Business Law: Validity of Contracts and Indoor Management Rule

Running Head: BUSINESS LAW
BUSINESS LAW
Name of the Student
Name of the University
Author’s Note

BUSINESS LAW1
PART A:
ANSWER 1:
ISSUES INVOLVED:
The main matters of dispute involved in the present case study are that whether:
 SOO burgers are required to give Mickey the CX- 9s model car,
 SOO burgers are required to give Brett the CX-9s model car.
Relevant rules of law:
The contract can be denoted as the agreement which can be validly as well as legally
enforced in the court of law between two or more individuals or persons who can be referred as
the parties of such contract. The contract if successfully made can make the parties bound to
follow and perform the promises they made towards each other.
In order to complete an agreement, lot of negotiations occurs among the parties and until
and unless, the parties are satisfied with the negotiations among them, no agreement can result.
The method used to reach such starts from an offer given by one part called the offeror to the
other called the offeree who does the acceptance of the offer made to him.
The offer generally consists of an indication showing the intention of the offeror to
contract on certain terms. In response if the offeree shows his eagerness to agree on those terms,
this forms the acceptance of the offer. In the case of Ermogenous v Greek Orthodox Community

BUSINESS LAW2
of SA Inc (2002) 209 CLR 95, the issue before the court was whether there was any agreement. It
was decided that the agreement can be considered to be a contract.
However, offer must be distinguished from the invitation to offer. Advertisements
showing services or goods cannot be considered to be offers. It was entrenched in Partridge v
Crittenden [1968] 2 All ER 421 where it was decided that advertisement is not an offer.
Similarly goods displayed in shops are invitations to treat or offer and not offers as in
Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd [1953] 1 QB
401. In the invitation to treat or offer, the invitation is made to any particular party but to public
at large. Moreover, an offer results from the acceptance of an invitation whereas an agreement
results when offer is accepted.
To form a valid agreement, the offer has to be accepted unconditionally. Moreover the
acceptance must correspond to the offer and it has to be communicated to the offeror. The case
of R v Clarke (1927) 40 CLR 227 shows that there cannot be any acceptance when the offer is
not known to the offeree.
Another type of contract is known as the unilateral contract in which no exchange of
promises in mutual manner is present when the agreement is made. In such contract, one party
makes a promise to do something when the other party does some particular and specific task.
However, here the court considers the promise to provide a reward not as a future consideration
but as executed consideration which is a good consideration to make an agreement legally
binding. The Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256 case provides that an unilateral
contract was formed where the promise made by the company in exchange of the promise
formed a legally binding agreement.