CONTRACT LAW: Contracts made between Intoxicated Persons

Question 1: Contracts made between Intoxicated Persons

The first contentious issue arising from the case is whether or not Bob is legally obliged to pay Jon the £5 he promised to pay him for increasing his share price by the agreed margins. Naturally, the honourable thing would be for Bob to honour his part of the deal since there is evidence that Jon has already fulfilled his duty. However, in legal terms, there are several factors that must be considered. One of the crucial factors relates to the manner in which the deal between the two was struck. In contract law, the term ‘formation’ comprises aspects such as the where and when a contract is made (Young, 2009 p.18).

Nonetheless, there are a number of crucial elements that determine the legal validity of a contract. Both parties to the contract must communicate that they intend to strike a deal, and the contractee must accept the offer. Likewise, there must be a form of consideration, either in cash or kind. Additionally, both parties must be capable of contracting, with capacity here referring to a sound mind. Likewise, the consent of both parties must be sought (Kitching, 2001 p.22). When evaluated against these elements, the deal between Bob and Jon appears to have been legally binding. When analysed from this point of view, Bob should keep his promise and pay Jon the amount he pledged to give, considering that Jon has performed his obligations as agreed. One such exception relates to the capacity of the contracting parties. The law states that “there are legal restrictions on the ability of minors, the mentally impaired and drunk people to enter into binding contracts” (FL Memo Ltd, 2006 p.62). This is to say that a contract entered into between two or more people who are influence of alcohol is treated in the same manner as would be a contract between insane persons (Chappell, Dunn & Cowlin, 2009 p.72). The rationale behind this position is that in most cases, a drunken person will make choices that could be unbelievably poor.

Relying on the exception of having been intoxicated at the time of making the deal, Bob could refuse to pay Jon. However, his is a special case: most of his business decisions are made in a pub setting (under the influence of alcohol). This implies that despite having been drunk, Bob was fully conscious of his conversation with Jon. In the 1848 case of Molton v. Camroux, it was ruled that contracts entered into between intoxicated persons are legally binding if one of the parties confirms having made the deal. Referring to the Bob v. Jon case, Bob did not deny having promised to pay Jon £5 million; his excuse was the conversation was purely banter and he had no intention of paying the money. The impression obtained from this is that Bob was perfectly aware of what he was offering Jon, but he knew very well that he would not honour the promise. Consequently, he is obliged to pay the money.

Word Count: 494

Question 2: Sale of Goods

The second issue that Bob is facing is whether or not he should deliver the trainers ordered by Fiona, even though there was a serious under-statement of prices. To arrive at an informed solution to this dilemma, a useful starting point would be to revisit what the law says about sale of goods. According to Brown (2000, p.224), the placing of an advertisement by a seller does not amount to a contract; it is merely an “invitation to treat”. In regard to the case scenario, this means that although Runningfast made an error by pricing its trainers at 80 pence, this error is of little consequence to the final deal between the company and buyers. Precisely, the advertisement only invites prospective buyers to initiate discussions and negotiations with the company concerning the price of trainers. In light of this, it is illegal for Fiona to demand Bob and his company to deliver the sixty pairs of shoes she ordered.

When it comes to sale of goods, the contract law gives sellers an upper-hand in deciding whether or not they will sell goods at particular prices (Brown, 2000 p.224). There are many cases illustrating that advertisements do not constitute contracts, but are just invitations to contract. For example, in the 1873 Harris v Nickerson case, the complainant was suing for having expressed interest to participate in an auction. Unfortunately, the auction never took place. The court hearing this case ruled that the advertisement about the planned auction was not a contract; hence no obligation existed for the auction to be held. Pursuant to this ruling, the complainant could not claim damages in compensation for the breached auction.

The Harris v Nickerson (1873) case is just one among the numerous examples showing that by virtue of being invitations to treat, advertisements do not create a legally binding relationship between sellers and prospective buyers. As a result, and considering that Runningfast has not yet received money from Fiona, the company is not obliged to sell shoes to Fiona at the incredibly low price of 80 pence.

Word Count: 343

Bibliography

Brown, A. 2000, The practice manager’s law handbook: A ready reference to the law for managers of medical general practices. Oxford: Blackwell Science.

Chappell, D., Cowlin, M., & Dunn, M. 2009, Building law encyclopaedia. Chichester, West Sussex: Wiley-Blackwell.

FL Memo Ltd. 2006, Employment 2006: Law and practice, human resources. London: FL memo.

Kitching, T. 2001, Purchasing scams and how to avoid them. Aldershot, Hampshire, England: Gower.

Young, M. 2009, Understanding contract law. Routledge.