Formation of Contract and Validity of Exclusion Clause under Common Law of Contract and Australian Consumer Law

Running Head: COMMERCIAL LAW 0
Business
Law
Student’s Name

BUSINESS LAW 1
Contents
Contents
Question 1..........................................................................................................................2
Issue...............................................................................................................................2
Rules...............................................................................................................................2
Application......................................................................................................................4
Conclusion......................................................................................................................5
Part B.................................................................................................................................6
Issue 1............................................................................................................................6
Rules 1...........................................................................................................................6
Application 1...................................................................................................................7
Conclusion 1...................................................................................................................7
Issue 2............................................................................................................................7
Rules 2...........................................................................................................................8
Application 2...................................................................................................................8
Conclusion 2...................................................................................................................8
References.........................................................................................................................9

BUSINESS LAW 2
Question 1
Issue
How to contract between Stan and MacBig restaurant were formed.
Rules
Parties to the contract have the option to choose a mode of the same since contracts
developed in written as well as in oral mode are valid. In the course of the development
of contracts, different elements are needs to be there. If any of the element is missing
then an agreement remain merely an agreement and cannot turn into a contract. These
are different elements which need to present legally and validly as required under the
common law of contract. The first element is an offer which is a proposal made by one
party to another. The proposal can be related to anything like it can be for doing
something or restraint of doing the same. The one who makes it is called offeror and
another party who receives it is known as offeree. Every offer is required to contain an
intention to bind the other as decided in the Harvey v Facey [1893] UKPC 1. People
often misunderstand offer with another aspect named invitation to treat (BPP Learning
Media, 2013). The lead distinguish between these two terms is that invitation to treat do
not contain the intention to bind others whereas an offer does. An offer is available to
accept but an invitation to treat is not. The later term is an invite for the offers, in return
of which offer comes. A party who presents the invitation to treat is generally required to
consider the offers made by different parties who came across to invitation to treat and
makes offers afterward. Further, an offer is more specific and addressed to a specified
person whereas an invitation to treat is addressed to different people. The case of

BUSINESS LAW 3
Fisher v Bell [1961] 1 QB 394 is important to discuss here. In this case, there was a
knife with a price tag displayed in the shop window. Such display was not allowed under
the statue. It was provided by the court later on that goods that are displayed in a shop
amount to an invitation to treat rather than offers. An offer is required to be
communicated to the person to whom it is being made i.e. offeree (Fairgrieve, 2016).
A second important element is a consent. To amount a contract, an offeree is required
to provide his/her absolute consent to the offer of the offeror. Here absolute consent
refers to a consent that is given for the offer made by offeror without making any
changes to the same. If the consent of the offeree makes changes in any of the terms of
an offer then it is considered as counteroffer instead of an acceptance. It was given in
the decision of the case of Entorres v Miles Far East [1955] 2 QB 327 that acceptance
is also required to be communicated to the offeror. Sometimes consent can also be
given through conduct as given in the case of Butler Machine Tool v Ex-cell-o
Corporation [1979] 1 WLR 401.
Consideration is the next important element of every contract for that parties to the
contract develops the transaction in between. Every person enters into the contract for
some purpose and consideration shows such intention. Anything valuable under the law
can become s valid consideration. Consideration must be sufficient as per subject
matter and other facts of the case. In other words to say that because of the adequacy
of consideration, the validity of the same cannot be challenged. It can be non-monetary
as well. A valid consideration is the one, which moves from the promisee. It was
provided in the case of Tweddle v Atkinson [1861] EWHC QB J57 that if a person other
than a promisee gives consideration then it does not seem a valid consideration. The