Contract Law

Running head: CONTRACT LAW
CONTRACT LAW
Name of the Student
Name of the University
Author Note

CONTRACT LAW1
Answer 1
Issue
The issues in the present case is whether any legally enforceable contract is present
between Tom and Andy related to the motor cycle and what will be done by Andy with 2000$.
Rule
A contract refers to the agreement that exists between two or more parties providing legal
duties for each of the parties present in the contract to perform certain acts (Poole, 2016). The
law of contract comprises of the laws and regulations that are directed towards enforcement of
some promises towards each other.
The Australian Contract law is mainly governed by the common law hence while
deciding any case references of common law cases can be taken (James et al., 2017). In order to
create a legally enforceable contract, the presence of an agreement must be there. Agreement is
initiated by means of an offer makes by one party to another. There cannot be unilateral contract
instead bilateral agreement must be there.
The validity of an agreement is usually determined by deciding the rules regarding the
offer and acceptance as laid down in the judgment given by the High Court in the case of R v
Clarke [1927] HCA 47.
The basic element of an agreement is the presence of an offer. Offer is made by one of
the parties showing his desire to bind himself on certain and conditions to be imposed on other
party. Here the desire is regarded as the offer and the party making such offer is considered as
the offeror. Such offer has to be supported by a permission given by the other party and such

CONTRACT LAW2
permission must be unconditional. The acceptor of the offer is called the offeree. Thus a valid
agreement is formed when an offer is accepted without any condition and such acceptance must
be communicated resulting into the formation of a valid agreement (James et al., 2017).
However there lies a big difference between an offer and invitation to offer (James et al.,
2017). Invitation to offer refers to a request which is made by a party to others in general and not
to any specific party by means of which people from public are invited to make an offer in
response to the invitation for making negotiations to affect a contract. The difference between
the offer and invitation to offer is discussed clearly in the case of Carlill v Carbolic Smoke Ball
Co. Carlill v Carbolic Smoke Ball Company [1892] EWCA Civ 1. An example of invitation to
offer is flyers displaying prices for sale as observed in the decision of the case of
Pharmaceutical Society of GB v Boots Cash Chemists (Southern) Ltd [1956] EWCA 6, [1953]
1 QB 401 held by Court of Appeal of England and Wales. The basic difference of both offer and
invitation to offer is that an offer when accepted results to an agreement whereas an invitation to
offer becomes an offer when responded.
Another category of offer is known as the counter offer which is made responding to the
initial offer. When a counter offer is made, the original offer in response of which such counter
offer is made gets rejected as well as replaced with the new offer (James et al., 2017). The
counter offer provides the original offerer to choose from either of the three options which are
accept the counter offer or reject it or make a new offer. It was held in the case of Hyde v
Wrench (1840) Beav 334, Lord Langdale held that since the counter offer causes the rejected of
the original contract, later on such offer cannot be accepted.
An offer remains unless it has been terminated by means of revocation by the offerer as
seen in Goldsbrough Mort & Co v Quinn (1910) 10 CLR 674. The offeror can cause the