Understanding Business Law: Contract Formation, Enforceability, and Legal Implications

In this issue we will discuss about business law and below are the summaries point:-  Determine if Ian and Ben formed a legally enforceable contract and the likelihood of Ian's claim against Ben.  Examine the elements of offer and acceptance in contract formation and their implications. : Reference section of the document (not included in the provided text).

Running head: BUSINESS LAW
Business Law
Name of the Student
Name of the University
Author Note

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Table of Contents
Part A...............................................................................................................................................2
Issue 1..........................................................................................................................................2
Issue 2..........................................................................................................................................4
References........................................................................................................................................6
Part B...............................................................................................................................................7
References........................................................................................................................................9

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Part A
Issue 1
To ascertain whether Ian and Ben formed an enforceable contract and whether Ian is
likely to succeed with his claim against Ben.
Rule
The existence of an agreement between parties depend on the presence of a valid offer
and acceptance. When a party asks another to do or not to do certain task for, it is said that the
person has placed an offer to the other person. An offer must be communicated clearly and
unambiguously with the other person. A person who makes the offer is called offeror and to
whom the offer is made, is called the offeree. A clear indication of the offer by the offeror
regarding his willingness to form a legally binding relation with the offeree must be establish to
form a valid contract. An offer may be expressed or it may be implied, it could be written or it
can be oral as well. An offer speaks about the offeror’s intention to make himself bound to
execute the agreement with the offeree, without any further negotiation regarding the time of
execution or amount of consideration (Knapp, Crystal & Prince, 2016). An offer is generally
indicated for a specific offeree for every agreement involves specifications, which could be
executed, by certain class or category of people. However, offer can be made to the whole wide
world as well, in that case it would be termed as an ‘invitation to treat’ which is generally a
request to people to consider the offer and respond accordingly as held in Pharmaceutical
Society of GB v Boots Cash Chemists (Southern) Ltd [1956] EWCA 6. An offer is made
available to the offeree until it is withdrawn by the offeror himself.
On the other hand, an offeree is supposed to accept the offer if it suits his need. On his
acceptance of a valid offer, the agreement becomes legally binding on both of them. Acceptance

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need not be expressed, it could be implied as well, through the conduct of the offeree. However,
silence cannot be considered as a form of acceptance under common law or the statutory law. If
the offeree does not respond even after the lapse of a considerable amount of time, the offer
would also lapse with time. Most importantly, when the offeree rejects an offer expressly by way
of clear and unambiguous communication, the offer lapses as well. The offeree cannot request or
demand the offeror to place the same offer again. However, it would be the discretion of the
offeror to place the same offer again to the same offeree.
Application
In this case, ben being the offeror, had given the offer to Ian to speak at a seminar, which
Ian expressly communicated and rejected through an email. However, he had indicated that he
would try to be present if possible. The email expressly rejected the offer stating that Ian had
another commitment on the same day. Such response is an enough to hold that Ian had no
intention to take part in the seminar, even though it had an uncertain clause. The uncertain clause
of the email could not be considered as an acceptance from Ian and therefore it was not justified
and ration for Ben to have waited for Ian to show up on the day of the seminar. Therefore, it was
right on Ben’s part to arrange for another speaker. Therefore, it can be clearly seen that there is
no existence of an agreement between Ben and Ian.
Conclusion
Therefore, there is no enforceable contract between Ben and Ian and Ian is not likely to
succeed with his claim against Ben

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Issue 2
To ascertain whether Ben has any defences to the claim against Sharon and whether
Sharon is likely to succeed with her claim.
Rule
When a party asks another to do or not to do certain task for, it is said that the person has
placed an offer to the other person. An offer must be communicated clearly and unambiguously
with the other person. A person who makes the offer is called offeror and to whom the offer is
made, is called the offeree. A clear indication of the offer by the offeror regarding his willingness
to form a legally binding relation with the offeree must be establish to form a valid contract. An
offer may be expressed or it may be implied, it could be written or it can be oral as well. An
offer speaks about the offeror’s intention to make himself bound to execute the agreement with
the offeree, without any further negotiation regarding the time of execution or amount of
consideration. An offer is generally indicated for a specific offeree for every agreement involves
specifications, which could be executed, by certain class or category of people. An offeree is
supposed to accept the offer if it suits his need. On the acceptance of a valid offer by the offeree,
the agreement becomes legally binding on both of them. Acceptance need not be expressed, it
could be implied as well, through the conduct of the offeree.
While, a great obstacle in the way of forming a valid contract is that the parties could be
under a mistake of fact or a mistake of law pertaining to the terms and requirement of the
contract. When both the parties to the contract are under a mistake of fact, the contract would be
considered as void. While in case of a unilateral mistake, the contract would be voidable on the

