Business Law Issues : Assignment

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

1BUSINESS LAW
Answer 1A:
Issue:
In the given circumstances the issue that has been identified is whether Magda and Avinash had
entered into a valid contract.
Law:
For a contract to be legally binding upon the parties it has to contain the necessary elements of
contract formation. The necessary elements of a valid contract are:
 Offer and Acceptance
 Consideration
 Capacity to contract
 Intention to create legal relations
 Legitimacy of the terms of the Contract
However, in this given scenario the element of offer and acceptance is of significant importance.
It can be mentioned that there are certain criteria which have been laid down by the provisions of
common law in relation to offer and acceptance.
Offer can be defined as the promise made by the offeror to the offeree to pay consideration for
the fulfillment of the terms of the offer. For an offer to be legally binding upon the offer it has to
be established that the offeror had the intention to e bound by the offer as held in the case of
Carlill v Carbolic Smoke Ball co [1893] 1 QB. However, it can be mentioned that an offer
should be distinguished from an invitation to treat. Acceptance of an offer will create a binding
contract however; an invitation of an offer cannot be accepted. This had been illustrated in the

2BUSINESS LAW
case Pharmaceutical Society of Great Britain v Boots [1953] 1 QB 401. As held in the case
Partridge v Crittenden (1968) 2 All ER an advertisement is to be treated as an invitation to
treat. An offer has to be accepted on the terms as proposed by the offeror. Any change in the
terms of the offer would constitute a mere counter offer and not acceptance as held in the case of
Hyde v Wrench (1840) 49 ER 132. In the case Scammell & Nephew v. Ouston [1941] AC
251, it had been held that mere enquiries cannot be called offers. It has to be further stated that
for acceptance to be considered, it has o be communicated to the offeror as held in the case
Entorres v Miles Far East [1955] 2 QB 327. An offer gets expired if acceptance is not done on
time as held in the case Ramsgate Victoria Hotel v Montefiore (1866) LR 1 Ex 109.
Application:
In the given scenario it can be stated that the price of the portrait as advertised by Magada on 19th
July constituted an invitation to treat as per the provisions of the Partridge v Crittenden (1968) 2
All ER.
Avinash’s act of sending the email to Magada for the purpose of buying the portrait can be
considered to be a valid offer. This offer had been made in relation to the advertisement given
by Magada.
However, Magada did not accept the offer of Avinash on the original terms of the offer and made
a counter offer by raising the price of the portrait by 200 dollars. Thus in this case original offer
made by Avinash gets extinguished as per the decision o the Hyde v Wrench.
The counter offer made by Magada was not accepted on its original terms as Avinash added
additional terms to the offer prior to accepting it. He had stated that he needed to consult with
his wife before he could finalize the transaction.