Formation of Contract between Hercules and Xena

Business Law

Table of Contents
Formation of Contract between Hercules and Xena........................................................................3
Issue.............................................................................................................................................3
Relevant legal rule.......................................................................................................................3
Application..................................................................................................................................4
Conclusion...................................................................................................................................4
Damages for breach of contract.......................................................................................................4
Issue.............................................................................................................................................4
Relevant Legal Rule....................................................................................................................4
Application..................................................................................................................................5
Conclusion...................................................................................................................................6
Exclusion Clause.............................................................................................................................6
Issue.............................................................................................................................................6
Relevant Legal Rule....................................................................................................................6
Application..................................................................................................................................7
Conclusion...................................................................................................................................7
References........................................................................................................................................8

FORMATION OF CONTRACT BETWEEN HERCULES AND XENA
Issue
There are two issues present in the given problem –
 Whether acceptance by phone is valid acceptance?
 Whether there is a valid contract exist between Xena and Hercules
Relevant legal rule
The contract can be referred to as a legally binding agreement between the two parties. For the
validity of the legal contract, it is essential that there must be the existence of the offer and
acceptance, the intention of the parties, and consideration. The presence of the agreement is
based on the communication among the parties (Viscasillas, 2016). Although, it is essential to
note that, communication can take place by any means, such as verbal, by action, or in writing. A
contractual agreement between the parties occurs at the time when the person who made the
offer (offeror), has communicated the offer to another person (offeree), and the offeree has
communicated consent to the offeror. Moreover, the contractual liability arises when each party
of the contract actually enter into a contract. However, the court also considers the objective
approach in the determination of offer and acceptance, as it is very typical to ascertain what is
the mind of another person (Byrne, 2018). For the ascertainment of the objective approach, the
court considers whether a reasonable person analyzing the activity of offeror and offeree would
believe that they were building an offer and giving consent (Skelton, 2017). The same objective
approach has been applied by the court in the legal case of Smith v Hughes (1871), for
determining the offer and acceptance. However, if any condition is attached to the manner of