Help with one small bit of contract law confusion:

20-01-2011 10:46pm #1

Just in the middle of doing a contract law question and am confused on one tiny little thing.......

Is a draft lease considered an offer?? and is this offer accepted when the draft lease is signed??

Its a fairly straightforward problem overall, but that one little part has me confused. Iv looked in my books and online but cant figure out whether a draft lease is an offer...

Any help very very much appreciated

Tom Young · 20-01-2011 10:54pm

The word draft might start the normal lawyer thinking that the document is incomplete and therefore subject to amendment/s. Until such time as the lease is no longer in draft form and contains the necessary details/particulars to be a lease/indenture proper.

The principles of contract law do apply as normal.

Offer + Acceptance = Agreement; Agreement + (Legal) Consideration = Legally Enforceable Contract.

Tom Young · 20-01-2011 10:58pm

In Casey v. Irish Intercontinental Bank, the court held that there was a concluded oral agreement, and the phrase “subject to contract and title” was introduced only at the time, when the memorandum was created. The court took the view that it was therefore not a term of the contract and could not be introduced unilaterally at a later stage. Thus a memorandum which satisfied the Statute of Frauds existed, despite the fact that it denied the existence of a contract. This was a “gazumping” case: agreement on all essential matters had been reached and the purchaser had been given the keys, but the vendor sought to renege on the contract when he received a substantially higher offer.

There is an existing legal principle that an agreement to a lease is as good as a lease. Also, consider the Statute of Frauds.

20-01-2011 11:08pm

ok i see, but in the question itself it says...... :

The company in question "began negotiating for the lease. On receipt of full particulars and a draft lease [the company in question] sent a fax indicating their willingness to lease the unit and asking whether there would be any other in flatable furniture shops in the city, as they did not think Galway could hold two such shops".....

the way i interpret this is that is that this is an offer by the people leasing the shop unit, and when the inflatable furniture shop later "signed and posted the draft lease", they accepted the offer and a valid contract had been formed..... Could you perhaps just help me out a little bit more by explaing a little further?

colonel1 · 21-01-2011 12:06pm

1992 wrote: »

ok i see, but in the question itself it says...... :

The company in question "began negotiating for the lease. On receipt of full particulars and a draft lease [the company in question] sent a fax indicating their willingness to lease the unit and asking whether there would be any other in flatable furniture shops in the city, as they did not think Galway could hold two such shops".....

the way i interpret this is that is that this is an offer by the people leasing the shop unit, and when the inflatable furniture shop later "signed and posted the draft lease", they accepted the offer and a valid contract had been formed..... Could you perhaps just help me out a little bit more by explaing a little further?

I am not 100% sure (I would need to see the entire question), but the first part of the question looks like a counter offer rather than an acceptance of the original offer as the company were querying the potential number of inflatable furniture shops that Galway could cope with which suggests that they are varying the original offer terms. Any attempts to vary the terms of the original offer = counter offer. Check out Fergus Ryan's nutshell to start off with, as he sets out definitions etc very clearly.

21-01-2011 12:27pm

colonel1 wrote: »

I am not 100% sure (I would need to see the entire question), but the first part of the question looks like a counter offer rather than an acceptance of the original offer as the company were querying the potential number of inflatable furniture shops that Galway could cope with which suggests that they are varying the original offer terms. Any attempts to vary the terms of the original offer = counter offer. Check out Fergus Ryan's nutshell to start off with, as he sets out definitions etc very clearly.

ok here is the full question:

Galway Properties Ltd placed an advertisement in the Galway Advertiser for the lease of a unit in the new Galway Mega-Shopping Centre. A Cork company, Inflatable Furniture Ltd, began negotiating for the lease. On receipt of full particulars and a draft lease, IFL sent a fax on the 1st of September to GPL indicating their willingness to lease the unit and asking whether there would be any other inflatable furniture shops in the centre, as they did not think that Galway could support two such shops. On the 2nd of September GPL sent the following fax to IFL: “No other inflatable furniture shops in the centre at present, but several such firms interested in the unit.” IFL signed and posted the draft lease on the 4th of September. On the same day they sent a fax: “Terms accepted, signed lease in post.” This fax arrived at the office of GPL a few minutes later, but was buried under a pile of letters and never read. By the time the letter arrived on the 6th of September, GPL had agreed (the previous evening) to lease the unit to someone else.

Advise IFL on their legal position.

I didnt think that it was a counter-offer, I thought it was just a request for further information?

colonel1 · 21-01-2011 12:42pm

1992 wrote: »

ok here is the full question:

Galway Properties Ltd placed an advertisement in the Galway Advertiser for the lease of a unit in the new Galway Mega-Shopping Centre. A Cork company, Inflatable Furniture Ltd, began negotiating for the lease. On receipt of full particulars and a draft lease, IFL sent a fax on the 1st of September to GPL indicating their willingness to lease the unit and asking whether there would be any other inflatable furniture shops in the centre, as they did not think that Galway could support two such shops. On the 2nd of September GPL sent the following fax to IFL: “No other inflatable furniture shops in the centre at present, but several such firms interested in the unit.” IFL signed and posted the draft lease on the 4th of September. On the same day they sent a fax: “Terms accepted, signed lease in post.” This fax arrived at the office of GPL a few minutes later, but was buried under a pile of letters and never read. By the time the letter arrived on the 6th of September, GPL had agreed (the previous evening) to lease the unit to someone else.

