Formation of A Contract, Free Essay Example

Published: 2022-03-22
Formation of A Contract, Free Essay Example
Type of paper:  Essay
Categories:  Contract Law
Pages: 7
Wordcount: 1846 words
16 min read

Alan's post on his Facebook timeline advertising to all his friends about his intention to sell his commercial law textbook together with his exercise book at $200 was an invitation to treat. An invitation to treat is an announcement to many people telling them that the author of the announcement is willing to accept offers on the advertisement. Alan's Facebook post cannot be an offer because it was not unequivocal and it was inviting anyone among his many Facebook friends to an offer to buy his textbook and exercise book. In such a case where an offer is made in response to an invitation to treat then a contract can only be said to be concluded when the offer is accepted by the one who made the invitation to treat. In this case, a contract was made between Alan and Bernard. The contract has two main terms. One term consists of the goods in question, that is the textbook and the exercise book. The other term consists of the accepted amount of $150 between Bernard and Alan.

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Contracting Parties

Contracting parties are persons legal or natural that have unambiguously expressed to create legal relations with each other about the sale of goods or services. According to the facts of this case, the contracting parties are Alan, Bernard, and Damien. Alan is under obligation to transfer and deliver the commercial law textbook together with the advertised exercise book notes to Bernard, and he must accept the textbook and exercise book in question and pay according to the agreement.

Bernard's Legal Position

Bernard saw Alan's post on Facebook selling his commercial law textbook together with his exercise book for $200 (Chitty, 2013). Bernard responded by making an offer of $150 to Alan. According to Chitty on Contracts;

"As a general rule, a display of goods at a fixed price in a shop window or on a shelf in a self-service store is an invitation to treat and not an offer. At this stage, the retailer may accept or reject that off. Similar principles would seem to apply where a supplier of goods or services indicates their availability on a website: that is, the offer would seem to come from the customer (e.g., when he clicks the appropriate button) and it is then open to the supplier to accept or reject that offer." (Chitty, 2013)Remedies Available To Bernard

Specific Performance. Since Alan did not perform the contract in full, the breached contract can only be cured by three available remedies. The first remedy is for Bernard to be awarded an order of specific performance to be enforced upon Alan. The remedy of specific performance ensures that both contracting parties fulfill the terms of the contract in full. This remedy compels Alan to deliver his exercise book to Bernard.

Damages. Bernard can also seek financial damages since the notes in the textbook are not the same as the notes in the exercise book. The notes in Alan's exercise book make the goods therein unique just like an autographed signed baseball or a canvas painting. Since the exercise book cannot be duplicated or purchased elsewhere in the similar fashion of a textbook, then damages can be an appropriate remedy for Bernard.

Rescission. The alternative remedy available to Bernard is contracted rescission. This remedy essentially terminates the contractual agreement between Alan and Bernard, and thus Bernard is refunded back his money. The remedy of rescission may be more attractive to Bernard since the contracted textbook is offered for free by Kaplan Higher Education, and as such he will have his money back and escape being ripped off.

The remedy of rescission is available to Bernard since Alan did not deliver his handwritten notes in his exercise book as expressed in his invitation to treat. The court while determining the case of Tymshare v. Covell stated that parties should "honor the reasonable expectations created by the autonomous expressions by the contracting parties." (Tymshare, Inc, 1984).

Charleen's Legal Position

Though Alan had agreed to Charleen's offer to sell his book to her younger sister on 6th, the legal agreement to deliver the book to her is not legally enforceable. Charleen is unable to make any legal claims on the textbook since it's not a necessity in her life as she is still pursuing her "O" levels.

Remedies Available to Charleen

Charleen should pursue restitution to have her $200 refund. Restitution is suitable for her case since stands to lose nothing by lacking the capacity to contract in the first place. An individual lacking capacity is unable to pursue specific enforcement.

Damien's Legal Position

Damien's act of sending a text message to Alan qualifies as an offer expressing interest in the textbook on sale. A contract was concluded when Alan accepted the offer made by Damien, and as such, it was Damien's duty to receive the textbook together with the exercise book and Alan's obligation to deliver the goods at the agreed time. Since the contract was fulfilled as pledged by both parties, Damien has no legal claim against Alan because the textbooks are the same. Damien cannot pursue rescission because he did not conduct proper research about the said textbook before making an offer.

Remedies Available to Daimen

The remedy of restitution can only be available to Damien if the Alan had acquired the commercial law textbook "Introduction to Business Law in Singapore" for free from Kaplan Higher Education if it was against Kaplan's policy to sell the book. Such a policy would render Alan's invitation to treat a fraud. If fraud can be established in this case, then the contract will be terminated and the contract and rendered null and void ab-initio.

