Legal Position and Remedies in Contract Law

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Commercial Law

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Introduction
Contracts create a legally binding relationship between parties, and they are bound
by their terms. The parties have to ensure that certain elements must be present in order to
create legally binding contracts between parties. This paper will evaluate a case study in
order to identify the laws which apply to the situation in relation to contract and its
essential elements. The legal position of each party will be analysed, and the conclusion will
be drawn based on legal principles and case judgements. Furthermore, this report will also
evaluate alternative dispute resolution (ADR) methods, including arbitration, mediation, and
litigation, and the pros/cons of each of these options will be analysed as well.
Question-1
Issue
The first issue presented in this case is whether a contract is formed between the
parties involving in this case? If so, who are the parties and when did not contract is
formed?
Rule
A contract defines the legal relationship between two or more parties that agreed to
bind themselves into legal obligations in order to perform or not perform specific actions.
For ensuring that parties of the contract enforce each other into its terms, it is important
that certain elements must be present in the contract (McKendrick, 2014). The first element
is an offer, which is also defined as the expression of willingness made by a party. Harvey v
Facey [1893] UKPC 1 is a relevant case in which it was established that a valid offer requires
that the party must have the intention to enforce its terms on himself in case they are
accepted by another party. The second element is the acceptance while forming a contract
in which the party to whom the offer is made gives his/her approval for accepting the terms
of the offer. It must be communicated by the parties to constitute as valid as given in
Entorres v Miles Far East [1955] 2 QB 327. The offer must be accepted as it is and the party
must agree to the terms as they are or else it is not considered as valid since it creates a
counteroffer that terminates the original offer as given in Hyde v Wrench (1840) 49 ER 132.

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In case the acceptance is given through post, then the postal rule applies, which
provides that the acceptance is considered as given at the time when a stamped and fully
addressed letter is put in the mailbox (Knapp, Crystal & Prince, 2019). Consideration is also
significant which must be present and transferred by the parties. Its value should be
recognised by the law. Intention is also crucial that contributes to the legality of the contract
since agreements made in social settings are not enforceable as given in Balfour v Balfour
[1919] 2 KB 571. Capacity of parties is also necessary, which means that parties of the
contract must be legally capable of forming a legal relationship due to which they must not
be bankrupt, mentally challenges or minor. In Nash v Inman [1908] 2 KB 1, it was held that a
minor could not form a contractual relationship with third parties.
Application
As per the facts, Alan posted an offer through his Facebook post to sell his book for
$200. After seeing the post, a counteroffer was given by Bernard for $150; however, it was
rejected by Alan. Based on the counteroffer, the original offer of Alan has been terminated,
and Bernard can no longer accept such offer as per Hyde v Wrench. However, Alan accepted
by the money sent by Bernard, and he gave him his textbook only, which formed a contract
between the parties. In the case of Charleen, a contract is not constructed since she lacks
the ability to bind herself legally. She is a minor that means she cannot form a contract;
thus, a contract is not formed between Alan and Charleen as per Nash v Inman. Alan made
his offer to all of his friends in which Damien was not included, and he comes to know about
the offer through Bernard. However, he made an offer to Alan regarding the book through
text message in which he offered him to pay money on 4th November. On 4th November,
Damien gave the money to Alan after he saw him at the campus which was accepted by
Damien. Since acceptance of Alan is given, a contract is constructed between the parties.
Conclusion
Based on the above observations, it can be concluded that a contract is formed
between Bernard and Alan. Charleen has not attained maturity; thus, she cannot form
contractual relationships. By accepting the money of Damien, Alan has given her acceptance
based on which a contract is formed between him and Damien.