Business Law: Contractual Agreements and Promissory Estoppel

Business Law
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Contents
Question 1........................................................................................................................................3
Question 2........................................................................................................................................5
References........................................................................................................................................7
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Question 1
Issue
Frank parked his car outside his house with a sign stating that he wants to sell his car for $2000
and interested people may contact at 3 Wood Street, Pad stowing. On seeing such advertisement
in morning, Bill called Frank and offered $1600 for purchase of car to which Frank replied that
he will think about the offer and will let him know. Later, on same day, Mark saw the sign on car
and shared the picture of car with his daughter and in afternoon posted a cheque in name of
Frank for $1950 along with a note specifying that he shall pick the car at 6.00 PM on Friday.
After this, John noticed the advertisement and he sent him an e-mail immediately stating that he
is accepting the offer of sale of car for $2000. He further stated in e-mail that he will come to
pick the car on Thursday and shall pay in cash at the same time. Meanwhile all these offers, a
colleague of Frank, Tom offered him $1700 for purchase of car to which Frank replied that in
case he does not receive any better offer during weekend, he will accept his offer. On Thursday,
Frank received Mark’s post and went to bank for depositing the cheque. At that time, he opened
his mail and noticed that he has received a better offer from John. Now, he wants to sell the car
to John. The issue here is ‘Does Frank have an agreement with any of the party?’
Rule
Under Australian Contract Law, for a contract to become legally binding, an offer must be
made by one party and must be accepted by the person to whom such offer is made. Before an
offer is made, sometimes there exists an invitation to offer (Turner, 2014).
When one or more party invites other parties to make an offer, then such invitation is called
invitation to offer. Here, the party making an invitation to treat does not intend to be bound if any
party makes an offer to it. It is mere indication of willingness of a person to negotiate a contract.
However, when an offer is made and its is accepted by other party, it becomes an agreement
which is legally binding (Poole, et. al., 2017).
There are certain rules of acceptance including ‘meeting of minds’ and ‘communication of
acceptance. The parties must ensure that they are agreeing on the same terms and that the person
accepting the offer has communicated his acceptance. The person accepting the offer also must
have an intention to accept such offer made to him.
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