Business Law Report: Contractual Disputes and Agreements Analysis

This report analyzes two business law cases involving contractual disputes. The first case focuses on Robert and Cameron, examining the principles of offer and acceptance, particularly the postal rule, in the sale of wheat. The analysis considers the communication of offers, acceptances, and revocations via post and email, concluding that a valid contract was formed. The second case involves Robert and Super Supplies Ltd., where Robert faces losses due to the company's cancellation of a milk supply contract. The report investigates the importance of understanding contract terms, highlighting Robert's failure to review the agreement and the implications of clauses allowing contract cancellation. The analysis emphasizes the concept of self-deception and the consequences of not reading and negotiating contract terms. The report provides legal advice to Robert on both scenarios, suggesting recourse for breach of contract in the first case and explaining the limitations of his position in the second.

Running head: BUSINESS LAW
Business Law
Name of the Student
Name of the University
Author Note

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Question 1
Issue
To advise Robert regarding Cameron repeated acceptance and rejection of his offer
pertaining to the sale of 50 metric tons of wheat at $250 per metric tonne.
Rule
Offer and acceptance being the most significant element of a valid and binding
contract it must be communicated in writing, orally or by way of implication. The
communication of an offer is deemed to be complete when and the offeree comes to know
about it; while, an acceptance of an offer is completed when it reaches the offeror as per the
general rule of communication of acceptance. However, the postal rule holds certain other
view about the completion of the communication of an acceptance. As per the postal rule of
communication of acceptance depends or rather varies for different situation and also from an
offeror to the offeree (Hough and Kuhnel-Fitchen 2014.). In case of offeror, communication
of acceptance is held to be complete even when the post is still in transmission with the postal
authority. As soon as the offeree posts the letter, the communication of acceptance from the
offeror's side is said to be completed. In case of offeree, communication of acceptance is
constituted as complete as soon as the offeror gets to know it.
The purpose of considering the importance of communication of offer and acceptance
is to provide protection to the offeror and the offered who may otherwise land up in situations
where they would be made bound to fulfil contracts without their knowledge that their offer
has been accepted or rejected as held in Henthorn v Fraser [1892] 2 Ch 27. Instantaneous
method of acceptance like verbal communication or introduction through emails gives a
benefits that the communication of offer as well as acceptance is done instantaneous and the
offeror and the offeree gets the idea of each other’s intention to the agreement. However in
case of non-instantaneous method of acceptance like communication through post, it is

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considered that the offeree has accepted the offer as soon as he post his acceptance letter even
though it is still in transmission with the postal authority (Knapp, Crystal and Prince 2019).
As argued in Bressan v Squires [1974] 2 NSWLR 46, the postal rule is an exception
to the general rule where both the offer and the acceptance or either of them is sent by post.
The postal rule makes sure that the acceptance of the offer is complete as soon as it is posted
and not when it is received by the offeror. Therefore it implies that the acceptance by the
offeree becomes valid even before his letter of acceptance reaches the offeror. Such
acceptance is considered to be valid even when the letter of acceptance does not reach the
offeror ever. However postal rule does not work when the acceptance has been made by
instantaneous method of communication like email for telephonic conversation. It is
important to comply with the rules of communication of acceptance in cases where dispute
arises regarding the validity of an agreement and whether the parties to the agreement shall
be bound by it. Application
In the given case Robert had placed the initial offer of buying 50 metric tons of wheat
at $250 per metric tonne to Cameron by way of post on September 5 which reached Cameron
on September 7. Cameron posted reply on the same day saying that he accepts Robert’s offer;
however he made a query regarding the inclusion of the delivery price of the terms of wheat
to his warehouse. On the next day, that is on September 8 Robert received Cameron’s
acceptance letter and quickly checked the price of the wheat which was said to fall and
therefore Robert agreed to the $250 e along with delivery charges by way of an email. Email
being and instantaneous method of communication reached Cameron immediately which he
happily accepted Robert’s offer. However on finding the fact that the price of wheat would be
going down Cameron sent an email around midday on September 8, refused to accept
Robert’s offer.

