Business Law Assignment

Business Law Assignment

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Question 1 (a)
A contract imposes contractual terms on its parties, and it binds them into the terms to
make sure that parties’ rights and duties are determined. Contractual terms are constructed
between parties to make sure that they did not violate them or else they could face legal
penalties. Following are the key components that form a contract, and they are necessary to
be evaluated to make sure that a valid contract is constructed.
1. Offer
Without this element, the process of formation of a legal relationship through a contract did
not begin. It is the starting point in which a promise is made by the party to another. The
presence of two or more parties is necessary for this component, and it is crucial that it
must have the authority to make sure that a relationship is constructed between people
right after its approval as given in Harvey v Facey.1 However, there is a difference between
this element and an invitation to treat in which the parties did not enter into a legal
relationship after receiving the approval. The details and prices of products displayed on the
self-service machine are not an offer in themselves since they are considered as an
invitation to treat.2 After selecting the product and going to the counter with the receipt, an
offer is made by Avinash since he wanted to receive the product by paying for the same.
2. Acceptance
Moving forward, only presence of an offer did not form a contract since it is important that
the promise which is made in the offer must receive approval form another party. Until the
parties agreed to fulfil the promise by doing or restrain from doing a particular act, the
process of establishment of contractual relationship did not start. The approval is given
when the parties are certain regarding the rules and regulations, and they agree to comply
with their rights and duties.3 It can be given through conduct by parties or in a written or
oral format. However, if the parties did not agree to the exact policies, then it leads to
creating of a counter-offer that resulted in terminating the original proposal due to which
the parties no longer have the option to make sure that they agree to the same terms as
1 [1893] UKPC 1
2 Mary Charman, Contract Law (Wilan, 2013).
3 Richard Stone, Q&A Contract Law 2013-2014 (Routledge, 2013).

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given in Hyde v Wrench.4 The cashier did not request for any changes in the order of
Avinash, and he proceeded to the next step by accepting the payment due to which
approval was given through conduct.
3. Intention
As long as parties did not want to create a legal relationship, others cannot enforce them to
become a part of the contract. Thus, the motive of the parties to agree and bind themselves
by their duties and responsibilities is important. Whenever parties agree to a certain offer
during social settings, this element is missing since neither of them truly wanted to create
legal relations.5 This is not the case with proposals that are made in relating to business and
in commercial settings since parties could suffer a potential loss if those proposals are not
fulfilled by the parties. The judgement of Edwards v Skyways6 uplifted this principle. An
agreement was made in which the plaintiff agreed to remove his contribution from the
pension fund, and the defendant agreed that he would receive an equal amount of
payment; however, this promise was not fulfilled. The judgement was given in favour of the
plaintiff since it was a commercial setting and parties had the intention to impose legal
obligations. Similarly, there is a business relationship when it comes to Avinash, and the café
and both of them intended to enforce the terms upon them.
4. Consideration
The availability of this component is crucial to make sure that contractual parties must
decide regarding the bargain of their agreement. It is important that the bargain of the
parties must have certain economic value from a legal perspective and it must not be past.7
One of the parties receives benefit through the availability of this component at the expense
of another party. It must be given by the promisee, and it must have a tangible value which
must be received by the party as given in White v Bluett.8 Without the availability of this
element, parties did not acquire the right to enforce each other into the terms of the
contract. The bargain in this case is that pastry which was given as per the description of
Avinash, and it was given by the café which is constituted as valid.
4 (1840) 49 ER 132
5 Jones v Padavatton [1969] 1 WLR 328
6 [1969] 1 WLR 349
7 Eastwood v Kenyon (1840) 11 Ad. & E. 438
8 (1853) 23 LJ Ex 36