Commercial Law Assignment

10/28/2017
Assignment 2 | (Student Details: )
COMMERCIAL LAW

COMMERICAL LAW
Introduction
A contract is an agreement, which is created between two or more
parties, which gives rise to legal rights and obligations. In a contract there
are usually two parties, in which Party X promises to Party Y to do some task
or work and in return, Party Y promises to fulfil the consideration condition.
The formation of contract requires the presence of some specific elements
(Bonell, 2009). These are the element of offer, the acceptance,
consideration, capacity, clarity and intent. Upon these six elements coming
together a contract is formed. Once a contract has been formed, the Party X
and Party Y get under an obligation to fulfil the terms of the contract. Where
the terms of the contract are not upheld, a breach of contract takes place. In
order to mitigate the dispute raised from such a breach, the parties have the
option of referring the matter to the different techniques of Alternative
Dispute Resolution (Gibson & Fraser, 2014). This discussion is focused on
these different concepts governed by the contract law.
Part A
I: ISSUE
The first issue relates to the contract formation between the different
parties.
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COMMERICAL LAW
R: RULE
As has been provided in the previous segment, the formation of
contract requires the element of offer to be present. An offer is deemed as
the expression of willingness of the parties to form a contract on the basis of
certain key terms and is made with the intention that once this offer is
accepted, it would become binding (Treitel & Peel, 2015). There is a need to
understand that an offer is different from an invitation to treat. An invitation
to treat shows that the parties are only willing to negotiate upon the possible
contract, which may or may not be formed, and required offer to be made.
For instance,
Partridge v Crittenden [1968] 1 WLR 1204 led the court to
decide that the ads which are published in the magazines or the newspapers
are not an offer, but an invitation to treat. However, when it came to the ad
published in the landmark English case of
Partridge v Crittenden [1968] 1
WLR 1204, it was deemed as a unilateral offer. This was because in this case,
the offer had been made to the world, which could be accepted by anyone
merely by performing the offer (Latimer, 2012).
Upon an offer being made, it becomes necessary for Party Y to accept
the offer made by Party X. This has to be done in the manner in which the
offer was made, and on the same terms which had been offered (Clarke &
Clarke, 2016). Where Party Y makes changes in the terms of offer, the
original offer expires owing to the counter offer having being drawn, and this
was held by the court in the
Hyde v. Wrench (1840) 3 Beav 334 case (Marson
& Ferris, 2015). It is also important to note that the acceptance has to be
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COMMERICAL LAW
communicated in a proper manner, and
Felthouse v Bindley (1862) EWHC CP
J35 provides that when the party remains silent on an offer, it is not
considered as an acceptance (Andrews, 2015).
Another important aspect of acceptance is the ‘date of acceptance’
which is considered as the date on which the Party X obtains the acceptance
of Part Y. However, the condition is changed when it comes to the ‘postal
rules of acceptance’ (Ayres & Klass, 2012). Under these rules, the ‘date of
acceptance’ is taken to be the date on which Party Y posts their acceptance
through a letter with the postal office, as this office is given the status of the
Party X’s implied agent (Elliot, 2011). A leading example of the applicability
of this concept can be seen in
Adams v. Lindsell (1818) 106 ER 250 where
the court considered the drawn contract to be valid and thus, enforceable (E-
Law Resources, 2017).
The next step with regards to the creation of a contract is the
consideration. When it comes to the consideration, it is crucial that it is not
past, and instead is present. Also, the same has to be sufficient and not
adequate. This means that the value of consideration can be anything which
the parties mutually agreed upon. However, a crucial requirement in this
regard is for the consideration to have legal validity. Without the element of
consideration, the contract cannot be deemed as a valid one (Frey & Frey,
2005).
The next contractual element is the presence of intention. There is a
need for the contracting parties to have a very clear intention of entering in
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