Commercial Law: Case Studies

Case Study 1

The Offer

In the case, it can be seen that there is an offer, an agreement which can be proved since it in writing, a consideration, there was certainty in the contract and a capacity on both sides of the agreement. According to Smits (2017) all the mentioned elements above are the hallmarks of a legally binding contract. The offer can be described as a cross breed of sale by display as held in Fisher v Bell and sale by self-service since Sally made an offer to buy as held in Lasky v Economy Grocers Ltd. The two methods of offer are applicable since Harry displayed the ring to Sally, who in turn made an offer to purchase the specific ring at a price given by Harry. The case has an element of confusion emanating on the issue of acceptance of the offer, which will form the premise of this case. 

Revocation of the Offer

The biggest dilemma in this case is whether communication difference interfered with the offer. When the offer was made, Sally was ready to confirm the contract on the condition that the same happens within some time that was dictated by other business demands. The communication between the two parties is maintained through writing letters which automatically takes time.  In their communication, Sally maintained that the duration of offer that the offer was supposed to remain open for acceptance was three days. In the meantime, Harry wrote a response to Sally which unfortunately got delayed. As such, Sally sold the ring. 

As it was held in Dickinson v Dodds, on the surface, it might look like there was no agreement between the two as Sally had revoked the agreement by selling the ring. The same scenario was repeated in Ruoutledge v Grant where the defendant’s offer was supposed to have the offer have a six-week duration of offer and revoked the offer on the fourth week as there was no agreement between the two.  In Byrne v van Tienhoven, it was held that the offeror was at liberty to revoke the offer since an offer is not binding and also, an offer could be revoked any time before acceptance. In the above two cases, one thing that is apparently the bone of contention between Harry and Sally is the mode of communication between the two. It was post, and as such, Sally erred in revoking the contract as examined below. 

Manner of Acceptance

In the offer, there was no stipulated mode of acceptance. As such, the mode of communication that the two parties have been having is held as the mode of acceptance. The court, in Felthouse v Bindley, held that for an agreement to be effective, an acceptance must be communicated to the offeror within a reasonable time, or within a time stipulated in the offer, in this case, 3 days. In the postal rule as held in Adams v Lindsell, acceptance was made when the letter was mailed, which was within the three days stipulated in the offer. As it was determined in Holwell Securities Ltd v Hughes, the same mode of communication should be used in accepting the offer, which Harry did. As such, the contract was valid. 

Conclusion

Despite there being a communication problem between Sally and Harry, the contract was valid by the postal rule as argued in Adams v Lindsell. The contract became valid because the mode of communication between the two parties had been using mail to communicate and Harry did not negate from the norm in making an acceptance. Further, Harry made an acceptance within the acceptance period stipulated in the offer. Adams v Lindsell confirmed that the postal rule allows a contract to be accepted upon by sending it within the acceptance period. The issue at hand is not when the acceptance was received by the offeror, but when the offeree made the posting. With all the established facts, it is therefore upon Sally to take up the costs of the contract since she revoked the contract after acceptance had already been made, a mistake that deserves to be awarded a legal reprieve. 

Reference

Smits, J. M. (Ed.). (2017). Contract law: a comparative introduction. Edward Elgar Publishing.

Case Study 2

What Tanya Should Know

Tanya, from a legal perspective is on the right trajectory at the same time being cognizant of the fact that inheritance problems need to be solved as early as possible. Since Tanya intends to hand over the assets to her children at some point in life, she would find the revocable trust useful. As espoused in Knight v Knight, trust requires three certainties; Intention, subject matter, and objects. In this case, Tanya has the intention to hand over her assets to her children through trust. As explained in Palmer v Simmonds, the property should be clearly identified, something that Tanya has figured out already. The objects are the individuals who are the beneficiaries (Tanya’s Children) as indicated in McPhail v Doulton. The revocable trust will allow her to be a trustee of the account as well as be at liberty to alter the terms of the contract at will. This will ease her management of the assets since she will not be bound by lengthy procedures and other parties. After all, it’s her assets and her children.  To further the advantages of the revocable trust, it will be possible for Tanya to provide instructions and directions on how the assets should be used in the event that she dies without having to have her family go through via the lengthy and torturous probate process. Privacy is somewhat desired in a family set up especially when it is an element of property and inheritance. As such, the revocable trust will give the family the desired privacy as compared to a will. 

Duties 

As the trustee, Tanya has both moral and legal duties. To begin with, she should at all times ensure that the property is well documented and that an inventory of all transactions pertaining to the assets maintained (Hepburn, 2013). As such, it should be possible to determine the value of such assets should need arise. Second, For the assets whose value is not stated in the trust deed, the inventory of transactions should be useful in appraising such assets. Third, Tanya has the responsibility of managing and administrating the accounts in the trust deed. In this, she should carry out investments which would allow the trust estate to grow and effectively provide a return to the beneficiaries. The investments should be done prudently to minimize risks and maximize returns, in short, she should ensure that the investments yield optimum returns. Fourth, Tanya should ensure all legal obligations pertaining to the property including payment of taxes, rates, and duties among others are done in due time. Documentation for such transactions proofing legal obligations should be maintained. Fifth, Tanya should have the necessary documents required for an audit trail in form of certified documents to ensure that should anything arise, her children will have a reference point. 

Conclusion 

Tanya should separate her business with the trust. She should ensure that the trust is not for her own benefit. As such, a mixture of the trust assets and her own property should not arise as it might be problematic at some point either in separating the estates or in legal obligations such as filing taxes. Tanya should ensure that all her children are equally treated as preferential treatment might be problematic especially in the administration of the estate. This, according to Miller (2014) is critical in avoiding the conflict of interest which might rock the trust. Tanya should come to the realization that her role in the business of being a trustee changes and it is not purely a maternal responsibility. When it becomes a trust with her as the trustee, she should be aware that the relationship is stepped up to become a legal relationship where the government has a right to ask question for the sake of accountability. 

References

Hepburn, S. (2013). Principles of Equity & Trusts (Aus) 2/e. Routledge-Cavendish.

Miller, S. (2014). Trust, Conflicts of Interest, and Fiduciary Duties: Ethical Issues in the Financial Planning Industry in Australia. Capital Failure: Rebuilding Trust in Financial Services, 305-331.

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