Formation of a Valid Contract and Exclusion Clause in Business Law

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Business Law

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Part A
Issue
Whether a valid contract has formed between Rachel and ChunkyChicken by fulfilling all the
essential elements of the contract?
Law
A contract is referred to a legal agreement which his formed between two or more parties.
This agreement gives them the right to enforce the contractual terms on each other. The
terms of the contracts bind its parties, and they have to comply with its terms. However,
this right is available only in case a valid contract is formed between the parties. A valid
contract is formed when its parties fulfil all the essential elements of the contract. These
elements include offer, acceptance, capacity, legality, intention and consideration.1 Firstly,
an offer is made to form a contract which is referred to a proposal or proposition which
gives rise to an agreement between parties after receiving acceptance. It can be expressed
or implied, and it must be clear and unambiguous. An offer can be revoked by a party at any
time before its acceptance unless it is supported by consideration as given in the case of
Goldsborough Mort & Co Ltd v Quinn2.
Moreover, it is important that parties must differentiate between offer and an invitation to
treat. Certain examples of invitation to treat include broacher, advertisement and display of
goods for sale. In Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern)
Ltd3 case, it was held by the court that goods which are displayed on shelf for the sale of
customers are not considered as a valid offer instead it is considered as an invitation to
treat.4 A valid acceptance is another key element of the contract which is referred to clear
and undoubted assent to the offer to comply with all of its terms. Certain rules must be
fulfilled in order to constitute acceptance as valid. It must be clear and undoubted and must
be communicated. It must be given with appropriate knowledge, and the party must use
correct method while communicating acceptance.
1 David Parker and Gerald Box, Business law for business students (Lawbook Co., 2013).
2 (1910) 10 CLR 674
3 [1952] 2 QB 795
4 Andrew Burrows, A casebook on contract (Bloomsbury Publishing, 2013).

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The acceptance must be free from any condition, and it must be given for all the terms of
the offer in order to constitute as valid as given in Hyde v Wrench5 case. Consideration is
another key element of a valid contract. It is referred to the price for which the promise of
another party is brought which makes the contract legally enforceable. It is the bargain of
the contract in which one party’s gain is another party’s detriment. Consideration must be
present in all simple contracts, and it must not be vague or illusionary as given in White v
Bluett6 case.7 The consideration must be sufficient in the eyes of the law as given in the case
of Hercules Motors Pty Ltd v Schubert8.
Application
In the given scenario, ChunkyChicken has implemented a self-service facility for its
customers where they can select what they want to order by clicking on the image or icon of
the product. The display of these products are not a valid offer, instead, they are invitation
to treat. As discussed in Pharmaceutical Society of Great Britain v Boots Cash Chemists
(Southern) Ltd case, the items which are displayed by the show on the shelf are not
considered as available for sale. Similarly, showing the items of the display is not a valid
offer; instead, it is an invitation to treat. The customers who wanted to purchase something
can make an offer by clicking on the screen to place their order. Rachel made an offer to
purchase the new gourmet chunkier chicken burger and hand cut chips in the screen, and
this offer was accepted by ChunkyChicken when a printed ticket was issued immediately in
which an order number and price is given which matched the terms of the offer made by
Rachel (Hyde v Wrench).
However, a valid contract has not formed between the parties at the movement because
the element of consideration is missing which is a key element to form a valid contract. The
consideration is paid by Rachael to the cashier when she paid $17.50 for the burger. The
consideration paid by her was not vague or illusionary, and it was sufficient for the product
purchased by Rachel, hence, it was a valid consideration (White v Bluett). The consideration
paid by Rachel for the burger was sufficient in the eyes of the law (Hercules Motors Pty Ltd v
Schubert). Thus, a contract is formed between Rachel and ChunkyChicken when a payment
5 (1840) 49 ER 132
6 (1853) 23 LJ 23 Ex
7 Chris Monaghan and Nicola Monaghan, Beginning Contract Law (Routledge, 2013).
8 (1953) 53 SR (NSW) 301