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Here it can be clearly seen that the offer made by Robert through post was lawfully
accepted by Cameron also by way of post, although it included a query. Both the offer and
the initial acceptance was made by way of non-instantaneous mode of communication, even
though Cameron’s acceptance would not be considered as complete for it was coupled with a
query. On a later stage Robert answered Cameron’s query by way of an email to which
Cameron reverted back by way of posting a letter of acceptance. Here Robert choose the
instantaneous way to answer Cameron’s query which reached him immediately as sent.
While Cameron chose to make use of the non-instantaneous way of communication and
posted his final letter of acceptance immediately after receiving Robert’s email. Therefore
Cameron’s last acceptance of Robert’s offer by way of post would be considered to be final
and complete even though it is in transmission, therefore cancelling out his latest email to
Robert where he refused to accept wheat from him. By way of the general rule of acceptance,
the offeree cannot revoke his own acceptance of an offer once he has accepted it. In addition
the postal rule of communication of acceptance clearly states that acceptance of an offer is
completed as soon as the offeree posts the letter of acceptance and such letter is in
transmission and has not reached the offeror yet
Conclusion
Therefore, subject to the fulfilment of other essential elements of a valid contract, an
agreement has been constituted between Robert and Cameron for they fulfilled all the
essential elements of a valid offer and acceptance to form an agreement. Robert is advised to
bring in in legal suits for breach of contract against Cameron for refusing to you execute his
share of the agreement.
Question 2
Issue

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To advise Robert pertaining to Super Supplies Ltd.’s sudden cancellation of the
contract with Robert, thereby effecting a loss for him for around $6,000.
Rule
To form a valid and binding contract, the parties to the contract is supposed to agree
to achieve a common goal with common intention, after they have met the criteria of a proper
offer and acceptance. An agreement is usually divided into the two parts where the offeror
and the offeree accepts each other’s offer and acceptance or rejects it and where they match
their common intention pertaining to the agreement. In this part, the offeror and offeree must
discuss their expectations from each other in order to perform or execute the contract which
becomes binding once all the requisite of a valid contract is met.
In a written contract, there is particularly a written agreement that include the clauses
and objectives that the parties want to incorporate in their contractual relationship. The
clauses involve the criteria, rules, regulations along with the specifications to execute the
agreement as well as the specifications to discharge it (McKendrick 2014.). The parties to the
contract are expected to be aware of all such specifications once they have signed the
agreement. The parties to a contract must go through every such rules, details and
specifications mentioned in the agreement so that it becomes easier for them to abide by it.
The signing of the agreement clears the fact that the parties are having the knowledge of each
other’s expectations and they agree to them. As otherwise they would not have carried the
agreement forward. The fact that the parties had consensus between them could be
ascertained by the conduct of the parties which could be interpreted by any reasonable man
that the parties had a clear agreement between them which is sufficient to execute the
contract. However, it could so happen that the parties or one of them had been functioning
under a misunderstanding or was not aware of a particular clause of the agreement which he

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might have overlooked (McKendrick 2014.). Even in such circumstance, it would not be
considered that the parties had no consensus between them or they were under a mistake.
In the case of Smith v Hugh [1871] LR 6 QB 597, the plaintiff sold ‘new oats’ to the
defendant who had agreed to buy them thinking ti be ‘old oats’ which in only what his horses
ate. The defendant refused to buy them when he found that the oats were new instead of old.
Hence, the plaintiff sued, stating that the defendant had previously agreed to form the
agreement without specifying old or new oats. The initial order of the court was that there
was a valid agreement between the parties and that it did not matter whether the subjective
intention of the parties matched, as by the conduct of the parties it was quite convincing that
they agreed to the terms of contract. However a new trial was asked for by the defendant.
Cockburn CJ of the Court of Queen’s Bench raised a question of the self-deception of the
defendant as he refused to accept the oats from plaintiff even when he had agreed to the
sample sent by the plaintiff which did not contain ‘new oats’. It was held that the failure of
the defendant to check the sample sent by the plaintiff would not constitute a defence of
mistake or lack of consensus for it was a self-deception created by the defendant himself
which would not be considered to set aside the agreement.
Application
In this case, Robert and Camille agreed to enter into the agreement for selling milk to
Super Supplies Ltd for a six month on a trial basis. The supply standard order form of the
company that was given by Camille to Robert contained the specification of the quantity and
date for delivering the milk. It was expected of Robert to go through the details of the supply
standard order form for understanding the specifications as well as the clauses of the
agreement which needed to be maintained by the parties. Signing of the agreement implied
that both the parties to the contract was aware of the pre-decided terms and condition of the
contract and also that they have negotiated the terms as per their convenience, like most

