The online. Some of the advantages of e-commerce

The growth in ecommerce has been astronomical in the 21st
century. E-commerce can be referred to as transactions that take place in a
virtual system where the participants interact via electronic means rather than
through a physical location. Recent statistics shows that at least 87% of UK
consumers bought at least one product online. This is still expected to show a year
on year growth of 9% from 2016 to 2017. The United Kingdom is only second to
Norway in Europe, as the leading ecommerce hub in the European continent.
Although the united states and china are the pacesetters globally, the growth
of mobiles and smartphones means that more online trading is still expected.
The number one goods sold online are electronic based including computers,
mobile devices, music and eBooks, but groceries occupy a healthy 48% of buyer’s
choices online. Some 11% of buyers buy all their groceries online. Some of the
advantages of e-commerce includes safe, quick, and hassle-free transactions all
at the buyer’s convenience. This has been instrumental in reducing the cost of
doing business. Giants in the business globally includes Amazon, Alibaba,
Walmart amongst others. The rise in e-commerce has had its backdrops. The
increasing faith in the online ecosystem means that more persons are going to
enter into valid contracts which are subject to offers, acceptance, invitation
to treat and termination.

CASE DESCRIPTION

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Certain aspects on the English contract law is captured in
this index case. An initial legal agreement was flawed when the initial flour
supply agreement between Bread-Basket Ltd and her long-term supplier was
breached. White Fluff Ltd placed a conspicuous ad in the local paper which can
be deemed as an offer because it stated the terms in which a contract can be
entered into, and was addressed to a specific group of persons. Since Allison
realized soon enough that the advertisement was a business mistake and decided
to terminate the offer by placing a counter ad in the local paper. However,
sending a confirmatory email for the order placed means that not only was it an
offer, but an intention to be legally bound is evident, hence a valid contract
has been reached according to the Consumer Rights Act 2015.

1.       The basic principles of English contract
law are divided into three broad parts;

A.      Formation of a contract

B.      Content of the contract

C.      Termination of the contract

Formation of a
contract

A contract is described as an agreement between parties that
leads to obligations that are legally binding. Regarding common law, three basic
ingredients must be present before a contract is said to have been created. The
first is an agreement, then an intention to create a contract then
considerations of the contract. An agreement is said to have taken place once
an offer is deemed to have been accepted. In the index case, the buyer agreed
to the offer, and a confirmatory email was sent acceding to the notion that it
was accepted and deemed as an obligation to deliver the goods.

a)      Offer

An offer can be referred to as a willingness to accept certain
terms laid out in a contract. An objective indicator of intent by the offeror
must be evident if the offer is accepted by the other party. This means that
the offeror will indicate either by words or by conduct to third party that he
intends to be bound by the details of the offer made. this scenario has played
out, where a university offered a prospective student admission due to a clerical
error.

The intended party for an offer might not be limited to one
party, it can extend to individuals, organizations or to the world at large. An
example is an online advertisement by amazon.com for the last Black Friday
deals or in the index case, the “half price” ad by White Fluff Ltd

An offer can be made in words, conducts and various other
electronic means.  An offer must clearly
be differentiated from an invitation to treat. In the latter, the party does
not make an offer, rather it invites another party to table an offer. To decide
whether a statement or an advertisement is an invitation to treat or an offer
is dependent on the intention in which it was created. An invitation to treat
is not made to be legally binding once the other party gives an affirmative to
it. Same cannot be said of an offer. Notable examples of an invitations to
treat includes; advertisements (Partridge v Crittenden 1968), auction sales (Barry
v Davies 2000), statement of price (Harvey v Facey 1893) and online sales.
The popular case of Carlill v Carbolic Smoke Ball Company 1893 is typical of
a scenario between an offer and an invitation to treat playing out. The firm
claimed that it was just a gimmick, but the fact that a deposit was made to the
bank as part of a possible pay out if the drug does not work, stamped it as an
offer.

b)     
Acceptance

An acceptance is described as an assent to a contract that is
final and can be regarded as an unqualified expression. As previously stated,
there must be an objective intention by the offeror to be bound by its
contractual terms. The acceptance for an offer must be in verbatim to the offer
made for it to form an agreement. It must bee an exact replica of the offer,
and all terms stated must be accepted.

An offer to buy a product can be accepted based on conduct (for
example, sending an ordered goods on a website to the recipient)

For an acceptance to have legal effect, it must be
communicated objectively to the offeror. Failure to do so, can cause undue
hardship to the offeror. The rule generally states that a postal acceptance
starts counting when it is posted independent of whether it was lost, destroyed
or not delivered. However, if stated in the express terms of agreement, the
postal rule will not be applicable. An offer with a specific mode of acceptance
needs it to be communicated in that specific way for it to have a legal event. If
it occurs via an instantaneous means such as an email, acceptance takes place
at the place and time of receipt. A silence from the offeree, does not amount
to acceptance.

