Business Law: Contract Law, Auctions, and Legal Implications

This assignment analyzes a business law case study involving Lee Auctioneers and Mrs. Grace Richards, focusing on contract law principles. It examines the formation of contracts, distinguishing between offers and invitations to treat, particularly in the context of property auctions. The essay explores the legal implications of bids, reserve prices, and the circumstances under which a contract can be terminated or become unenforceable. The assignment provides advice to the client regarding potential court rulings, emphasizing the importance of accepting the highest bid when a reserve price is met. The paper also discusses the factors that can influence a court's interpretation of an invitation to treat and the conditions under which a contract can be terminated. The conclusion emphasizes the legal obligations of the auctioneer to accept the bid when the reserve price is met, highlighting potential legal consequences for non-compliance.

BUSINESS LAW

TABLE OF CONTENTS
1. Way in which contract law is made.............................................................................................1
2. Difference between an offer and an invitation to treat................................................................1
3. Offer and acceptance position when buying a property..............................................................1
4. Factors which would have persuaded the court that there was an invitation to treat..................2
5. Conditions under which client can terminate a contract..............................................................2
6. Under what circumstance the contract could become unenforceable..........................................2
7. Advice to client what could be the court’s ruling........................................................................3
REREFENCES................................................................................................................................4

INTRODUCTION
This assignment is based on a case study of a case between Lee Auctioneers Vs Mrs Grace
Richards. In which Lee Auctioneers put a studio flat for sale at auction, subject to reserve. Mrs
Grace Richards made a bid for £210 000, which was the highest bid but Lee Auctioneers did not
accept the bid and Mrs. Grace Richards claimed that a legally binding had been entered when she
made a highest bid and Lee Auctioneers need to accept the bid.
1. Way in which contract law is made
There are certain basic rules of contract law that are required to be focused on when a legal
contract is made. There are certain elements of contract that are required to be considered when a
contract is made such as: acceptance, offer, considerations, intention to create legal relation,
content (Cordella and Gualdi, 2019). When resource exchange increases and there is a
requirement of parties to agree on a common point and are required to be assured then for such
cases contract law was made. Contract law is a common body of making and enforcing
agreements. It helps in making sure that parties to a transaction are clear on their terms. A valid
contract consists of four parts: first is offer which is made by a party who is offering to other
party. Party offering is required to indicate all the terms and conditions on the basis of which
offer will be given to the other party. Other party is required to accept terms of the party. Second
is acceptance which helps in making a contract complete. Party that accepts a contract is required
to accept all the terms of original offer. They must make sure that the other party knows it. Third
is consideration i.e. both the parties are required to give something up. For example, is one party
is offering a product then the other party is required to pay for it. Last is mutual intention to enter
into an agreement i.e. both the parties must intend to enter into a contract.
2. Difference between an offer and an invitation to treat
An offer is statement of terms which offeror is prepared to bound contractually. Offer
made by offeror should be complete, specific and capable of being accepted by the acceptor. It
includes terms and conditions of agreement with an intention that no longer negotiation will take
place (Nickerson, 2018). For example: when an auction takes place, each bid is an offer which is
then accepted by the auctioneer. An offer can be revoked or withdrawn any time prior to
acceptance provided there has been a communication between client and contractor. Whereas,
invitation to treat is completely different from offer as it only initiates ap party to make an offer
it is not intended to binding. In this, offers from people comes, negotiation on terms is done on
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the basis of which contract will be created. In this it is not essential to make an agreement. It
becomes an offer when responded by the party to whom it is made.
3. Offer and acceptance position when buying a property
When auction of each bid is considered as an offer. property is done or selling of a
property is done. If a reserve price to the property is set then the highest price bid by the acceptor
is an offer i.e. whenever they meet the criteria of reserve price and bid the highest price, they are
in a position to make an offer and in a position to buy property. When all the basic required
criteria and reserve price of a property are meet then in such condition offeror is in position of
accepting the highest bid (Liu, Mulherin and Brown, 2018). If the offeror accepts the highest bid
of property then they are even in a stronger accepting position and need to sell the property.
4. Factors which would have persuaded the court that there was an invitation
to treat
Invitation to treat is a stage just before an offer is made. There are various factors that can
persuade a court to understand that it was an invitation to treat. Initially court use to assume that
call for bids is usually an invitation to treat till the offeror does not accept it. But today there is
only one circumstance in which bidding is an invitation to treat in which the seller can choose
from bids or till they accept the bid but at the moment seller declares that there is a reserve price
and it has been met it becomes an offer which will be accepted by the highest bidder.
5. Conditions under which client can terminate a contract
Conditions under which client can terminate a contract are:
 When client send the notice of revocation to the offeree before they accept the bid. The
offeror at an action has a right to withdraw the bid but before it is accepted (Olldashi and
Hoxha, 2019).
 If client has set some conditions for the auction and those conditions are not fulfilled then in
such case they can terminate the contract like reserve price set by the client was not met then
in such case they could have terminated the contract.
 An offer can be rejected by the offeror when offeree makes a counter offer. If had initially
offered a price below their reserve price but afterwards she bid highest price for the bid then
in such case client can terminate the contract because the first offer was already rejected by
the offeree.
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6. Under what circumstance the contract could become unenforceable
If the transaction is under statute of fraud in such case contract can become
unenforceable, until and unless writing is done or signed by the auctioneer. Other than this
condition of the contract becomes invalid or illegal then in such case contract can become
unenforceable (Price, 2019). In such cases parties should either negotiate or modification in the
contract terms and conditions should be made.
7. Advice to client what could be the court’s ruling
Client had conducted an action on subject of reserve i.e. they had set a reserve price for
their property. Mrs Grace Richards highest bid fulfilled their reserve price condition and a
legally binding offer was made. It was mandatory for Lee Auctioneers to accept the bid sell their
property in the highest bid made by Mrs Grace Richards, they cannot cancel the offer or it can
also be said that it was mandatory for them to accept the offer. But not doing so, as per the court
ruling then in such cases it may be fraud or even criminal in nature as it is considered as defect in
validity of the auction.
CONCLUSION
From the above assignment it has been concluded that it is mandatory for Lee
Auctioneers to accept the bid as the auction was based on action on subject of reserve and if they
do not accept this bid then a fraud case can be filed against them.
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REREFENCES
Books and Journals
Cordella, A. and Gualdi, F., 2019, June. Law, Technology and Policies: A Complex Negotiation
To Generate Value. In Proceedings of the 2019 3rd International Conference on E-
commerce, E-Business and E-Government (pp. 21-28).
Liu, T., Mulherin, J.H. and Brown, W.O., 2018. The development of the takeover auction
process: The evolution of property rights in the modern wild west. Available at SSRN
3112724.
Nickerson, J., 2018. Auction terms and conditions reviewed. REIQ Journal, (Jul 2018), p.22.
Olldashi, E. and Hoxha, R., 2019. Albanian Legislation on Restitution of Property Confiscated
During the Communist Regime: Its Structural Inconsistencies and a Negative Social
Perspective for Achieving an Effective Domestic Remedy. Proceedings Book, p.42.
Price, G., 2019. 1. THE AUCTION.
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