Contract Law: Elements of Agreement and Formation of Contract

Accounting 2018
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Accounting
April 4
2018
BLOCK 1 TRIMESTER 1 2018: TLAW 101 BUSINESS LAW

Accounting 2018
Question 1
Issue
Whether a contract was created with any of the three parties, based on the submitted tenders?
Rule
A contract can be created only when certain important elements are present under it. The
elements of agreement, i.e., offer and acceptance are followed by elements like intention,
capacity, consideration and consent (Clarke and Clarke, 2016). When a contract has to be started,
an offer has to be made, which shows that one party is offering the other party with something.
There is a need to differentiate an offer from an invitation to treat. The tenders are deemed as
invitation to treat due to the reason that they invite price for the particular task, which then
becomes the offer (Ayres and Klass, 2012).
The next requirement for creating a contract is for the offer to be accepted by the party to which
the offer is made and this acceptance has to be provided in a time based manner. The date of
acceptance is when it reaches the offering party (Andrews, 2015). Though, when it comes to
postal rules, this date of acceptance changes and this becomes the date on which the accepting
party posts the acceptance letter. It does not matter when the acceptance letter actually reaches
the offering party. This is because the postal officers are deemed as the agent of offering party,
resulting in the acceptance of postal officers as that of the offering party (Gibson and Fraser,
2013).
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Accounting 2018
It becomes crucial to note here that the postal rules apply in such cases only where the post has
been stated as a mode of acceptance or that there is reason enough before the offering party that
post would be used for giving the acceptance on a particular matter, as had been seen in
Tallerman & Co Pty Ltd v Nathan's Merchandise (1957) 98 CLR 93.
Application
The facts of this case demonstrate that the University had invited tenders openly where a closing
date of 01st June had been set. As the tenders are the invitation to treat, this invitation would be
deemed as invitation to treat. Each reply to this tender would become an offer. Each of the offers
made by the different parties need to be analysed now. Greenland sent their offer through hand
as the offer was delivered through hand. The laws stated here provide that the date of offer is the
date when the offer actually reached University which was 29th March. In the case of the second
party which is Enviro, the offer was sent through post on 15th May, resulting in the date of offer
being 15th May as a result of applicability of postal rules. The offer of Plant Forever was posted
on 30th May and this would be offering date for them.
Coming to the acceptance part, the Enviro offer had being forgotten due to error on part of
administrative assistant of University, making it their fault. This fault resulted in no contact
being formed. In context of Greenland, their offer was not accepted owing to the rumours. It is
not obligatory to accept every offer, so no liabilities arise here. University accepted Plan
Forever’s offer through the postal mode. Based on Tallerman & Co Pty Ltd v Nathan's
Merchandise, this would be deemed as a valid mode of acceptance as it was the mode being used
for every communication. And the acceptance of postal officer would make the acceptance of
University and it would not matter that the post was destroyed.
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