The question of law occurred in the given scenario whether a contract has been established between Tom and Lisa or not. And
If Lisa own Tom anything at the end of transaction.
In formal terms any kind of agreement which law enforces is termed as contract. It can be oral or written and the purpose of the contract can be formal or informal too. But in order to make the contract legally binding, there are many elements which must be included in contract. These elements are discussed below:
Elements of Contract
Offer is the first element and foremost one which must be present in contract to make it legal. Without offer there can’t be a legal contract. Offer is a promise offeror make in written or oral form or both and thus initiate the process of contract. The offer is made between two legally competent parties and both parties should be competent in legal terms to enter in contract. The other party to which offer is made and accepts it should know all the terms, rules and regulations related to it. That means the language and intent should be clear and ambiguous for the accepting party. For example, a newly married couple entered in a contract with tour and travel agency, wherein the agency provided them with package of 7 days’ honeymoon in Switzerland. The agency send the couples, the rules and regulation format to the couples and asked them to sign it. These rules and regulation format provide the clear and ambiguous picture of what is on offer to the offeree and also helps offeror make clear statement about what he is offering. It helps in avoiding the contingencies in future due to lack of information or misunderstanding on both sides (Archibong, 2020). The couple should read it carefully before signing it, and if have any doubt should ask the offeree in advance before signing it. Once signed it becomes legally binding in nature. If the offer is not in written format but oral one discussed over phone or one to one discussion, it becomes legally binding and valid when the offeree accepts it knowing the clear picture of what is on offer and what are the terms of offer.
In another example a case is cited of Carlill v Carbolic smoke ball co (1893) 1 QB 256. In the case it was advertised by the company named Carbolic that they have designed a smoke ball which helps in curbing the ongoing disease influenza among many others. The company cited to offer £300 as a reward to person if he/ she catches influenza or shows the symptoms of influenza even after using their smoke balls. In this case Plaintiff, Carlill said that believing the advertisement purchased the packets of smoke balls and used them as per instructions provided (Clarke, and Scurry, 2020). She did so because she believed in the statement provided by the company through their advertisements. For two months she used their smoke balls and followed all there instructions properly but got influenza attack after 2 months. She asked company to reward her £300 as per promise and write a formal letter for same but company refused to pay the reward as per promise citing that there was no written or oral contract which was signed. In the ruling made by the court, it was cleared by the court that the company in fact made a unilateral kind of offer when they advertised their product in the market. When the customer purchased the product knowing Clearly what is on offer and used it as per instruction, a legally binding contract was made between them and as per the terms of advertisement and offer company is liable to pay the reward money amount to plaintiff which was £300.
The offer is made by the offeror but should be accepted by the offered which becomes the second necessity item of contract and that is acceptance. IT states that acceptance is required form the side of offeree. The offeree should know all the rules and regulations related to offer and have clear and ambiguous picture and after knowing everything he/ she should accept the offer and makes it legally binding (Pfeiffer, 2016). During the periods of negotiations where both the parties are discussing terms of contract, it will not be treated as contract and will not be legally binding. When the offeree accepts the offer there should no influence on him/ her and he should give the acceptance in clear and understandable form which can be oral or written or both. For example, a couple requested the hotel staff to book a room for them and in order to do so they must send them with the accommodations and costs details (Smits, 2016). The hotel sends all the relevant details asked by the couple regarding the accommodation and costs and also gives the offer that if the £100 advance deposit done by the couple, room will be allocated to them in advance. When couple deposited the amount of £100 then a legally binding contract forms between couple and the hotel.
This is the total amount of payment which is decided by parties to the contract in the undertaken agreement. It is mutually decided payment which is done at the time of formulation of the contract. However, consideration could be in money and kind as well. if in the contract, there is no consideration is decided then the contract would not be legal and would not bound upon the parties to the contract.
Intention to Create Legal Relations: Intention is an important element to create a valid and legal contract.
