Agreement and Consideration in Business Law

This article discusses the importance of agreement and consideration in business law. It explains the legal requirements for an agreement to be valid, including offer, acceptance, legal intention, and consideration. The article also provides relevant case law examples to illustrate these concepts.

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Contents
Solution............................................................................................................................................2
Answer (a).......................................................................................................................................2
Issue.............................................................................................................................................2
Relevant Law...............................................................................................................................2
Application of Law......................................................................................................................2
Conclusion...................................................................................................................................3
Answer (b).......................................................................................................................................3
Issue.............................................................................................................................................3
Relevant law.................................................................................................................................3
Application of Law......................................................................................................................4
Conclusion...................................................................................................................................4
Bibliography....................................................................................................................................5

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Solution
Answer (a)
Issue
Whether there is an agreement between Harry and Connor?
Relevant Law
An agreement is said to be in existence between two parties when there is an offer made by one
party to another and the other party accepts the offer made to it. An agreement is meeting of
minds whereby one party shows its intention to be in agreement with the other by giving an offer
and the other party accepts the offer by showing its intention to be in agreement with the person
making an offer. (Latimer 2016)
The two ingredients which make up an agreement are explained in detail below:
Offer - An offer is a proposal which is given by one party (offeror) to the other party (offeree) in
order to formulate an agreement. An offer must be specific and not an ambiguous and it is then
only the same is considered to be a valid offer. An offer may be in oral or written form. An
offeror by his proposal gives his set of terms upon which he wants an offeree to accept his offer
(Harvey v Facey 1893). An offer can be made to world at large or to a specific person but the
offer is said to be concluded when it comes within the knowledge of an offeree (Carlill v
Carbolic Smoke Ball Co [1893 1893). When an offer is made for specific period of time then it is
said to lapse after the expiry of such period (Dickinson v Dodds 1876). (Gibson and Fraser 2013)

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Acceptance – An acceptance is said to occur when an offer made by an offeror is assented too or
confirmed by an offeree as per the terms of an offer. An acceptance must be clear and specific. It
must be made before the lapse or expiry of an offer. Acceptance is complete when it is
communicated to an offeror (Entores Ltd v Miles Far Eastern Corp 1955). An acceptance must
be same and equal to an offer. In case the acceptance is there but with a variation in offer, then,
the said acceptance is not an acceptance and gives rise to a counter offer, which becomes a new
offer (Hyde v Wrench 1840). When the offeror states that the acceptance must be in proper
manner or mode then in such case the acceptance is said to be complete when the acceptance is
made in that particular manner only. But if there is slight variation in the manner of acceptance
then such acceptance is valid acceptance (Tinn v Hoffman 1873). An agreemnst is said to be
concluded when the accepatnec comes within the knowledge of an offeror. In case of acceptanec
by pos,t the acceptance is concluded when the letter with regard to acceptance is posted (Adams
v Lindsell 1818). It does not matter when it reaches but when it is put in transit then acceptance
is said to be complete. (Gibson and Fraser 2013)
Application of Law
Connor at his brother engagement met Harry. At the function negotiations took place between
them. Harry told Connor that he is willing to revamp his employee procedures. Harry on this told
Connor that on Monday he will send a proposal with regard to same to Connor.
Harry sends an email on Monday to Connor and states that he is willing to appoint Connor on his
board as a Human Resource consultant. Harry stated that Connor will provide him with exclusive
services for 2 weeks from 1st August 2018. Connor will have to work onsite with his assistant
manager and him. The fee of $28,000 was also stated by him for the said services which included

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undercover parking. The above proposal is an intention on the part of Harry to enter into an
agreement with Connor, hence same is an offer and the said offer is complete when Connor reads
the mail of Harry.
As Harry had stated that Connor should send his acceptance in writing by the end of day else
Harry will assume that Connor does not wish to move further. In this case Connor sends his
acceptance by way of a letter as his mail was not working due to defective NBN services. He
also called up Harry but his phone was not answered by Harry. As the acceptance was in writing
hence the same is valid as it was made on same day (Dickinson v Dodds 1876). As Harry only
stated that the acceptance must be in writing hence acceptance was made through post hence due
to slight deviation in mode of acceptance also the same is termed as a valid acceptance (Tinn v
Hoffman 1873). As per postal acceptance rule the acceptance is complete when the letter
regarding acceptance is put in course of transit (Adams v Lindsell 1818). It does not matter when
the letter is received by Harry. The acceptance is said to be complete when the letter is posted,
hence there is an agreement between two of them. So on Wednesday harry cannot revoke his
offer as it had already been accepted by Connor on Monday.
Conclusion
Hence there is a conclusive agreement between Harry and Connor as Connor had accepted the
offer of Harry in the mode in which he wished within specific time frame.

