Business Law: Contract Formation, Terms and Consumer Guarantees

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

1BUSINESS LAW
Question 1A
Issue
Franco has entered into a contract with the resort. The issue is to determine whether a
valid contract has been formed between them in consideration of elements of contract formation
and a valid contract.
The issue is also to determine the ways in which a contract can come to end and also
what remedies can Franco pursue legally against the resort.
Law
The formation of a contract needs offer and acceptance (Agreement), intention of being
bound legally and consideration.
Offer and invitation to treat are different. An advertisement is only an invitation which is
not given any legal status under contract law as per Partridge v Critenden (1968) 2 All ER 425.
Offer will be present of a person makes an expression which any prudent individual will fell as
having legal intention as per Harvey v Facey [1893] UKPC 1. An agreement is completed
when an offer is accepted by the other party. The process of accepting the offer is called
acceptance. Acceptance can be found only if the other person has not made any alterations to
offer clauses and have effectively notified the offeror about accepting the offer as per Hyde v
Wrench (1840) 49 ER 132. A contract requires exchange of promises having value provided by
the parties to the contract. These valuable promises are essential for the formation of a contract
and are called consideration as per Williams v Roffey Bros [1990] 2 WLR 1153. A contract
cannot be formed if the parties do not intend to be bound to the terms in a legal way. This

2BUSINESS LAW
intention is identified objectively and is an essential element of contract Jones v Padavatton
[1969] 1 WLR 328.
A contract will be taken as valid in court in case the parties had the capacity to form a
contract, the subject matter was legal and the consent was free. Free consent signifies absence of
duress, unconscionability, misrepresentation and undue influence. A person has to be more than
18 years and of a sound mind to be capable of a contract. The consent must not be obtained
through any force of fraud or taking advantage of the position of another person. In case the
consent is not free the contract will be voidable.
A contract can come to an end in varies ways. These ways include discharge, breach,
mutual agreement and frustration. In case the contract has been breached a party can claim losses
which have been incurred as the breach has been made. In the case of Addis v Gramophone
[1909] AC 488 the compensation for breach was discussed by the court. The courts aim to put
the plaintiff in position where the contract was not breached. The court may also allow the
plaintiff to get out of the contract without having any obligations also in case of breach.
Application
There has been an advertisement made by the resort that they are going provide special
services to the guests. As this is an advertisement it would be an invitation and under Partridge v
Critenden it would not be given any legal status. Franco has been made an offer when he visited
the office of the resort by the manager. This was an offer as it contained adequate details such as
price and services to be provided for a reasonable person to consider it as an offer. The offer at
$375 had been accepted by Franco. The commercial agreement had pre-established intentions
and the consideration was the say in the resort and $375 for the room. Thus, a contract is created