(BLO1105) Business Law PDF

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Name of Student
Name of Institution
Instructor
Date
Business Law Assignment

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PART A: Contract Formation
Introduction
A contract is an agreement entered into between two or more persons which is binding on
the parties and is capable of enforcement before a court of law. The formation of a legally
binding contract is procedural and has to encompass all the essential requirements for it to obtain
a legally binding status. The essential elements for the creation of a valid and enforceable
contract therefore include; offer, acceptance, consideration, intention, capacity and illegality.
A contract begins with the making of an offer; which if accepted leads to an agreement.
Whether there was an offer
The display of items/menu on the screen by ChunkyChicken restaurant is not an offer. It
is referred to as invitation to treat in contract law1. Rachel made an offer by selecting a product
object on the screen which ChunkyChicken restaurant had the choice to accept or reject. This
practice by ChunkyChicken restaurant can be equated to the display of goods in supermarkets
and shop windows as well as advertisements which courts have ruled to be invitation to treat and
not an offer.
In the case of Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern)
Ltd2, it was held that displaying goods on shelves amounted to an invitation to treat and not an
offer. A similar finding was arrived at when goods were displayed on a store window in the case
of Fisher v Bell3. The offer was therefore made by Rachel since the items/food displayed on the
screen was an invitation to treat.
Whether there was acceptance
1 Andrews, Neil. Contract law (Cambridge University Press, 2015)2 (1952) 2 QB 7953 (1961) 1 QB 394

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The offer was made to ChunkyChicken Restaurant. The person who makes the offer is
referred to as the offeror while to whom the offer is made is known as the offeree. Acceptance of
the offer happens at the point where a receipt is printed containing the order number and the
amount to be paid by the customer. The rules of acceptance have to be complied with i.e
acceptance must be communicated to the offerror within reasonable time and it should be clear
and unambiguous. Acceptance of an offer is what creates an agreement between the contracting
parties.
Intention to create legally binding obligations
A contract will only be enforceable where all the parties to the contract were willing to be
bound and developed the necessary intention to enter into the contract. Intention of the parties to
contract can be ascertained by use of presumptions; for instance, in a commercial or business
transaction, courts presume that the parties had the intention to create legally binding
relationship4.
In Carlill v Carbolic Smoke Ball Co, the defendant argued that the cash offered as a
reward in a newspaper advert for the promotion of sales amounted to an advertising stunt and
that no intention existed to create a binding and enforceable contract in the circumstances. The
court held that such advert created an intention and therefore a contract existed, being a
commercial or business transaction. ChunkyChicken restaurant being a business establishment,
there is presumption that the parties had intended to be bound by the terms of the contract
between them.
Capacity
4 Anson, William Reynell, Jack Beatson, Andrew S. Burrows, and John Cartwright Anson's law of contract (Oxford
University Press, 2010)