Business Law and Ethics: Formation of Contract and Rights and Responsibilities

This report discusses the essentials of forming a contract, the rights and responsibilities of parties under contract, and provides advice on the contracts formed in a case scenario. It also explores the role of business law in running a business and its activities.

Business Law and
Ethics

INTRODUCTION
Business law in any country plays very important role in running of business and its
activities. There are many laws which are associated with business law. They are: partnership
law, company law, contract law, insurance laws, negotiable instrument laws, etc. all these laws
help support business and its activities either directly or indirectly. Nature of business defines the
laws that are to be followed by them. All business activities requires to contract with other
parties even for small requirement. Contract is the essential of any business (Goldberger, 2019).
Contract law builds the contractual relationships between the parties to the contract. This report
consist of a case scenario where an offer was rejected and later was accepted. This report also
explains the essentials of forming a contract and rights and duties of parties under contract.
MAIN BODY
Case scenario
Angharad is a business person who has a business of buildings. She posted an
advertisement in the local print and online media for the services they render. Bridie upon
looking at the advertisement contacted Angharad to built a wall in her garden and along with it
she also specifies description and planning of the said wall. Angharad responded her with a quote
of £500 in writing with a time clause which says that the offer is valid only for 10 days and later
any quotation will not be accepted. Within 10 days duration Bridie contacted Angharad through
e-mail stating that she is not accepting the quotation. After few days on having second thought
she emailed back to Angharad that she is accepting the quotation. Again Angharad emailed back
to her stating the new quotation which would be £600.
what is a contract?
A contract is an agreement where parties makes promise with each other and such a
promise have an enforceability of law. It is not important for a contract to be in writing, it can be
orally made between the parties. The contract to be valid and legal shall fulfil the four essentials
which are required to make it valid, binding and enforceable by the law. The four required
essentials are offer, acceptance, intention to create legal relationship and consideration (Cafaggi
and Iamiceli, 2020). Once all the essential conditions are fulfilled it is considered as a valid
contract. Contract are of many types and the terms and conditions mentioned in the contract are
generally divided in two parts i.e. express terms and implied terms. In a contract the terms can

be expressly made in the contract mutually by the parties. There are few terms to the contract
that are not written or mentioned in the contract but are implied to the parties. The valid
formation of contract gives binding effect and law enforceability upon the parties to which they
are obliged with. The terms mentioned in the contract therefore cannot be breached by the
parties. Breach of contract results in parties paying damages and compensation to the innocent
parties (Cote, 2019). There are ways in which contracts are terminated, when they have any
expiry date mentioned in the terms. In that case the contract is not said to be breached by the
parties. A contract can also be terminated if it gets impossible for the party to carry out its terms.
Misrepresentation of the contract also leads to the end of contract if the facts of the contracts are
unclear to the parties.
What are the essential conditions of forming a contract?
Forming a valid contract is very important under the law of contract. A valid contract
creates a binding effect on the parties and makes it enforceable by the law. It is therefore
important that the contract fulfils all the essential conditions of a valid contract to make it
binding and enforceable by law. There are four essentials which are needed to be fulfilled. They
are: Offer: It is the first essential which is required to be fulfilled to start formation of a
contract. An offer is made by one party to another for it to be accepted. Acceptance: It is the second essential of forming a valid contract. It is the acceptance of
offer after the offer is made by the party. If the other party rejects the offer, it is
considered as revoked. But, If the offer is accepted by the party it forms an agreement
between the parties. Intention to create legal relations: It is the third essential of forming a valid contract.
The contracting parties must have an intention to create legal relationship with each
other. The parties must have clear intention to form contract (Mills and Saprai, 2019) .
The intention must not be the result of force or any kind of influence from any other
party.
 Consideration: It is the fourth and the last essential which is very important to be
fulfilled in order to complete the formation of a contract. Consideration means some
amount or money which is of value.

