Contract Law: Essential Elements and Exceptions

Contract Law 1
Contract Law

Contract Law 2
Answer 1- part A
Issue:
Whether there is any binding contract between the Magda and Avinash in context of
conversation held between them?
Law:
Agreement is considered as the most necessary component for establishing contractual
relationship between two parties, which normally includes offer and acceptance of a contract. It
also involves consideration and partie’s intention to enter into a contract. Therefore, it can be
said the most important elements for existence of contract are offer, acceptance, consideration,
and intention of parties to be legally bounding. This can be understood through case law Carlill v
Carbolic Smoke Ball Co, Court of Appeal [1893] 1 QB 256; [1892] EWCA Civ 1. Court define
that valid contract exist, as all the essential components related to the contract were present. In
this case, Court mainly focuses on the offer and acceptance of the contract.
It must be noted that, in case, offer is rejected by the offeree then after that it cannot be accepted.
Rejection can be done in two forms either by direct refusal of the contract or by making counter
offer related to the contract, which means giving acceptance but on different terms of the
contract. Even though different terms related to the contract are immaterial in nature then also
counter offer will be treated as rejection of the old offer or new offer. However, it is necessary to
differentiate the counter offer from the mere request of the information, and for being effected it
is necessary that rejection must be communicated and postal rules do not apply on the letters of
rejection.
Application:
In the present case, original offer is made by the Magda to the Avinash includes selling of
framed print of Olympian champion, Paris Stilton, for $1,800 cash. Magda open this offer until
11.59 pm on Tuesday 21 February. Later, this original offer was rejected by the Avinash by
making counter offer in context of the same painting, and it is considered as the counter offer
because Avinash change the terms stated in the original offer (certificate of authenticity that
verified the portrait’s origin and status as a limited edition work). In case law Hyde v Wrench,

Contract Law 3
(1840) Beav 334. In this case, court held that if any change was occurred in the terms of the
contract then it will be considered as the rejection of the original offer. Court further stated that,
there was no binding contract between the parties because P automatically rejects the original
offer by making counting offer.
As stated above, Rejection of the can be done in two forms either by direct refusal of the contract
or by making counter offer related to the contract, which means giving acceptance but on
different terms of the contract. In the present case, Avinash reject the original offer and make
new offer to the Magda which was accepted by the Magda but with the condition that this new
offer is open until 4 PM of 20th. However, time limit is considered as the request of information
which is associated with the counter offer made by Avinash and this request is not fulfilled
within reasonable time period because Avinash fails to provide confirmation till 4 PM.
Therefore, it can be said no valid acceptance is present in the contract.
As stated, it can be said the most important elements for existence of contract are offer,
acceptance, consideration, and intention of parties to be legally bounding. In the present case,
valid acceptance is not present which means all essential elements are not present.
Conclusion:
There is no binding contract exist between the Magda and Avinash.
Answer 1 Part B
Issue:
Whether Alton possessed any consumer rights under the Australian consumer law against the
Magda?
Law:
Section 3 of the competition and Consumer Act 2010- Schedule 2 stated that any person acquired
goods in context of consumer if the amount paid for goods does not exceed $40000, and goods
are acquired for personal, domestic or household use.