James Price is an Information Technology consultant with specific expertise in website design. His consultancy is doing well, but he would really like to gain another client to ensure that he has enough work for the foreseeable future.
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One Saturday, at his brother Anthony’s 40th birthday celebration, James is approached by Mark Jackson, a store owner, who James has met previously at some of his brother’s other social functions. Mark explains to James that he is looking to revamp his store’s website and that he could use James’ expertise to complete the project. James expresses his interest in assisting and Mark tells James that he will email him on Monday with a proposal.
On Monday morning, Mark sends James the following email:
After thinking further about your potential involvement in the website project for the store, I want to bring you on board as a consultant.
The terms of the engagement are that you will provide your web design services exclusively for two weeks, starting on 1st February 2014, working onsite with me and the store manager. In terms of remuneration, you will be paid a flat fee of $35,000 with a parking spot to be provided for the time that you are onsite.
It is important that if you want this work, you indicate your acceptance in writing by the end of the day.
I look forward to hearing from you.
An hour after the email is sent, James reads it and is happy with the terms of the proposal. He goes to draft an email to Mark detailing his acceptance of the terms of the offer, but because of a sudden storm that has hit the area where he lives, James’ email stops working and he is unable to send the message to Mark. James then tries to call Mark to tell him that he wants the work, but Mark doesn’t answer, and James is not given the option to leave a message. As a last resort, James drafts a letter to Mark communicating his acceptance of the offer proposed. He then takes the letter, and a strategic map for the project that he quickly prepared, to the post office and posts them at 4.30pm on Monday afternoon. The letter and the map take a day to be delivered to Mark and he receives them late Tuesday afternoon.
On Wednesday, Mark realises that he has offered to pay James $15,000 more than an award winning web design firm has quoted him for the job, and he doesn’t want to engage James anymore. He sends an email to James saying that because he didn’t receive James’ acceptance by the end of Monday, James has missed out on the work. Mark also states in his email that he never meant for the proposal to be real anyway because he was only trying to help out his friend Anthony by throwing James some work. James is upset upon receiving this email from Mark and calls his lawyer for advice on the situation.
Using the four step process, discuss the element of agreement required for the formation of a legally binding contract between James and Mark.
STEP 1: Identify the principles or issues of law
The principles of law here is that in addition to intention and consideration aspects, there should be the existence of a valid agreement between James and Mark which is required for the formation of a legally binding contract to be created.
Step 2: Explain the rule(s) of law relevant to the principle/area/issue of law identified in step one with reference to authority.
There are three main requirements for the formation of a legally binding contract; intention to create a legal contract, offer and acceptance (agreement) of the terms of the contract and consideration (reference book P-60).