Enactment of Valid Contract: Case Analysis

LST2BSL: Introduction to Business Law and Ethics
[Document subtitle]
[DATE]
Grizli777
[Company address]

Question 1
Issue
The main issue is to decide whether Simon and Julie have enacted a valid contract or not by
considering the fact that Simon has sent the acceptance through SMS.
Rule
Enactment of valid agreement is an imperative aspect for enforceability of contract. It
requires a lawful offer by offeror and acceptance by offeree. The validity of offer and
acceptance depends on the media used for communication. Instantaneous and postal mode of
communication are the two most commonly used modes1. Communication through mobile,
email, telephone and telex constitutes as instantaneous mode. When the offeree uses
instantaneous mode for communicating the acceptance, then it would become enforceable
only when the acceptance is received by offeror2. The verdict announced in Entores Ltd v
Miles Far East Corporation3 case is the testimony of this aspect. However, this is only valid
when the offeror has not particularly asked to convey the acceptance with a specified mean of
communication. This is evident from the judgement ruled in Yates Building Co. Ltd v RJ
Pulleyn & Son (York) Ltd4 case. Further it is also imperative that acceptance must be
communicated before the offer gets expired or terminated by the offeror.
Application
Offeror Julie has directed an offer to Simon through email in relation to the quote of her
traffic maintenance service for Simon’s work. Also, she has specified that the offer of the
quoted price would be available for acceptance until the end of the week. Simon has received
the offer and hence, approached other service provider for more quotes and then realised that
the lowest quote is sent by Julie only. Thereby, he sent his acceptance for the offer through an
SMS to Julie. Further, it is essential to note that sending acceptance through SMS would also
be a valid mode of communication because Julie has not specifically asked for sending
acceptance via email. Also, Simon was worried that maybe she may not check the mail on
weekend and thus, sent it through SMS. It can be concluded that SMS has been successfully
received by Julie’s phone which indicates that acceptance becomes enforceable and a valid
contract is enacted between the parties. Further, difference in mode of sending acceptance
1 Athule Pathinayake, Commercial and Corporations Law, (Thomson-Reuters, 2014, 2nd edition) 98
2 Robert Bryan Vermeesch and Kevin Edmund Lindgren, Business Law of Australia (Butterworths, 2013, 12th edition) 74
3 Entores Ltd v Miles Far East Corporation [1955] EWCA Civ 3
4 Yates Building Co. Ltd v RJ Pulleyn & Son (York) Ltd (1975) 237 EG 183
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would not create any impact on the enforceability of the acceptance because she has not
specifically asked for email for conveying acceptance. Also, he has sent the acceptance
before the revocation and thus, a valid contract is enacted between Julie and Simon.
Conclusion
It can be concluded that Julie and Simon have enacted a valid contract due to the presence of
valid offer and acceptance. Thus, both the parties have to fulfil contractual liabilities.
Question 2
Issue
The main issue is to find whether there is a binding agreement formed between Peter and
Julie in relation to the local fundraiser job or not. Further, the intention of the parties to create
legal contractual relation along with the presence of consideration for Julie would also be
discussed.
Rule
Presence of valid offer and acceptance is considered to be essential elements for contract.
However, presence of mutual consideration is also imperative for formation of contract. No
contract would be formed between the parties when no valid consideration is present for the
parties5. Further, it is noteworthy that adequacy of the consideration is not essential. In other
words, the adequacy of the consideration is not important for contract enactment even a
chocolate wrapper would also be considered as valid consideration for contract as evident
from the verdict of Chappell & Co Ltd v Nestle Co Ltd6. Further, when the contracting parties
are involved in the commercial transaction then the assumption would be made that the
parties are having intention to create legal contractual relationship7. The intention to enter
into contract needs to be justified only when the contracting parties are bound with domestic
relations as witnessed from the verdict of Jones v Padavatton8case.
Application
5 Wayne Pendleton and RogerVickery, Australian business law: principles and applications, (Pearson Publications, 2015,
8th edition) 103
6 Chappell & Co Ltd v Nestle Co Ltd [1959] UKHL 1
7 Robert Bryan Vermeesch and Kevin Edmund Lindgren, Business Law of Australia (Butterworths, 2013, 12th edition) 121
8 Jones v Padavatton [1968] EWCA Civ 4
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