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Contract Law Essay Feedback

Hi! I am a second year student at the uni of Cambridge and would love some feedback on my contract law essay. My supervisor has a strict limit on the number of essays that he would mark so any corrections would be super helpful. I will attach both the question and my answer below.

Ingrida is a collector of antique cars. Her wealthy aunt recently passed away and left Ingrida a large inheritance, allowing Ingrida to add to her collection of cars. First, Ingrida sees a Jaguar E-Type for sale. It is being sold by a hybrid auction, which allows buyers to make bids both online and in person. Ingrida attends in person and makes the highest bid. The auction house, however, refuses to deliver the car, as it turns out that a higher bid was placed online but, owing to a technical issue, the auctioneer did not see this bid before the hammer came down. The online buyer is demanding that the car be delivered to them instead of Ingrida. Second, in a magazine, Ingrida sees a tender for an Aston Martin DB5. The tender terms state that: ‘The car will be sold to the person who makes the highest bid by midnight on 2 February 2022.’ Ingrida is the highest bidder but the seller, Vidas, dislikes Ingrida owing to a longstanding family feud. He therefore tells her that he is going to sell the car to the secondhighest bidder. Third, Ingrida’s neighbour Caterina is selling her Ford GT40. They orally agree on a price of £180,000. Caterina is not good with technology, so incorrectly inserts a full-stop and the written agreement between the parties records a price of £1,800.00. Both parties sign the agreement. Finally, Ingrida responds to Darius’s online advertisement offering a Ferrari F40 for sale for £300,000. She emails Darius and states that she would like to buy the car but will only pay £200,000. Darius responds and states, ‘It is yours for £250,000, but you must let me know via post or email by 5pm on Monday 31 January 2022’. Ingrida sends a letter on 28 January 2022 stating that she would like to buy the car, but has second thoughts when a Ferrari Dino 246 GT comes on the market. She therefore emails Darius at 12pm on Sunday 30 January 2022 stating she no longer wishes to purchase the car. Ingrida receives an out-of-office reply in which Darius states, ‘Owing to the pandemic, I am home-schooling my children and will be unable read or reply to messages until Monday 7 February 2022.’ Ingrida’s letter arrives on Monday 31 January 2022 at 2pm.

Jaguar E-Type
Ingrida’s attempt to purchase a Jaguar E-Type presents an intriguing issue in the context of auction law and the obligations of auctioneers. At the auction, Ingrida made the highest bid in person, but due to a technical error, a higher online bid went unnoticed until after the hammer had fallen.

The general rule in auction sales, as stipulated in the Sale of Goods Act 1979, is that a sale by auction is complete when the auctioneer announces its completion by the fall of the hammer. This principle was affirmed in Payne v. Cave (1789), where it was held that the bid constitutes an offer, which the auctioneer can accept or reject until the moment the hammer falls, at which point the contract is formed. Further, Barry v. Davies (2000) underlines the obligation of the auctioneer to sell to the highest bona fide bidder, emphasizing the auctioneer's role in ensuring the integrity of the auction process.

In Ingrida’s case, the hammer falling in response to her bid indicates acceptance of her offer, completing the contract at that point under the standard auction rules. The subsequent discovery of a higher online bid does not invalidate this contract, as the contract was already concluded. The technical issue that prevented the auctioneer from seeing the online bid at the time of auction complicates matters but does not change the fact that a contract was formed with Ingrida when the hammer fell.

Given that the contract was formed with Ingrida, the auction house's refusal to deliver the Jaguar E-Type to her constitutes a breach of contract. This scenario is further complicated by the auction house’s duty to act fairly towards all bidders, including the unseen higher bidder. However, the primary legal obligation remains with the person to whom the auctioneer sold the item, which in this case is Ingrida.

The legal position favors Ingrida in asserting her right to the Jaguar E-Type. The auction house’s failure to recognize the highest online bid due to a technical error does not detract from the fact that a contract was legally formed with Ingrida at the auction. Her remedies include both specific performance and damages, with a strong case for enforcing the contract as per the auction rules.

Aston Martin DB5
Ingrida finds herself in a dispute over a tender for an Aston Martin DB5 where she submitted the highest bid but was subsequently denied the car because the seller, Vidas, harbors a personal dislike for her.

Tenders and bids are governed by the principles that define clear rules for acceptance and performance. According to the tender terms, "The car will be sold to the person who makes the highest bid by midnight on 2 February 2022." This phrase implies a contractual obligation to sell to the highest bidder, which is a binding commitment as established in Blackpool & Fylde Aero Club v. Blackpool Borough Council (1990). This case elucidates the principle that an invitation to tender with a clear acceptance criterion forms a binding obligation on the part of the inviter to accept the highest or most economically advantageous bid.

