Contract Formation and Offer Acceptance

This business law assignment examines the issue of whether a valid contract was formed between Danny and Rupert. It outlines the principles of contract formation, including offer, acceptance, consideration, capacity, and certainty, using relevant case law examples like Brogden v Metropolitan Railway Co., Hyde v Wrench, Powell v Lee, and Tinn v Hoffman. Applying these principles to the facts provided, the assignment argues that no contract was formed because Rupert's acceptance did not match Danny's specified method of communication.

Running head: BUSINESS LAW ASSIGNMENT
Business law Assignment
Name of the Student
Name of the University
Author Note

1BUSINESS LAW ASSIGNMENT
Table of Contents
Issue.................................................................................................................................................2
Principle...........................................................................................................................................2
Application......................................................................................................................................3
Conclusion.......................................................................................................................................3
Reference list...................................................................................................................................4

2BUSINESS LAW ASSIGNMENT
Issue
Whether there was a contract between Danny and Rupert
Principle
A contract is rendered valid when there is an offer, acceptance, consideration, capacity
and certainty, which makes it enforceable in the court of law. An offer is a proposal made by the
offeror to the offeree with the legal intention to be bound by a contract on acceptance by the
offeree.
An offer is different from an invitation to treat where a party merely invites offers to the
world, which any person may accept or reject. Advertisements of goods for sale are an example
of invitation to treat.
In Brogden v Metropolitan Railway Co. [1877]1, it was held that an acceptance much
match the terms of the offer. If the offeree introduces a new or varies the contractual terms, it
shall amount to a counter offer, which the original offeror may accept or reject and such counter-
offer shall nullify the original offer as was established in Hyde v Wrench [1840]2.
In Powell v Lee [1908]3, it was ruled that an acceptance must be communicated to the
offeror to form a valid contract. In Tinn v Hoffman [1873]4, it was held that the offer must
specify the method of acceptance in which case actual communication of acceptance will be
required.
1 [1877] 2 App Cas 66.
2 [1840] 3 Beav 334.
3 [1908] 99 LT 284.
4 [1873] 29 LT 271.

3BUSINESS LAW ASSIGNMENT
Application
On the facts here, Rupert advertised about his Toyota van and offered it for sale at
$12,000 but Danny offered $9500 for the van. This amounts to a counter offer as Danny varied
the terms of the offer proposed by Rupert, which nullifies the original offer to sale the van at
$12,000.
However, Danny specifically mentioned that the acceptance of the offer should not be
made through phone but meet him personally by visiting his house before 2 pm if he was
interested to sell the van.
However, Rupert did not visit his house but texted Danny and even emailed him that he
was interested in selling the van at the offered price $9500. This implies that Rupert did not
communicate the acceptance in the method specified by Danny, thus, not forming a valid
acceptance.
Hence, as established in Powel v Lee, an acceptance must be communicated to form a
valid contract and as was established in Tinn v Hoffman and acceptance must be communicated
in the manner specified5.
Conclusion
In the absence of a valid acceptance, which renders a contract as valid, it can be said that no
contract was formed between Danny and Rupert.
5 [1873] 29 LT 271.

4BUSINESS LAW ASSIGNMENT
Reference list
Brogden v Metropolitan Railway Co. [1877] 2 App Cas 66
Hyde v Wrench [1840] 3 Beav 334
Powell v Lee [1908] 99 LT 284
Tinn v Hoffman [1873] 29 LT 271