On 15 October 2010 East Midlands Airways (‘EMA’) advertise a second-hand Airbus 321 for sale in an aviation industry trade journal for £10.4m. Later that same day, Paul, the Chief Executive Officer of Gunnell Aviation Ltd, phones EMA’s Managing Director, Joseph. Paul says that his firm would very much like to view the Airbus 321 but that he is off on a 5 day business trip to Zurich, Switzerland and will not be able to view the aircraft until he returns. Joseph says that if another buyer comes forward he will have to sell the Airbus 321 to that buyer. Paul then says he will pay £100,000 if EMA promises not to sell the Airbus 321 to another buyer for the next 5 days. Joseph agrees to this.
Analyse whether any contract has been made between the parties and if so, what are its terms? Refer to the relevant case law to support your answer.
This case concerns the law of contract. A contract is a legally binding agreement. Every business will need to make contracts at one time or another. Contracts are formed by agreement between the parties to the contract.
A contract in law requires offer and acceptance. The offeror makes an offer by stating a set of terms with the intention that these terms will form a legally binding agreement if they are accepted by the offeree.
The law on ‘invitation to treat’ is found in Partridge v Crittenden [1968] 1 WLR 1204. In this case, the defendant was charged with unlawfully offering birds for sale. In this case, the defendant was held to be not guilty because his advertisement was held to be an ‘ invitation to treat’ not an offer.
An offer to buy can be written or spoken, or it can be inferred from the conduct of the offeror.
Paul later says Paul’s he will pay £100,000 to EMA. As a price is mentioned this is a solid offer to EMA to buy the plane.
The price of £100,000 amounts to good consideration but it is not adequate.
Joseph accepts Paul’s offer and both sides are legally bound. EMA cannot sell the Airbus for the next five days. Gunnell Aviation must pay EMA £100,000 for EMA’s promise not to sell the Airbus to another buyer and must sell to Paul.
Commentary:
The most common reason for poor performance in this (and any other law examination) is poor knowledge of the relevant law, poor analysis and most importantly, poor application of the law to the facts. The answer does state some relevant contract law principles which will score a few marks. However, the answer ignores the facts on many occasions or is sloppy with its analysis the facts. The analysis of the nature of Paul’s offer to EMA is incorrect and leads to the wrong conclusion in law. Any knowledge of the relevant case law is inadequately demonstrated.
Janice Denoncourt, Senior Law Lecturer, Nottingham Law School.