Formation of a Contract and Exclusion Clause in Business Law

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Name of Student
Name of Institution
Instructor
Date
Business Law Assignment

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PART A: Formation of a Contract
Introduction
A contract is said to refer to that agreement that subsists between individuals which is
intended to be enforceable in law. For a contract to be enforceable and binding between the
parties to it, such contract has to be formed following the essential requirements for entering into
and formation of a valid and enforceable contract. The essentials elements include; offer,
acceptance of the offer, capacity, intention of the parties, illegality and consideration. An offer
and acceptance is what parties refer to as an agreement which gives rise to a contract. I shall then
proceed and analyze whether the essential elements of a valid contract were complied with in
this case scenario.
Was there an offer
An offer should be distinguished from an invitation to treat. Courts have held that display
of goods in supermarkets and kiosk windows does not constitute an offer but an invitation to
treat1. It is Rachel who made an offer to ChunkyChicken restaurant when she selected to buy
chicken; ChunkyChicken had the right to reject or accept the offer but chose to accept the offer
made by Rachel.
In Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd2, the
court stated that by displaying goods on shelves, interested buyers are invited to make offers to
buy; it is called an invitation to treat and not an offer at that time. Similarly, the decision in
Fisher v Bell3, the court held that goods displayed on the window of a shop did not amount to an
offer but an invitation to treat. The defendant could not therefore be convicted of offering to sell
1 Andrews, Neil. Contract law (Cambridge University Press, 2015) 34
2 Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd (1952) 2 QB 795
3 Fisher v Bell (1961) 1 QB 394

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dangerous weapons to the public. In this case therefore, Rachel made a valid offer which was
accepted by Chunky Chicken Restaurant.
Did acceptance occur?
Rachel made the offer to ChunkyChicken Restaurant staff who had the capacity to enter
into contracts of such nature for and on behalf of ChunkyChicken Restaurant. Acceptance of the
offer occurred at the point where a receipt was printed from the electronic machine with the price
to be paid and a description of the items bought and the order number. The offer was duly
accepted and such acceptance communicated to the offeror through the printed receipt. This is
what culminated into an agreement between ChunkyChicken restaurant and Rachael.
Intention to contract
All the parties should be willing to be bound by the terms of the contract. A contract is
void where a party is made to enter into a contract through threats, violence or misrepresentation.
These are called vitiating factors in contract. Intention of the parties can be discerned from the
surrounding circumstances at the time when the contract was negotiated as well as through
presumptions. Presumptions are the common methods through which intention is determined.
Parties to commercial contracts for instance are presumed to have had the intention to contract4.
This was the finding by the court in the case of Carlill v Carbolic Smoke Ball Co, where
the court stated that the advert that had been run by the defendant had the intention as they had
even deposited money in the bank to pay individuals as reward; and it being a commercial
contract, there was a presumption that the parties had the necessary intention. ChunkyChicken
restaurant runs a business popularly referred to as an eatery. This is a business enterprise and
4 Anson et al, Cartwright Anson's law of contract (Oxford University Press, 2010) 23