Corportaion/Business Law Answer 2022

Running Head: BUSINESS AND CORPORATION LAW 0
Business Law Assignment
8/5/2019
Student’s Name

Corportaion/Business Law 1
Contents
Answer A.........................................................................................................................................2
Answer B.........................................................................................................................................6
Scenario 1 6
Scenario 2 7
Scenario 3 9
References......................................................................................................................................11

Corportaion/Business Law 2
Answer A
A contract can be understood as a legally binding agreement where parties to the same have an
obligation to fulfill their promises to each other. Many of the factors are there that collectively
makes a contract legal and binding, therefore these factors are known as essentials of a contract.
The same are required to be there in each contract. Every one of these elements has certain rules
and the factors must be according to those rules only. The very first element is an offer. An offer
is a proposal to do a particular thing or not to do in return for something. Anything can be
mentioned in an offer such as a proposal to purchase a car or proposal to sell a house. The person
who creates the offer is called as offeror and the other party who receives the offer is known as
offeree (Smallbusiness.findlaw.com, 2019).
A valid offer is the one that consists of an intention to bind the parties. In the case of Harvey v
Facey [1893] AC 552, Privy Council held that in case of missing of intention to be bound, a
communication is treated as a request for information or something else but not the offer.
Intention makes the difference between an offer and other terms similar to offer that exist in
contract law such as an invitation to treat. It is just an invitation to offer and not the offer itself as
an intention to bind the parties remains missing there. It was provided in the decision of the case
of Pharmaceutical Society of Great Britain v Boots [1953] 1 QB 40 that goods placed on display
in a shop also a type of invitation to treat (Marson, 2013). Hence, in other words, to say that
advertisement and any other communication that offer something cannot be treated as an offer
until the intention to bind rise there. Another essential element after the offer is acceptance. In
order to become a contract, every offer is required to have consented. If all the other essentials
are there then a contract is established as soon as offeree provides his/her acceptance to the offer

Corportaion/Business Law 3
made by offeror. Here this is to inform that offeror and offeree are required to communicate offer
and acceptance to each other. Secondly, it was decided in the case of Hyde v Wrench (1840) 49
ER 132 that for a valid acceptance, the terms of the same must match to the terms of offers. If
there is any variation between these two, then the acceptance provided by offeree becomes
invalid and does not give rise to any contract. Lastly, an agreement is required to be certain.
The third and one of such important element is a consideration. These factors are required to be
studied in-depth as many rules are associated with the topic of valid and legally acceptable
consideration. Firstly, the meaning of consideration is required to be understood. This is to state
that under every contract there is a certain exchange of promises between parties. These
promises are known as consideration. Only existence of consideration is not enough but the same
must be according to the rules. First of all a consideration must not be past one. It means if
anything is already been paid or if an action already been performed then the same cannot be
used as a consideration for future contracts as decided in the case of Re McArdle (1951) Ch 669.
Secondly, consideration need not be adequate all the time. The decision provided in the case of
Chappel v Nestle [1960] AC 87 House of Lords, seems to be important here. In the subjective
case, the House of Lords provided that consideration is required to be sufficient only (Charman,
2013). It means it is not required that consideration must be market value and it can be anything
that has value in the opinion of the law. For instance, if someone purchases a car in consideration
of £1 then also £1 would be considered as valid consideration under contract law. The third
condition says that consideration must be paid by promisee only. It has been provided in the
decision of the case of Tweddle v Atkinson [1861] EWHC QB J57 that if any other person pays
consideration on behalf of promisee then also promisee cannot enforce a contract, as he/she does
not become a party to contract in such a situation.

Corportaion/Business Law 4
Many of the times, people do certain things out of their public duty. For instance, police officers
search for a lost car of citizens where they report FIR. In such a situation, the performance of
such public duty cannot be treated as a valid consideration. Nevertheless, an exception has found
in the case of Glasbrook Bros v Glamorgan County Council [1925] AC 270, where the court
determined that public duty could be considered as a valid consideration in those cases where
promisor goes beyond his/her duty (Smits, 2014). For instance, providing protection to the public
is the duty of police but if police provide additional security to a particular person then such
action can be treated as a valid consideration. Similarly, an existing contractual duty of a person
cannot be considered as a valid consideration unless the person goes beyond such duty and do
something in addition. Lastly, where the promise was made for the payment of the debt in full,
part payment of the same cannot be treated as a valid consideration.
In conjunction with the offer, acceptance, and consideration, one another essential element is
also there that is the intention of the parties. For a valid contract, it is must that, parties to the
same have the objective to create legal relationship. This is the reason that in cases of domestic
and social agreements, such intention remains missing most of the times and these agreements
fail to become a contract (E-lawresources.co.uk, 2019). In a conclusive way, this is to state that a
valid offer, acceptance, intention of the parties and consideration make a legally binding
contract.
Now after the study of elements that makes a contract valid, another issue is to check the
importance of the contract in businesses. To answer this query this is to state that contracts are
important for business as it contains and outlines the rights and responsibility of each party in
conjunction with other elements. It shows that parties to the contract have decided something
mutually and will perform their promises. In the world full of commerce, cases of deal-breaking

