INTRODUCTION TO BUSINESS LAW & ETHICS.

INTRODUCTION TO BUSINESS LAW & ETHICS
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Question 1
Issue
The key issue is to determine if a binding contract has been formed between Simon and Julie
taking into regards the validity of the acceptance sent by Simon.
Rule
In order to form an enforceable contract, a key requirement is a valid agreement. This would
require a valid offer and agreement. A crucial role with regards to offer and acceptance is
played by the underlying mode of communication1. There are broadly two modes of
communication namely postal media and instantaneous media such as telephone, mobile,
email, telex. With regards to acceptance that is communicated using the instantaneous media
of communication, it is considered to be valid at the same instant when it is received by the
offeror2. This has been highlighted in the verdict of Entores Ltd v Miles Far East
Corporation3 . Also, unless specified it is not imperative that acceptance only needs to be
communicated with a particular means of communication only. This has been highlighted in
the verdict of Yates Building Co. Ltd v RJ Pulleyn & Son (York) Ltd4. Additionally, the
acceptance of the offer before expiry or revocation leads to formation of a valid contract.
Application
In the given scenario, an offer has been sent by Julie to Simon through the use of email as per
which she has provided an estimate for her services which have been sought by Simon.
Further, Julie makes it clear that the offer would remain open until the end of that week.
Meanwhile, Simon takes quotations from other vendors and realises that Julie has offered the
best quotation. As a result, he has expressed his acceptance for Julie’s offer by sending an
SMS to her mobile phone. Simon did not send the acceptance by email as he was worried that
Julie may not read the same.
In the given case, the acceptance would become valid at the moment the acceptance SMS is
received by Julie’s phone irrespective of the fact whether she reads it or not5. Also, the
different mode of communication used in acceptance does not make the acceptance invalid
1 Andy Gibson and Douglas Fraser, Business Law (Pearson Publications,2014, 8th edition ) 84
2 Shayne Davenport, Business and Law in Australia (Thomson Reuters, 2014, 5th edition) 123
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
5 Ibid.3

since Julie had not specified that acceptance should be communicated through a particular
mode only6. Additionally, the acceptance to the offer was expressed before the same expired.
As a result, e legally binding contract has been formed between Simon and Julie.
Conclusion
Owing to existence of a valid offer and valid acceptance which is communicated before
expiry of offer, hence a legally binding agreement has been formed between Simon and Julie.
Question 2
Issue
The key legal issue is to determine if in the context of the local fundraiser job, Peter and Julie
have enforced a binding legal agreement. The key factor is to determine whether
consideration is present for Julie. Additionally, the intention to enter into legal relations also
needs to be discussed.
Rule
For the formation of a binding contract, a key requirement is the presence of a valid
agreement. However, another key requirement that ought to be fulfilled is that mutual
consideration needs to be present. In the absence of consideration, the common law position
is that no contract would be formed7. However, it is noteworthy that the consideration
involved for both parties need not be equal or adequate but sufficient. Also, whether
consideration is sufficient or not is for the concerned parties to determine considering their
subjective opinion. This should not be determined by the courts8. This understanding has
been highlighted in Chappell & Co Ltd v Nestle Co Ltd9 . Additionally, in case of commercial
transactions it is presumed that intention to be legally bound is present. Intention to enter into
legal relationships need to be provided only in case of domestic agreements as indicated in
Jones v Padavatton10 .
6 Ibid.4
7 Robert Bryan Vermeesch and Kevin Edmund Lindgren, Business Law of Australia (Butterworths, 2013, 12th edition)143
8 Wayne Pendleton and RogerVickery, Australian business law: principles and applications, (Pearson Publications, 2015,
8th edition)132
9 Chappell & Co Ltd v Nestle Co Ltd [1959] UKHL 1
10 Jones v Padavatton [1968] EWCA Civ 4