Understanding Commercial Law: Elements of a Contract and Legal Positions

This document provides an explanation of the essential elements of a contract in commercial law, including offer, acceptance, consideration, and intention to be bound. It explores legal positions in cases involving counter-offers, contracts with minors, and misrepresentation. The document discusses relevant laws and court rulings to analyze the outcomes of each case. Subjects covered include commercial law, contract law, and legal positions. No specific course code, course name, or college/university mentioned.

Running head: COMMERCIAL LAW 1
Commercial Law
[Author Name(s), First M. Last, Omit Titles and Degrees]
[Institutional Affiliation(s)]
Author Note

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Abstract
A contractual agreement becomes enforceable if all the three essential elements of a
contract are present. These elements include an agreement made of an offer and acceptance, a
valid consideration and an intention to be bound by the terms of the contract. A legitimate offer
entails the offer who is the party making the offer, an intention to make the offer, and terms that
go with that offer upon its acceptance. On the other hand, a legitimate acceptance entails a
communication of intention of the offeree to accept the offer with all its terms. Where the offeree
responds with different terms, that is called a counter-offer that destroys the original offer.
Despite being the rules, the law of contract may lender a contract invalid even if all these
elements exist. For the purpose of this paper, the circumstances that would be covered involve a
contract made with a minor or one made through misrepresentation.
Keywords: Offer, Acceptance, Rescission, Counter-Offer

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Case Introduction
The intention of this paper is to provide an explanation of the legal position of the issue
of Bernard and Alan, Charleen and Alan and Damien and Alan. All the issues started with Alan’s
post on Facebook on 1st November his intention to sell his “Introduction to Business Law in
Singapore” textbook together with his notes for $200. Alan asserted that both the book and the
notes made him score a High Distinction grade, and whoever was keen to reply before 5th
November. Bernard replied on 2nd November asking whether the book could cost $150. Alan
replied on 3rd November to him stating that the price remained at $200, and he had even made the
offer to someone else. Even though, Bernard places $200 to an envelope that reaches Alan on 4th
November. Alan took the cash, and on 7th November, he passed just the Book to Alan asserting
that the notes were written inside thee book.
Charleen was the Alan’s younger sister who read the post, and informed his brother that
he would be purchasing the book and the materials. Being young and on her GCE “O” levels,
Alan took her less seriously and he just nodded his head on 2nd November when Charleen asked
him whether he could pass the $200 on 6th November. On 6th November, Charleen then placed
the $200 on Alan’s table.
The issue of Damien arose from the same post, but for this time Damien read the post
from Bernard, and took with him Alan’s phone number. Damien then sent Alan his intention to
purchase the book, and made the payments of $200 for both the book and materials on 4th
November. Alan took the money, purchased a new book, and together with the materials, he
passed them to Damien on 7th November. However, Damien and Bernard later realized that the
book was available for free at school.

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Bernard Legal Position
Issue
Whether an offer remains available after a counter-offer.
Rule of Law
The rules that apply to counter-offers were set in (Hyde v. Wrench, 1840) that an offer
should be replied with an acceptance for there to be a contract. However, where the offeree
replies with other conditions instead of accepting the conditions that were given by the offeror,
that becomes a counter-offer (McKendrick, 2012, p. 84). A counter-offer resets the entire
negotiation and changes the initial offeror to the offeree and the initial offeree to the offeror.
Notably, once there has been a counter-offer, the offeree who gave the counter-offer cannot
move back to accept the offer which he already displaced.
Application of the Law
On application, the legal principles relevant issues of counter-offer would be applied to
the situation to the issue of Alan and Bernard. While looking at the rules set in (Hyde v. Wrench,
1840), the Court’s opinion was that the parties never made a binding contract since the counter
offer killed the original offer. Similarly, Alan offer was terminated when Bernard replied with a
counter-offer.
Like the facts of the case of (Hyde v. Wrench, 1840), Alan already informed Bernard that
the price remained at $200. This infers that Alan rejected the counter-offer that Bernard was
making for $150. The case of (Pickfords Ltd v. Celestica Ltd, 2003) also offers sufficient
confirmation to Bernard situation. In the case, the court affirmed that counteroffers introduce
new terms. On matters of Bernard’s counter-offer, we can conclude that the parties did not make
a conclusive contractual relationship.

