Contract law problem question – Posh Posters (2500 words) This scenario relates to two companies, Pretty Paintings Limited (“Paintings”), and Posh Posters Limited (“Posters”), who are engaged in the poster trade. They have entered into commercial relations with one another in respect of some stock, namely 1000 posters, which Paintings has offered to sell to Posters. This offer has been made by way of a letter to Posters.
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We will look at what, if any, contractual obligations and rights have arisen in the dealings between the two parties in respect of this stock. As often happens in commercial relationships, certain problems develop in relation to the delivery of the posters. In order to assess whether either party has contractual recourse in these circumstances will depend on what terms are considered to constitute the contract between the two. We will look at the correspondence between Paintings and Posters in order to establish what terms governed the commercial relationship in order to assess whether Posters is able to bring a claim for breach of contract against Paintings. We will begin by considering the correspondence between the parties chronologically in order to establish what, if anything, constitutes the binding contractual agreement between the two parties. The starting point in any discussion of contractual arrangements is that contracts are fundamentally premised on the fact of agreement between the parties; this is, after all, the purpose of contracts. In the present case, for example, there is certainly an agreement between Paintings and Posters that 1000 posters will be sold to Posters by Paintings for a consideration of £1000. This is not, of course, sufficient on its own to amount to a contract imposing obligations on either party. Furthermore, as Norweb Plc v Dixon (1995) tells us, in order for a contract to be found, the agreement in question must have been entered into voluntarily by the parties (as opposed, for example, to being entered by legal compulsion). It is clearly the case here, however, that the two commercial parties have freely chosen to enter into this commercial relationship. We have seen that the basis of any contractual arrangement, agreement between the parties, is present in this case. We have also seen that this arrangement was entered into through the choice of the parties in question. What, then, were the terms of this agreement? Steyn LJ famously considered there to be four important aspects of contract formation in G Percy Trentham Limited v Archital Luxfer Limited (1993). Firstly, English law will generally adopt an objective theory of contract formation. Secondly, in the vast majority of cases, the coincidence of offer and acceptance will represent the mechanism of contract formation. Thirdly, where a transaction has already been performed the court is more likely to find a binding contract, and fourthly in such cases as this,
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