Termination of Contract and Legal Issues

Title Page
Student name
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Contents
Solution 1.........................................................................................................................................3
Area of law...................................................................................................................................3
Legal rules....................................................................................................................................3
Application of the legal rules to the factual problem...................................................................3
Conclusion...................................................................................................................................5
Solution 2.........................................................................................................................................5
Area of law...................................................................................................................................5
Legal rules....................................................................................................................................5
Application of the legal rules to the factual problem...................................................................6
Conclusion...................................................................................................................................8
Area of law...................................................................................................................................8
Legal rules....................................................................................................................................8
Application of the legal rules to the factual problem...................................................................9
Conclusion.................................................................................................................................10
Reference List................................................................................................................................11

Solution 1
Area of law
The law of contract – Offer, Acceptance, Counter Offer, Revocation
The main legal issue that arose was whether Robert has any contractual relationship with
Cameron?
Legal rules
An offer and an acceptance are the two contract ingredients which are required to initiate any
contractual relationship amid the parties.
An offer is an act carried on by an offeror wherein he conveys his terms to the offeree and
expects that the offeree will affirm to the same and is held in Smith v Hughes [1871]. An offer is
only considered to be binding when the offeree is in the knowledge of the offer and is held in
Felthouse v Bindley (1862). An offeree confirmation to the offer terms is considered to be an
acceptance in law and is held in Empirall Holdings v Machon (1988). An acceptance must be
made only after the offeree is in the knowledge of the offer. Any confirmation which is not in
response to the offer is no acceptance in law and is held in Carlill v. Carbolic Smoke Ball Co
(1891). Also, an acceptance must be communicated to the offeror. Silence is not an acceptable in
law and is held in Latec Finance Ltd v Knight (1969). (Latimer, 2012)
Further, an acceptance must be absolute and no changes must be made to the terms of the offer.
If the acceptance is made and variations are made to the terms of the offer, then, it is not an
acceptance and is called counter offer and is held in Stevenson Jaques& Co v McLean (1880).
Counter offer cancels the original offer and the counter offer so made is now considered to be the
new offer.
Application of the legal rules to the factual problem
As per the facts,
On 5th September, a letter is written by Robert and posted to Cameron wherein Robert offered
him to sell 50 metric tons of wheat at a price of $250 per metric tonne.
To start the contract, it is Robert who has taken the initiative and sends an offer letter to
Cameron on 5th September. The letter is received by Cameron before 7th September (as an

acceptance is send by Cameron on 7th September) and thus by applying the rule laid down in
Carlill v. Carbolic Smoke Ball Co the offer is considered to be completed as it comes in the
knowledge of the offeree, Cameron.
Now, there can be a concluded contract that can be established between the parties provided the
offer which is posted by Robert to Cameron is duly confirmed by Cameron without any
alterations,
On 7th September, a reply is posted by Cameron in response to the offer letter. In the letter
Cameron accepted the offer that is made by Robert, however, the acceptance was not absolute in
nature,. Rather, he included a term according to which if Cameron did not hear to the contrary he
would assume that the prince is inclusive of the delivery of the goods to the warehouse of
Cameron.
Now, as per Stevenson Jaques& Co v McLean, if Cameron would have inquired something or
have sought some sort of information then the acceptance would have been considered to be
absolute in nature. However, Cameron while accepting the offer of Robert brought a material
alteration to the terms of the offer by which he is considering the price to be inclusive of the
delivery to the warehouse charges.
Now, the acceptance that is made by Cameron is not an acceptance but is considered as a counter
offer and thus revoked the offer made by Robert on 5th September. So, the new offer that now
exists is the one made by Cameron on 7th September. Now, Robert is the new offeree.
It is now Robert who must accept the offer of Cameron in order to make a binding contract amid
the two.
However, before the new offer reaches Robert, he read a posting on the internet according to
which the price of the wheat was about to fall and thus he immediately sent an email to Cameron
wherein he stated that the price of the wheat is $250 and includes delivery.
It is now important to submit that the email that was sent by Robert to Cameron is not against the
offer that is made by Robert on 7th September. As per Empirall Holdings v Machon an
acceptance can only be made provided the offeree is in the knowledge of the offer. but, in the
present case, Robert was not in the knowledge of the offer when he sends the email. The mail