Business Law: Contract Formation, ACL Provisions, and Valid Consideration

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

1BUSINESS LAW
Answer 1
Part 1
Issue
The issue which has been identified through the analysis of the situation taking place between
Magdais and Avinash is that whether valid contract has been formed between them.
Rule
Where the issue in context is in relation to contract law the essential elements of contracts have
to be analyzed to determine contract formation. A contract has five essential elements which are
as follows:
 Offer and acceptance
 Consideration
 Intention to create legal relationship
 Capacity
 Legality of object
In order to analyze the issue the elements which require a thorough analysis is that of offer and
acceptance. Common law sets out specific criteria to analyze whether the elements of offer and
acceptance have been fulfilled or not.
The element of offer has been described by Stone and Devenney (2017) as an expression which
is made to create a legal relationship with another party. An advertisement however is as

2BUSINESS LAW
invitation to offer as per Pharmaceutical Society of Great Britain v Boots Cash Chemists
[1953] 1 QB. An acceptance is the consent that a party makes to execute the offer and form a
contract. As per the Felthouse v Bindley [1862] EWHC CP J35 case acceptance has to be
communicated and the acceptance has to be unequivocal in nature. In the case of Hyde v
Wrench [1840] EWHC Ch J90 the court ruled that a counter offer which is an unequivocal
acceptance ends the original offer. In the case of Jacques & Co. v McLean (1880) the court
stated that mere inquired are not counter offers. An offer elapses if not accepted on time as per
Barrick v. Clark, [1951] S.C.R. 177.
Application
Sunday 19th July
The advertisement which has been made by Magda to sell the portrait at $2000 is an invitation to
treat according to the principles of Pharmaceutical Society of Great Britain v Boots .
An offer has been made by Avinash through email according to which he wants to purchase the
portrait at a price of $1600. This is an offer as it has been made in relation to the advertisement
and is complete.
An offer has been followed by a counter offer as per Hyde v Wrench as Magda has provided a
new price which is more than the offer of Aviniash. Thus the offer for $1600 has ended.
Avinash likes the price of $1800 but he wants to consult his wife. Here he has not made a valid
acceptance as he has additional conditions attached.
Magda has made a valid offer which states that she will sell him the painting at a price of $1800
and the offer is open till 21st February.

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20th February
A mail has again been done by Avinash which states that he has consulted with his wife and he
would like to purchase the portrait at a price of $1800. However he has provided a new condition
through which he asks for certificate of authenticity. This is an additional condition and thus as
per the case of Hyde v Wrench it is a counter offer which has been made by Avinash which has
defeated the original offer which was open to be accepted till 21st February. Thus the offer is no
longer eligible to be accepted. The additional condition cannot be treated as an inquiry.
Latter Magda has mailed him that she would be willing to provided the certificate to him as well.
This is a new offer which was open till 4 pm.
However Avinash who was decided to think again over the deal did not make the acceptance by
4pm. In this situation the offer has elapsed by time as per the case of Barrick v. Clark. Thus no
contract has been formed between Avimash and Magda based on the rules of offer and
acceptance as an offer was never lawfully accepted.
Conclusion
There is no contract between the parties.
Part 2
Issue
The issue which needs to be analyzed in the given situation is that what provisions of ACL has
been breached by Magda and what are Eltons rights.
Rules