Principles of Law of Contract and Alternative Dispute Resolution

This assignment discusses the principles of law of contract and the elements necessary for creating a legally enforceable agreement. It also explores alternative dispute resolution methods available to parties such as arbitration and mediation. The document includes solved questions related to the legal position of parties in different scenarios. Subject: Commercial Law, Document Type: Assignment

COMMERCIAL LAW 1
Commercial Law
Student Name:
Date:
Institute:

COMMERCIAL LAW 2
Contents
Introduction......................................................................................................................................3
Question (i)......................................................................................................................................3
Issue.............................................................................................................................................3
Rule..............................................................................................................................................3
Offer.........................................................................................................................................3
Acceptance...............................................................................................................................3
Consideration............................................................................................................................4
Application...................................................................................................................................4
Conclusion...................................................................................................................................4
Question (ii).....................................................................................................................................5
Issue.............................................................................................................................................5
Rule..............................................................................................................................................5
Application...................................................................................................................................5
Conclusion...................................................................................................................................6
Question (iii)....................................................................................................................................6
Issue.............................................................................................................................................6
Rule..............................................................................................................................................6
Application...................................................................................................................................7
Conclusion...................................................................................................................................7
Issue.............................................................................................................................................7
Rule..............................................................................................................................................7
Application...................................................................................................................................8
Conclusion...................................................................................................................................8
Question (v).....................................................................................................................................8
Issue.............................................................................................................................................8
Rule..............................................................................................................................................8
Application...................................................................................................................................9
Arbitration................................................................................................................................9
Mediation..................................................................................................................................9
Conclusion.................................................................................................................................10
Conclusion.....................................................................................................................................10
References..................................................................................................................................11

COMMERCIAL LAW 3

COMMERCIAL LAW 4
Introduction: The present assignment is related to the principles of law of contract. The
principles are to be applied for the purpose of considering if any of the parties have entered into
an agreement that is enforceable by the law. At the same time, various alternative processes of
with the disputes between the parties need to be discussed to see if any of these ADR methods
are available to the parties for resolving the dispute present between them.
Question (i)
Issue: under the law of contract, the presence of certain elements is necessary for the formation
of a contract that can be enforced by the law. Therefore in the present question, the issue is if
Alan and any other party had formed an argument that can be enforced by the law and when was
the exact time of the formation of this contract.
Rule: For deciding this issue, it has to be seen if the elements that are essential for creating a
valid contract are present or not. Under the law of contract, the elements discussed below should
be present in an agreement so that the agreement can be considered as being enforceable by law.
Offer: the law requires that a promise was made by one party. This promise provides that the
party making the offer is going to do something or may not do a particular thing.
Acceptance: under the law, the party to whom the offer has been made is required to accept it on
the same terms. On the other hand, when any changes are made in terms of the offer while
accepting it, such acceptance is not valid under the law. It is considered that the acceptance of
introducing new terms is not valid, but it is a counter offer. However, the acceptance of the party
can be expressed in words, deeds or by performance as may be required (Carlill v Carbolic
Smoke Ball Company, 1892). The requirement is that the acceptance should be the mirror image
of the terms mentioned in the offer. On the other hand, when the offeree introduces any new

COMMERCIAL LAW 5
term, it is considered that the offer has been rejected and the offeree had made a counter offer
(Pharmaceutical Society v Boots Cash Chemists Ltd., 1956).
Consideration: it can be described as something of value, which is assumed to be given in return
of the promise that has been made by the offeror. Under the law, consideration can be present in
the form of money or an act or the promise of performing a particular act. The consideration is
going to be treated as valid if the other party has been induced to enter the contract based on such
consideration (Currie v Misa, 1875). As a result of the requirement, which prescribes that
consideration should be present in an agreement, the contract is differentiated from a contract for
the gift. The reason is that a gift is made voluntarily. In such cases, a gratuitous transfer of
property takes place without giving something of value in its place. However, the failure of
performing a promise of providing a gift is not legally enforceable in the form of a breach of
contract. The reason behind this situation is that in the case of a gratuitous promise, there is no
consideration to support it (Davies, 2017).
Application: given the legal rules that have been discussed above, in this case, it needs to be
noted that $200 were given by Damien as the price for commercial law book and material. This
value was accepted by Alan. He assured Damien that the box and other material would be given
to him on November 7. Under these circumstances, it can be stated that in this case, all the
elements necessary for the formation of a valid contract are present.
Conclusion: in this case as I've had formed a valid contract with Damien

