Business Law Assignment: Contract Formation and Elements

Business Law Assignment
Question based assignment
04-Dec-17
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Business Law Assignment
Question 1
I: Issue
The case study presents the main issue as a possible contract being formed between Mojo
Beverages and Ben based on the published advertisement.
R: Rule
A contract is deemed as a legal document which is given the validity through presence or certain
key elements. It is the promise made by one party to do something for the other party, and the
other party pays the amount of consideration, as is decided between the parties, for such work
done by the first party (Mau, 2010). A contract can be formed by writing the terms on a
document and the same is signed by the parties, to result in a written contract. Another form of
creating a contract is to discuss the terms in an oral manner, to result in an oral contract.
Irrespective of the mode of formation of contract, it has legal validity, so long as it has all the
requisite element of contract formation (Clarke and Clarke, 2016). The elements required for
forming the contract include offer, acceptance, consideration, clarity, intention and capacity.
Only when all these elements are present, can a contract be deemed to be formed, which has
legal validity in eyes of law (Andrews, 2015).
The first requirement for forming the contract is the offer, were some terms are offered by the
offering party. It is important that a proper difference is made between an offer and an invitation
to treat. An invitation to treat precludes the offer, which denotes the negotiation phase of a
contract. In this phase, the parties negotiate and do not have the intent of being bound by the
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Business Law Assignment
contract, which is present in the offer (Ayres and Klass, 2012). It is not necessary that every
contract would have an invitation to treat, but the same would be true for an offer. So an offer is
the terms offered by the parties and the invitation to treat is the negotiation of the terms which
become the offer later on. This issue is particularly important when it comes to ads placed in the
assignment. In general, these are deemed as invitation to treat, as per the case of Partridge v
Crittenden [1968] 1 WLR 1204 (Blum, 2007).
However, where the advertisements are worded in such a manner that they can be accepted by
simply working on the stated terms of this advert, it results in the creation of a unilateral
contract, as a result of the advertisement being deemed as an offer as per Carlill v Carbolic
Smoke Ball Company [1893] 1 QB 256. In this case, an advert in the newspaper had been given
by the defendant where it was stated that any person who became sick with influenza, after they
used the smoke ball made by the defendant in the prescribed manner. The plaintiff was the
person who used this smoke ball and still got influenza and claimed for the reward amount. The
defendant claimed that this was a sales puff, which made the advert an invitation to treat instead
of an offer. However, the Court of Appeal denied this claim and upheld the claims of the plaintiff
by stating that Carlill had to be rewarded since she had relied on the advertisement and
performed the stated conditions, which made it an offer and ultimately a unilateral offer (Stone
and Devenney, 2017).
Once an offer has been made, it needs to be accepted, by the other party, to fulfil the requirement
of acceptance. The offer has to be accepted by the party to which the offer has been made.
However, where the offer is made to the world, any person can accept the same. This is the case
of unilateral offers, and acceptance in such case can be made by simply performing on the terms
of the offer (Abbott, Pendlebury and Wardman, 2007).
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