Taxation

Assignment

The legal issues rose by the case was of offers and invitations to treat. Also the communication, acceptance and or withdrawal factors must be taken into consideration.

Before discussing the case, we must define what a contract is. A contract is an agreement between two or more parties which is legally binding. A contract is any promise or set of promises made by one party to another for the breach of which the law provides a remedy. The promise or promises may be expressing (either written or oral) or may be implied from circumstances.

For the contract to be formed the following must be present within the agreement; intention to create a legal association, offer and acceptance and consideration.

The first of the above stated conditions is invitation to treat. In contract law, an invitation to treat is an action by one party which may appear to be a contractual offer but which is actually inviting others to make an offer of their own. The distinction is important because if a legitimate contractual offer is accepted by another, a binding contract is immediately formed and the terms of the original offer cannot be further negotiated without both parties consent. An invitation to treat may be seen as a request for expressions of interest. An example of this would be shop displays. Displays of goods with price tags are also usually invitations to treat. (Fisher V Bell [1961] 1 Q.B 394.) Self-service shops such as supermarkets are usually treated in the same way. (Pharmaceutical Society of Great Britain V Boots Cash Chemists (Southern LTD) [1952] 2 Q.B 795.) It was held that if the display of goods were an offer then we would not be able to change our minds once an article had been selected off the shelf. There is also the reason that a shopkeeper would have to do business with a rival and thus put himself out of business.

The wording of the offer in the current case invites people to make an offer. By saying “Ð'Ј5400 or nearest offer”, it indicates that the offeree is willing to negotiate on the price. If the offer had said “Ð'Ј5400”, then there would be no room for negotiation. He would be making the offer as there would have been no offer to treat.

An offer is defined as a proposition by one party to another, on agreed terms. The promise to be bound is also a part of this proposition. (Carlill V Carbolic Smoke Company LTD [1893] 2 Q.B 49) the courts have shown that for an advertisement to be seen as an offer then it has to be very specific and detailed. In this case there were other implications, for example Ð'Ј1000 was placed in a bank account as a show of good faith, and this highlighted the validity of the offer. So the more specific an advertisement the more likely it is to be seen as an offer.

The advertisement by Tariq indicates that an offer is not being made; it is an invitation to treat.

In order for a contract to be fulfilled in legal terms a legitimate offer and legitimate acceptance must be present. This means that the person offeree must agree to the proposition of the offeror, or it will be regarded as a counter offer. If and when this offer is accepted, a contract is then legally formed. There are several ways of accepting an offer, which include orally, in written form or by the behaviour of the parties involved. There must be clear transmission of acceptance between the parties involved. Some other rules of acceptance must also be fulfilled in order for the acceptance to be valid. The first of these is that the offeror should choose the method of acceptance. Secondly the acceptance must be explicit and conform to the terms of offer. If the agreement is changed in any way the terms of acceptance are declared invalid.

Offers can be accepted in several different ways, such as by post, over the telephone, by email or by fax. The moment a letter of acceptance is posted a contract comes in to existence between the parties. The same can be said of faxes and emails. However in the case of a postal letter, the letter must be received by the offeror in order for it to be valid.

Consideration must also be taken into account. Consideration can be defined as a benefit that is bargained for, to the promisee.

In Tariq’s case he is faced with several situations at once.

By writing his advertisement for his car of “Ð'Ј5400 or nearest offer” Tariq has sent out a unilateral offer. This means that he does not know who will take up his offer. The fact that he has written “or nearest