Enactment of Valid Agreement and Contract in Business Law

BUSINESS LAW
Contract Act
STUDENT ID:
[Pick the date]

Question 1
Issue
The central issue is to determine with whom Frank has enacted an agreement based on the
given case facts.
Rule
The two main aspects for the enactment of a valid agreement are the presence of lawful offer
and acceptance with valid consideration. It is essential that the offeror should highlight valid
offer to the offeree for the acceptance as highlighted in the verdict of Australian Woollen
Mills v The Commonwealth (1954) 92CLR 424. Also, an acceptance would be termed as
valid acceptance only when it has been communicated to the offeror within the given ambit
of time or as per the instruction given by the offeror (Carter, 2012). No enforceable contract
would be enacted between the parties when the valid acceptance for offer has not been
communicated. It is noteworthy that where electronic mode of communication (mail, fax and
so forth) is used for the negotiation of the contract then it is essential that acceptance for the
offer would be enforceable on the offeror only when the mail has been opened by the offeror
(Andrews, 2013). Also, it is imperative for an enforceable contract that when the offeror has
received the valid acceptance for the object for which the offer has been made, then the
offeror cannot reaccept another acceptance for the same offer (object) (McKendrick, 2013).
In case when the offeror has put an advertisement to sell their product or service then it is
imperative to distinguish whether the advertisement would be categorised as invitation treat
or offer.
Invitation to treat is also known as invitation to bargain in which the person who has posted
an advertisement has invited the parties to bring their offers for the negotiation. In such cases,
the person who is advertising is not bounded to sell their product even if the parties have
made offers that fit the advertisement requirement. The verdict of Partridge v Crittenden
[1968] 1 WLR 1204 is the evidence of this aspect (Gibson and Fraser, 2014). According to
the judgement of this case, defendant who put the advertisement for the sale of protected
birds in the newspaper was not contractually obliged to sell particular birds only. It means he
would have the right to sell more goods than the person would actually have. In this scenario,
the person who has put an advertisement has all the rights to do negotiation with the various
offeror and can decide whom he is going to enter into legal relationship. According to the

verdict announced in GB v Boots Cash Chemists Ltd [1953] case, the display of goods for
sale would be categorised under invitation treat and not offer (Davenport and Parker, 2014).
Application
It is evident from the above facts that the sign put by Frank on the shop’s window to sell car
for price $2,000 is an advertisement and also he invites parties to come up with offer and
therefore, it can be said that the sign is invitation treat not offer.
(a) It can be seen that Bill has offered Frank a consideration price of $1,600 for the car.
This offer has not been accepted by Frank because he has not given any acceptance
for Bill’s offer. Therefore, no contract has been enacted between Bill and Frank.
(b) In second case, Mark has offered a price of $1,950 for the car and hence, has posted a
cheque to the name of Frank. Further, it is evident that when Frank has received the
offer of Mark then he went to the bank and has deposited the cheque. This is the
indication of the aspect that Frank has accepted the offer of Mark and then only he has
deposited the cheque to the bank. If Frank has not accepted the offer of Mark, then he
must send back the cheque to Mark. Yes, it can be said that Frank has the right to
reject the offer of Mark by sending the cheque back to Mark. This is because
advertisement was invitation to treat and Frank has position to reject the offer of
Mark. Therefore, the conclusion can be made that Frank and Mark have entered into
an enforceable contract.
(c) John has sent an email to Frank regarding the advertisement that he is ready to pay
$2,000 for car. It is apparent that Frank has not seen the mail before and already been
entered into enforceable contract with Mark and therefore, the object for the contract
has not been available. Hence, Frank cannot accept the offer of John and no contract
would be formed between John and Frank.
(d) It is apparent that Frank has clearly stated to Tom that he would consider his offer of
selling his car for $1,700 only when he would not get any better option. However,
Frank has accepted the offer of Mark and enacted a contract with him. Therefore, no
contract is enacted between Tom and Frank.
Conclusion