Foundations of the law of Obligations Essay Example | Topics and Well Written Essays - 2000 words

Foundations of the law of Obligations - Essay Example The defendant responded to the offer with a counter-offer by setting out new terms and conditions and excluding the price variation clause (Koffman and Macdonald 134). The counter-offer contained an acknowledgement slip that explicitly set out that the buyer’s conditions would form the basis of the contract. The plaintiff signed the acknowledgement slip and delivered it back to the buyer. Plaintiff (seller) retuned the cover letter stating that delivery was to be ‘in accordance with our revised quotation of May 23rd’. The Court held that the counter-offer by Ex-cell Co extinguished the validity of the original offer by Butler Machine Co thus price variation clause did not form part of the contract. In addition, by signing the tear-off acknowledgement slip send by Ex-Cell Co, Butler Machine Co had signified and validly accepted a new offer thus destroying their original offer. The issues that arose centered on the battle of forms when parties send their own terms a nd conditions that they seek to be applied to the contract (Taylor and Taylor 153). In this case, the terms and conditions send by the last party to communicate usually form the basis of the contract and thus the valid terms and conditions for the contract were those send by buyer (Ex-Cell C0). The majority adopted the ‘mirror image’ approach to valid contract formation by asserting that acceptance must mirror the terms contained in the offer. According to this mirror image approach, a buyer’s order that contains variations of the seller’s offer quotation should not be construed as an acceptance, but a counter-offer (Charman78). Young asserts that a legally binding contract requires offer and acceptance, but some unusual commercial transactions may entail negotiations that are evidenced by a series of passing of documents such as quotation, purchase order and acknowledgement of the purchase order ( 89). United Kingdom still conforms to the ‘last shot rule’ in determining the battle of forms contract cases since a counter-offer rejects the original offer (Mulcahy 102). This traditional way of analysis of the offer and acceptance is evident in the case of Trollope & Colls Ltd v Atomic Power Construction Ltd (1963) 1. W.L.R 333 when the court held that a counter-offer kills the original offer. Acceptance of the counter-offer must be communicated in order to form a valid contract as evidenced by the requirement of acknowledgement slip by Ex-Cell Co (Poole 18) Under the United Nations Convention on Contracts for the International sale of goods (CISG), Article 19 (1) asserts that an offer that purports to be an acceptance, but contains additional terms, limitations and conditions is a rejection of the initial offer and amounts to a counter-offer (Richards 321). Article 19 (1) clarifies that additional terms that affect the quality, price and time of delivery to the extent of the liability of one party are considered to alter t he original offer materially thus amounts to counter-offer (Bix 190). Under the principles of European contract law, Article 2.208, a reply by offeree that contains new terms is rejection of the initial offer. UNIDROIT PICC Article 2.11 on battle of forms, a counter-offer rejects original offer while Article 2.22 requires the parties to indicate in advance or immediately of their