Business and Corporation Law Assignment 2022

Running Head: BUSINESS AND CORPORATION LAW 0
Business Law Assignment
4/8/2020
Student’s Name

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Question 1
Issue
The issue of the case is to check whether a binding contract was there between the
shop and Graham or not.
Rules
For a valid contract, some elements need to be there such as offer, consent,
consideration, and intention of the parties. At the moment when all these elements
come together, a valid contract is formed. It means to check whether a valid contract
exists between the parties or not, it is necessary to check the presence of all these
elements. The offer may be oral or written and to be a valid one, the same requires
carrying clear conditions. In the case of “Harvey v Facey [1893] UKPC 1”, it was
provided that an offer must show the intention of the offeror to be bound (Merkin and
Saintier, 2019). As similar to the offer, an invitation to treat is another important term.
This term refers to a call for offers and in reply, to such an invitation, an offer needs to
make. The main difference between an offer and invitation to treat is that the later term
does not contain any intention to be bound. Here this is to state that an invitation to treat
always comes before an offer but need not to be present in each case. Since this term
does only represent invitation hence cannot be accepted. In the case of the
Pharmaceutical Society of Great Britain v Boots [1953] 1 QB 401, it was given that
goods are treated as an invitation to treat where they are displayed in a shop along with
the price (Davidson, 2015).

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Another element is consent (also known as acceptance) that needs to exist in a valid
contract. The offeree i.e. the person to whom the offer was made is required to give
such acceptance. In the case titled “Entorres v Miles Far East [1955] 2 QB 327”, the
court provided that for the validity of acceptance the same must be communicated to
another party i.e. the offeror. Further, the acceptance must be given for the same terms
as mentioned under an offer. The third element, which is necessary to develop an
agreement into a contract, is consideration, which is actually a motive behind the
creation of a contract. Consideration refers to the promise which parties makes each
other to pay and the same may exist in any legal form. It means a valid consideration
does not need to be in the monetary form. The last element demands both parties to be
serious about the contract and therefore must be intended to develop legal
relationships. In those agreements which are made in a commercial context, the law
takes an assumption that the parties have the intention to create legal relation as
decided in the case of “Esso Petroleum v Commissioners of Customs & Excise [1976] 1
WLR 1” (Taylor and Taylor, 2017).
Application
In the case given hereby, Graham and his friend visited an antique shop. Graham
inspected a table and asked the price of the same to the shop owner. To check the
existence of contractual elements this is to state that the goods mentioned in the shop
were only an invitation to treat applying the “Pharmaceutical Society of Great Britain v
Boots”. The offer of the case arrived when the shopkeeper informed the price of the
table to Graham. The terms of this offer were clear where the shop assistant offered to
sell the subjective table for a particular value i.e. $5000. Another element of the valid

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contract i.e. acceptance arrived where Graham agreed to purchase the table and
provided his address for delivery. This consent was a valid one as the same was
properly communicated to the offeror. Further, the consent was given for the original
terms of the offer as Graham agreed to buy the table for $5000. A valid consideration
was there for both the parties as for Graham, the consideration was a table, and for
Shop, the consideration was $5000.
The issue of the case arose when Graham stated that he had no intention to buy the
table and he was only pretending to do so. Here to state that that agreement was made
in a commercial context and therefore applying the decision of “Esso Petroleum v
Commissioners of Customs & Excise”, the law will assume that the intention to enter
into a legal relationship existed on the part of both the parties irrespective of what
Graham further stated,
Conclusion
As an offer, consideration, and intention of the parties were there hence a valid contract
was developed as soon as Graham gave his consent to the offer made by the shop.
Question 2
Issue
Whether Andrew is correct in his argument that the agreement was not enforceable as
it was made in a domestic context.

