Validity of Contract and Exclusion Clause

Business Law
Running Head: BLO1105 0
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Contents
Part A..........................................................................................................................................................2
Issue 2
Rules 2
Application 3
Conclusion 4
Question 2...................................................................................................................................................4
Issue 4
Rules 4
Application 5
Conclusion 5
Question 2...................................................................................................................................................5
Issue 5
Rules 5
Application 6
Conclusion 6

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Part A
Issue
Whether a valid contract was developed between John and Span and Spic. Another issue is to
check that Whether Span and Spic can rely on the exclusion clause that they have mentioned on
the slip or not.
Rules
A contract can be understood as a legally binding agreement where two parties promise to
perform a particular task for each other in return to a specific consideration. The main
characteristic of a contract is that the law can enforce the same. A contract is developed when the
same has all the essential elements. These elements are basic requirements that need to be
present in each contract. In the following section, these elements are discussed:-
 Offer: - An offer is a basic element, which comes first of all elements. It is a proposal to
do or to not do a particular thing in reward of a consideration. The person who makes this
proposal is known as offeror and another person who receives such offer is known as
offerree. An offer must be addressed to a specific person. Many requirements are there in
relations to an offer and an offer that fulfills all of them is treated as a valid one. It was
provided in the case of Harvey v Facey1 that an offer must contain an intention to be
bound. The issue associated with the offer is its similarity with other terms. Invitation to
treat is the one term, which creates huge confusion. It seems to be the same as an offer
but in actual the same is different. It is just a call for offers where one party invite offers
1 Harvey v Facey [1893] UKPC 1, [1893] AC 55

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and thereafter another party is required to make the offer2. Afterward, the party who
makes an invitation to treat comes at the place of the offeree and hence requires to accept
the offer. Now the other issue is related to the identification of offers and an invitation to
treat. As mentioned above, both of the terms seem to be interchangeable but legal
treatments of both are different. In general, advertisements are considered as an invitation
to treat but this is not true for every situation. Pharmaceutical Society of Great Britain v
Boots3 is an important case to study here where it has been decided that the good
displayed in shops or shelf with price tags are just invitation to treat and the customer has
to make an offer to purchase those goods. After that, the trader who displays such goods
needs to decide whether to accept the offer or not.
 Acceptance: - Once an offer is made by the offeror to the offeree, the later party need to
provide free consent to offer. The consent must be for the exact terms that are mentioned
under an offer. An offeree needs to communicate his/her acceptance to the offeror. In the
case of Brogden v. Metropolitan Railway Co.4, the court decided that acceptance can also
be provided via conduct5. It means if the nature of the offer is the one that can be
consented by doing a particular thing then the acceptance will be able to grant through
conduct.
 Consideration: - This is the main motivation behind the development of a contract for
each party. It can be anything but must not be an illegal article or activity. A valid
2 Duhaime.org, Invitation to Treat Definition: (Web Page)
<http://www.duhaime.org/LegalDictionary/I/InvitationtoTreat.aspx>.
3 Pharmaceutical Society of Great Britain v Boots [1953] 1 QB 401
4 Brogden v. Metropolitan Railway Co. (1877) 2 App. Cas. 666
5 James Marson, Business Law (OUP Oxford, 2013)