COMMERCIAL LAW 6
Question (ii)
Issue: it needs to be decided in this question if a valid contract was formed between Allen and
Bernard and what is the legal position of Bernard.
Rule: under the law of contract, when a particular offer has been rejected by the other party, it is
not allowed to accept the offer afterward. The law also provides that if the other party has made a
counter offer, it is not allowed to withdraw it and try to accept the original offer. This legal
situation is present because when a counter offer is made by a party, it is considered that the
party has rejected the offer and in its place made a new offer (Dickinson v. Dodds, 1876).
Similarly, it is also possible for the offeree to reject the offer directly or to make a counter offer.
It is provided by the law that the offeree had made a counteroffer when new conditions are
mentioned in place of accepting the offer on the same terms. Due to this reason, the requirement
has been prescribed by the law, which requires that the acceptance needs to be the mirror image
of the offer.
Consequently, if any variation is made in terms of the offer, it is going to be treated as a counter
offer. Such acceptance is not considered as valid. At the same time, the party making the
counteroffer is not allowed to accept the original offer afterward (Hervey, 2017).
Application: after applying the above mentioned legal position to the facts of this case, it can be
stated that the counteroffer has been made by Bernard, and he had not accepted the offer, validly.
The reason was that in place of accepting the offer made by Alan, Bernard made a counter offer
to purchase the commercial law book at $150. Is it is clear that Bernard made a counteroffer and
is not allowed to accept the offer of $200 later on?

COMMERCIAL LAW 7
Conclusion: under the circumstances, it can be said that Alan and Bernard did not have a legally
enforceable contract.
Question (iii)
Issue: In this question, the issue is if Alan and Charleen have formed an agreement that is
enforceable by the law.
Rule: Charleen is the sister of Alan. She had also seen the notice in which Allen had expressed
his desire to sell his commercial law book. Therefore, Charleen agrees to pay $200 for the
material. However, in this case, it is possible that Charleen could be a minor. Therefore it
becomes important to consider if Charleen has the legal capacity necessary for the formation of a
valid contract. The term minor is used for the persons who are less than the age of being adults or
in other words, less than 18 years of age. According to the law of contract when any person has
entered into a contract with a minor, the contract is voidable at the option of the minor. The
purpose behind introduction of this rule under the contract law was to protect the interests of the
minors, because they may not be in the position of fully comprehend the results of the
transactions that they are going to be involved in. Given this situation, it is believed that the
minors do not have the legal capacity of entering a legally enforceable agreement(Morris, 2011).
Under the circumstances, it is required by the statute that a minor may avoid a particular contract
that is disadvantageous for him or her.
Conversely, the other party is not allowed to avoid the contract created with a minor. However,
in this regard, there are some exceptions. These exceptions are applicable where there is a
possibility of abuse of this rule, or particularly harsh consequences may arise due to the
application of this rule (Sherborne, 2017).

COMMERCIAL LAW 8
Application: in view of the legal rules that have been discussed above, in this case, probably
Charleen is a minor. Due to this reason, she does not have the capacity of performing a legally
enforceable agreement with Alan to purchase the books and notes. Therefore, the contract
created between them can be avoided by Charleen.
Conclusion: a legally enforceable agreement has not been formed between Charleen and Alan.
Question (iv)
Issue: the legal position of Damien needs to be considered in this question.
Rule: under the law of contract, it is considered that the parties have formed an agreement that
can be enforced by the courts when certain vital elements are present. Therefore it is necessary
that an offer has to be made. The offer needs to be accepted (Roberts, 2017). At the same time,
other vital elements should also exist. Only then the parties are successful in creating an
agreement that can be enforced by the law. To decide the legal position of Damien it has to be
seen if all vital elements exist or not. This inquiry is necessary for arriving at the conclusion if
Damien had formed a legally enforceable agreement with Alan.
Application: Damien is a friend of Bernard. He comes to know regarding the offer from
Bernard. He also has the desire of purchasing the material. Under the circumstances, he arranges
the telephone number of Alan and sends him a message. He makes an offer to Alan that he was
to purchase the material and asked if he can get the money to Alan on four November. When
Damien met Alan on that day, he gave the money and said that they had made an agreement
regarding the purchase of the material. Alan took the money and told him that he would give the

