Contract law is an important branch of law among the world around us. They help state the rules of what participating parties need to abide by. A contract is inevitably perceived as a legal method for creating a mutually binding agreement between two or more parties and it is enforceable by law. It consists of four major concepts: offer, acceptance, consideration, and intention to create legal relations. Both parties must agree to the terms of the contract and promise to stick to the contract’s terms and conditions. Otherwise if breached, the breaching party may be at risk of encountering serious consequences. This essay analyses whether there have been any contract terms between Zantek Airways (‘ZA’) and Pinto Aviation Ltd using case-law, and whether Zantek Airways is entitled to withdraw from the sale of the aircraft.
Firstly, it is clearly shown from the scenario that a contract has been made between the two parties, Pinto Aviation Ltd and Zantek Airways through oral communication. It was stated that Jacinho, ZA’s managing director agreed to an offer when Francesco, the chief executive officer of Pinto Aviation Ltd, who was willing to pay £120,000 for ZA to not sell the Airbus 456 to another buyer for the next five days as a promise. When an offer is accepted, the offer is considered terminated. Therefore, a contract has been formed when referring to the rule of the termination of an offer. A contract is formed when an offer is terminated through oral or written communication. This contract is valid as it was done orally via a phone call and through acceptance by the offeree. The following case studies will focus purely on the termination of a contract through acceptance and why they are relevant to the case between Pinto Aviation Ltd and Zantek Airways.
Using the case study Bryne & Co v Leon Van Tien Hoven & Co (1880)1, the defendants wrote a letter on the 1st of October to the claimants and offered to sell 1000 boxes of tin plates on sale. The claimant was based in New York and the defendant was based in Cardiff with the letters taking about 10 to 11 days for delivery. Bryne & Co received the letter on the 11th of October and accepted the offer on the same day via telegram. A letter was sent from the claimants on the 15th of October too. This proves that a contract was formed between the two parties. However, a letter of withdrawal of the offer was sent from the defendant on the 8th of January. The claimant then sued the letter of revocation on the 20th of October and sued the defendant for a breach of contract. In an evaluation this case, the decision was in favour of the plaintiff since the revocation was uncommunicated to the claimant. As the letter was accepted on the 11th of October, the offer could not be revoked after that date and both parties would have had a valid contract established. The revocation will not be in effect until it is received by the receiver.
A second case study that proved that there was a termination of an offer was the case study, Walford v Miles (1992)2. On the 17th of March, Mr. Miles was in negotiations with Mr. Walford of a photographic processing business for sale. The defendant agreed that the claimant had £2m in his bank account to buy Mr. Miles’s business, both parties will agree to end negotiations with another party, would not consider another alternative third party, and will never cancel the contract to accept a better offer with another buyer. Despite this contract, the defendant made negotiations with another third party and withdrew the contract with the claimant. Mr. Miles later sold the business to the third party and the claimant reported the defendant for a breach of contract. Even though the contract was withdrawn from the defendant, the House of Lords were in favour of the defendant. This was because it was unclearly stated what was meant by a third party. This lacked certainty and it was voided to be an effect of the contract. Another point that supported in favour of the defendant was that the contract was subject to everything in agreement except the price. A third point to note was that there was never a ‘locked-in’ agreement since there was never a specified duration of time when the agreement was subject to contract. Therefore, the agreement was not legally enforceable. Since there was an unspecified duration of time stated in the contract, the contract was considered ‘locked-out’.
A third case study relates to Scammell and Nephew v HC(1941)3. This was when Ouston agreed to pay £286 for a van to be supplied from Scammell for two years ‘on hire purchase terms’. Prior to the ‘hire purchase’ contract to be considered for purchase, Scammell sued Ouston because he agreed to supply the van on ‘hire and purchase terms’. Ouston counterclaimed saying that there was no contract of sale since the terms ‘hire and purchase terms’ were extremely unclear. The final judgment was that the contract was not obliged by law since the ‘hire and purchase terms’ were uncertain in the contract. An agreement of the price was imposed but, there was not much clarity when relating the contract to ‘HP terms’. There were no timely payments, nor the quantity of the instalments was considered. This case was therefore in favour of the defendant.
By applying these case studies to Pinto Aviation Ltd vs Zantek Airways 2017, it was highlighted from the three case studies that a contract was formed through acceptance via some form of communication. All the offers were acknowledged by the two parties and each of the offers was terminated through one party accepting the offer’s terms and conditions. By focussing on the second part of the question, if the withdrawal of the aircraft was stated to not be permitted within the contract, Jacinho would have breached the contract and Zantek Airways was not entitled to withdraw the offer. The revocation of Leon Van Tien Hoven & Co withdrawing the offer was not permitted since it was poorly communicated to the claimant. However, the contract that both Francesco and Jacinho agreed upon was, ZA was only not to sell the aircraft to another buyer but, the contract never stated anything about the aircraft to not be withdrawn. Since there were no terms stating the aircraft could not be withdrawn, ZA was entitled to withdraw the aircraft from the sale. This relates well to the Walford v Miles 1992. For the case when there was no time specified for the contract, there were unclear terms what a third party implied, and all the terms of the contract except price were with full of ambiguity. In relation to the Scammell and Nephew v HC&JG Ouston (1941) case, the ‘HP terms’ were vague and therefore the instalments could not even be considered. These two case studies show that vagueness, missing information, and a lack of clarity within the contract may result in another party taking advantage of the offer for their own gain.
