Avatar: Professor

Mode: Question & Answer

Time: 02:51 AM
Date: Fri 23/Jun/2023

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1. The advertisement was not an offer but an invitation to treat. This is because it did not
contain definite terms that would create legal relations between the parties. Section 2(1) of
the Law of Contract Act provides that an offer must be certain and definite. The case law of
Carlill v Carbolic Smoke Ball Co (1893) supports this position.2. The 20th January bid was an
irrevocable offer because it contained a promise to keep the offer open until March 1. This
is known as an option contract, and once the option is exercised, the offer becomes binding.
Section 4 of the Law of Contract Act provides that an offer can be revoked at any time
before acceptance unless it is supported by consideration.3. There was acceptance by Drive
In Cinema of Ohio's bid on February 1 when they sent a telegram to Ohio accepting their
bid. However, Ohio revoked their offer on February 11, before acceptance was
communicated to them. Revocation is effective once it is communicated to the offeree.
Section 5 of the Law of Contract Act provides for acceptance and revocation.4. Remedies
are available if there has been a breach of contract. In this case, Ohio could sue for damages
for breach of contract if they can prove that Drive In Cinema's acceptance was
communicated to them before they revoked their offer. Drive In Cinema could also sue Ohio
for breach of contract if they can prove that Ohio's revocation was not effective. The
remedies available include damages, specific performance, and injunctions. Section 56 of
the Law of Contract Act provides for remedies.5. Assuming Ohio or Drive in Cinema want to
sue for damages, the court that would have jurisdiction to entertain this case would be the
High Court of Kenya. This is because the Law of Contract Act provides that the High Court
has jurisdiction to hear and determine any civil proceedings arising out of a contract.6.
There was an intention to create legal relations between Drive In and Ohio, but not between
Drive In and Reno. This is because Ohio's bid contained definite terms that would create
legal relations between the parties, while Reno's bid was subject to a condition that would
make it uncertain whether legal relations would arise. The case law of Gibson v Manchester
City Council (1979) supports this position.7. The three companies had the capacity to
contract because they were all legal entities. Companies are deemed to have the capacity to
contract unless they are specifically prohibited by law. Section 4 of the Companies Act, 2015
provides for the capacity of companies to contract.8. A company can lose its capacity to
contract if it is dissolved or wound up. This is because a dissolved or wound up company
ceases to exist as a legal entity. Section 843 of the Companies Act, 2015 provides for the
effect of dissolution or winding up on the capacity of a company to contract.9. The
communication of acceptance is complete as against the offeror when it is put in a course of
transmission to him, so as to be out of the power of the acceptor. Section 4 of the Law of
Contract Act provides for the communication of acceptance. In this case, Drive In Cinema's
acceptance was communicated to Ohio when they sent the telegram on February 1.