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Rules
The common law of contract demands that each party of the contract has an intention to
develop legal relations. The motive behind this requirement is to set aside those cases,
which are not appropriate for the court actions. Many times parties of an agreement do
not have any such intention and therefore the same cannot be enforced by the courts. It
mostly happens in those cases where parties have domestic or social relation in mutual.
To test whether the intention to develop a legal relationship exists or not can be
determined by tests those have been given in the decision of various cases. In the
decision of the case of “Jones v Padavatton [1969] 1 WLR 328” it was provided that
social and domestic agreements do not consist of the intention of the parties to create
legal relations. “Errington v Errington Woods [1952] 1 KB 290” is an exception of this
rule where it was given that even after being into domestic relationship parties seems to
have the intention to create a legal relationship where a written agreement exists
between them (australiancontractlaw.com, 2020). Further, in the case of “Merritt v
Merritt [1970] 1 WLR 1211 Court of Appeal”, it was given that in those cases where
parties are separated, it is generally considered that they have the intention to be
bound.
Application
In the case given hereby, Andrew and Susan have separated in 2018 and entered into
an agreement after living apart for 12 months. Here to state that parties seem to be in a
social relationship due to their previous relationship but an exception of Merritt v Merritt
would apply here. The reason behind this is as parties are separated and therefore they
will be presumed to have an intention to be bound. Further to assume that the

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agreement was developed in a written manner and therefore the parties had the
intention to be bound.
Conclusion
The argument raised by Andrew is not correct and the agreement was enforceable, as it
was not made in a domestic context irrespective of the fact that parties are likely to have
a social relationship.
Question 3
Issue
Whether Chris can set aside the contract? If yes, then on what basis he can do so?
Rules
Sometimes, contracts formed are valid yet can be held invalid later on for many of the
factors. Contract law outlines some factors, which affect acceptance of the offeree and
therefore makes the contract void or voidable sometimes. These factors include
mistake, the incapacity of parties, duress, misrepresentation, undue influence and
unconscionably. Undue influence is a situation where a party enters into a contract as a
result of pressure. These factors exist where one party of the case exploits the
relationship existing between him/her and the other party to gain an unfair advantage. It
means that for an undue influence the defendant must gain an advantage. Further in
those situations where a third party gets the benefit of such influence then the contract
may not be held liable unless the third party was in a position of liability to check
whether the consent of the claimant was free or not as given in the case of “ Barclays

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Bank v O'Brien [1993] QB 109”. A contract may be discharged by way of mutual
agreement of parties (Clarke and Greer, 2016).
Application
In the case given hereby, Chris and George are the parties of the contract. Here the
consent given by Chris seems to be influenced by the saying of Bruce, who was not a
party of the final contract. This undue influence seems to be there as a result of a
statement by Bruce, Chris felt fear of his dog's death and entered into a contract with
George. Now, George as a third party does not seem liable to check that whether the
consent of George was free or not as he had no reason to believe otherwise and was
also not aware of the relationship of Bruce and Chris. Therefore, it is not relevant that
Chris had decided to sell his dogs in a hurry.
Conclusion
Chris cannot set aside the contract based on undue influence .Further he can do so by
making a mutual agreement with George. However, for the same, George would require
to be ready for this agreement.

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References
australiancontractlaw.com. (2020) Errington v Errington (or Errington v Wood). [online]
Available from: https://www.australiancontractlaw.com/cases/errington.html [Accessed
on 08/04/2020]
Barclays Bank v O'Brien [1993] QB 109
Clarke, S., and Greer, S. (2016) Land Law Directions. UK: Oxford University Press.
Davidson, A. (2015) Social Media & Electronic Commerce Law. Australia: Cambridge
University Press.
Entorres v Miles Far East [1955] 2 QB 327
Errington v Errington Woods [1952] 1 KB 290
Esso Petroleum v Commissioners of Customs & Excise [1976] 1 WLR
Harvey v Facey [1893] UKPC 1
Jones v Padavatton [1969] 1 WLR 328
Merkin, R., and Saintier, S. (2019) Poole's Textbook on Contract Law. UK: Oxford
University Press.
Merritt v Merritt [1970] 1 WLR 1211 Court of Appeal
Pharmaceutical Society of Great Britain v Boots [1953] 1 QB 401

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Taylor, R., and Taylor, D. (2017) Contract Law Directions. UK: Oxford University Press.