The paper " The Transaction between Franco and Robert " is an outstanding example of a business assignment. The issue of law at hand is what elements need to be present for a binding contract to be created between Franco and Robert, and what actions would constitute each of the elements in the agreement between them. Franco had promised Robert that he would sell him a bike for $500, and deliver it to him when the semester ends. However, he decided to extend his studies in Australia for another semester and chose to keep the bike.
Whether he can renege on this deal on not, is dependent on whether an enforceable contract was created. Rule In common law, a contract is an agreement between two or more parties intended to create legal obligations. The main elements of a contract are offer, acceptance, consideration and willingness to create a legal relationship. Furthermore, there must be two separate parties and an agreement entered between them. The parties can be two people, two companies or a person and a company. Secondly, the two parties must have the qualifications to agree and fulfil the terms and conditions set in the contract.
They must have attained a certain age recognised by the law. In addition, they must have a complete comprehension of the details of the contract. Thirdly, there must be a lawful object of value. Commonly, money is used in exchange for products or services, though other objects of consideration have not been excluded. Finally, there must be sufficient legal consideration. A contract must be created for lawful activities. A contract is not legally binding if its details violate the law or support illegal activities.
An offer is an expression in writing, speech or conduct showing the willingness to enter a contract and to be bound by the acceptance of the offeree. Acceptance is an expression of assent to the terms expressed by the offeror. Consideration may be a promise to undertake a particular action, or even money. If there is no agreement or consideration, any transaction between two parties cannot be enforceable as a contract. When one party does not meet their end of the bargain, they breach the contract.
Breach of contract can occur through none performance, substandard performance, unreasonable withdrawal of an offer, or through the commission of criminal offences like a fraud. The main question that arises here is whether the transaction between Robert and Franco satisfies all the four elements of an enforceable contract. In Smith v Hughes, the court held that the conduct of the people entering a contract is enough to make it legally enforceable. He argued that if a man conducts himself in a manner that would make a reasonable man believe that he was accepting the terms proposed by the other party, it is interpreted that he had intended to the terms set by the other party.
This means that all the elements of an enforceable contract were present in the interaction. In Abbot v Lance is was held that an offer can be retracted before it has been accepted, however, the offer becomes irrevocable once the offeree has partly performed the relevant acts. In this case, Robert had not started performing the relevant actions like paying the amount for the bike in part or in full.
This means that since Franco had not started performing relevant acts, Franco revocation of the contract does not amount to a breach of contract. This is also supported by the judgment in Veivers v Cordingley. In this case, Cordingley wanted to buy a piece of land which would have been worth more if he subdivided the plots. After several complications, Veivers agreed to help in seeking permission to subdivide the plots. He would get an extra $200,000. While Veivers was in the process of getting the permission, Cordingley withdrew the offer.
It was held that the offeree has already started performing the act whose completion would constitute completion of the contract (Hare, 2003). Therefore, revocation of the offer would constitute a breach of contract. In Byrne v Van Tienhoven, the court held that the revocation of an offer is not effective before it has been communicated to the offeree. In the case of Franco and Robert, the offeree had not started performing actions that would constitute completion of the contract. Furthermore, Franco communicates to Robert about his decision to keep the bike, meaning that the revocation of the contract is effective.
BibliographySteele, Jenny. Contract Law: Text, Cases, & Materials: Text, Cases, and Materials .Oxford: OUP, 2012