Summary of the scenario
The scenario underlines the existence of a valid and legally binding contract between Happy Hotels Limited and Exquisite Cuisine Limited, which is evidenced by the presence of competent parties, offer and acceptance, and consideration. However, Happy Hotel revoked the acceptance of the contract before Exquisite Cuisine Limited could execute its contractual obligation. This section examines the legal position of each of the parties concerning the revocation of the contract.
Happy Hotels Limited legal position
The law of contract stipulates that parties to the contract are bound to their contractual obligations immediately when acceptance takes effect. While it is difficult to retract an acceptance, there are certain grounds in which this may be possible. One of these grounds relates to consumer contracts (Stone, 2005, p. 64). Therefore, in this case, Happy Hotels Limited has a legal right to retract its acceptance in regards to the delivery of 30 pieces of Pasta Steamers from Exquisite Cuisine Limited. In defending the legality of its decision to retract the contract, Happy Hotel should cite the Consumer Protection (Distance Selling) Regulation of 2000 (Stone, 2005,p. 64). The contract for the supply of consumer goods between the two parties was characterised by ‘distance communication’ through the internet. As such, Happy Hotels acted legally by revocating its acceptance through telephone. According to the postal rule, revocation of acceptance is legally binding as soon as the communication on revocation is made, whether the offeror receives the message or not. According to the ruling in the case of Carlill v Carbonic Smoke Ball Co., the court held that revocation is possible in contracts involving the performance of a particular act if the performance of such an act had not commenced (Marson, 2013, p.130). According to the scenario, Happy Hotels Ltd revoked its acceptance before Exquisite Cuisine Limited commencing the process of delivering the 30 pieces of Pasta Steamers that Happy Hotels Ltd had ordered.
Exquisite Cuisine Limited legal position
Exquisite Cuisine Limited may consider suing Happy Hotel Limited for damages arising from the breach of contract. In suing for damages, Exquisite Cuisine Limited should seek to achieve the position that it would have attained had Happy Hotel performed its end of the contract and accepted the delivery of the 30 pieces of Pasta Steamers. Thus, Exquisite Cuisine has a legal ground to sue the client as an effort to mitigate its loss. This assertion is underlined by the ruling in the case of British Westinghouse Electric and Manufacturing Company v Underground Electric Railway Co. of London. In this case, the court held that where a contract is legally cancelled, a firm can legally recover the contract price (Boella & Pannett, 1999, p. 124).
Conclusion
In summary, Happy Hotels Limited has a legal ground in making its decision to revoke its acceptance in the contract by applying the postal rule. The legality of the revocation of the acceptance is underlined by the fact that it was before Exquisite Cuisine Limited performing the act of delivering the Pasta Steamers ordered. Similarly, Exquisite Cuisine Limited has a legal ground in suing its client for damages arising from the revocation of the contract.
References
Boella, M., & Pannett, A. (1999). Principles of hospitality law. Andover: South-Western Cengage Learning.
Marson, J. (2013). Business law. Oxford: Oxford University Press.
Stone, R. (2005). The modern law of contract. London: Psychology Press.