Contract Law: Validity of Offer and Acceptance

This article discusses the validity of offer and acceptance in contract law with a case study. It explains the grounds for termination of a contract and the remedies available for breach of contract. The case study involves a dispute between John Doe and Tom Jones over the sale of barley, and between Gorpal and Alistair over a car purchase contract. The article provides expert guidance on the subject.

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Business Law

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Answer 1A
Issue
Whether there is any contract exist between the Tom and John Doe in context of selling the
Barley of Grade A
Law
Valid contract exists between the parties if there is offer and acceptance, which means,
offer and acceptance are the two important elements of the valid contract.
Offer is defined as a communication through which one party under the contract promises
the other party to do something or not do something in case another party ready to do something
or not do something.
Acceptance on the other side is the unequivocal statement made by the offeree, and
through this statement, offeree agrees to the offer made by the offeror. It must be noted that,
acceptance is considered as valid acceptance if such acceptance is given in exchange of the offer
directed by the offeror and it must be given to the person who gives the offer.
It must be noted that, acceptance must be communicated to the offeror, and in case
acceptance is not communicated to the offeror then such acceptance cannot be considered as
valid acceptance.
There is general rule that if offer is rejected by the offeree then it is not possible for the
offeree to accept the offer. In other words, once the offer is rejected then it cannot be accepted
(ACL, no date}.
As stated once the offeree rejects the offer then it can no longer be accepted. Rejection of
the offer can be done by making the direct refusal of the offer by the offeree or by making the
counter offer. Counter offer is defined as the new offer made by the offeree, which means,
acceptance of the offer is given on the different terms and regulations. It must be noted that, even
in case different terms are not important in nature then also such counter offer will be treated as
the new offer or the rejection of the original offer. In other words, slight difference in the terms
of the offer will result in the new offer.
Therefore, it is important to make difference in the counter offer and only the request for
the extra information. For making the rejection effective, it is necessary that rejection is
communicated to the offeror.
It is clear from the above facts, that any contract which is made by the arty in response to
the original offer will be considered as counter offer, and making of the counter offer
automatically results in the rejection of the original offer.
Application
In this case, Offer is made by John Doe for selling the barley to the Tom Jones in the
letter which is written on 15th August, and letter further stated that offer is open till 22nd August.

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On 17th August Tom replies to the offer letter by sending the letter in which he stated that he is
interested in purchasing the Barley but he will make the payment in Instalments.
John Doe receives this letter on 18th and Replied that he cannot accept this condition of
Tom. This letter is received by Tom on 20th August, but a day before, Tom arrange the loan and
write another letter in which he stated that he is ready to pay cash and accepts the offer made by
John Doe in the letter of 15th August.
Tom made the counter offer in his letter of 17Th August by stating that he makes payment
in instalments, because this is the new term. Counter offer is defined as the new offer made by
the offeree, which means, acceptance of the offer is given on the different terms and regulations.
It must be noted that, even in case different terms are not important in nature then also such
counter offer will be treated as the new offer or the rejection of the original offer. In other words,
slight difference in the terms of the offer will result in the new offer.
This can be defined through the case law Hyde v Wrench, (1840) Beav 334. In this case,
defendant offered the plaintiff to purchase the land for the amount of $1200, but plaintiff rejected
the offer. Defendant further offered the plaintiff to purchase the land at $1000, but plaintiff
responded to purchase the same at $950. Defendant refused to sell the land at that amount. Later,
plaintiff agreed to purchase the land at $ 1000 but now defendant refused to sell the land. In this
case, court determines the question whether there was any valid contract (ACL, no date}.
Court held that, there was no valid contract between the parties because offer made by
plaintiff to purchase the land in $ 950 was counter offer, and it can be considered as the rejection
of the original offer or it can be deemed as the new offer. As stated by the rule, once the offer
was rejected then it was not possible to make subsequent acceptance in terms of the offer.
Justice Lord Langdale stated that, no valid contract exists between the contractual parties
in terms of purchasing the land. If offer of the defendant to sell the land at $1000, and in case
such offer was accepted unconditionally and with same terms on which such offer was made
then only such contract was deemed as valid contract. In this case, plaintiff made the new offer
to purchase the land at $ 950 and because of this he rejected the offer made by the defendant.
In this case also Tom does not accept the offer with original terms, and these slight
changes in terms will be considered as new offer. In other words, Tom rejected the original
offer. There is general rule that if offer is rejected by the offeree then it is not possible for the
offeree to accept the offer. In other words, once the offer is rejected then it cannot be accepted.
Therefore, there is no valid contract exists between the John Doe and Tom Johns.
Conclusion
There is no valid contract exists between the John Doe and Tom Johns.