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Answer (b)
Issue
Whether the agreement amid Harry and Connor is supported with legal intention and
consideration?
Relevant law
To form a valid agreement there should be presence of offer and agreement (Carlill v Carbolic
Smoke Ball Co [1893 1893). But, mere agreement (offer and acceptance) is not enforceable and
to convent any agreement into contract there should be legal intonation and consideration amid
the parties to support the promises made.
When the offer and acceptance are exchanged amid the parties, then it is very necessary that the
promises must bring some benefit or some disadvantage to the parties. There should be some
change in the position of the parties when the promises are made and this gain/loss to hold the
promises enforceable if consideration in law and is held in (Thomas v Thomas 1842). The
consideration is not required to be adequate to be enforceable in l.aw. In (Chappell & Co Ltd v
Nestlé Co Ltd 1960) it was submitted by the court that the only requirement to consider that the
consideration is valid is that it has some sufficiency in the eyes of law. The consideration might
not justify the value of the promises but it is sufficient to hold the promises valid in law. In the
leading case of (Dunton v Dunton 1892), the court held that it is the promisor from where the
consideration should move and from any outsider. There is no value if past consideration and the
same is invaid and is held in (Harrington v Taylor 1945). (Latimer 2016)
Even when there is conisderation to make te offer and acceptance enforceable, but, every
communication of promises should be made with legal intention and is held in (Ermogenous v
Greek Orthodox Community 2002). When the parties are in commercial/business relation then as

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per (Esso Petroleum Ltd v Commissioners of Customs and Excise 1976), the court found the
presence of legal intention generally. But, when the parties share family relation, then as per
(Woodward v Johnston 1992), the relationship is hold with no legal intention. This general rule
is not static and is rebuttable as is held in (Todd v Nicol 1957) that the parties in family are in
contract as the promises are made with legal intention. (Gibson and Fraser 2013)
Application of Law
The facts reveal that there are numerous negotiation that are exchanged amid harry and Connor
through mails wherein valid offers and acceptance are made. So, there is presence of agreement
between the two.
Both Harry and Connor met at an engagement part of the brother of Conner, Blake. On Monday,
an email was sent by Harry to Conner through which a valid offer is communicated amid the
parties. The offer that was sent by harry to Conner was affirmed by Connor by sending a letter of
acceptance and that has resulted in the binding agreement amid the parties there and then, that is,
at the time of the post of the letter of acceptance by Connor. Now, since the agreement is made
amid them so, both the parties are bound by the agreement terms. When the offer is made, then,
in order to support the promise, it was submitted by Harry (promisor) that he will gave $28,000
to Conner if Connor accept the offer and in return provide his services to Harry. Thus, Harry is
giving money in exchange of seeking services from Conner. Thus, a monetary benefit if received
by Conner then a detriment of money is caused to Harry but a benefit of services will be received
by Harry (Dunton v Dunton 1892). Thus, the presence of money to support the promises of
Harry and Connor is valid and the same is made at the time when the promises are made and is
nit past as per (Harrington v Taylor 1945) and thus is valid in law.

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It is further, submitted that when Harry has made an offer to Connor, then, at that time he was
not a strange to Connor. They both have already met before the engagement party of Blake (at
the birthday part of Blake) and Harry is aware that Connor provide services in which harry is
interested. It is submitted that Harry is interested in seeking the services of Connor and wanted
Connor to be part of his board and in order to seek the services, a promise is made to gave
$28,000 in return of seeking services. Thus, when the offer is made by Harry then there is clear
intention that he is not asking for any gratuitous service but is willing to pay due amount so that
Connor take the offer of Harry seriously. So, the offer made by harry has legal intention.
Further, Conner when submitted his acceptance by post then he is also not willing to provide his
services for free but wanted the money in exchange of the services. He is so willing to accept the
offer that he sends his acceptance by post. So, when the acceptance is made there is legal
intention on the part of Connor to be bound by the promises.
So, the promises which are made by Harry and Connor are made with legal intention and there is
no relevance that both of them have earlier met at the birthday party of Blake.
There is legal intention amid the parties.
Conclusion
There is presence of consideration of $28,000 when the offer and acceptance are exchanged amid
Harry and Connor and the promises are made with legal intention.

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Bibliography
Adams v Lindsell . (1818).
Carlill v Carbolic Smoke Ball Co [1893. (1893).
Chappell & Co Ltd v Nestlé Co Ltd . (1960).
Dickinson v Dodds . (1876).
Dunton v Dunton . (1892).
Entores Ltd v Miles Far Eastern Corp . (1955).
Esso Petroleum Ltd v Commissioners of Customs and Excise . (1976).
Excise, Esso Petroleum Ltd v Commissioners of Customs and. 1976.
Gibson, Andy, and Douglas Fraser. Business Law 2014. Pearson Higher Education AU, 2013.
Harrington v Taylor. (1945).
Harvey v Facey . (1893).
Hyde v Wrench . (1840).
Latimer, Paul. Australian Business Law 2016. Oxford University Press, 2016.
Thomas v Thomas . (1842).
Tinn v Hoffman . (1873).
Todd v Nicol . (1957).
Woodward v Johnston . (1992).

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