If all the above condition given are fulfilled by the parties entering into contractual
relationship then the contract will be termed as binding and enforceable by law (Howells, 2019).
Breach of it would make party liable for damages and compensation.
Advice Angharad and Bridie on which contract(s), if any, have been formed in this
negotiation.
In the given case scenario, Bridie contacted Angharad to built a wall in her garden to
which she was offered a quotation of £500 from Angharad only if she accepts the said offer
within 10 days. Before the expiry duration of 10 days, she replied to the offer saying that she do
not wish to accept the quotation. Later after rejecting the said offer she again emailed back to
Angharad saying that she is now accepting the offer. To this, Angharad replied back with a new
quotation of £600 to built the wall in her garden.
It was held in the case of Dickinson v. Dodds that, once an offer is revoked by the party
and is also communicated to the one who had made such an offer then in that case the offer will
be revoked and later the same offer cannot be accepted by the party. Therefore, Once an offer is
rejected by the Bridie, she cannot accept the same as the revocation of the offer was already
communicated to Angharad and was also received by her.
In the above case, Again on emailing to Angharad for accepting the offer, Bridie receives
a new quotation of £600 as a new offer. This offer is a new offer and it had no connection with
the old offer which was made earlier by Angharad as it was already revoked and cannot be
accepted by Angharad.
In the new given situation, If Bridie accepts the new quotation offer of £600 then there
will exist a contract between the parties but if in the given case scenario, quotation offer is again
rejected, then the offer again will be revoked.
Rights and responsibilities of the party under law of contract
The contract after its formation creates a contractual relationships between the parties.
There are many rights and duties which comes as a part of this relationship (Sein, 2017). Few of
the rights and responsibilities of the parties to the contract are given below:
Rights:
 It is the right under the law of contract that all parties are dealing fairly and in good faith.
 It is the right of the party to receive timely payment of consideration.
 The parties to contract have exclusive right to ownership.

 In case there is any breach or term or of contract, the parties have right to file a law suit
against the other part for breach. Right to know the detailed facts involved with the contract being made between the
parties.
Responsibilities:
 It is the duty of the party to make time payment of the consideration decided as part of
the contract.
 It is duty of the parties to deliver the products or services as specified in the contract. The
contract always contains specific obligations to the delivery. The parties are bound by it.
 It is the duty of both the parties to act in good faith and any act must not amount to
breach of contract.
 It is also he duty of parties to contract that they disclose the related facts of the contract
clearly to the opposite party. They should not practice any act which can cause delay in
the services or hampers the relationships between the parties.
CONCLUSION
From this report it is concluded that, to form a valid contract it is important the essentials
of the contracts are fulfilled. After the essentials are fulfilled it makes the contract valid,
enforceable and binding upon the parties. Contractual relationships are governed by the contract
law which gives various rights and responsibilities upon the parties who are in the contractual
relationship. To form a contract it is necessary that the offer is accepted by the party. If the offer
is rejected at first by the party it is revoked and later it cannot be accepted.

REFERENCES
Books and Journals
Cafaggi, F. and Iamiceli, P., 2020. Regulating Contracting in Global Value Chains. Institutional
Alternatives and their Implications for Transnational Contract Law. European Review of
Contract Law, 16(1), pp.44-73.
Cote, M., 2019. The" Segregated Funds Contract": An Insurance Product in the Shadow of
Securities Law?. RJT ns, 53, p.395.
Goldberger, J., 2019. Contract law in the cases: 2018 in review-part 1 of 3. Commercial Law
Quarterly: The Journal of the Commercial Law Association of Australia, 33(2), p.9.
Howells, G., 2019. Book review: European Contract Law in the Digital Age, edited by Stefan
Grundmann.(Cambridge: Intersentia, 2018). Common Market Law Review, 56(6).
Mills, C. and Saprai, P., 2019. Commercial Boycotting and Conscientious Breach of
Contract. Journal of Applied Philosophy, 36(4), pp.575-591.
Sein, K., 2017. What rules should apply to smart consumer goods: goods with embedded digital
content in the borderland between the digital content directive and normal contract
law. J. Intell. Prop. Info. Tech. & Elec. Com. L., 8, p.96.