Business Law: Contract Formation and Online Agreement Analysis

This report examines the principles of contract formation within the context of business law, specifically addressing scenarios involving postal and online agreements. The analysis utilizes the I-R-A-C method (Issue, Rule, Application, Conclusion) to dissect a case study involving contract revocation and adherence to legal procedures. The report delves into the intricacies of Australian postal regulations and the Electronic Transactions Act, clarifying rules around offer, acceptance, and the timing of communications. It highlights the importance of unambiguous consent in online contracts and discusses the legal implications of modifications to agreements. The report draws parallels with the case of Adams v Lindsell, emphasizing the significance of the postal rule and the timing of acceptance. The conclusion underscores that revocation of an offer must be received before acceptance to be effective, and that the offeree's actions are considered binding once the acceptance letter is posted. The report references key legal texts and journals to support its arguments.

Business Law

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY ..................................................................................................................................1
Issue :..........................................................................................................................................1
Rule :...........................................................................................................................................1
Application :................................................................................................................................3
Conclusion :................................................................................................................................3
REFRENCES...................................................................................................................................4

INTRODUCTION
Contract is a formal promise between two parties that is legally enforceable on the basis
of specific terms and conditions. Along with this, if the contract get violated then legitimate
bodies allow the injured person to access the suitable legal remedies. However, assignment is
going to highlight an appropriate procedure of forming contract through post. In fact, focussing
on major elements of agreement which is based on online and sending offer or acceptance
through e-mail as well as post (Besley, 2015). Basically, contract of Arthur and Ben will
properly outlined in this project with the help of I-R-A-C method.
MAIN BODY
Issue :
According to the given case of Arthur advertises, there are mainly two issue which is
identified in this case; one is revocation of the contract by Ben and online agreement have some
rules as well regulation which is not followed by the Arthur and Ben. Hence, revocation of
contract and legal procedure is not followed is the problem come out from the given case.
Rule :
In the given case contract is done by the post through letter which is valid in the eyes of
Australian law (Law, 2016). There are several rules these need to be followed by the Arthur and
Ben while doing contract through letter. Description of these rules and regulation is mention
below :-
Withdrawal of acceptance by post – It must be noted that the Australian Postal
Regulations enable an individual who has posted a letter for recovering it, provided that reasons
for recovery are satisfactory and the person can put claim against it in written. The National
Credit code is a statutory modification to the general postal rule. Schedule 1, s 196(1) (b), of the
National Consumer Credit Protection Act 2009 (Cth) provides that documents which is sended
through post is related to the consumer credit will be well thought out to be given on the date
when it would have been delivered in the ordinary course of post (Loafman and Altman, 2014).
Although, once the offeree accepted the offer, then agreement is binding on the parties until they
both get mutual consent to release each other.

Electronic offer and acceptance – Agreement take place through electronic process then
there is process of it which is not followed by the Ben. This is the major issue because of which
breach of contract take place. Description of this are as follows :-
 Email, internet and contract formation – Australia's adoption of the United Nations
Convention on the use of Electronic Communications in International Contract (2005), in
2011 the Commonwealth passed the Electronic Transactions Amendment Act 2011 (Cth).
The electronic transactions act clarifies the rules and regulation: on the formation of
contract is there any error in electronic communication (s 15D), on the invitation of
treatment (s 15B), related to the location of party (s 15A), place of dispatch as well place
of receipt (s 14B), timing of receipt (s 14A) and on the updation of electronic signature
provision and default rules for time of dispatch (s 14) (Posner, 2014).
Whereas, Electronic transaction Act provides times for receipt (s 14A) and dispatch (s 14).
moreover, acceptance by email was capable of creating legal relation under the Electronic
Transaction Act 1999 (Cth), ss 4, 8(1) as well as parties had reached a binding agreement.
Contract is formed only when offerer received the offerer's acceptance at the server they had
stipulated. In the case of online contract, s 15B provides that a proposal to form a agreement,
rather than an proposal addressed to the particular person, is taken as an invitation to treat, unless
the contrary intention can be shown clearly by the proposal making person (Brown, 2015). This
is similar as the position at common law in which offerer who is inviting the formation of offers
and further negotiations is not bound unless the price offered by the customer is accepted.
According to the section 15B (2) state that, proposal using interactive applications for placing an
order is consider invitation to treat.
 Formation of a contract online – Online contract only take place when purchaser accepts
the terms and condition of the seller by clicking on the accept, agree or buy button. For
ensuring unambiguous consent, most sellers need purchaser for modifying default setting
from not agree to accept or agree. Moreover, if no natural person reviews or interview in
formation of offer and acceptance then it will not form a valid contract under s 15C.
Hence, these rules are not followed by the Arthur and Ben while doing contract through
post (Allen and Kraakman, 2016). After doing agreement, Ben made modification in the existing
contract which is not valid because of this issues rise between Arthur and Ben.

