Business Law

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

1BUSINESS LAW
Question 1
Issue 1
Whether the buyer has any potential claims against the Seller. Whether the seller has any
potential defences. Whether the seller has a chance of succeeding in case of any legal
proceeding.
Rule
For the purpose of creating a legally enforceable agreement, a contract is required to be
authentically created with the existence of all the ingredients that are needed for the
formation of a valid contract. The first ingredient in this regard can be pointed as the
formation of an agreement, which has been created by way of a valid offer initiated by one
party to the contract with the view to avail the assent of the other party by way of a valid
acceptance. This comes in line with the principle that has been set out in the case of Appleson
v. Littlewood [1939] 1 All E.R. 464.
The validity of the offer is important for the purpose creation of the contract, which is
valid. For this purpose, the offer needs to be communicated to the person with whom the
legal relationship has been intended to be effected and in certain, clear and unambiguous
words. This can be explained with the case of Brogden v Metropolitan Rly Co (1876-77) LR
2 App Cas 666. However, the invitation to treat cannot be regarded as an offer as the same
implies the assent of the party to make negotiation with respect to an offer. The same can be
explained with the case of Pharmaceutical Society of GB v Boots Cash Chemists (Southern)
Ltd [1956] EWCA 6.
On the other hand, the acceptance is required to be validly made for the purpose forming a
legally enforceable contract. It needs to communicated and the communication needs to be
effected in a reasonable manner. This can be illustrated with the case of Powell v Lee (1908)

2BUSINESS LAW
99 L.T. 284. The acceptance is required to be absolute and is to be made with respect to the
exact terms of the offer. The same can be illustrated with the case of Felthouse v Bindley
[1862] EWHC J35.
The understanding of the parties to a contract with respect to the terms of the contract is
required to be similar. The parties need to agree on a particular condition of a contract with
the same understanding as that of the other party to the contract. This can be discussed with
the case of Household Fire and Carriage Accident Insurance Company (Limited) v Grant
(1879) LR 4 Ex D 216.
Consideration is also necessary as well as mandatory for the purpose of creating a valid
contract. This is because both parties are required to earn some benefit under the contract.
This can be explained with the case of Currie v Misa (1875) LR 10 Ex 893. Moreover, the
parties to the contract are required to possess the motive to create a legal obligation. This can
be illustrated with the case of Merritt v Merritt [1970] EWCA Civ 6.
An option contract can be defined as a contract that has been instituted as collateral to the
main contract for the purpose of keeping an offer open for a particular person with an
advance payment of a portion of the consideration. This can be explained with the case of
Cook v. Coldwell Banker/ Frank Laiben Realty Co. 967 S.W.2d 654.
Application
In the present case, the courier has been put a for sale sign with an intention of selling his
car, it can be treated as an invitation to treat as can be made evident with the case of
Pharmaceutical Society of GB v Boots Cash Chemists (Southern) Ltd [1956] EWCA 6. The
buyer has made an offer to buy the car over a phone call. This can be treated as a valid offer
as can be explained by the case of Brogden v Metropolitan Rly Co (1876-77) LR 2 App Cas
666. Moreover, seller offered to sell the car he is required to make a payment of $5000 via