Corportaion/Business Law 5
are normal. Such cases bring adverse impact to businesses as it consists of legal cost of lawsuits.
In such a situation contract provides safeguard to parties as it outlines the serious consequences
if expectations are not met. This is to state that business contracts put pressure on the parties to
fulfill their obligations (Faris, 2019). In case of any issues, enforcement becomes easy in the
presence of a contract. In case of contract breach by any of the parties, the innocent party can
take action as mentioned in the contract. Apart from this, deadlines are important elements in
business especially when it comes to a service contract. Business contracts contain provisions
related to payment schedules, work deadlines, and set the requirements that what is to be done by
parties and at what times (Herman, 2019). These terms constitute a guarantee with respect to
payment of services and performance of work and ensures timely delivery of both. In the absence
of a contract, these terms often create confusion. Parties may held one another liable and create
another level of certainty. They can make the provisions of penalties in case of late payment or
delivery of services. In a summarized way this is to state that business contracts let all the parties
know about the intention of other and circumstance of failures to fulfill those expectations.
In every business transactions, parties are responsible for particular things but are also not
responsible for many other things. In case of absence of a contract, parties cannot decide who is
responsible for what. Contracts remove this confusion and clearly states the liabilities of each
party involved in a deal. Commercial contracts often include no liability clause. These clauses
outline the event on which parties are not liable to another party. In such a situation, contract
plays an important role in the business as the same determine the limit of liability of one party,
which is also, can be treated limitations of the right of another party. For instance, in a contract
of sale, the seller can mention that the same would not be liable for any internal damage found
after delivery. It would prepare the mind of the customer that he/she has limited rights with

Corportaion/Business Law 6
respect to return of the car. As contracts are binding, parties to the contract have knowledge that
in case of breach of any of the contract they may be held liable in a legal manner. Lastly, at the
end of a commercial deal, parties may refer their contracts to check the pending obligations
hence this would not be wrong to state that contract guide the whole commercial deal and work
as a reference throughout the same. In conjunction with this, it provides legal rights to parties in
against each other and hence is very important to businesses.
Answer B
Scenario 1
Issue
Whether George is legally liable to fulfill the order of Mary.
Rules
Parties to the case are required to fulfill their obligation when there is a valid contract. A contract
is developed when the offer gets its acceptance. It means if offeree accepts an offer then offeror
is required to fulfill the obligation made under the offer. Nevertheless, this is to inform that offer
can be accepted not the invitation to treat. As mentioned earlier invitation to treat is a call for
offers and consist of no legal obligations. When a party makes an invitation to treat, another
party is required to make an offer. Advertisements are the type of invitation to treat and cannot
be considered as an offer as discussed in the case of Partridge v Crittenden (1968) 2 All ER 421.
In this case, the defendant sited an advertisement in which he offered some bramble finches,
whereas it was an offense under the Protection of Birds Act 1954 to offer the subjective bird for
sale. When the defendant was charged for an offense he made the appeal against such charge. It

Corportaion/Business Law 7
was given in the decision that advertisements are not offers but only an invitation to treats
(Stone, Devenney and Cunnington, 2011).
One exception of this rule is there that has been decided in the case of Carlill v Carbolic Smoke
Ball Co [1893] 1 QB 256 Court of Appeal. As per the decision of this case, the advertisement
can be treated as an offer in case of unilateral contracts (Poole, 2012).
Application
In the given case, Mary has seen an advertisement where George stated that he has Dalmatian
puppies for sale and also stated the price of the same. This advertisement would be considered as
an invitation to treat as it does not seem like a unilateral offer. In addition to this, the same was
not made to one or more specific people but to the public. If to apply the provisions of the case
of Partridge v Crittenden, this advertisement would be treated as an invitation to treat and no
obligation under an offer can put on George. The call made by Mary was the offer of the case as
she replied to an invitation to treat. In reply to the offer made by Mary, George was required to
submit the acceptance that he did not do. In the absence of acceptance, no contract was
developed between Mary and George.
Conclusion
As no contract was developed between the parties, George is not liable to fulfill the order made
by Mary.
Scenario 2
Issue
Is Mary eligible to accept the offer made by Jim?

Corportaion/Business Law 8
Rules
When an offeror makes an offer, the offeree is required to accept the same. Only acceptance is
not enough, it must be a valid acceptance. As mentioned in the answer to question A, valid
consent is the one that is absolute and make no changes in the original offer. Many of the times,
offeree does not get agree with one or more terms of the offer but ay the same times agrees upon
other terms. In such a situation, offeree accepts the offer by making changes in one or more
terms. Such acceptance does not constitute a valid acceptance and known as a counteroffer under
contract law. In other words, to say, a counteroffer is a communication by the offeree where
he/she accept offeror’s offer with certain changes.
The facts of the case of Hyde v Wrench are necessary to discuss here in order to understand. In
this case, the defendant made an offer to the claimant in which a farm was offered for sale in
consideration of £1,000. The claimant became ready to purchase farm but for £950. The
defendant withdrew his offer and denied to sell the farm for £950 (Taylor and Taylor, 2015). The
claimant carried an action against him. In the decision of the case, it was decideds that no
contract was there. The communication of claimant was a counteroffer and not the acceptance
and a counteroffer cancels out all the previous offers of a transaction. In order to develop a valid
contract, a counteroffer is required to be accepted by another party similar to a normal offer.
It means that when a party makes a counteroffer, all the previous offers get cancel and does not
remain available to accept.
Application
In the case presented hereby, a person named Jin made an offer to another person Mary in order
to buy Mary’s fridge for £150. This seems to be a valid offer as consideration and intention to

