Business Law

Running head: BUSINESS LAW
Business Law
Name of the Student
Name of the University
Author Note

1BUSINESS LAW
Issue
The issue in this given scenario is to advise Alpha his duties and obligations towards
piggy for the agreement that is signed with her pertaining to the completion of the installation
work by January 22.
Rule
A contract is a legally binding agreement between people who have agreed to do or
not to do something in exchange of a consideration. However apart from this, a contract to be
held as valid needs to satisfy several other essential elements. Once it is established as valid
and binding, the party breaching it shall be subject to legal actions1.
Therefore, to bring charges against a breaching party, it needs to be established that
the contract was binding by ensuring that it satisfied the essential elements to form a valid
contract. The most important element of a valid contract is the process of offer and
acceptance between the offeror and the offeree. An offer is the communication made by a
person to another which includes a promise to do or not to do something in exchanges of
something in return from that other person. The person making the offer is called the offeror
and the person receiving the offer is known as the offeree2. However, as held in Carlill v
Carbolic Smoke Ball Co Ltd, it is important to note that an offer could be made to the whole
world at large also by way of invitation to treat3. In case of an invitation to treat, the others
are requested to make an offer to the person holding to goods, convince him to sell the
product to the person making the offer to buy it as discussed in Pharmaceutical Society of
Great Britain v Boots Cash Chemists (Southern) Ltd4. An offer could be terminated in
different ways like: a) revocation by the offeror before it reaches the offeree or before the
1 McKendrick, Ewan. Contract law: text, cases, and materials. (Oxford University Press (UK), 2014).
2 Stone, Richard, and James Devenney. The modern law of contract. 2017 Routledge.
3 Carlill v Carbolic Smoke Ball Company [1892] EWCA 1.
4 Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd [1956] EWCA 6.

2BUSINESS LAW
offeree accepts it; b) rejection by the offeree is it may not have matched his intentions or
purpose; c) extinguishment of the time duration specified for the acceptance of the offer; d)
death of either of the parties; and e) failure of a condition.
Acceptance is the positive reply to the offer given by the offeror, stating that the
offeree accepts the offer. The offeree can only accept an offer made to him in order to who
constitutes a valid acceptance. The response of the offeree should match with the offer as and
information shared but which is not in response to the offer does not constitute an agreement
as held by Crown v Clark5. Acceptance requires no particular form; it can be in written, oral
or implied. The acceptance must be communicated with the offeror either by way of non-
instantaneous mode of communication like post or by the instantaneous ones like telephonic
conversation, email, and fax.
Consideration is the second most significant element to constitute a binding contract
as it is the value that is being exchanged among the parties as a sign of promise to do or not
to do something. A contract becomes valid only when there is the involvement of
consideration in it6. However it is held that consideration must have certain value in the eye
of law, if not sufficient as held in Woolworths Ltd v Kelly7. An exchange or discussion of
exchange of consideration signifies that the parties to the agreement had a common intention
to create a binding contract.
An acceptance is the sign that proves that there has been consensus ad idem between
the offeror and the offeree. ‘Consensus ad idem' means meeting of minds between the
parties, which is the third most important element after offer-acceptance and consideration, to
constitute a valid and binding contract8. The parties to the contract must agree to a certain
5 R v Clarke (1927) 40 CLR 227.
6 Cartwright, John. Contract law: An introduction to the English law of contract for the civil lawyer.
(Bloomsbury Publishing, 2016).
7 Woolworths Ltd v Kelly (1991) 22 NSWLR.
8 Turner, Chris. Unlocking contract law. 2014 Routledge.