Business Law Assignment - Contract Formation and Communication

Business Law Assignment

2 Business Law Assignment
Question 1
Issue
The main issue based on the facts of this case comes out to be the contractual position of the
University with regards to the three tenders which have been submitted.
Rule
A contract is the promise which two or more parties make for doing their part of the
contractual promise. It can be formed in both oral and written manner (Turner, 2014). In order
for the contract to have legal validity in the eyes of law, there is a need for some important
elements to be present in every contract. The absence of any one of these elements would
mean that a contract is not valid under the law. These elements include the elements of
agreement, which include offer and acceptance, and the other elements like consideration,
clarity, consent and intention (Blum, 2007).
The first step in the ladder of creating a contract is for an offer to be made. This offer shows
that party X has offered some terms to party Y which can be accepted or rejected by the party
Y. There is a need to draw the line between invitation to treat and offer, where the invitation to
treat comes before an offer, but not necessarily may be present in every case (Ayres and Klass,
2012). Tenders are classified as invitation to treat as the tenders merely invite the parties to
send their quotation of terms and price for the work which the tender making party wants to
get done. Upon a tender being invited, the offer has to be made, which needs to be then
accepted by the tender making party (Lindgren, 2011).

3 Business Law Assignment
The second step in the ladder of contract formation is acceptance. The offer which has been
made by the offering party needs to be accepted by the party to which such an offer had been
made. The acceptance has to be properly communicated and it is completed only when the
offering party gets such acceptance communication. This is the date when the acceptance is
taken to be present, which is the date when the offering party gets such acceptance
communication (Andrews, 2015). A leading exception to this rule is the postal rules. The postal
rules provide that the date of acceptance communication is to be taken as that date on which
the accepting party posts the acceptance letter through mail. There is no relevance of the date
on which the letter of acceptance actually reaches the offer making party (Gibson and Fraser,
2013).
In the case of Byrne v Van Tienhoven (1880) LR 5 CPD 344, the court had held the postal office
as being the agent of the offer making party where they specify this mode as the acceptance
mode. Thus, based on the agency law, the acceptance being received by the postal office is that
of the offering party. It is important to note that the postal mode can only be made use of when
the same has been stated as the valid mode of acceptance and that the offering party has the
reasons to believe that the acceptance would be given through this mode as was held in the
case of Tallerman & Co Pty Ltd v Nathan's Merchandise (1957) 98 CLR 93.
Application
In this matter, the university had invited tenders for certain work with a closing date of 01st
June. The first party in this case, i.e. Greenland sent their offer on 29th May by physically
delivering it in the tender box. This would be the date of offer for Greenland. The second part of