Essentials of Valid Contract : Assignment

Running Head: ESSENTIALS OF CONTRACT
Essentials of contract
Name of the Student:
Name of the University:
Author Note

1ESSENTIALS OF CONTRACT
Table of Contents
Question One: Part A.......................................................................................................................2
Issue:............................................................................................................................................2
Rule:.............................................................................................................................................2
Application..................................................................................................................................4
Conclusion...................................................................................................................................5
Part B...............................................................................................................................................5
Issue.............................................................................................................................................5
Rule:.............................................................................................................................................5
Application:.................................................................................................................................6
Conclusion...................................................................................................................................8
Question Two: Implied and Express terms of a contract.................................................................8
Introduction..................................................................................................................................8
Implied Terms..............................................................................................................................8
Express Term...............................................................................................................................9
Type of Contract term existing in Question one........................................................................11
Conclusion.................................................................................................................................11
Bibliography..................................................................................................................................13

2ESSENTIALS OF CONTRACT
Question One: Part A
Issue:
It is to be stated that for a contract to be valid and legally binding upon the parties, it must
contain the basic essentials of a valid contract. In this case the essentials of a valid contract will
be discussed to analyze whether a valid contract had been formed between Avinash and the café.
Rule:
There are four important essentials that need to be present for the formation of a valid contract as
held in the case Pharmaceutical Society of Great Britain v Boots1. There has to be an offer. The
offer must be accepted on the terms of the offer. The parties to the contract must intend to create
legal obligation by entering into the contract2. There has to be a consideration present in the
contract.
Offer:
It can be said that an offer is the statement of expression which intends to create
contractual relationship and bind the parties by such relationship3. The person making the offer is
called the offerer and the person to whom the offer is made is called the offeree. It is to be
mentioned that for an offer to be effective, it has to be complete. An offer, as made by the offeror
cannot have indefinite and ambiguous terms4. It was held in the case AGC (Advances) Ltd v
McWhirter5 that if any of the terms of the offer is missing or incomplete the offer would merely
1 [1953] 1 QB 401
2 Wilkinson-Ryan, Tess, and David A. Hoffman. "The common sense of contract formation." Stan. L. Rev. 67
(2015): 1269.
3 McKendrick, Ewan. Contract law: text, cases, and materials. Oxford University Press (UK), 2014.
4 Bayern, Shawn. "Offer and Acceptance in Modern Contract Law: A Needles Concept." Cal. L. Rev. 103 (2015):
67.
5 (1977) 1 BLR 9454

3ESSENTIALS OF CONTRACT
be treated as an invitation to treat. An important case which discussed the provision of invitation
to treat is the case Great Britain V Boots Cash Chemists ( Southern) Ltd (1953) 1 QB 401
Intention to Create Legal Relation:
It is to be mentioned that for a contract is considered to be an agreement which legally
binds the parties. It was held in the remarkable case Carlill v Carbolic Smoke Ball Company6
that the intention of the parties to create legal relations would be evaluated from the perspective
of a reasonable man acting in a similar situation as the plaintiff. It can be said that the court
assumes the parties to a commercial contract intend to create legal relations as held in the case
Esso Petroleum v Commissioners of Customs & Excise 7. An objectives test is to be applied to
judge whether there was intention of the parties to create legal relations as held in the case Carlill
v Carbolic Smoke Ball Company [1893]. However, the burden is on the party to provide contrary
evidence, who wishes to establish that such party did not intend to form legal relations8. Rebuttal
is only successful rarely as was held in the case Rose & Frank Co v Crompton & Bros Ltd.
Acceptance:
The principles of valid acceptance have been illustrated in the case R v Clarke9, in which
it was held that the acceptance must be in reliance of the terms of the offer. Acceptance is the
second step after the offer is made to the offeree. Acceptance of an offer can only be done by the
the person to whom the offer was made and on the exact terms of the offer. Any proposition to
change the terms of offer by the offeree would constitute counter offer and not acceptance10. The
6 [1893] 1 QB 256
7 [1976] 1 WLR 1
8 Shavell, Steven. "Damage measures for breach of contract." The Bell Journal of Economics (1980): 466-490
9 (1927) 40CLR 227
10 Bartling, Björn, and Klaus M. Schmidt. "Reference points, social norms, and fairness in contract
renegotiations." Journal of the European Economic Association 13.1 (2015): 98-129.