Advise IFL on their legal position.

I didnt think that it was a counter-offer, I thought it was just a request for further information?

Yes on looking at the entire question, it was just a mere request for information rather than a counter-offer.

The question is concerned with acceptance of an offer and whether or not a fax is covered by the postal rule. Admittedly I am very hazy about the whole ins and outs (have to revise the whole offer, acceptance rules for forthcoming exam soon) of the postal rule. Robert Clark's book on contract law is the best one to look at for this question imo.

21-01-2011 12:44pm

Yes on looking at the entire question, it was just a mere request for information rather than a counter-offer.

The question is concerned with acceptance of an offer and whether or not a fax is covered by the postal rule. Admittedly I am very hazy about the whole ins and outs (have to revise the whole offer, acceptance rules for forthcoming exam soon) of the postal rule. Robert Clark's book on contract law is the best one to look at for this question imo.[/QUOTE]

Ok no worries, thanks for the tips

colonel1 · 21-01-2011 1:56pm

1992 wrote: »

Yes on looking at the entire question, it was just a mere request for information rather than a counter-offer.

The question is concerned with acceptance of an offer and whether or not a fax is covered by the postal rule. Admittedly I am very hazy about the whole ins and outs (have to revise the whole offer, acceptance rules for forthcoming exam soon) of the postal rule. Robert Clark's book on contract law is the best one to look at for this question imo.

Ok no worries, thanks for the tips

[/QUOTE]

Your welcome 1992 and good luck with the question!

Victor · 21-01-2011 6:34pm

1992 wrote: »

Galway Properties Ltd placed an advertisement in the Galway Advertiser for the lease of a unit in the new Galway Mega-Shopping Centre.

Invitation to treat.

On receipt of full particulars and a draft lease, IFL sent a fax on the 1st of September to GPL indicating their willingness to lease the unit

Statement of intent.

and asking whether there would be any other inflatable furniture shops in the centre, as they did not think that Galway could support two such shops.

Mere query.

On the 2nd of September GPL sent the following fax to IFL: “No other inflatable furniture shops in the centre at present, but several such firms interested in the unit.”

Avoiding the question / "mere puff" / putting on notice.

IFL signed and posted the draft lease on the 4th of September.

What is the postal rule?

On the same day they sent a fax: “Terms accepted, signed lease in post.” This fax arrived at the office of GPL a few minutes later, but was buried under a pile of letters and never read.

How does the postal rule and the Electronic Commerce Act apply to a fax?

By the time the letter arrived on the 6th of September, GPL had agreed (the previous evening) to lease the unit to someone else.

Is there a question of privity of contract or a similar principle/

How does the Statute of Frauds apply to the post and fax? What if the third party pulls out?

Tom Young · 21-01-2011 7:12pm

All of what Victor says!

RJunior · 22-01-2011 11:21pm

Tom Young wrote: »

The word draft might start the normal lawyer thinking that the document is incomplete and therefore subject to amendment/s. Until such time as the lease is no longer in draft form and contains the necessary details/particulars to be a lease/indenture proper.

The principles of contract law do apply as normal.

Offer + Acceptance = Agreement; Agreement + (Legal) Consideration = Legally Enforceable Contract.

Intention to create legal relations is important.

Victor · 22-01-2011 11:24pm

RJunior wrote: »

Intention to create legal relations is important.

So are legality and capacity, etc. However, as we are talking about a property lease, I think intention is covered.

RJunior · 22-01-2011 11:31pm

Victor wrote: »

So are legality and capacity, etc. However, as we are talking about a property lease, I think intention is covered.

Apols, re-read your post and see the reference to intent

Tom Young · 23-01-2011 1:58am

RJunior wrote: »

Intention to create legal relations is important.

Whether correctly or incorrectly, I had taken that for read. Thus the problem with other people doing posters homework for them.

Assignments in contract in particular are usually given at a point in time in a syllabus or course where multiple areas have been lectured or covered. What I suggested above was/is merely the basic premise for all contract related issues. The myriad of issues that can arise in a certain example or set of circumstances can be great. I should say that of course many of the issues, such as intention to create legal relations can usually be dispatched in one single sentence.

Tom

Victor · 23-01-2011 3:16am

Tom Young wrote: »

The word draft might start the normal lawyer thinking that the document is incomplete and therefore subject to amendment/s.

Re-thinking this, the use of the word "draft" seems to merely imply it was unsigned.

RJunior wrote: »

Apols

I don't know that word and neither does google.

RJunior wrote: »

Apols, re-read your post and see the reference to intent

There is a big difference between "intention to form a legal binding contract" and a "statement of intent".

I could say "I intend to go to the park with you", but that has nothing to do with a contract.

Compare:

"I intend to go to the park with Bob" - SOI with no legal bearing.

"I intend to go to give Bob money every year" - SOI, with no intention to form a contract."

"I intend to go to give Bob money every year and will sign a deed." - SOI, with no intention to form a special contract(?).

"I intend to go to give Bob money if he gives me the computer." - SOI, with intention to form a contract.

Help with one small bit of contract law confusion:

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