Contract Law: Essentials, Rules, and Remedies

This article discusses the essentials of contract law, including offer, acceptance, consideration, intention, and capacity. It also explores the rules and remedies related to breach of contract and the three alternative dispute resolution methods. The article provides examples and case laws to explain the concepts. Course code, course name, and college/university are not mentioned.

Running head: CONTRACT LAW
Contract Law
Name of the student
Name of the university
Author note

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Table of Contents
Introduction......................................................................................................................................2
1.......................................................................................................................................................2
2.......................................................................................................................................................6
3.......................................................................................................................................................8
4.......................................................................................................................................................8
5.......................................................................................................................................................9
References......................................................................................................................................12

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Introduction
The definition of contract can be stated as the agreement that is made between the parties to
create legal liabilities and it is enforceable by the court of law. There are certain legal terms and
conditions that are present in the contract. It becomes essential when there is legal responsibility
present in the terms that are mentioned in the agreement. There are certain essentials that help
the contract to become a valid contract and enforceable at the court of law. They are the offer,
intention, acceptance, capacity, and consideration (McKendrick, 2014).
An agreement can only become a contract if an offer that is valid is made by an individual who is
capable to make an offer who is known as the offeror to the other individual who is capable to
accept an offer who is an offeree. The parties should have the consideration to the contract that
seems to be valid in law (Knapp, Crystal & Prince, 2016).
1.
Issue
There are certain questions in the issue that has been found out. The first question is there any
valid contract that exists between both the parties and the second question is if there is any valid
contract existing between them, then when did this contract come into force.
Rules
Offer
An offer is prepared by an individual who is known as the offeror to the other person who is the
offeree. It can be made in public or to any group. It can be made impliedly or expressly.
According to the case of, the learned justice pointed out that an offer that is valid should have the

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intention to legally bind the offeree. Therefore, to follow the important factors of the contract
binding, the parties should intend to bind legally to each other to the terms that are mentioned in
the contract. There are two different and separate perceptions like an offer and an invitation to an
offer. The term invitation to an offer has been discussed in the case of Partridge v Crittenden
[1968] 1 WLR 1204. An offer is bound legally. The definition of an invitation to an offer is that
an expression that has been made by a person to the other person and encourages the other
person to make such an offer.
An offer must be complete in nature in order to be considered as valid. There are certain essential
elements that must be comprised of the offer and they are as follows:
 Price of services or goods
 Intention
 Description
 Time
This idea has been given in the case of Smith v Hughes (1871) LR 6 QB 597. An offer can be
withdrawn by the offeror at any moment before it is accepted. This contract has been properly
discussed in the case of. In addition, the above-mentioned case also states that if the offer has
been withdrawn or rejected then that offer will not be accepted.
If the offeree does not accept the offer that has been made before by the offeror then a
counteroffer is made but there are certain changes that have been made in the terms of the offer.
Even if for once the offeror rejects the counter offer then it cannot be accepted subsequently. In
the case of Hyde v Wrench [1840] EWHC Ch J90 there are certain essentials that are related to
counter offer has been given.

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Acceptance
A binding agreement comes into force or existence if the competent party has accepted the offer
in a valid manner. Certain essential elements have been mentioned of an acceptance that is
lawful in nature.
 The offeree should accept the offer and must be transferred to the offeree in the same
manner that has been provided by the offerer.
 The offeree should accept the terms that have been mentioned in the offer. It must be
accepted in their original form. If any changes that have been done to the original offer
then it is not considered to be an acceptance but it is considered to be a counter offer.
 There must not be any uncertainty regarding the language and terms of an agreement.
The important factors of acceptance have been mentioned in the case of Entorres v Miles Far
East [1955] 2 QB 327. This precedent states that an acceptance can only become binding if it
has been acknowledged.
The postal rule states that the acceptance is bound as the offeree has posted the letter of
acceptance. This idea has been mentioned in the case of Adam v Lindell (1818) ER 250.
Consideration
The word consideration has been defined as the idea of value that has been offered and accepted
by several organizations who enters into a contract. It is said to be as a valid and reasonable
promise. It might not be impartial. Consideration and past consideration regarding the existing
liabilities are not found to be valid (Hunter, 2015).
Intention

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The term intention means when both the parties to an agreement do not intend to bind each other
legally with the terms that have been mentioned in an agreement, then the contract does not
come into existence as per Errington v Errington Woods [1952] 1 KB 290
Capacity
A person should be above 18 and of a sound mind to enter into a contract that is valid.
Application
Certain rules that have been explained above and must be applied in the present case effectively.
The details of the case that had been mentioned above, states that an offer that is valid is made by
Alan. The validity period of the offer, the price and mode of acceptance and the explanation
about the goods has been mentioned by Alam in the offer that has been made by him.
An offeree can only accept the offer that has been made by the offeror. No such third person is
bound by such offer. The offer that has been made by Alan states that it has only been made for
his friends and not for Damien as he is not in Alam's list of friends so he does not have any right
to accept the offer made by Alam. Hence, there is no contract that exists as no offer has been
made by Alam to Damien. However, Damien had sent an SMS to Alam that is regarding an
invitation to an offer. This invitation has been accepted by Alam and therefore he agreed to sell
his book in the rate of $200 and then Damien accepts the offer and buys that book on the date of
4th November on the same price that has been mentioned by Alam.
There are two important causes that might be discussed as to why there is the existence of a valid
contract between Charleen and Alan. Firstly, as Charleen is minor so she does not have any right
to enter into the contract and secondly while he was accepting the offer that was made by

