

             The formation of a contract in law demands that there exists an agreement between the offeror and offeree; a consideration and an intention. In this case, an agreement must be preceded by a valid offer as well as a valid acceptance. HFC made an offer to pay Ian £80,000 to do repair work on their stadium, in readiness for the start of the next season.  By accepting an offer, the offeree is in effect willing to be contractually bound by the terms of the contract. I am of the view that the contract between HFC and Ian is not valid as it fails to meet all the requirements.

One of the requirements of an offer is that the terms ought to be certain, clear, and complete. In case of vague terms of a contract, the court may rule that a complete agreement has not been made. For instance, in Gunthing v Lynn, Lynn the offeror bought a horse from Gunthing and promised to pay an additional $5 in the event that the horse brought him luck. This led to a dispute between the two parties on whether the offer made was valid. In its ruling, the court held that the offer was too vague since it was hard to establish a clear meaning. In the case of HFC v Ian, it is not clear whether the additional £15,000 that HFC had promised Ian to enable him to speed up the repair work, it is not clear whether Ian accepted the offer or if indeed there had been an agreement. For an offer to be valid, it must be complete, final, and clear.  Also, while there was a consideration of the contract from the promisee, this may not qualify as a valid consideration because Ian already had an existing contractual duty with HFC to ensure the completion of the repair works before the start of the following season.

However, the clause in the contract that limits Ian to a liability of £10,000 should there be a breach of contract could have been overridden by the counter-offer that HFC made to Ian of an extra £15,000 to have the repair work completed in time.  In Buttler v Ex-cell-o Corporation, the court held that the offer for the sale of the machine purchased by Ex-Cell-O on terms given by Butler was not valid because Ex-Cell-O made a counteroffer, thereby overriding the earlier offer. The court applied the last shot rule in which the terms of a party to a contract who is last to communicate prevails. In the case under review, HFC was the last party to make a counteroffer of an extra £15,000 and going by the last shot rule, this offer overrides any other earlier offer.

While the additional £15,000 was not part of the original contract, it was nonetheless related to the business matter. In Edwards v Skyways, the court ruled that an ex-gratia payment that the defendant had promised the plaintiff and which he failed to honour was relevant to the business at hand, and was thus binding. In the same vein, the promise of an extra payment by HFC to have the work completed in time is binding.

Bibliography

Books

Oughton, Sourcebook on Contract Law (Cavedish Publishers 2000) 142

Stone, Richard, Q&A Contract Law 2013-2014 (Routledge 2013) 61

Case Laws

Butler Machine Tool Co. Ltd v Ex–Cell–O Corp 1979 UK 1 All ER 965; [1979] 1 WLR 401

Edwards v Skyways Ltd [1964] 1 WLR 34

Guthing v Lynn (1831) 2B & AD 232

Oughton, Sourcebook on Contract Law (Cavedish Publishers 2000 ) 142

Guthing v Lynn (1831) 2B & AD 232

Butler Machine Tool Co. Ltd v Ex–Cell–O Corp 1979 UK 1 All ER 965; [1979] 1 WLR 401

Edwards v Skyways Ltd [1964] 1 WLR 34