In Vidas's refusal to sell to Ingrida despite her compliance with the tender criteria, we encounter a breach of this principle. The law typically protects the expectation of the highest bidder in such scenarios, where the terms of the tender create a contractual expectation that the highest bid will be honored. The unilateral decision by Vidas not to sell to Ingrida based on personal reasons stands in contrast to these legal obligations and may be challenged on the grounds of breaching the terms of the tender.

Ingrida has a strong basis to seek specific performance, which would compel Vidas to complete the sale in accordance with the terms of the tender. This remedy is particularly pertinent where the goods in question, like an Aston Martin DB5, have unique attributes making monetary damages an insufficient remedy. Alternatively, if specific performance is deemed inappropriate, Ingrida could seek damages for any loss she has suffered.

Ingrida's legal position appears strong; she can compellingly argue that Vidas breached the tender's terms by not selling her the Aston Martin DB5 despite her highest bid. She should pursue specific performance to enforce the terms of the tender or, failing that, seek damages that reflect her loss due to Vidas's breach.

Ford GT40
Ingrida's purchase agreement with her neighbor Caterina over a Ford GT40, which involved a significant typographical error in the contract price, highlights issues related to mistakes in contract law. Initially agreed orally at £180,000, the contract was erroneously recorded due to a clerical error as £1,800.00, which both parties signed.

The law distinguishes between different types of mistakes that can affect the validity of a contract. A common mistake, where both parties are mistaken about the same material fact, can render a contract void if the mistake goes to the essence of the agreement. In this scenario, the mistake about the price—a fundamental term of the contract—raises questions about the contract's validity and enforceability.

Given that both Ingrida and Caterina believed and agreed that the price would be £180,000, the error in the written contract can be classified as a common mistake. Legal precedents such as Great Peace Shipping Ltd v Tsavliris Salvage (International) Ltd (2002) have clarified that for a contract to be voided due to common mistake, the mistake must be so material that it makes the contract's execution impossible under the terms that both parties believed to be true. In Bell v. Lever Brothers Ltd (1932), the House of Lords held that a contract could be set aside due to common mistake if the mistake rendered the contract essentially different from what was agreed.

The doctrine of rectification provides a remedy where the written contract does not reflect what was agreed upon because of a mistake. Rectification would allow the correction of the price in the contract to £180,000, aligning the document with the original oral agreement. This adjustment requires clear evidence that both parties had a continuous common intention regarding the correct price, which was misrepresented due to a clerical error when drafting the document.

Should rectification be unachievable or contested by Caterina, Ingrida could seek rescission of the contract. Rescission would nullify the contract, returning both parties to their pre-contractual positions. Given the clear evidence of a mutual mistake, rescission is a plausible route if rectification cannot be confirmed.

Ingrida's case for rectifying the contract to reflect the originally agreed price of £180,000 for the Ford GT40 is strong, given the clear mutual mistake. If rectification proves difficult, pursuing rescission to cancel the contract due to this fundamental error remains a viable option. In both cases, clear communication and documentation of the original agreement will be crucial in persuading the court of the parties' true intentions.

Ferrari F40
The postal acceptance rule, established in Adams v. Lindsell (1818), states that acceptance is deemed to occur at the moment a correctly addressed acceptance letter is posted, even if the offeror never receives it. However, modern communication methods and instantaneous modes of acceptance, such as email, have complicated the application of this rule.

Ingrida's initial email to Darius expressing interest in purchasing the Ferrari F40 constitutes a valid offer. Darius's response, offering the car for £250,000 and specifying the acceptance deadline of Monday, January 31, 2022, creates a unilateral contract offer, which Ingrida can accept by fulfilling the specified condition—communicating her acceptance by the stipulated deadline.

Under the postal rule, if Ingrida's revocation email is deemed to have been communicated upon sending, her acceptance letter posted on January 28, 2022, would precede her revocation and constitute a valid acceptance of Darius's offer. However, the effectiveness of the revocation depends on whether Darius received and read the email before Ingrida's acceptance letter arrived by post.

Darius's out-of-office reply, indicating his unavailability to read or respond to messages until Monday, February 7, 2022, raises questions about the timing of Ingrida's revocation and its effectiveness. If Darius did not read Ingrida's revocation email before her acceptance letter arrived, the revocation would be ineffective, and Ingrida's acceptance of Darius's offer would stand.

Ingrida's situation regarding the purchase of the Ferrari F40 presents a complex interplay of acceptance, revocation, and timing issues. The application of the postal rule and the timing of communication between the parties will determine the validity of Ingrida's acceptance and revocation. Clear evidence of communication timelines and Darius's awareness of Ingrida's revocation will be essential in resolving this contractual dispute.

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