Business Law: Contract Formation, Australian Consumer Law, and Rules of Consideration

Running Head: BUSINESS LAW
Business Law
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Author Note

1BUSINESS LAW
Answer 1
RELEVANT ISSUE
It is required to identify whether there is a valid contract formed between Magda and Avinash.
RULE
This situation deals with the contract law, therefore all the essentials of the contract law are been
examined to determine the contract formation. The contract consists of five important
components which are stated below:
1) Legitimacy of the object.
2) The intention for creating a lawful relationship.
3) Consideration.
4) Offer and Acceptance.
5) Capacity.
The major component which is required to be carefully examined is offer and acceptance.
Certain criteria are been laid down by Common law for this purpose, which makes sure whether
or not the offer and the acceptance are been fulfilled.
The component of offer is an interpretation made for the purpose of creating a lawful
relationship with the other party.

2BUSINESS LAW
According to Fisher v Bell [1961] 1 QB 394, an advertisement is said to be a proposal made to
the offer. However, acceptance is said to be a consent made by a party for the purpose of
executing an offer, and to form the contract.
An acceptance needs to be communicated as well as definite in nature as mentioned by Entorres
v Miles Far East [1955] 2 QB 327.
Meanwhile, it was stated by the court in the case of Hyde v Wrench (1840) 49 ER 132 that if a
counter offer is said to be a definite acceptance then it ends the offer initially made.
According to the case of Scammell & Nephew v. Ouston [1941] AC 251 it is stated that the mere
inquires do not make counter offers.
In the case of Ramsgate Victoria Hotel v Montefiore (1866) LR 1 Ex 109 it was stated that if the
acceptance is not done on time then the offer is said to be expired.
APPLICATION
The incident which occured on 19th July (Sunday), $2000 was the sale price of the portrait stated
by Magda in the advertisement. According to the Fisher v Bell it was said to be an invitation
made to treat.
Avinash made an offer of $1600 by an email he sent to Magda, for buying the portrait. This offer
was made with regards to the advertisement and was complete.
The offer of $1600 ended as there was a counter offer made by Magda of a higher price which
was decided by Avinash, as per the case of Hyde v Wrench.

3BUSINESS LAW
No valid acceptance was stated by Avinash as he had additional conditions for the acceptance of
the offer, the price of the portrait was raised by $200 of the initial offer, and therefore Avinash
wanted to discuss with his wife before finalizing it.
The valid offer which was made by Magda stated that the portrait will be sold to Avinash for the
amount of $1800, and 21st February was the duration of this offer.
On the 20th February, a confirmation of the purchase was made by Avinash as he mailed Magda
regarding it, the mail also consisted of a condition which stated that the purchase will be
successful after Avinash gets the certificate of authenticity. According to the case of Hyde v
Wrench, this act done by Avinash was said to be a counter offer and therefore it ends the initial
offer made, and it was valid till 21st February. This condition was not acceptable to be
considered as an inquiry and therefore this was not eligible to be approved.
There was a mail sent by Magda which stated that she was ready to send the certificate of
authentication to Avinash. However, this was a fresh offer which was applicable just before 4
pm.
According to the judgement made in the case of Ramsgate Victoria Hotel v Montefiore the
acceptance was not made by Avinash in the given time period and thus this offer was said to be
expired. Therefore, no such contract was made between Magda and Avinash, according to the
principles of offer and acceptance, as this offer was never seen to be legally approved.