Application :
According to the given case study, an appropriate process of forming contract is not
followed by both the parties which are involved in an agreement. Due to which, elements of
contract done through post needs to apply in entire situation. As in this case, on 1st February
Arthur advertise his computer for sale in the newspaper which contain all the information. Ben is
the person who read that advertisement on 2nd February, then he post an offer for purchasing the
computer in $2000. letter in which Ben shown interest of buying computer is received by the
Arthur on the 4th February. After this, on 5th February, Arthur send letter to Ben in which mode
of payment is asked by him i.e., cash or cheque. On next day Ben given reply to the letter in
which it is written that mode of payment will be cash on delivery as well this letter is received by
the Arthur on 8th February. After this, on 10th February at 2pm, Arthur send letter to Ben stating
that he is agree for selling his computer in $2000 COD. Respective letter is reached to the Ben at
3pm on 11th February but on 9th February there is some modification in the contract which is
made by Ben i.e., he want to purchase the computer in $1800 and this letter is sended by him to
Arthur on 9th February at 1pm. This letter is received by the Arthur on 10th February at 4pm.
One of the most resemble example of the Arthur case is; Adams in which same problem
is identified (Adams V Lindsell (1818) 106 ER 250). this case was presented in court of King's
Bench, description of the case: an offer for selling good was posted on 2nd September, requesting
a reply by the return of post. However, the letter was not correctly addressed and not reached to
the offeree until 5th September. But he accept it by the post on the same day, but letter was not
reached till 9th September to offeror. It was two days later than the defendants would have
expected to received it. Since the offer had not heard anything by &th September, the date on
which reply could been expected if the letter was addressed correctly (Halliday and Shaffer,
2015). Defendant sold product to the third party on 8th September and offeree sued for breach of
contract. Issue in this case is to identify when was the contract concluded on the posting or on
receipt. But decision is that acceptance took place on 5th September when the letter of acceptance
is posted. The offerer's make mistake which was held against him in this instance.
Conclusion :
From the above mention case it has been concluded that, if revocation of the offer is to be
effective, it must be received by the offerer is to be effectual, thus it should be received by the
offere before they the posting of acceptance letter. Although, the offere receive notification of

the revocation of offer is not related as long as it was not clear that offerer has withdrawn the
offer and this notice has arrived before the acceptance can take place. Same as in the case on
Arthur and Ben, revocation of contract take place that firstly Ben want to purchase computer in
$2000 but after some time modification in made by him in the agreement is that he will purchase
it in $1800 and it was not clear by the Arthur because of delay in posting of letter.

REFRENCES
Books and Journal
Halliday, T. C. and Shaffer, G. eds., 2015. Transnational legal orders. Cambridge University
Press.
Allen, W. T. and Kraakman, R., 2016. Commentaries and cases on the law of business
organization. Wolters Kluwer law & business.
Posner, R. A., 2014. Economic analysis of law. Wolters Kluwer Law & Business.
Loafman, L. and Altman, B.W., 2014. Going online: Building your business law course using the
Quality Matters Rubric.Journal of Legal Studies Education. 31(1). pp.21-54.
Law, J. ed., 2016. A dictionary of business and management. Oxford University Press.
Besley, T., 2015. Law, regulation, and the business climate: The nature and influence of the
World Bank Doing Business project. Journal of Economic Perspectives. 29(3). pp.99-
120.
Brown, J. R., 2015. The demythification of the board of directors. American Business Law
Journal. 52(1). pp.131-200.