On the other hand, it can be argued that there was never a contract proposed and the scenario was never an offer since advertisements usually imply an invitation to treat. The offer is meant to be for the public to consider purchasing and the Airbus 456 would not have been entirely reserved for only Jacinho. Using the case study Partridge v Crittenden (1968)4, Partridge advertised Bramblefinch cock and hen for sale in a magazine for 25 Shillings. Under the Protection of Birds Act 19545, Bramblefinch were a protected species and were banned from being sold in an offer. As a result, Crittenden, the defendant charged Partridge for offering a protected bird species for sale. Partridge then appealed the charge to court. The last judgment for this scenario was that the charge was rejected on an appeal because an advertisement constituted as an invitation to treat and not an offer for sale. The advertisement was only inviting the public or other parties to make an offer.
Another case on an invitation to treat was Fisher v Bell (1961) 6. Mr Bell, the defendant was a shopkeeper who displayed a flick knife by his shop window, and it included a price tag. It was against the law for flick knives to be offered for sale. In fact, offering flick-knives for sale was a criminal offense. This was contrary to the Restriction of Offensive Weapons Act 1959, section 1(1)7 as it illegal to manufacture, hire, sell, lend, or offer on sale. It was arguable whether the flick knife was an offer for sale or whether it was an invitation to treat. It was concluded that that the last judgment was in favour of the defendant since the display was an invitation to treat, and the flick knife was not offered for sale within the s1(1) of the act. The display was legal since the knife was displayed inside his shop to invite customers to buy it.
A third case study on the contract never being proposed was by the Pharmaceutical Society of Great Britain v Boots (1953) 8. This was when Boots introduced a self-service support system into their branches. Customers have the options to select items from a shelf, place them inside a basket and bring the basket of items to the cash till to process their payments. The pharmacist was registered and operated the tills. However, the claimant noticed and reported a breach of section 18(1) of the Pharmacy and Poisons Act 19339, which required that there needed to be a supervision of a pharmacist of selling pharmaceutical products in the ‘Poisons List’ as stated by law. It was concluded that Boots did not breach the Act since the new service system was considered as an invitation to treat. The display of pharmaceutical goods on the shelves was not on offer and once the customer decides to buy the goods, it constitutes as an offer to the cashier waiting by the till. The customer was given the chance of returning the items back to the shelves if they no longer wanted the goods as well. The whole payment system was also under the contract by a qualified pharmacist.
By using these cases to support the claim that it was not a contract between Pinto Aviation Ltd and Zantek Airways, Zantek Airways advertised the second-hand Airbus 456 for sale at £12.6m. Since it was an advertisement, the advertisement was not an offer for sale, but rather an invitation to treat. Therefore, by using this concept, Zantek Airways was entitled to withdraw the aircraft from the sale. This case relates well to the case of Partridge v Crittenden (1968) because the advertisement from Partridge was an invitation to treat offer too. The cases relating to Fisher v Bell (1961) and Pharmaceutical Society of Great Britain v Boots (1953) may not have referred to an advertisement, and rather displays. However, both displays, and advertisements are relatable since both had the same obligation of invitation to treat and both implied the same purposes of advertising the products on sale.
Overall by analysing the case studies and using various concepts, it is concluded that there was a contract proposed since an offer was made by Francesco. The advertisements may have imposed that there was no offer proposed and it was an invitation to treat. However, the consideration of Francesco saying that he will pay the £120,000 to Zantek Airways would have constituted an offer. It was also through via a phone call which is an acceptable type of communication for Zantek Airways to consider. It was stated in the scenario that Jacinho did accept the offer. This resulted in a termination of the offer and a contract was formed. In spite of the fact that a contract was formed, the contract only stated that Zantek Airways promises to not sell the Airbus 456 to another buyer within the next five days. It was never stated in the offer that Zantek Airways promises not to withdraw from the contract. If Francesco had communicated that Zantek Airways will not withdraw the second-hand Airbus 456 for sale, then Zantek Airways would not have been entitled to withdraw the airbus from the contract. Since Francesco did not communicate to Zantek Airways to not withdraw the contract, this shows that Zantek Airways was always entitled to withdraw the aircraft from sale anytime.
1 Bryne & Co v Leon Van Tien Hoven & Co (1880) 5 CPD 344
2 Walford v Miles (1992) 2 AC 128
3 Scammell and Nephew v HC&JG Ouston (1941) 1 AC 251
4 Partridge v Crittenden (1968) 1 WLR 1204
5 Protection of Birds Act 1954
6 Fisher v Bell (1961) 1 QB 394
7 Restriction of Offensive Weapons Act 1959
8 Pharmaceutical Society of Great Britain v Boots (1953) 1 QB 401
9 Pharmacy and Poisons Act 1933