Rules of Offer and Acceptance in Contract Law

This article discusses the rules of offer and acceptance in contract law and their implementation. It also analyzes the validity of exclusion clauses in contracts. The first case involves the validity of a contract between Jack and Ann, while the second case involves the validity of an exclusion clause in a contract between Batty and Qualal motors.

Contract Law 1
Answer 1
The main issue in this case is whether it is possible to consider the Jack and Ann as contracting
parties on the terms of offer letter send by the Ann to the Jack? This issue mainly involves the
rules related to the offer and acceptance, and also the implementation of these rules.
Any contract is the valid contract if such contract includes all the important elements of the
contract such as offer, acceptance, consideration, intention to create legal relations, and capacity.
If any one element is missing from the agreement then such contract is not a valid contract.
Offer is the statement of readiness or promise made by one party to the contract known as offeror
to the other party of the contract known as offeree, if offeree shows willingness to do or not do
any act. It is necessary for the valid contract that party made the valid offer, because if offer is
not valid then such contract is not binding on the parties. Offer can be made by the offeror in any
form, as no specific manner is decided by the law for the purpose of making the offer. Following
are the rules which govern the validity of the offer, which means, for making the valid offer,
offeror must complied with these rules:
 Communication related to the offer must be given by the offeror to the offeree.
 Offer must be clear in nature, which means, there must not be any confusion in the offer.
 Offeror can make the offer to either single person or whole world (Consult Australia,
2012).
Cancellation of offer: these are the most important provisions related to the offer, because there
are number of situations in which offer is considered as cancelled offer. It must be noted that,
offeror holds the power to cancel the offer, but offeror can cancel it until the time it is not
accepted or approved by the person to whom such offer is directed. Following are some ways
through which offer made by offeror can be considered as cancelled offer:
First, offer can be cancelled by the person who made it (offeror) through the revocation.
Revocation is the method through which offer can be terminated by the offeror, but offeror must
remind that he/she can revoke it until the time it is not accepted by the offeree. Once offer is
accepted by the offeree then there is valid contract between the parties and offeror lost the power
to revoke/cancel it (Dickinson v Dodds (1876) 2 Ch. D. 463).
Ann writes the letter to the Jack in which she gives the offer of selling her car for amount of
$12000, and this letter (Letter 1) was posted by Ann to the Jack on 1st March. Ann further stated
in the letter that offer given by her is only valid until the date of 7th March. Later, she realized
that she is not any more interested in selling her car, and then she wrote another letter (letter 2) to

Contract Law 2
the jack in which she revokes the offer given by her in the letter posted on 1st march. She posted
this another letter on 2nd March.
However, offeror can also terminates the offer any time, and this can be done in that case also
when he/she announced to open the offer until the particular date. Revocation of the offer is fall
in the discretion of the offeror, but such discretion must be used only before the time it is
accepted by the offeree. For making the revocation effective, it must be communicated to the
offeree; otherwise revocation of offer is considered as invalid.
Second, offer can be terminated by the offeree also, and such termination is divided into two
ways that are rejection of the offer and counter offer. First way that is rejection of the offer, in
which offeree rejects the offer made by the offeror. It must be noted that, it is not possible for the
offeree to accept the offer if such offer is once rejected by the offeree. On the other hand, offeree
can reject the offer made by the offeror by making the new offer. In other words, offeree can
accept the original offer by making modifications in the terms of that offer. If offeree provides
his acceptance to the offer made by the offeror in context of those terms which are not exactly
same as the original offer, then such offer is called as counter offer. Offer with modified terms is
considered as the counter offer, even though modification is very small.
Hyde v Wrench, (1840) Beav 334 is the case law which can be used to understand this concept
of the counter offer. In this case, Court highlights the concept of the counter offer. As per this
case, there was no valid contract exists between the plaintiff and defendant, because instead of
accepting the original offer, plaintiff made the new offer to the defendant for purchasing thee
land for $950. This new offer made by plaintiff was known as counter offer because in this
plaintiff fails to accept the original offer.
Court further stated that, once the original offer was rejected by the offeree by making the
counter offer, then it was not possible for the offeree to accept the offer. In this case, no valid
contract was exists between the parties.
Jack made the counter offer by accepting the original offer with the modified terms. As per the
law, offeree made the counter offer if he/she accepts the original offer by making modifications
in the terms of that offer. If offeree provides his acceptance to the offer made by the offeror in
context of those terms which are not exactly same as the original offer, then such offer is called
as counter offer. Offer with modified terms is considered as the counter offer, even though
modification is very small.
In this case, decision of the Hyde v Wrench will implement, and as per this case, there was no
valid contract exists between the plaintiff and defendant, because instead of accepting the
original offer, plaintiff made the new offer to the defendant for purchasing thee land for $950.
This new offer made by plaintiff was known as counter offer because in this plaintiff fails to
accept the original offer. In the similar manner, in the present case also, Jack made the offer to
make payment in instalments and this is considered as the new offer because he change the terms