COMMERCIAL LAW 9
material on 7 November. However, Alan procured a new book and gave it to Damien along with
his notes.
Conclusion: Therefore, in the present case, it is concluded that the agreement formed between
the parties was legally enforceable. This conclusion arises due to the fact that all the vital
elements are present in this case. As a result, Damien had formed a legally enforceable
agreement with Alan.
Question (v)
Issue: the issue is related that the different alternative dispute resolution options that are
available to the parties and the pros and cons related to these options.
Rule: as compared to the traditional method of using litigation to resolve the dispute that is
present between the parties, there are several other alternative dispute resolution processes
available to the parties for this purpose. Therefore, some ADR processes that may be available to
the parties, in this case, are going to be discussed in the present question.
Application: the ADR processes that may be used by the parties are as follows:
Arbitration: The parties may include an arbitration clause in the agreement created between
them. In such cases, the arbitration clause provides that if any dispute arises between the parties,
the dispute is going to be resolved by using the services of a private arbitrator instead of directly
going to the court (Blackham and Allen, 2019). The process of arbitration can help the parties in
resolving their disputes quickly and efficiently as against the method of litigation. Generally, in
the case of arbitration, a streamlined process of discovery is used (Brett, 2015). Therefore in
place of already overburdened courts, the arbitrator exclusively hears the agenda of the parties.
In case the parties involved in the dispute are in the business which requires particular

COMMERCIAL LAW 10
technological skills, the parties may decide for an arbitrator who has such particular
technological skills.
On the other hand, this is not possible in case of litigation as the judge may have limited skills
concerning that particular area. Another advantage that is available in the process of arbitration is
privacy regarding the matter (Ngira, 2018). But there are some disadvantages that also present in
case of arbitration. Consequently, after a decision has been made by the arbitrator that one side
has won and the other side has lost, it is not possible for the party to appeal against the decision.
On the other hand, an appeal can be made against the decision of a court. As a result, the party
losing the case does not have any other recourse left to it (Sourdin, 2016). Therefore, while
deciding the use of arbitration for resolving the dispute, the parties should keep in mind this fact.
Mediation: Another ADR process is that of mediation. In this process, the parties select a neutral
third party that works to resolve the dispute and broker a deal. Therefore, when the process of
mediation is adopted for resolving the dispute there is no winner or loser. The objective in case
of the process of mediation is to reach at conciliation. However, similar to arbitration in case of
mediation, also the decision can be made quickly, particularly against the court proceedings.
Similarly, mediation permits the parties to select the expert who has special skills in that
particular area. On the other hand, there is a disadvantage present in mediation. It encourages the
parties to give modestly during the negotiations.
Conclusion: it can be concluded in this case that the above-mentioned ADR processes are
available to the parties for resolving their dispute as against the use of litigation.

COMMERCIAL LAW 11
Conclusion
In this assignment, the elements that have to be present in case of an agreement so that it can be
claimed that the agreement is enforceable by the law, have to be considered. It has to be seen in
the parties have created an agreement that can be enforced by the law. At the same time, various
ADR methods have also been discussed to see if any of these methods are available to the
parties.

COMMERCIAL LAW 12
References
Blackham, A., & Allen, D. (2019). Resolving Discrimination Claims Outside the Courts:
Alternative Dispute Resolution in Australia and the United Kingdom. SSRN Electronic
Journal. doi:10.2139/ssrn.3362157
Brett, J. (2015). Attitudinal Structuring, Alternative Dispute Resolution, and Negotiation
Strategy.Negotiation Journal, 31(4), 359-360. doi:10.1111/nejo.12107
Davies, P. (2017). Interpretation and Rectification In Australia. The Cambridge Law Journal,
76(3), 483-486. doi:10.1017/s0008197317000733
Hervey, T. (2017). Rachael Field, James Duffy and Colin James (eds), Promoting Law Student
and Lawyer Well-Being in Australia and Beyond. The Law Teacher, 51(3), 373-374.
doi:10.1080/03069400.2017.1322859
Morris, S. (2011). Agreement-Making.Alternative Law Journal, 36(3), 187-193.
doi:10.1177/1037969x1103600310
Ngira, D. (2018). (Re) Configuring ‘Alternative Dispute Resolution’ as ‘Appropriate Dispute
Resolution’: Some Wayside Reflections.SSRN Electronic Journal. doi:10.2139/ssrn.3212091
Roberts, M. (2017). Variation contracts in Australia and New Zealand: whither
consideration?.Oxford University Commonwealth Law Journal, 17(2), 238-264.
doi:10.1080/14729342.2017.1360604

COMMERCIAL LAW 13
Sherborne, A. (2017). Restitution in the conflict of laws: characterization and choice-of-law in
Australia. Journal of Private International Law, 13(1), 1-34.
doi:10.1080/17441048.2017.1294394
Sourdin, T. (2016).Innovation and Alternative Dispute Resolution.SSRN Electronic Journal.
doi:10.2139/ssrn.2400776
Case Law
Carlill v Carbolic Smoke Ball Company [1892] EWCA 1
Currie v Misa (1875) LR 10 Ex 893
Dickinson v. Dodds (1876) 2 Ch.D. 463
Pharmaceutical Society of GB v Boots Cash Chemists (Southern) Ltd [1956] EWCA 6