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Answer 1B
Issue
Whether John Doe is liable to wait till the 22nd August in context of selling the Barley
Law
Termination of offer is considered important regulation to understand, as it can be
occurred in different forms. As defined by the general rule, once the offer is rejected by the
offeree or revoked by the offeror then it is considered as the termination of the offer. If the offer
is terminated by the parties then such offer does not exist anymore, even though promise is made
by the offeror to open the offer till the specific date. However, there is an exception which stated
that in case such promise is supported by the consideration then offeror needs to open the offer
till the date. For making the rejection and revocation effective, it must be communicated whether
in direct manner and indirect manner (ACL, no date}.
There is general rule that if offer is rejected by the offeree then it is not possible for the
offeree to accept the offer, which means such offer is no longer exist.
Application
In this case, Offer is rejecting by Tom and such rejection can be deemed as the
termination of offer. If the offer is terminated by the parties then such offer does not exist
anymore, even though promise is made by the offeror to open the offer till the specific date.
Therefore, there is no legal obligation on John Doe to wait till 22nd August.
Conclusion
In this case, offer made by John Doe no longer exists and there is no legal obligation on
John Doe to wait till 22nd August.

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Answer 2A
Issue
Whether it is possible for the Gorpal to terminate the contract with the Alistair on the ground of
the non-performance
Law
It is possible to discharge the contract in number of ways, and generally contract is
discharged through performance by those parties who are under contractual obligations. In case
any party under the contract fail to discharge their obligations under the contract then it is
deemed that contract is breached by the party.
Breach of the contract gives right to the non-breaching party to terminate the contract
which is discharged by breach. Non-breaching party holds the right to terminate the contract in
terms of breach in following situations.
 Provisions related to the contract allowed the discharge for breach in some specific
situations, such as, party failed to supply the goods to the other party under the contract
then other party may terminate the contract.
 In case another party to the contract cancels the contract, which means, they reject all
their obligations under the contract such as they said that they are not going to perform
the contract.
 In case breach conducted by the party is serious in nature, because minor or technical
breaches usually do not allowed the non-breaching party to cancel the contract (ACL,
n.d.}.
It must be noted that, contractual obligations of the party can be discharged in case
contract is breached by the party. This situation generally occurred when one party terminates
the contract because of the breach conducted by another party. However, termination is allowed
only in those situations when breach is justified. This can be understood with the help of case
law British And Beningtons Ltd V North Western Cachar Tea Co Ltd: HL 1923.
Prima facie termination will be considered as an option available to the party in case in
case another party fails to perform their obligations defined under the contract or another party
cancel the contract willingly by showing their unwillingness to perform the contract. Discharge
of breach is generally divided into two categories that are general category or specific category,
and this is stated under the original contract.
It also occurred by the failure of the one party to perform the contract, and when non-
breaching party use their option to terminate the contract.
Cancellation of contract by any party is mainly depend on the fact whether contract is
breached or not, and breach only occurred when there is any breach of the condition or the
breach of any serious term. Generally, breach of warranty under the contract will be considered
as sufficient ground of the termination of the contract.

