Contract Law: Principles of Offer and Acceptance

Running Head: CONTRACT LAW
Contract Law
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CONTRACT LAW
Issue
The issues which have been indentified in relation to the given case study are as follows
1. Is there a valid contract formed between Monica and Earley Furniture Sdn Bhd based on
the principles of offer and acceptance and if yes when
2. Is there a valid contract formed between Monica and Table for two Sdn Bhd based on the
principles of offer and acceptance and if yes when
Rule
The law of contracts in primarily governed by the application of cases laws or common
law along with a few specific statues (McKendrick 2014)
This is a branch of civil law as it is related to a dispute between two or more parties and
the essence of this law is compensation rather than punishment. A single or collective promises
which are eligible to be enforced by law . it includes those agreements which the parties gave
mutually entered with one another. Only if a contract has been signed it does not become
enforceable unless the court analyzes the objective intention of the parties to the contract
(Knapp, Crystal and Prince 2016).
Thus in order to form a contract a complete consensus in relation to the terms of the contract
has to be present between the parties. In addition the parties to the contract must also have an
intention of binding each other to the terms of the contract. A contractual promise has to be
provided support through a consideration which is something which has a value to it. In an
apparent simple contract there are three elements which have to be analyzed in order to identify
its validity (Poole 2016). These include

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CONTRACT LAW
1. Intention
2. Agreement (Offer and Acceptance)
3. Consideration
Intention
Intention is the element which is one of the primary to contract formation and is
integrated to avoid accidental contracting. As set out through the case Carlill v Carbolic Smoke
Ball Co [1893] 1 QB 401 an objective test is applied by the court in relation to intention of the
party. Here the courts consider the inferences which can be derived from the conduct or words of
the contractual parties, which goes as far as a contract is likely to be inferred via the actions of
the parties along with or without their express words (Ayres and Schwartz 2014).
In commercial agreements as stated through the case of Banque Brussels Lambert SA v
Australian National Industries Ltd (1989) 21 NSWLR 502 a presumption is made that there is
intention to legally bound by the terms of contract. However if proper evidence is provided the
presumptions can be rebutted as stated in the case of Edwards v Skywards (1964) 1 WLR 349
(p.380).
An objective test for the purpose of identifying intention can also be deployed through
the help of a reasonable person approach as it had been done in Carlill v Carbolic Smoke Ball
Company. In this case the inducement of a reasonable person to enter the contract based on the
circumstances and wordings of the offer was enough to derive the presence of intention on the
offeror’s part.