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Also, apart from Alan’s rejecting the counter-offer, Alan also provided additional
information that his rejected offer had been made to someone else. The implications made by this
statement is that the offer was no longer available. In the ruling of (Dickinson v. Dodds, 1876),
the Court reiterated that once a party to whom the offeror had given the offer receives the
information that the offer was given to someone else, that is a complete communication of
revocation. With this, Alan message to Bernard was a revocation and the ruling of (Routledge v.
Grant, 1828) made it clear that the offeror has the right to revoke the offer.
Conclusion
There was no binding contract between Alan and Bernard. Bernard countered the original
offer, and Alan did not accept the counter-offer. In addition, Alan informed Bernard about the
revocation of the original offer.
Charleen Legal Position
Issue
Whether contracts with minors are enforceable.
Rule of Law
In respect of contracts with a minor, the law takes a particularly protective stance creating
a general rule that considers contracts with minors as not binding to them. However, there are
times when there is an exception to this rule. For instance, where the minor contracted to
purchase goods that were necessary to his life, the law would enforce such a contract. Again, for
this exception to work, the terms should not be harsh to the minor. In (Pickfords Ltd v. Celestica
Ltd, 2003), the court ruled that objects such as pins, rings, or watches are not regarded as not
necessary. In Singapore, the law regulating contracts with minor is found under (Minors’

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Contracts Act, 1994) and (Infants Relief Act, 1874) and states that contracts of necessities are the
only once valid when made with a minor.
Application of the Law
Looking at the facts, Charleen is taking the GCE “O” levels which demonstrates that she
is a minor. Secondly, even Alan his brother did not take her seriously due to her age. Therefore,
adopting the first legal presumption, any agreement with Charleen would not be valid unless that
agreement is for necessities. The guiding principles for this case can be inferred from the ruling
of (Nash v. Inman, 1908). In this case, a vendor supplied fancy clothes to a minor at Cambridge
school. However, when the seller intended to enforce the contract to the minor, the Court
declared that the clothes would have only been enforceable if the minor needed them. But for
that time, her wardrobe had enough clothes.
While looking at both cases, the court would apply the reasoning of (Nash v. Inman,
1908). Firstly, the court would see that Charleen was a student and a book could be necessary for
her studies. However, like in (Nash v. Inman, 1908), the Court would consider that this was not
the right time for Charleen to be studying commercial law. A similar approach was taken in (De
Francesco v. Barnum, 1890) where the Court stated that a contract with minor cannot be valid
unless the minor is contracting for goods that are beneficial to him/her. While looking at the
status of Charleen, the book she was contracting to get was for students at higher education and
she is still at O levels. Therefore, the book is not necessary or beneficial to the GCE “O” level
student.
There are also other facts that demonstrate that there was no meeting of minds as
explained in (Ming Lee & Chng, 2017). When Charleen offered to purchase the book, Alan just
nodded his head. Looking at the ruling of (Felthouse v Bindley, 1862), the court stated that a

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party cannot impose an acceptance just because the other party did not reject the offer. In other
words, the case of (Felthouse v Bindley, 1862) established that there can only be a contract if the
offeree communicates its acceptance.
Conclusion
There was no binding contract between Charleen and Alan since the rules of the contract prohibit
contracts with minors. Secondly, there was no valid acceptance from Alan.
Damiens Legal Position
Issue
Whether a contract procured through misrepresentation is enforceable.
Rule of Law
In law, contracts procured through misrepresentations are voidable. Voidable contracts
are valid in the face of the law, but the other party can choose to set them aside without acquiring
liabilities. The basic requirements for a claim of misrepresentation require the claimant
demonstrate that the defendant made an unambiguous untrue statement of facts with the intention
of inducing the other party to form a contract (Stone & Devenney, 2014, p. 355). Secondly, the
statement must be untrue whether it was oral, written or an inference from the conduct. For
instance, the Court in (With v. O’Flanagan, 1936) stated that a failure for one party to disclose
the actual value of the practice and the statement that the practice had earned £2,000 per year
was a misrepresentation. The third requirement is that give statement must be a fact which
should not be contradicted with an opinion (Stone & Devenney, 2014, p. 355). Lastly, the
claimant must show that the only reason it entered into the contract was because of that untrue
statement or an induction (Stone & Devenney, 2014, p. 355).