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It must be noted that, breach of the provision related to the time under the contract will be
considered as the breach of intermediate term in both common law and statutory law. Right
related to the termination of the contract in context of the breach of the time provision will
usually available to the non-breaching party. However, this right is only available in case there is
serious breach of the intermediate term and the non-breaching party served the valid notice to the
breaching party (ACL, n.d.}.
Application
In the present case, Alistair discharge the contract by non-performing their obligations
under the contract, as he fails to deliver the car on the time. In case any party under the contract
fail to discharge their obligations under the contract then it is deemed that contract is breached by
the party.
As stated above, Cancellation of contract by any party is mainly depend on the fact
whether contract is breached or not, and breach only occurred when there is any breach of the
condition or the breach of any serious term. It must be noted that, breach of the provision related
to the time under the contract will be considered as the breach of intermediate term in both
common law and statutory law. On the basis of this law, it can be said that breach is justified
because Alistair breach the term of time provision and this breach can be considered as the
breach of intermediate term.
Right related to the termination of the contract in context of the breach of the time
provision will usually available to the non-breaching party. Therefore, Goral Singh holds the
right related to the termination of the contract.
Contract
Gorphal can terminate the contract on the ground that contract is breached by discharge.
Answer 2B
Issue
Whether any damages are available to Gorpal for the breach conducted by the Alistair
Law
Common law introduces number of remedies for those who suffer damages because of
the breach their contract. In other words, following remedies are available for the non-breaching
arty in context of the breach of the contract-
Common law provides number of remedies in the form of damages and liquidated claims and
both the remedies are defined below-

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 Damages under breach of contract are deemed as the substitute of performance, and they
are mainly given to the non-breaching party for putting them in the position in which they
were in case contract is performed by the breaching party in proper manner. It must be
noted that, punitive damages are generally not given to the non-breaching party. It is
necessary that claimed loss must not be too remote in nature, and necessary actions must
be taken by the non-breaching party for reducing the loss.
 Another type of remedy which is available in case of the contractual breach is the debt or
liquidated damages. Liquidated damages are available in those situations only when there
is clause stated under the contract that specific amount of sum is paid to the non-
breaching party in case another party breach any provision under the contract. It must be
noted that, specified sum of amount is not deemed as penalty, and the non-breaching
party holds the right to sue the breaching party for the liquidated damages instead of the
un-liquidated damages.
Another type of remedy is the equitable remedy which is available in terms of the breach
of the contract, and this mainly includes specific performance and injunction.
Application
Grophal holds the right to claim for damages against the Alistair in context of the breach
of the contract, as this remedy is given by the common law. In other words, Aistrair breaches the
contract by failing to perform the obligations under the contract and this gave right to Grophal
for seeking the damages. Damages under breach of contract are deemed as the substitute of
performance, and they are mainly given to the non-breaching party for putting them in the
position in which they were in case contract is performed by the breaching party in proper
manner. It must be noted that, punitive damages are generally not given to the non-breaching
party. It is necessary that claimed loss must not be too remote in nature, and necessary actions
must be taken by the non-breaching party for reducing the loss.
In this case also, Grophal can seek the damages from the Court because Alistair breaches
his obligations under the contract.
Conclusion
Grohal can seek the damages from the Court because Alistair has breached his
obligations under the contract.

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References
ACL. Hyde v Wrench (1840) Beav 334. Retrieved from
https://www.australiancontractlaw.com/cases/hyde.html.
ACL. Agreement. Retrieved from https://www.australiancontractlaw.com/law/formation-
agreement.html.
ACL. Discharge by Breach, Australia. Retrieved from
https://www.australiancontractlaw.com/law/termination-breach.html.
ACL. Performance and termination. Retrieved from
https://www.australiancontractlaw.com/law/termination.html.
ACL. Remedies. Retrieved from https://www.australiancontractlaw.com/law/remedies.html.
British And Beningtons Ltd V North Western Cachar Tea Co Ltd: HL 1923.
Hyde v Wrench, (1840) Beav 334
Legal Service Commission, Discharge following breach. Retrieved from
https://www.lawhandbook.sa.gov.au/ch10s02s13s01.php.
Legal Vision, 2016, Offer and Acceptance In Commercial Negotiations. Retrieved from
https://legalvision.com.au/understanding-offer-and-acceptance-in-contract-law.
McGrave, R. E. (1993). The common law discharge of contracts Upon breach, Melbourne
University Law Review, Volume 4.