Business Law: Contract Formation, Mistake and Breach

INTRODUCTION TO
BUSINESS LAW

Contents
Issue 1.........................................................................................................................................2
Rules 1........................................................................................................................................2
Application 1..............................................................................................................................2
Conclusion 1...............................................................................................................................3
Issue 2.........................................................................................................................................3
Rules 2........................................................................................................................................3
Application 2..............................................................................................................................4
Conclusion 2...............................................................................................................................4
Issue 3.........................................................................................................................................4
Rules 3........................................................................................................................................4
Application 3..............................................................................................................................5
Conclusion 3...............................................................................................................................5
References..................................................................................................................................6

Issue 1
The first issue in the given case scenario is the determination of whether there is an existence
of a contract between the parties in question.
Rules 1
The Australian Contract Law prescribes certain essentials which must exist in order to
confirm a valid formation of contract between the parties (Latimer, 2016). As per the contract
law, a contract is referred to as the agreement duly formed between the parties that can be
enforced at the courts. The first condition is that presence of offer and acceptance thereon.
The former refers to the willingness of one party to create a contract and the communication
thereof is vital. The advertisements are regarded as an invitation to treat, unless these are
comprised of certainty in terms of all the key terms. A valid acceptance constitutes
acceptance to all the chief terms along with the communication thereof. The second key
condition is known as the intention of being legally bound by the contract as held in the
renowned case law of Ermogenous v Greek Orthodox Community of SA Inc. (2002) 209 CLR
95. This means that the parties must agree that the rights and obligations indicated in the
agreement hold the potential to be enforced at the courts. The existence of consideration is
the next key element, which denotes a payment of some kind, not necessary in the form of
money, in exchange of the promise received. The case of Biotechnology Australia Pty Ltd v
Pace (1988) 15 NSWLR 130 is important to note here which states that some form of
consideration should support the agreements to regard the latter as binding. The yet another
important element is the certainties of terms, which should not be vague and must expressly
or implied state certain obligations to be performed by the parties. Further to state, the parties
must possess the legal capacity to enter into the contracts and the object of the contract must
not be immoral or illegal, else the contracts would be void. Hence, the essential conditions
must exist at time of formation of contract to regard a contract validly formed.
Application 1
The above stated rules when applied to the given case scenario, leads to the following
mentioned useful insights. The physical menu is the invitation to treat by the Lame Duck
Restaurant to the public. When parties accept the invitation to treat, the same becomes an
offer. In the given case, there is an acceptance of the invitation to treat by Lin as per the given
rates in the physical menu and the same becomes an offer. The accounts department of the