Contract Law 3
of the offer made by the Ann. This new offer automatically rejects the original offer made by the
Ann in Letter 1, and once the offer is rejected it cannot be accepted by the offeree. Jack made the
Therefore, second letter posted by Jack in which he accept the original offer is not valid.
It must be noted that, counter offer automatically cancels the original offer made by the offeror,
and as per the general rule once offer is rejected by the offeree then offeree cannot accept the
offer. In other words, original offer cannot revive by the offeree if such permission is not
provided by the offeror.
After considering the different provisions it can be said that acceptance given by the offeree is
considered as the invalid acceptance if such acceptance was not given on the exact terms of the
original offer. Kennedy v. Lee (3 Mer. 454), is the perfect example of this statement, and as per
this case, offeree cannot accept the offer given by the offeror until such offer was un-subsisted
by the defendant.
Counter offer is also called the mirror rule which states that acceptance given in context of the
offer must reproduce the terms related to the original offer.
Jack receives the Letter 1 in which Ann gives the offer to sell her car on March 3, and in reply to
this letter, Jack posted his acceptance. In letter of acceptance, Jack stated that he requested the
Ann to accept the payment of $12000 in instalments of $1000 every month. This letter of
acceptance is received by the offeror that is Ann on March 4. This letter of acceptance is posted
by Jack on 3rd March that is on same day on which he receives the letter 1 at 2:00 A.M.
On the same day, Jack’s uncle sends him the cheque of $ 16000 and he receives this cheque after
posting the acceptance letter. After receiving the cheque, he send another letter to the Ann in
which he accept the original offer given by Ann on the same terms and conditions of the original
offer.
Later, jack receives the Letter 2 posted by Ann in which she revokes the offer made to the Jack
in the Letter 1.
In the present case, provisions of the offer and acceptance will applied and as per these
provisions, once the offer is rejected by the offeree then it is not possible for the offeree to accept
the offer again. In this, Jack already rejects the offer made by the Ann by making the counter
offer. Jack made the counter offer in the letter of acceptance posted by Jack on 3rd March.
Above stated rules and implementation clearly stated that Jack and Ann are not contracting
parties because no contract is present between the two.

Contract Law 4
Answer 2
The main issue in this case is whether exclusion clause imprinted by Qualal motors on the back
of the towing machine is valid or not, and whether Batty holds any right to file claim against the
Qualal motors for the injuries suffered by her?
Contracts terms are those elements of the contract which identify the powers and obligations of
the contracting parties and through these terms only court resolve the issues occurred between
the parties to the contract. There are two types of terms related to the contract and these terms are
express terms and implied terms. Both the terms consider the power and obligations of the
parties related to the contract.
It is necessary for the contracting parties to incorporate their discussion in the contract in the
form of terms. In other words, negotiations occurred between the parties of the contract is
incorporated as the term in the contract signed between the parties. Those terms which are
expressly stated under the contract are known as the express terms and those terms which are
imposed by the statute are known as the implied term.
Exclusion clause is one of these terms, as it is the clause through which one party related to the
contract exclude their liability in any particular situation or all situations occurred in that
contract. In other words, one party of the contract incorporate exclusion clause under the contract
signed between the parties for the purpose of excluding their liability in terms of that contract.
There are some important elements which must be considered by the party while incorporating
the exclusion clause under the contract, unless such clause is considered as the invalid clause.
This can be understood with the help of case law White v Blackmore [1972] 3 WLR 296.
Exclusion clause is also known as the limited liability clause, and in Australia, this clause is
governed by both contract law and by Competition and Consumer Act 2010. These clauses are
effective if it complied with all the provisions of these law or if they does not breach any
provisions of these laws.
This clause is effective in nature if it is incorporated in proper way in the contract signed
between the parties, which means, clause is only effective, if it is properly incorporates into the
contract, otherwise clause is not valid in nature.
It is the obligation of the party who wants to rely on the exclusion clause to bring the clause in
the notice of the party against whom such clause is used. This can be understood through the
case law Thompson v LMS Railway [1930] 1 KB 41. In this case, plaintiff was not able to read
and because of this he gave her niece money for the purpose of purchasing the excursion ticket.

