Business Law 2 Business Law Author Note

Running head: BUSINESS LAW
Business Law
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Author Note

1BUSINESS LAW
Table of Contents
Answer 1(a).....................................................................................................................................2
Introduction......................................................................................................................................2
Rule..................................................................................................................................................2
Application......................................................................................................................................3
Conclusion.......................................................................................................................................4
Answer 1 (b)....................................................................................................................................4
Issue.................................................................................................................................................4
Rule..................................................................................................................................................5
Application......................................................................................................................................6
Conclusion.......................................................................................................................................7
Answer 2..........................................................................................................................................7
References......................................................................................................................................10

2BUSINESS LAW
Answer 1(a)
Introduction
A contract becomes enforceable in law if it includes all the essential elements that render
it as a valid contract. Such elements include a valid offer, acceptance, and consideration, capacity
of the contracting parties and the legal intention of the contracting parties to be bound by the
contract (McKendrick, 2014).
The presence of such elements must be established from the communication, taking place
between the contracting parties in order to determine the validity of the contract and its
enforceability. For determining whether an absolute agreement exist between the contracting
parties, the contracting parties have unanimously agreed to the terms and conditions of the offer.
Rule
A contract is commenced when a party makes a valid offer known as the offeror to the
other person known as the offeree (Goldberger, 2016). An offer is said to be valid where any
person with reasonable understanding shall believe that the expression made by the offeror
signifies development of a legal relationship as was ruled in Smith v Hughes [1871] LR 6 QB
597. For every offer made, a valid acceptance for such offer must be made to commence a
formation of the contract as was held in Entorres v Miles Far East [1955] 2 QB 327 and such
acceptance must be communicated to the person making such offer as was ruled in Powell v Lee
[1908]99 L.T. 284. The offer shall expire if the acceptance is not communicated within the
stipulated or reasonable time.

3BUSINESS LAW
An invitation to treat cannot be termed as a valid contract such as an advertisement that is
an invitation of offer. In Carlill v Carbolic Smoke Ball Company [1892] EWCA Civ 1, it was
held that an advertisement is considered as an offer if it is a unilateral offer. In Scammell &
Nephew v. Ouston [1941] AC 251, the court held that mere inquiries do not amount to a valid
offer.
Further, Patridge v Crittenden [1986]1WLR 1204, ruled while determining the validity
of an offer, it must be accepted exactly how it was proposed without any modifications otherwise
any change in the offer shall amount to an counter-offer as was held in Hyde v Wrench [1840]
EWHC Ch J90 as the mirror image rule. Further, a mere request for information regarding the
terms of the offer shall not amount to counter-offer as was ruled in Stevenson v Mc Lean [1880]
5 QBD 346.
Application
In the given case, Magda has advertised the sale of her painting on her own website. As
per the ruling in Patridge’s case, the painting advertisement shall be considered as an invitation
to treat.
On February 19, Avinash offered to purchase the painting for $1600 and made such offer
through mail. As per the decision in Smith v Hughes, Avinash made a valid offer as the
expression made by him signified legal intention to bind the other party to the contractual terms.
However, when Magda offered $1800 for the painting, it amounted to an counter-offer
that terminated the original offer made by Avinash as ruled in Hyde’s case. Based on the same
principle, Avinash offered an additional condition of consulting with his wife about the purchase