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option of the party who had mistaken the fact (Shopov, 2013). This could be a defence for the
contracting parties as well, to discharge the contract as held in Petelin v Cullen (1975) 132 CLR
355.
Application
In the given case, Ben had hired Sharon believing her to be an expert in astronomy as it
was so mentioned in the webpage of her University. However, it was an error on the part of
Sharon’s university as she was an expert in astrology, and Sharon had no knowledge about such
error. She accepted Ben’s offer believing that Ben hired her for her expertise in astrology. She
was under the mistake of fact about Ben’s intention. While, Ben took her for an expert in
astrology which was his mistake as to the matter of fact. Therefore, both the parties were under
the mistake of fact and Ben could discharge the contract by siting the defence of mistake of fact.
In addition, there cannot be a valid contract where is a mistake of fact in the mind of both the
parties to the contract.
Conclusion
Therefore, Sharon is not likely to succeed with her claim as Ben could state the defence
of mistake of fact to rescind the contract.

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References
Knapp, C. L., Crystal, N. M., & Prince, H. G. (2016). Problems in Contract Law: cases and
materials. Wolters Kluwer Law & Business.
Petelin v Cullen (1975) 132 CLR 355
Pharmaceutical Society of GB v Boots Cash Chemists (Southern) Ltd [1956] EWCA 6
Shopov, A. (2013). Mistake As a Ground For Nullification of Contracts (Theories and
Approaches on Its Relevance). International and Comparative Law Review, 13(1), 61-72.

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Part B
Issue
The issue is whether Gordan has the right to retain his car of Cheng has a better title to it
and can eventually retain the car.
Rule
The latin phrase “Nemo dat quod non habet,” means that a person cannot give to another
what they do not have. This is generally known as the nemo dat rule according to which when a
person has purchased a personal property for another who do not have any right of ownership,
then the purchaser will also have no right to ownership of the property. The term is equal to the
pharse “Nemo plus iuris ad alium transferre potest quam ipse habet" according to which a person
cannot give another additional rights to what he actually has (Chambers, 2008).
The rule is also generally held to be valid even in case the purchaser did not have
knowledge about the fact that the seller does not have any title or right to sell the property or
claim ownership regarding the same. In the case of Shogun Finance Ltd v Hudson [2003] UKHL
62, the court held that where the seller did not have the right to sell the car to the purchaser, the
car will not belong to the of the purchaser even if he acted in good faith under the rules of s.27
of the Hire Purchase Act 1964. This was established based in the principles of the case of Cundy
v Lindsay (1877–78) LR 3 App Cas 459 where it had been stated by the court that a contract
which has identity as the key element will be void if there have been lies about the identity by
the purchaser.

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Application
Mary has obtained the car belonging to Gordon through an act of fraud. This is because
Mary has informed Gordon that she is Joan Bennet the new mayor of Melbourne. The only
reason because of which Gordon agreed to allow Mary to take the car and pay after a week was
her identity. In this situation the principle of the case of Cundy v Lindsay can be applied and it
can be determined that the contract between Gordon and Mary is void. This means that Mary
does not have good title to the car she has obtained from Gordon. The rules relating to Nemo
plus iuris ad alium transferre potest quam ipse habet emphasize that a person cannot give another
additional rights to what he actually has. This means that Mary cannot pass a title to cheng even
if he is a good faith purchaser. This signifies that Gordon has a better claim in relation to the car.
The assertion can be further supported through the application of the Shogun Finance Ltd v
Hudson case as in this case also there were similar facts and the court had ruled in favour of the
original owner stating that the car belonged to him rather than the purchaser in good faith.
Conclusion
Gordon has a better claim in the situation with respect to the Car

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References
Chambers, R. (2008). An introduction to property law in Australia.
Shogun Finance Ltd v Hudson [2003] UKHL 62
Cundy v Lindsay (1877–78) LR 3 App Cas 459