When an acceptance is varied to the initial offer, the
necessary communication cannot take place. Such scenarios can lead to a counter
offer, which the offeror can choose to either accept, reject or counter. For
example, is some situations, the offeror offers to trade on its usual terms and
the offeree agree to admit, but on the offeree’s terms, that signifies a
counter-offer. Creating a counter- offer implies throwing out the original
offer which afterwards cannot be reinstated or accepted (except the parties approve).
It is imperative to discriminate a counter-offer from an ordinary demand for additional
information regarding the initial offer. An offer might be cancelled at any
time prior to its acceptance, however the

reversal must be passed on to the offeree. While cancellation
need not be communicated by the offeror in person (a trusted third party is
handy), if it is not passed on, the revocation is ineffective. Once an offer
has been acknowledged and accepted, an agreement is said to have been reached. This
is the basis of a contract; however, it is not enough solely to form a legal
obligation.

c)      
Consideration

In common law, a consideration needs to be evident before a
mere promise can be binding as a contract (a deed can also be made). Consideration
is something with worth, given as an exchange in place of a promise, and it is significant
for a contract to be legally bound. This is normally either unfavorable to the
promisee and/or of some advantage to the promisor (because he may receive value).
As an illustration, a seller’s promise can be said to be considered when the
buyer makes a payment for goods to be delivered, delivery of the goods by the
seller is a consideration of the buyer’s willingness to pay. Same applies for
both offline and online transactions. In addition, an informally made promise
does not amount to a legal contract, and it must not only be in writing. Three
factors must be considered in a contract:

A consideration needs not be adequate, it is accepted once it
is sufficient

A consideration must be made for the present, and not the
past

A consideration must move from the promisor, although it need
not move to the promisee before a contract is deemed to have taken place.

Contractual intentions

An agreement, even when a consideration is present is not
binding, except there was an intention to create legal relations. Both parties
agree for it to be legally binding.  Considering
normal commercial dealings, there is a presupposition that the parties planned
to create legal relations. The obligation of refuting this belief rests on the
party who avows that no permissible outcome was intended, and the onus must be
a substantial one. Many social and domestic arrangements are not legally
enforceable because there was no genuine intention to create legal relations,
and any claim will be refuted. An example is the Balfour vs Balfour case.

Form

Ordinarily, a contract can be formed informally, it need not
to be in writing only, for it to be deemed to be a legally binding document.
Hence, an oral and/or informal exchange also qualifies in this regard.

Some exceptions exist to this rule in English law. Examples
includes: contracts of guarantee; sale of land (Law of Property Act 1989); a
lease that amounts to a duration of greater than 3 years.

CONTENTS OF A CONTRACT

Divided into express terms and implied terms

Express terms

These are terms that both parties have set out in their
agreement. Once the express terms have been set, its interpretation to brought
to view. The document outlining the parties’ agreement should undergo an
objective interpretation. It is not done based on what either of both parties
intended, but it is interpreted from an objective point of view. For evidence
not to be added or varied, the “parol evidence rule is applied”. This means
that it is presumed that all terms set out are in the documents, and no
extrinsic evidence is permissible. This can be refuted only when it is stated
that the written document does not contain all the terms set out by both
parties.

Implied terms

A contract may have terms that are not expressly stated, but
are still legally binding. Reasons includes;

Terms implied by fact: this can be tested by the official
bystander test. Here both parties would have put the terms expressly when the
contract was being made, and they both agree that it was needed.

Terms implied by law/statute: these are terms imported from already
existing laws whether it was intended to be incorporated by the parties. For
certain contracts, the law has a set of attributable terms that are linked to
such contracts (Sale of Goods Act 1979). For terms bound by professional
conduct, standardized rules and regulations are applied to different
professions, for example a doctor is duty bound to maintain confidentiality,
and a lawyer must serve a client’s best interest.

Terms implied by custom

Terms should also be admissible based on prior usage, or
knowledge of similar contracts within a locality.

2. Intention to
create legal relations

The law recognizes that often parties enter agreements
without any intention to make it legally permissible. The law therefore
purports that there should be an intention to create legal relations and create
a dichotomy between a social/domestic agreement where parties do not normally
intend to create legal relations, and commercial/business agreements where
parties do intend to create legal relations. To dwell more on commercial
transactions as related to the index case, certain business agreements are
legally binding while some are not. According to English law, if both parties
agree that such agreement will not be legally binding, then the court will respect
their wishes (Rose and Frank Co. v J.R. Crompton & Bros Ltd). However, the
law naturally presumes there is an intention to create legal relations when
intending parties are entering business agreements. A “genuine intention
to be bound” is used interchangeably with another phrase “intention to create
legal relations”. This concept is very much prevalent in English contract law
where is connotes whether parties to a certain agreement will presume for a
court of law to enforce the agreement as a law (Hepple 1970). As a definition,
a contract is an agreement that is legally binding. An offer is made by a
party, and that offer gets accepted, that denotes an agreement, but it does not
yet qualify as a contract. The fundamental factor that changes an agreement to
a contract is “intention to create legal relations”. A legal obligation is
instituted by both parties; any breach which can lead to pursuit of legal
remedy. With respect to the case study, an intention to create legal relations
is evident. Although White Fluff Ltd cannot meet up with the value of the order
placed by Joan, the fact that the order has been confirmed, and a valid
confirmation email setting a delivery timeline for the exchange of the promised
goods, there is a presumption there is an intention to create legal relations.
A onus rebutting such presumption must be a heavy one in her regard to mitigate
any legal effect. 

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