Alternative Forms of Dispute Resolution

Alternative forms of dispute resolution are gradually becoming popular by the day and are increasingly being embraced by disputants due to their reliability, flexibility and their efficiencies as compared to the traditional litigation processes (Stipanowich, 2016). Various dispute resolution remedies available and the pros and cons of these options.

The aggrieved parties, in this case, can opt for their disagreement to be resolved through alternative dispute resolution mechanisms. These mechanisms are arbitration and mediation.


Arbitration is an adjudicative process where parties to a dispute opt to settle their disagreement through an arbitrator. It is often described as a creature that comes into existence after the creation of the disputing parties alone (Rofat Kos, 2014).

Advantages Of Arbitration

Party-driven. The advantages of arbitration are that there are minimal chances of parties claiming the arbitrator is biased since both disputants jointly participate in the selection of an arbitrator (Jaime, 2014). The only downside of this particular aspect is that there is an initial delay experienced when parties are picking arbitrators. This process registers the delay when picking an arbitrator that is preferred by both disputants. The disputants may refuse the choice of the other party even when they are best suited to determine the dispute. Eventually, the disputants may settle on a less qualified individual that compromise the quality of the award declared.

The other advantage of arbitration is that parties to a disagreement incur far much fewer costs associated with the settlement of the dispute as compared to court litigation processes. Parties can save resources as well as time.

Flexibility. Flexibility is another added advantage when disputants opt to settle their disputes through arbitration. As compared to court litigation, parties can decide to meet at different venues at their convenience. Parties can choose to conduct their arbitration process during social gatherings where the atmosphere is relaxed and favors a quick settlement. The arbitration process can also be taking place during flexible times of the day, night or even during weekends and public holidays. There is no rigidity regarding time as it is experienced with court processes where if a party misses out in court then the case is given another hearing at a far-off date which adds delay and frustration to the dispute and the parties. Disputants in a commercial transaction can easily agree to execute some aspects of the disputed contract while the determination of the dispute is still in progress.

Confidentiality. This aspect also guarantees privacy to the parties. They're disputes if embarrassing in nature or involve delicate intellectual property and trade secrets can be safely determined in a manner that guarantees privacy to the parties. It should be noted that proceedings of arbitration processes are not published for public consumption as it is normally done with court processes.

Demerits of Arbitration

Notwithstanding all the glamorous benefits available to disputants when they chose arbitration over court litigation, some shortcomings are yet to be cured and are such, not appealing to the disputing parties. An example of this shortcoming is the lack of predictability of a settlement due to the confidentiality of the process. Since arbitration processes are not reported, parties are unable to determine the eventual outcome and as such some may be unable to effectively proceed with the process while adequately guarding their rights and interests. Parties may unwittingly surrender their rights or fail to protect their interests during the arbitration process adequately.

Arbitration clauses may not be appropriate where contractual parties are of such a unique nature where one yields immense powers and dominates over the other party regarding knowledge. A good example is pharmaceutical companies where if allowed to utilize arbitration clauses in the course of their businesses may greatly jeopardize the health of their customers. It will be utterly unfair for an inflicted patient to be referred to the arbitration process because the drug manufacturer failed to adhere to a safety standard that protects the health of the drug consumers (Gilles, 2016).


Mediation entails a consensual routine in a party-driven process with the aim of settling a dispute. Unlike arbitration which is majorly guided by the professional arbitrator, mediation is a purely party-driven process that is highly informal (Rundle, 2013). Parties undergoing mediation are the ones that suggest possible solutions to their problems while the professional mediator plays a secondary role in encouraging the parties to proceed with haste. The fact that parties drive the process, resultant agreements are rarely disputed (Linda Vleri, 2013).

Advantages Of Mediation

Just like arbitration, the process has similar advantages. These include: It is a less costly process where mediators bill per hour and hence disputants are conscious not to incur unnecessary expenses and hence are quick to reach an amicable settlement. Mediation is also a flexible process that does not limit parties to a particular venue or time as it is with court cases. This flexibility helps parties settle much faster (Roberts, 2014).

Disputants in mediation develop a greater sense of empowerment. Research states that disputants tend to be more responsible and desirous to have the dispute settled. A major contributing factor to this aspect is because juries are not involved in mediation processes hence making parties the ultimate decision makers. Mediation also offers confidentiality during the process of settling disputes since they are conducted in private settings, unlike civil litigation processes which are conducted in public.

Demerits of Mediation

Waste of time. Disputants involve in the process of mediation may spend time and fin...

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