Corportaion/Business Law 9
bind was there. Mary was expected to accept or reject the offer. Mary accepted the offer but with
a new condition and changed the amount of consideration from £150 to £200. The letter sent by
Mary was a counteroffer and not the acceptance. Jim rejected an offer made by Marry. Here
applying the provisions of Hyde v Wrench, the counteroffer made by Mary canceled all the
previous offer of the case. Therefore the earlier offer made by Jim is no longer available.
Conclusion
As offer made by Jim is canceled, hence Mary cannot accept the same.
Scenario 3
Issue
Can Mary force Dan to sell the car in a legal manner?
Rules
A contract makes out of an agreement and an agreement makes out of the acceptance of an offer.
It means if an offer does not get acceptance, there cannot be either an agreement nor a contract.
Parties cannot sue each other unless they have a valid contract and one of the party breach any
term of the same. An offer is required to contain valid terms only. It means if an offer contains
anything that is not in compliance with the provisions of Contract Law then the same cannot be
treated as a valid offer and cannot be enforced further.
As per the provisions of contract law, acceptance to offer is mandatory for the purpose of
development of a contract. Communication of acceptance is also a mandatory thing to do. This is
the reason that acceptance cannot assume to be there unless offeree informs the same to the
offeror. Felthouse v Bindley [1862] EWHC CP J35 Court of Common Pleas is an important case

Corportaion/Business Law 10
to discuss here. In this case, a person made an offer to purchase his uncle’s horse and stated that
if he would hear nothing by a specific time, he considers the offer accepted by an uncle and the
horse as his. In the decision given in the case, it was provided that no contract was there as the
uncle has not accepted the offer and silence could not be treated as acceptance (Liuk.co.uk,
2017).
Application
In the case presented hereby, Mary wrote a letter to Dan and offered to purchase his car
£10,000. The letter stated that if Dan would not reply by Friday then the car will be considered
owned by Mary. The facts of this case are far similar to the case of Felthouse v Bindley. Here the
issue of the case started when Dan has not replied by Saturday and Mary went him to ask for car
delivery. The action of Mary is not legal here as Dan has not accepted the offer made by her and
silence of Dan cannot be treated as valid acceptance. As no acceptance was there, hence no
contract has developed between Mary and Dan.
Conclusion
As no contract was there, Dan is not liable to sell the car and Mary has no legal entitlement to
force him for the subjective sell.

Corportaion/Business Law 11
References
Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256 Court of Appeal
Chappel v Nestle [1960] AC 87 House of Lords
Charman, M. (2013) Contract Law. Oxon: Routledge.
E-lawresources.co.uk. (2019) Intention to create legal relations. [online] Available from:
http://e-lawresources.co.uk/Intention-to-create-legal-relations.php [Accessed on 07/08/2019]
Faris, S. (2019) What is the Importance of Contracts to a Business? [online] Available from:
https://smallbusiness.chron.com/importance-contracts-business-906.html [Accessed on
07/08/2019]
Felthouse v Bindley [1862] EWHC CP J35
Glasbrook Bros v Glamorgan County Council [1925] AC 270
Herman, C. (2019) Why Are Contracts Important in Business? [online] Available from:
https://yourbusiness.azcentral.com/contracts-important-business-5691.html [Accessed on
07/08/2019]
Hyde v Wrench (1840) 49 ER 132
Liuk.co.uk. (2017) Felthouse v Bindley (1863): Silence cannot be acceptance. [online] Available
from: https://liuk.co.uk/felthouse-v-brindley/ [Accessed on 07/08/2019]
Marson, J. (2013) Business Law. UK: OUP Oxford.

Corportaion/Business Law 12
Partridge v Crittenden (1968) 2 All ER 421
Pharmaceutical Society of Great Britain v Boots [1953] 1 QB 40
Poole, J. (2012) Casebook on Contract Law. UK: OUP Oxford.
Re McArdle (1951) Ch 669
Smallbusiness.findlaw.com. (2019) What Is an Offer? [online] Available
from:https://smallbusiness.findlaw.com/business-contracts-forms/what-is-an-offer.html
[Accessed on 07/08/2019]
Smits, J., M. (2014) Contract Law: A Comparative Introduction. UK: Edward Elgar Publishing.
Stone, R., Devenney, J., and Cunnington, R. (2011) Text, Cases and Materials on Contract Law.
Oxon: Routledge.
Taylor, R., and Taylor, D. (2015) Contract Law Directions. UK: Oxford University Press.
Tweddle v Atkinson [1861] EWHC QB J57