Enterprise Law: Validity of Contracts and Legal Rights

This document discusses the validity of contracts and legal rights in enterprise law. It covers topics such as contract formation, invitation to treat, valid offer and acceptance, postal rules, consideration, and intention to create legal relations. The document includes case studies and provides answers to key legal issues.

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Question 1
Issue
The key issue is to decide if Carla has the legal right to refuse to sell the book.
Rule
With regards to contract formation, a pivotal element is the presence of valid agreement. This
typically requires a valid acceptance to a valid offer. However, it is imperative to differentiate
between offers and invitation to treat (Carter, 2016). A relevant case in this regards is
Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd [1953] EWCA
Civ 6. In this particular case, the medicines were displayed in the shelves along with their
respective prices (Andrews, 2014). This display was considered as invitation to treat and not
offer. This difference is relevant as if the display is an offer to buy the underlying product at the
mentioned price, then acceptance by the customer would result in contract formation. However,
if the display is an invitation to treat, then the willingness on the part of the buyer to purchase the
good at a specified price is an offer which may or may not be accepted by the seller (Gibson &
Fraser, 2014).
Application
In the given case, the display of books in the shop by Carla would be considered as invitation to
treat and not offer. Hence the action on part of Brenda to take a copy of the book and offer the
money which is displayed on the book would constitute as offer. This offer may or may not be
accepted by Carla who has the legal right to reject the offer or provide a counter offer.
Considering that the display of book is not offer but invitation to treat, hence Carla can legally
refuse the sell the book.
Conclusion
Based on the above discussion, it is evident that considering that display of book at the shop does
not constitute an offer to sell, hence Carla can legally refuse to sell the book presented by
Brenda.

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Question 2
PART A
Issue
The key issue is to determine if an agreement has been formed between Edward and Greg with
regards to presence of valid offer and valid acceptance.
Rule
With regards to execution of a valid agreement, it is essential to have a matching and valid offer
and acceptance. The timing of enforceability of the acceptance varies in accordance with the
underlying communication media that is used for communicating acceptance. In case of the use
of postal media for execution of agreement, postal rules are applicable (Taylor & Taylor, 2015).
As per this, an offer would be considered as valid when the letter containing the offer is received
by the offeree. However, the acceptance on part of the offeree is considered to be applicable
when the acceptance letter is posted by the offeree (Edlin, 2015). As a result, in postal
communication the acceptance is independent of the time taken for the offeror to receive the
acceptance letter. This aspect has been highlighted in the verdict of the Adams v Lindsell (1818)
1 B & Ald 681 case (Paterson, Robertson & Duke, 2015).
Application
As per the given facts, an offer through post has been sent by Edward on February 4th. This offer
becomes applicable on February 7 when the letter is received by Greg. He replies to the letter
and provides his acceptance on the very same day. As per the postal rule of acceptance, the
acceptance communicated by Greg would be applicable on February 7th only since the
acceptance letter has been posted on the very same day. The acceptance letter is received on
February 11 but it does not matter. Owing to presence of both a valid offer and a valid
acceptance, an agreement has been enacted between Edward and Greg on February 7. Further,
Greg changes his mind and sends another communication to Edward stated that he is not
interested. However, since acceptance has been given earlier, now it cannot be rolled back.
Conclusion

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There is a valid agreement between Edward and Greg with regards to the sale of goods and the
same is not nullified despite the email from Greg indicated his unwillingness to proceed with the
purchase.
PART B
Issue
The key issue is to highlight if Edward can hold Peter liable for the $ 50 which has not been
paid.
Rule
With regards to contract enactment, a key requirement is the presence of consideration for both
the parties involved. Even in instances, where an original contract is amended, the enforceability
of the amended contract is contingent on the presence of mutual consideration for the parties
involved. In this context, it is noteworthy that payment of part debt does not form good
consideration for the creditor (Parker & Davenport, 2014). This has been highlighted in the
Foakes v Beer [1884] UKHL 1 where the amended contract for part payment of outstanding debt
was considered to be void. As a result, even if the contract for part payment is signed between
the parties, then also the creditor would have the legal right to recover the outstanding dues
provided the creditor reluctantly agreed to the part payment (Carter, 2016).
Application
Based on the given facts, it is apparent that the original contract was for payment of $450 by
Peter to Edward. However, owing to deteriorating financial situation of Peter, Edward decided to
extend an alternative offer to discharge the outstanding debt by the payment of $400, thereby
giving a discount of $ 50 to Peter. Peter agreed to this offer and hence an alternative contract was
enacted to replace the initial one. However, this particular contract would be declared void
considering the fact that there was no consideration on the part of Edward to accept $50 lesser
than the actual value. As a result, payment of $ 400 does not discharge his debt and the
remaining $ 50 can be recovered from Peter by Edward.

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Conclusion
Based on the above discussion, it can be concluded that the contract enacted for discharge of
debt with a lower amount is not valid owing to lack of mutual consideration. Therefore, Edward
can still recover $ 50 from Peter.
PART C
Issue
The key legal issue to consider is whether Peter and Edward would have a binding legal
agreement for the sale of goods if they were cousins.
Rule
A key requirement with regards to enactment of binding contract is the presence of intention to
be bound in legal relations on part of both parties. This condition is assumed to be met when the
parties are unrelated and the underlying transaction is commercial in nature (Andrews, 2014).
However, with regards to domestic agreements (i.e. agreements where the parties have a personal
relationship), the underlying assumption is that the intention to create legal relations is not
present as highlighted in Jones v Padavatton [1968] EWCA Civ 4 case. As a result, there needs
to be adequate proof for the presence of intention for creation of legal relations in such cases so
as to enact enforceable contracts (Taylor & Taylor, 2015).
Application
In the scenario presented, the underlying agreement for sale of goods would be a domestic
agreement considering that the underlying parties (i.e. Edward and Peter) are cousins. As a
result, there is need to additional evidence such as the presence of a written contract or verbal
statement on part of the parties to enforce the contract legally. In the given scenario, no such
evidence is present which supports that both the parties had intention to enforce the contract
through legal means.
Conclusion

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There is no evidence to indicate that cousins had intention to create a legal relationship with
regards to sale of goods. As a result, the contract for sale of goods between Edward and Peter
would be void and non-enforceable.

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References
Andrews, N 2014, Contract Law, 3rd edn, Cambridge University Press, Cambrisge
Carter, J 2016, Contract Act in Australia, 3rd edn, LexisNexis Publications, Sydney
Davenport, S & Parker, D 2014, Business and Law in Australia, 2nd edn, LexisNexis
Publications, Sydney
Edlin, D 2015, Common law theory, 4th edn, University Press Cambridge, Cambridge
Gibson, A & Fraser, D 2014, Business Law, 8th edn, Pearson Publications, Sydney
Paterson, J Robertson, A & Duke, A 2015, Principles of Contract Law, 5th edn, Thomson
Reuters, Sydney
Taylor, R & Taylor, D 2015, Contract Law, 5th edn, Oxford University Press, Oxford