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Application of the Law
On the face of Alan and Damien’s contract, it is clear that there was a complete
contractual relationship. However, the book that Alan sold to Damien was one that was offered
for free at school. Damien can then bring a claim of misrepresentation and seek to rescind the
contract. Once the claim goes to Court, Damien would need to prove that all the four elements of
misrepresentation existed. Firstly, he would need to prove that there was a statement made by
Alan. This one would not hard for Damien since he can show the post made by Alan on
Facebook. The second requirement would be showing that the statement was false. Like in (With
v. O’Flanagan, 1936), Alan had the knowledge that the book was offered for free but he instead
posted to sell it to take advantage of those never had such information. In (With v. O’Flanagan,
1936), it is clear that concealing facts is a form of misrepresentation. The situation with Alan and
Damien is also similar to the case of (Redgrave v. Hurd, 1881). In the case, the Court ruled that
there was fraudulent misrepresentation where the seller was taking advantage of the lack of
knowledge of the buyer. After proving that the statement was false, Damien would the need to
show that that statement induced her into buying the book. An induction can be found on Alan’s
assertion that he a High Distinction where the statement was also a false one.
Conclusion
Damien can sue Alan to rescind the contract. The court would allow rescission due to proof of
fraudulent misrepresentation.
Alternative Dispute Resolutions
Business contracts are made through negotiations that go back and forth to an extent
where terms of the contract can be confused with merely made statements. When such a thing
occurs, a dispute over the contract arises, and parties may seek resolution methods that can bring

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their dispute to an end. The most commonly used methods of alternative dispute resolution
(ADR) in Singapore are Arbitration, Mediation, and Neutral Evaluation. In mediation, the
disputing parties choose a neutral person called the mediator. parties will call upon a mediator.
The mediator helps the disputing parties to settle disputes through a conciliatory approach as
they discuss the course of the dispute (Chua, 2019). The main goal of meditation is to calm the
parties to a stage where they can talk and listen to one another, and this helps them in narrowing
the differences. Once the differences are settled, the parties can agree on terms of the disputed
agreement without involving the Court (Chua, 2019). In mediation, the role of the mediators is
mainly to oversee and advise the parties but they do not make determinations as to who was
wrong.
Like mediation, arbitration seeks the involvement of a neutral third party. Also, the
process is consensual, and the disputing parties bring their disputes to the arbitrator. The
arbitrator can be one or a team of impartial persons (Jamal, 2015). In an arbitration procedure,
the parties and their lawyers present the side of their case and then wait for the arbitrator to make
a final binding resolution based on the facts of their case (Jamal, 2015). The arbitration person
or team are professionals with a certain level of knowledge and expertise in the area of the
dispute. For instance, in a construction dispute, the arbitrator can be someone with a background
in construction engineering who understands the facts of the case.
Lastly, neutral evaluation. This one is an exercise where a neutral third party comes in
and conducts an evaluation of the dispute (State Courts Singapore, 2019). The disputing parties
together with their lawyer presents their case. The evaluator then conducts his assessment, and
advice the parties on their likelihood of winning the case if they go for a trial (State Courts
Singapore, 2019).

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Conclusion
As Alan took Bernard’s money which was not part of any contract, Bernard can take an
action towards Alan for the recovery of his money. Instead of going to Court, it can be a good
chance for Bernard to consider getting a third party to try and mediate their case with Alan. A
third party can explain to Alan that there were no contractual arrangements with Bernard hence
need to refund the money and get back his book. Also, even other parties such as Damien may
involve ADR to get Alan to give back their rights. Once all these fails, Damien and Bernard can
bring an action to Alan and claim for damages.

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References
Chua, E. (2019). The Singapore Convention on Mediation—A Brighter Future for Asian Dispute
Resolution. Asian Journal of International Law, 1–11.
https://doi.org/10.1017/S2044251318000309
De Francesco v. Barnum., 45 Ch. D. (1890).
Dickinson v. Dodds., 2 Ch. D. (1876).
Felthouse v Bindley., 11 CBNS (1862).
Hyde v. Wrench., 3 Beav. (Court of Appeals 1840).
Infants Relief Act., (1874).
Jamal, A. A. (2015). ADR and Islamic Law: The Cases of the UK and Singapore (SSRN
Scholarly Paper No. ID 2607427). Retrieved from Social Science Research Network
website: https://papers.ssrn.com/abstract=2607427
McKendrick, E. (2012). Contract Law: Text, Cases, and Materials. OUP Oxford.
Ming Lee, C., & Chng, K. (2017). Lord Denning’s influence on contract formation in Singapore
—an overdue demise? Oxford University Commonwealth Law Journal, 17(2), 211–237.
Minors’ Contracts Act., Cap 399 § (1994).
Nash v. Inman., 1908 KB 2 (1908).
Pickfords Ltd v. Celestica Ltd., 2003 EWCA Civ (2003).
Redgrave v. Hurd., 20 Ch. D. (1881).
Routledge v. Grant., 4 Bing. (1828).
State Courts Singapore. (2019). State Courts. Retrieved April 8, 2019, from
https://www.statecourts.gov.sg/cws/Mediation_ADR/Pages/An-Overview-of-Neutral-
Evaluation.aspx

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Stone, R., & Devenney, J. (2014). Text, Cases and Materials on Contract Law (3rd ed.).
Routledge.
With v. O’Flanagan., 1936 Ch (1936).