For the execution of contract between one or more parties, the parties should carry a common intention. Also, such intention must be fair and clear to all other contractual parties because gap in intention may lead to a lawsuit (Savelyev, 2017). For instance, Thomas and Peter established a contractual alliance for doing the business. In that case the interest of both partners should be fair and common towards the objectives of business. If they would carry any uncommon interest then it will eventually result into a lawsuit in the future and also cause the failure of business.
Revocation of Offer
An offer made by the offeror be revoked by him at any time before the acceptance. After receiving an acceptance on the offer, it becomes a legal promise which cannot be revoked by either of the party. It was held in the case of “Routledge v Grant  4 Bing 653” that an offer revoked by the offeror before the acceptance shall not be regarded as the breach of promise. In this case the Defendant informed promised to open the offer for six weeks for the lease of his home but before the completion of such period he has withdrawn his offer (Georgiou, 2019). However, he informed the claimant about his decision to revoke the offer in prior. The Court held in this case that till the time of revocation of offer, no acceptance was received hence the offeror has the right to withdraw the offer within a specific time before the acceptance.
If a contract has been formed between Tom and Lisa?
According to the provided circumstances, both Lisa and Tom have created an oral contract for the manufacturing of tables. However no written contract has been executed but they agreed with all the terms and conditions of performance of contract on the conversation via email. Hence the conditions of contract shall be legally binding on both Tom and Lisa. In this case, Lisa offered to Tom for making of six new tables for her coffee shop and such offer was accepted by Tom (Kwan, 2017). Tom agreed for making the tables for Lisa for $3600 which also covered his labor. Few days later, Tom sent an email to Lisa for informing that the color of timber for tables would be darker in comparison of the color she demanded. Lisa has received and read the mail properly and didn’t respond on the matter of color of timber. At the time of delivery of tables, Lisa rejected the tables and said to Tom for cancelling the contract because the color of tables was not as per the given description by her (Georgiou, 2019).
In that case Lisa has no right to cancel the contract or revoke the offer. As it is described by the law that an offer can only be revoked before the acceptance is made. Further she cannot reject the delivery of tables due to the color differentiation because she was already informed with the fact regarding the color of tables and did not reacted at that time. The termination of contract can be done with an appropriate reason such as failure of performance or performance against the description given but here in that case the reason for gap in the performance was already informed to Lisa which makes Tom out from the default. Hence Tom could not be held liable for such cause. Also, they both are legally binding in the contract thus Tom may enforce Lisa for the specific performance of contract or may file a suit against her for the breach of contract.
Does Lisa own Tom anything?
The consideration agreed between Lisa and Tom for the making of tables was for $3600 in total which also involved the labor of Tom. In between the making process of tables Tom asked Lisa to pay $500 in advance so that he could buy the timber for tables. Lisa transferred the amount of $500 at the same time (Parks, 2016). Hence the remaining amount of $3100 shall be paid by Lisa on the completion of delivery of tables. However, both Lisa and Tom were friends and Lisa own Tom $700 from one of the previous trips but this amount shall not be included in the consideration amount as that was not the part of contractual consideration. Hence Lisa own Tom the remaining amount of agreed consideration excluding $500 for manufacturing of tables. Also, he has the right to present his claim before the Court for recovery of consideration from Lisa.
It could be inferred after the entire discussion of rule and given scenario that a contract is binding even if it is created in an oral form. However, it is necessary to include all the essential elements into the contract for making it legally binding. In the given case law, the offeror wanted to revoke the contract after the acceptance if received on the offer which is not enforceable under the law of contract. An offer can only be revoked by the offeror before the acceptance. Hence Lisa cannot revoke the offer given to Tom and bound to discharge her part of performance. However, the termination of contract can be done but for this a valid reason is required but ion the given scenario, no default was found on the part of Tom as he already informed about the color of timber to Lisa. Therefore, Tom has the right to receive the agreed consideration in full.
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