Contract Law 5
on the front side of the ticket was printed "Excursion, For Conditions see back"; and on the back
side of the ticket, there were number of conditions stated in which one of the condition stated
that excursion ticketholders does not hold any right to take action against the company in terms
of the any injury caused to the ticketholder. Later, plaintiff stepped out of the train and gets
injured.
The main issue in this case before the court was whether the defendants had taken the reasonable
steps for the purpose of bringing the condition to the notice of the plaintiff. In this case, court
held that defendant does not own any duty towards the plaintiff because they bring the condition
in the notice of the plaintiff by highlighting about the conditions and exclusion clause on the
front side of the ticket. Therefore, in this case, Court held that it was not relevant on the part of
the plaintiff to not read the conditions of the excursion ticket, and plaintiff does not hold any
right to claim against the company.
In the present case, there is agreement between the batty and employee of the Qualal motors, as
agreement is verbal in nature but still employee is under obligation to tell the Batty about the
exclusion clause.
It must be noted that, there must be proper incorporation of the exclusion clause, which means,
clause must be incorporated in such manner as it comes into the notice of the reader.
Batty is not aware about the exclusion clause before entering into the transaction with the Qualal
motors, ad such clause is not notified to the Battty by the employee of the Qualal motors. Batty
entered into the transaction at the time when she agreed on the advice given by the employee off
the Qualal motors and at that time, contract created between the parties.
In this case, provisions of the exclusion clause will be applied, and as per these provisions
clause is effective in nature if it is incorporated in proper way in the contract occurred between
the parties, which means, clause is only effective, if it is properly incorporates into the contract,
otherwise clause is not valid in nature. It is the obligation of the party who wants to rely on the
exclusion clause to bring the clause in the notice of the party against whom such clause is used.
It must be noted that, there must be proper incorporation of the exclusion clause, which means,
clause must be incorporated in such manner as it comes into the notice of the reader. In case law,
McCutcheon v MacBrayne [1964] 1 WLR 125, exclusion was printed between the 27
paragraphs and in the small fonts. Court stated that in this case, exclusion was not incorporated
in the document in the proper manner. Therefore, in this case consistency of dealing was not
present, because of which there is no course of conduct.
In the present case, employee of the Qualal motors fails to bring the exclusion clause stated on
the back of the towing machine in the notice of the Batty, such clause is not incorporated in
proper manner. Therefore, Qualal motors cannot rely on the exclusion clause because they fail to

Contract Law 6
bring the exclusion clause in the notice of the Batty, and also fails to incorporate the clause in the
proper manner.
In this case, Batty can file claim against the Qualal motors for the purpose causing injury and
damage while towing her car.
In this case, batty holds the right to file case against the Qualal motors and take amount from
them in context of her injury and damage to her car.
References:
ACL. Agreement. Available at: https://www.australiancontractlaw.com/law/formation-
agreement.html. Accessed on 20th July 2018.
ACL. Hyde v Wrench, (1840) Beav 334. Available at:
https://www.australiancontractlaw.com/cases/hyde.html. Accessed on 20th July 2018.
ACL. Unfair contract terms. Available at:
https://www.cbs.sa.gov.au/assets/files/unfair_contract_Guide_ACL.pdf. Accessed on 20th July
2018.

Contract Law 7
Arts law. Exclusion clauses, disclaimers and risk warnings. Available at:
https://www.artslaw.com.au/images/uploads/Exclusion_clauses_disclaimers_and_risk_warnings
_December2014.pdf. Accessed on 20th July 2018.
Bristow, G. Exclusion Clauses - Drawing The Line. Available at:
http://classic.austlii.edu.au/au/journals/MacarthurLawRw/1998/1.pdf. Accessed on 17th July
2018.
Consult Australia, (2012). Australian contract law. Available at:
https://nerdyturtlez.com/tutor/order.php?id=773305. Accessed on 17th July 2018.
Dickinson v Dodds (1876) 2 Ch. D. 463
Hyde v Wrench, (1840) Beav 334,
Kennedy v. Lee (3 Mer. 454),
Legal Service Commission. Exclusion Clause. Available at:
https://www.lawhandbook.sa.gov.au/ch10s02s06.php. Accessed on 17th July 2018.
Thompson v LMS Railway [1930] 1 KB 41
McCutcheon v MacBrayne [1964] 1 WLR 125.
White v Blackmore [1972] 3 WLR 296.