Contract formed upon acceptance of payment

Chiorino

Wondering if anyone has any opinion as regards when (or if) exactly a legal contract is formed in relation to payment which is then subsequently refunded to the payer.

As an example, a business (A) provides a service to another business (B) at a specific function/event each year. Business A has provided this service for 10 years with no formal written contract in place.

As per previous occasions, business A pays a booking fee to attend/perform at this years event function whereupon business B, having intially cashed the booking fee cheque, then refunds the payment to business A stating that they will be obtaining the service from an alternate supplier.

Having (initially) accepted the booking fee, has business B entered into a binding contract and would business A be entitled to seek damages for losses incurred?

Steve

Not an expert or professional but my understanding is offer and acceptance can be verbal but unless consideration (deposit / payment) was paid from B to A then there is no binding contract.

P. Breathnach

Offer or acceptance need not always be explicitly put in words. They can be inferred from behaviour.

Neither is a contract contingent on when consideration passes.

But on the somewhat vague outline given in the OP, I think it might be difficult to establish that a contract exists. It would be particularly difficult if the payment had been returned fairly promptly.

Steve

Given the circumstances, I would agree.

There is also contractual intent to consider and the precedent that

*Commercial agreements are presumed to be enforceable*

GerardKeating

Chiorino wrote: »

Wondering if anyone has any opinion as regards when (or if) exactly a legal contract is formed in relation to payment which is then subsequently refunded to the payer.

As an example, a business (A) provides a service to another business (B) at a specific function/event each year. Business A has provided this service for 10 years with no formal written contract in place.

As per previous occasions, business A pays a booking fee to attend/perform at this years event function whereupon business B, having intially cashed the booking fee cheque, then refunds the payment to business A stating that they will be obtaining the service from an alternate supplier.

Having (initially) accepted the booking fee, has business B entered into a binding contract and would business A be entitled to seek damages for losses incurred?

All depends on the terms of the unwritten contract, does it include a cancelation option?

Was the Deposit solicited, or did "Business A" just sent it assuming the "contract" would be renewed for this year.

robman60

Hard to give a definitive answer from the OP, but I think the deposit/booking fee could be viewed as partial consideration. Given that partial consideration is no consideration at all, I think B is entitled to give a refund and that ceases dealings between the parties prior to the formation of any contract.

In light of the above, past dealings cannot give rise to any implied terms as implied terms would only arise where the contract had actually been formed. In my view, no contract exists given the facts.

Victor

Homework?

Not every contract is written. It can probably be concluded that there were contracts in the previous years.

Habitual (somewhat unspoken) conduct can set the framework for a new contract or quasi-contract, e.g. if I have newspapers delivered every day, to end the contract I need to do something positive. Mere silence, while accepting the newspapers through my letter box is accepting the status quo.

So, let us say Business A provides a bar / catering service at a conference organised by Company B on Company B's premises. Individual attendees pay for their own meals and drinks. As the event is valuable to Business A, they are willing to pay Company B for (a) the opportunity to sell (b) the reimbursement of third-party costs incurred by Company B.

The mere payment of money could be for anything, e.g. last year's fee might be outstanding, it might be a loan, it might be an error.

However, certain matters may depend on the facts of the case, e.g. if Company B issued specific requirements this year ("we are expecting extra attendees, please provide more staff than usual"), there may be a quantum meruit situation - British Steel v Cleveland Bridge.

However, if there was complete silence other than payment and it wasn't the day* before the event that the payment was returned, then I would say no contract and no quasi-contract.

Also, look at the rules of paying deposits - the coronation cases. Although this is slightly novel, as the supplier is the one paying.


* Exact time period may depend on the facts of the case.