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Charleen, he was thinking about something else. Therefore, there was no intention of Alan to
bind Charleen legally.
A person called Bernard who is in the friend list of Alan said that he wants to buy that book for
$120. According to the acceptance's rule, a counter offer was made by Bernard and there was no
acceptance. The offer that was made before, was withdrawn as the counter offer was made by
Bernard. Then a fresh offer was made by Alan and he stated that he wishes to sell that book for
$200 and then this new offer was accepted by Bernard on the moment when Alan posted the
acceptance letter on the date of 4th November. Hence, a valid contract has been formed on the
date of 4th November between Bernard and Alan.
Conclusion
On the date of 4th of November, a contract was formed. It was formed between Alan and
Damien and Alan and Bernard but no such contract was formed between Alan and Charleen as
she was minor.
2.
Issue
The issue here is the Bernard and Alan's legal position in regards to the contract that has been
made between them and the remedies of it.
Rule
If the terms of the contract are violated or breached then the parties are eligible for the
contractual remedies. If the party that is related to the contract fails to go with the terms that have

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been mentioned in the contract then that party is responsible to pay the compensation and
damages as per Addis v Gramophone [1909] AC 488.
There are certain remedies that have been mentioned if the rights of the parties are breached are
damages, injunction, recession, repudiation, specific performance and restitutionary awards
(Hunter, 2015).
With regards to the rules of damages and compensation, the court has specified them effectively
as mentioned in the case of . This example states that the compensation must be equal of what
the party has lost and the compensation amount must be apt that it leaves the party from its
original position if the contract has not been breached or formed as per Hadley v Baxendale
(1854) 9 Ex Ch 341
Application
It was promised by Alan that he will be providing with his notes that are handwritten along with
his book by his offer. On the 4th November, a contract that was made between Bernard and Alan
came into existence. As per the terms that have been provided in the offer, Alan was supposed to
give his handwritten notes along with the book but it was found out that the book will be given
free of cost. As per the rules of consideration, the book was considered to be a consideration that
is valid. The book's cost is immaterial. Bernard cannot claim for breach of contract against Alan
as he has fulfilled all his obligations that have been mentioned in the contract.
Conclusion
As Alan is not responsible for breach of contract so Bernard does not have any right to claim for
any compensation.

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3.
Issue
The legal position of Charleen and Damien.
Rule
The details that have been presented in the case states that there was no contract that seemed to
be effective between Charleen and Alan. The absence of the contract does not arise remedies and
contractual obligation.
Application
There was a void contract between Charleen and Alan as Charleen is minor at age and was
incompetent to make a contract. Alan did not have any intention to create any legal obligation.
There was the intention of Alan to sell his book to Charleen. Charleen has the right to request
back her money that amounts to $200 that she already paid for the book and the money was kept
on the table. She paid on the moral basis unless Alan had already taken the amount. Alan must
not take the cash but if he takes it then it might make the contract valid.
Conclusion
As there is no existence of a valid contract then is no question of remedies.
4.
Issue
On the date of 4th November, a valid contract was created between Alan and Damien what are the
remedies.

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Rule
The rules of the remedies are effectively mentioned above.
Application
There is an existence of a valid contract between Alan and Damien as per the details that have
been set on the case. The facts that are set in the contract stated that it was the duty of Alan to
give his notes that are handwritten along with the book. But somehow he failed to give them and
instead combined some other notes inside the book. Thus, it is clear that Alan has breached the
terms of the contract. Damien has the right to claim for specific performance. He can also claim
for the compensation and has the right to withdraw the contract because the noted that were
handwritten was the important term of the contract.
Conclusion
The contractual rights of Damien have been breached and he claims for remedies.
5.
There are three kinds of Alternative Dispute Resolution methods that exist and have been
mentioned below:
a) Meditation: a third party that is neutral is being appointed and they help the other two
parties to resolve the dispute so that they can settle it.
Advantage
 The term meditation saves a lot of time and seems to be cost-effective.
 There is no need to follow the procedures that are complex in nature.
Disadvantage

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 The decision that has been made by meditation are not binding the parties legally.
 They do not involve any process of discovery that is established.
2) Arbitration: There is a need for arbitrator so that he can supervise the process of
arbitration. They control the disputed result.
Advantages
 It saves money and time.
 Precedents and statutes are being consulted to reach a decision.
Disadvantage
 Arbitrator’s decision is independent.
 It seems to be expensive than other ADRs comparatively.
3) Conciliation: The third party establishes the positive and an understanding relationship
between the parties.
Advantages
 The procedure is flexible in regards to time, content and structure.
 It is not complicated but it is cost effective and fast.
Disadvantages
 It does not legally bind on the parties.
 There is no guarantee of an efficient and effective result.
Conclusion
To conclude the aforementioned discussion that there are no obligations that Alan has towards
Charleen. Furthermore, all the contractual obligations have been fulfilled by Alam towards
Bernard. Alan is responsible for the violation of the contract with Damien. There are some
ADR's that have been mentioned so that Damien and Alan can resolve their issue properly.

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References
Adam v Lindell (1818) ER 250.
Addis v Gramophone [1909] AC 488.
Bix, B. H. (2017). 1. Theories of contract law. Comparative Contract Law, 7.
Entorres v Miles Far East [1955] 2 QB 327
Errington v Errington Woods [1952] 1 KB 290
Hadley v Baxendale (1854) 9 Ex Ch 341
Hunter, H. (2015). Modern Law of Contracts.
Hunter, H. (2015Uncertainty and risk: contract law. Without Prejudice, 16(6), 20-21.
Knapp, C. L., Crystal, N. M., & Prince, H. G. (2016). Problems in Contract Law: cases and
materials.
McKendrick, E. (2014) Wolters Kluwer Law & Business. Contract law: text, cases, and
materials. Oxford University Press (UK).
of Hyde v Wrench [1840] EWHC Ch J90
Partridge v Crittenden [1968] 1 WLR 1204
Smith v Hughes (1871) LR 6 QB 597

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