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CONTRACT LAWPage2of15Question 1Issue (a)Whether the four elements required for creating a contract were presented between Lilaand the store; and Dina and Lila, or not?RuleA contract is to be defined as an undertaken promise where one side of the party promiseto pay the contractual consideration and the other side promises to undertake the contractualpromise1. For creating a contract, there is a need for the presence of certain elements, whichincludes offer, acceptance, consideration and intention of the parties. For creating a contract, thefirst step is for an offer to be made. It is important to differentiate between an offer andacceptance, as the former shows intent of creating a legal relationship and the latter denotes theintent of negotiating upon the offer. The advertisements in general are deemed as an invitation2.It is also important to differentiate between an offer and a request for information.Harvey vFacey3was a case where the Privy Council stated that answering about the lowest price of penwas a request of information and not an offer as there was a lack of intention. Also, the offer canbe revoked before the same is accepted by the other party4.This offer has to be then accepted by the party to which the offer had been made. Thedate of acceptance is such date on which the acceptance is attained by the party which made the1Neil Andrews,Contract Law(Cambridge University Press, 2nded, 2015)2Jill Poole,Casebook on Contract Law(Oxford University Press, 2016)3 AC 5524Michael Furmston and G.J. Tolhurst,Contract Formation: Law and Practice(Oxford University Press, 2010)
CONTRACT LAWPage3of15offer. However, the postal rules of acceptance prove to be an exception and provide that the dateof acceptance is such date on which the acceptance letter is posted and the date of receiptremains irrelevant5. This is because the postal office is considered as an agent of offering party,as perByrne v Van Tienhoven & Co6,which means the receipt of postal office is the receipt ofthe offering party. The postal rules of acceptance are applicable on the electronic mails as well;so the date of sending the email is the date of particular offer/ acceptance based on section 14 ofthe Electronic Transaction Act, 19997. Also, the offer has to be accepted as had been made. Ifanything is changed in it, it is deemed as a counter offer as perHyde v. Wrench8which leads tothe expiry of original offer.The next requirement is for the contract to have a valid consideration, which haseconomic value. Lastly, the parties need to have the legal intention of getting into the contract.Once all the four elements are present together, a valid contract is formed9.ApplicationLila and StoreIn this case, an offer was made by Lila to the store for the phone at $1000 on which acounter offer was made by the store to Lila to purchase the phone at $1500. This was because theconsideration had been changed and as perHyde v. Wrench, the original offer expired with thiscounter offer. However, even this counter offer was not accepted as the products changed lateron to add an iPad and scanner. So, a new contract was formed at this stage, where the three5Paul S Davies,JC Smith's the Law of Contract(Oxford University Press, 2016)6(1880) LR 5 CPD 3447Electronic Transaction Act, 1999 (Cth)8(1840) 3 Beav 3349Andy Gibson and Douglas Fraser,Business Law(Pearson Higher Education AU, 2013)
CONTRACT LAWPage4of15products were to be bought by Lila at $2500. The discount voucher was not something whichhad been purchased and so, it did not form a part of the contract. This discount promotion wasinstead an offer which could be accepted by Lila in the next six months period. And since theoffer was revoked through email three months ago, the date of revocation would be three monthsago. Hence, due to the lack a standing offer and an absence of a contract in this regard, a contractwas not formed between Lila and the store for the discount promotion.Dina and LilaThere was no offer made in this case. The advertisement which was given in thenewspaper was an invitation to treat. On this, an offer could have been made, had it notcontained a question. An offer has to explicitly state the terms which are being offered. Here,there was uncertainty about the furniture being how old. Hence, this was not an offer. Andneither was the reply of Dina an offer as this was only information given before the contract wasformed. This entire communication was a pre-contractual negotiation. And without an offer, acontract cannot proceed.ConclusionHence, no contract was formed between Lila and store, and Dina and Lila, owing to lackof valid acceptance in first case and lack of offer in second case.Issue (b)Whether the advertisement was an offer to sell the item or not?