Contract Law: Validity of Consideration

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Contents
Solution 1............................................................................................................................. 2
A........................................................................................................................................ 2
Issue................................................................................................................................. 2
Applicable law.................................................................................................................... 2
Application of Law............................................................................................................... 3
Conclusion......................................................................................................................... 4
B........................................................................................................................................ 4
Issue................................................................................................................................. 4
Applicable law.................................................................................................................... 4
Application of Law............................................................................................................... 5
Conclusion......................................................................................................................... 6
Solution 2............................................................................................................................. 6
Bibliography.......................................................................................................................... 9
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Solution 1
A
Issue
Whether Magda and Avinash had a valid contract?
Applicable law
When any two parties to the contract wants to enter into any contractual relationship, then, the
main contractual elements includes:
I. Offer – An offer is the proposal made by an offeror to an offeree communicating his
desires with a hope of approval1.2
When offers are invited with the help of advertisement then it is an invitation to
treat and is held in Partridge v Crittenden3. Offer are made to the inviter who when
accepts results in contract.
An offer can be revoked before the same is accepted in law and is held in Byrne v
Van Tienhoven4 and must be communicated to the offeree.
If an offer is remained open for some time then it is an open offer. The open offer is
binding provided it is supported with value (consideration) and is held in Dickinson
v Dodds5.
II. Acceptance – When the offeree confirms the offer then it is an acceptance.
If the offer is not accepted but the terms of offer are changed and then accepted then
it is counter offer which cancels the original offer. The new counter offer is the new
offer and is held in Hyde v Wrench6.
III. Consideration – Anything of value which is required to support the offer and
acceptance in order to make them enforceable in law and is held in Chappell & Co
Ltd v Nestle Co Ltd7.
IV. Legal intention – The parties must have legal intent to bind by the contract and
enforce in law8.
V. Capacity - The parties should be of sound mind and must be major9.
1 Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256.
2 Paul Latimer. 2011. Australian Business Law 2012. CCH Australia Limited.
3 Partridge v Crittenden [1968] 1 WLR 1204.
4 Byrne v Van Tienhoven (1880) LR 5 CPD 344.
5 Dickinson v Dodds (1876) 2 Ch.
6 Hyde v Wrench (1840) Beav 334.
7 Chappell & Co Ltd v Nestle Co Ltd [1960] AC 87.
8 Balfour v Balfour [1919] 2 KB 571.
9 Nash v Inman [1908] 2 KB 1.
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Application of Law
The facts establishes that,
Magda is a professional photographer. She sells her prints through her website and also
through her studio.
One of the works category ‘Elite Sports’ was set out on the website where photographs of
limited edition, framed, photographic portraits are shown along with postage and
handling.
A notice is displayed on the website that the portraits are numbered and signed by Magda, and
are printed on archive quality, acid-free paper.
There was a portrait of Australian Olympic champion, Paris Stilton for sale @ $2,000 on the
website with a description that it is ‘a limited edition of only 3 prints’. Only one was unsold.
It is submitted that an advertisement is not an offer but an invitation to sell. Thus, the portrait
by Magda on the website is an invitation to sell10.
On 19th February, Avinash has made an offer to buy the portrait for $1,600 by sending an email.
So, now a fresh offer is made which if accepted by Magda results in contract.
However, the offer of Avinash is not accepted by Magda rather she submits that she can sell the
same for $1800.
Thus, the Magda by changing the price of the portrait has made a counter offer which has
cancelled the offer of Avinash11.
The new offer that now stands is the new offer that is made by Magda, that is, for sale price of
$ 1800.
Now, Avinash finds the offer interesting but asks Magda to hold the offer till 21st February as
he needs to discuss the same with his wife. This was confirmed by Magda by sending an email
to Avinash.
It is submitted that an offer which is made by Magda was an open offer. However, in order to
hold the offer for Avinash till 21st, it is necessary that the same must be supported with some
kind of consideration.
However, Avinash has not paid any consideration to keep the offer remain open for him till
21st.
10 Partridge v Crittenden [1968] 1 WLR 1204.
11 Hyde v Wrench (1840) Beav 334
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