Business Law

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

1
BUSINESS LAW
Table of Contents
Issue 1.............................................................................................................................2
Issue 2.............................................................................................................................4
References......................................................................................................................6

2
BUSINESS LAW
Issue 1
To determine the buyer’s potential claim against the seller and the seller’s defence
against the buyer’s claim. Also, to determine who among the buyer and the seller is to
prevail if the case is taken to the court.
Rule
A legally binding contract must have a proper exchange of offer and acceptance
where the offeror makes an offer and the offeree either accepts or rejects it. An offer must be
clear and free from any ambiguity; devoid of a doubt regarding the performance of the
contract. An offer and an invitation to treat are different from each other, where an offer is
specifically made to a particular offeree for making a binding contract, while an invitation is
given to the world at large as held in Carlill v Carbolic Smoke Ball Company [1892] EWCA
1. An offeror must communicated the offer to the offeree and similarly the offeree must
communicate his acceptance back to the offeror to be valid, as held in Henthorn v Fraser
[1892] 2 Ch 27. An offer can be revoked by the offeror only before it reaches the offeree or
the offeree acknowledges it. The offeree can either accepts it or rejects it on his discretion.
Similarly, an acceptance can only be revoked by the offeree immediately after receiving the
offer and not after he has accepted the offer and made an effective communication of such an
acceptance as well. In addition, an express term of an agreement cannot be changed after the
communication of an offer and an acceptance has been completed (Stone & Devenney,
2017).
Apart from offer and acceptance being an essential element of contract, the capacity
of the parties is a significant factor too which determines whether a party is eligible to enter
into an agreement. A party must be above the age of 18, of sound mind, not be intoxicated
and not be a bankrupt to be capable of entering into a valid agreement. If it is found that a
party was not satisfying one of the factors, then the other party may use it as a defence to