Contract Law: Validity and Dispute Resolution

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

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Answer 1
Issue 1
Whether there is a valid contract between John and Fred for the sale of the PC.
Rule
Contract is an agreement, which has legal enforceability. It is an agreement that has been
instituted by an offer made by one party, which has been accepted by another party. A valid
contract must contain certain elements that will render it to be valid and it will gain the status
of a legally enforceable agreement. The following paragraph will strive to discuss the four
elements that an agreement needs to posses in order to gain the status of a valid contract.
The first element that a valid contract must contain is the existence of an agreement that
has been achieved by an offer. An offer is a communication of the inclination made by the
promisor to enter into a contract on certain conditions with an intention to enter into a legal
relationship with the promise. The terms of the offer must be clear and unambiguous. It must
contain any illegal or wrongful terms. The person making the offer have the intention to
create legal relationship. The same can be explained with the case of Smith v. Hughes (1871)
LR 6 QB 597. The offer needs to be accepted for the purpose of creating a valid contract. An
acceptance implies a conduct of the promisor that indicates the willingness of the promisee to
be bound by the terms of the offer.
The second element that a valid contract must have is the acceptance of an offer, which
results into an agreement. The acceptance needs to be valid to create a legal relationship. The
acceptance to be a valid one needs to be communicated either expressly or by conduct. Mere
silence cannot be treated as a valid acceptance. The same can be illustrated with the case of
Felthouse v Bindley [1862] EWHC J35. However, in case of unilateral contracts, the
acceptance can be effected without any express communication of the same. Acting upon

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such an offer can be treated as a valid acceptance. The same can be illustrated by the case of
Carlill v. Carbolic Smoke Ball Co. [1893] 2 Q.B. 484. The acceptance needs to be effected by
the offeree himself and must effected within a reasonable time. In case a particular method
has been specified for the acceptance, the same needs to be effected in accordance with the
same. The same can be illustrated with the case of Yates Building Co. Ltd v. R.J. Pulleyn &
Sons (York) Ltd (1975) 119 Sol. Jo. 370. Acceptance needs to be unconditional, the alteration
of a terms of the offer while accepting it is not a valid acceptance as the same will amount to
a counter offer and not a valid acceptance. The offer and acceptance, which has been effected
in a lawful manner creates a valid contract.
The third element of a valid contract is the consideration involved in the contract. In the
case of Currie v Misa (1875) LR 10 Ex 893, the court has declared consideration to be an
essential element for the formation of a valid contract. Consideration implies a value or
benefit that a person must obtain form the performance of the contract. Each of the party to a
contract must obtain a benefit from the contract to make the contract a valid one. The same
can be illustrated with the case of Dunlop Pneumatic Tyre Co Ltd v Selfridge Ltd [1915] AC
847. Consideration needs to be present in the contract, the adequacy of the same is irrelevant.
The same has been explained in the case of Chappell & Co Ltd v. Nestle Co Ltd [1959] 2 All
ER 701.
The fourth element of a valid contract is the intention of the parties to the contract to
create legal relationship. This can be illustrated with the case of Daniel John Brader v
Commerzbank AG [2013] SGHC 284. The mere achieving of an agreement without the
intention of creating a legal relationship does not amount to a valid contract. The same can be
illustrated with the case of Rose & Frank Co v JR Crompton & Bros Ltd [1924] UKHL 2.

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An offer, which has not been accepted can be revoked at any time before the acceptance
has been effected. The revocation needs to be communicated to the offeree. However, the
revocation of an offer can be communicated either by the offeror himself or any other person
in his behalf. The same can be illustrated with the case of Dickinson v. Dodds (1876) 2 Ch.D.
463. In the case of Byrne & Co v Leon Van Tienhoven & Co [1880] 5 CPD 344, the offeror
posted the offer on 1st of October, which has been revoked by post on 8th October. On 11th
October the offer was accepted via telegram but the letter of revocation has been received by
the offeree on 20th October. Therefore the revocation is effective on 20th of October and the
contract was rendered to be accepted on 11th October. Therefore, the revocation was not
effective.
The Electronic Transactions Act 2010 (Cap. 88) renders the formation of a contract via
electronic mode to be valid under section 11. Section 2 of the Act defines communication to
be any declaration, statement, demand, request, offer, notice or acceptance, which the parties
to the contract effects in connection to the contract. Section 13 of the Act provides for the
time of receipt and dispatch of the communication via electronic device. The section renders
the communication to be received by the addressee when it enters the system of the
addressee.
Application
In the present situation, John has made an offer to Fred asking him to buy a computer for a
price of $2500 dollar via email. This is a valid offer both under the contract law and the
Electronic Transactions Act 2010 (Cap. 88). Fred has made an offer to keep the former offer
open till 15th of May for a price of $50 dollars for it. This can also be considered to be a valid
offer. Therefore, the first essential element of a valid contract is apparently present in both
the cases.