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parties do. However, in this case Robert failure to go through the clauses of the agreement as
he readily signed the agreement out of extreme excitement to expand his business. Here, this
is a clear example of self-deception which a party brings upon himself when they fail to
acknowledge the terms and conditions set by the other party. In such circumstance, the failure
of the party who misses out to read the expressed conditions of the contract is not entertained,
for no one is to be blamed for the ignorance of the party.
Clauses like ‘right to cancel contract at any time’ by one of the parties could be
negotiated right before the other party agrees to it and signs the agreement. Robert could be
asked Super Supplies Ltd to amend or remove such a clause, had he read through the
agreement. Similarly, a clause of an agreement that talks about the reimbursement of damage
to the other party could be discussed before confirming the agreement by putting a signature
on it. Robert should have negotiated with the compensatory amount of $1000 with Super
Supplies Ltd and in case of disagreement he could have withdrawn himself from signing the
order. However, Robert’s failure to do so and thereby bringing self-deception on himself
would not be considered by the court as a mistake. Robert’s self-deception would not affect
the decision of Super Supplies Ltd as it was clear with its terms and conditions right from the
beginning by providing the supply standard order form to Robert who had every opportunity
to go through it and consider the terms and conditions of the company with which he was
signing the contract.
Conclusion
Therefore, in this scenario, Robert would not be able to sue and recover damages from
Super Supplies Ltd by stating that it has deceive him by concealing its terms and conditions
of the agreement.

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Question 3
Issue
To determine whether Robert could claim damages or the price of the tickets from the
theatre in the given circumstance and also whether the claim would have a merit if the
scenario changed.
Rule
The general rule of defence under the law of contract states that a party who has been
accused of breaching a contract has certain defence available with him by which he can claim
his innocence or helplessness pertaining to the occurrence of the particular act. When an
action is brought against a defendant by the plaintiff regarding the breach that has resulted to
loss or injury sustained by the plaintiff, the defendant shall have certain defences by which
may help him to absolve his liabilities by citing his innocence or incapacity to prevent such
breach from occurring. Under the common law of contract, the defendant who has breached
the contract has certain defences available like, mistake: mutual or unilateral, undue
influence, fraud or misrepresentation, frustration of contract and Impracticability or
impossibility (Hillman 2014).
The defence of Mistake is cited when either both the parties have a mutual mistake or
there was a unilateral mistake by one of the parties to the contract. In case there is a mutual
mistake it is strongly doubted as to whether there was a consensus between the parties at all,
thereby raising a question regarding the validity of the agreement which often declares an
agreement as void ab initio. While in case of unilateral mistake, the court usually does not

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consider declaring the agreement void as it is only one party that effected the mistake and
took no action to address it.
In case of the defence of impossibility or impracticability, the occurrence of an
unplanned and sudden event or incident is taken into consideration which did not allow the
defendant to carry out his duty to execute the contract (McElroy 2014). When certain
accidental or adverse situation occurs after the contract has been formed which affects the
performance or execution of the contract, the party who failed to perform his part due to such
incident would have a defence of impossibility or impracticability to claim. However, the
defendant must prove that such an adverse situation affecting the performance of the contract
was nothing that occurred due to his faults and that it was beyond his capability to prevent. It
needs to be established that no reasonable man could foresee the occurrence of such incident
and could prevent (McElroy 2014.). It must also be proved that defendant was looking
forward to perform or execute the contract as decided and therefore had taken all the
necessary precaution to prevent any adverse situation that could have been though of by any
man of ordinary prudence. However, the non-occurrence of such adverse incident was
actually the basic assumption that was expected from the parties to the contract. Not just the
defending party, even the aggrieved party must not have assumed the occurrence of such risk
that would jeopardize the contract.
In the case of Taylor v Caldwell [1863] EWHC QB J1 the parties to the contract
formed an agreement of hiring a music hall for a performance. After the contract was
confirmed, the music hall was on fire due to certain accident thereby making the contract for
hire impossible to be executed. When the plaintiff brought in action by claiming damages
from the owner of music hall that is the defendant, Blackburn J held that the doctrine of
absolute liability would not be applicable in this case as the implied term of the contract
stated that the music hall would exist on the date for which it was hired for the performance.

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While in the case of Krell v Henry [1903] 2 KB 740 or commonly known as the Coronation
Case where the owner of the hotel sued the defendant who had hired a room in his hotel to
watch the coronation procession of Edward VII. The coronation was postponed for the king
fell ill and therefore the defendant had no reason to hire the room and pay the owner. The
owner sued the defendant and the court held that although the defence of ‘impossibility’
could not be applied here as the defendant could sit in the balcony irrespective of the fact
whether he could see the procession. However, it was held that the contract should be
terminated on the grounds that it was frustrated due to the occurrence of an outside or
external event that was neither the fault of the defendant nor the plaintiff. Therefore, the court
decided to set it aside.
The doctrine of vicarious liability is another defence which is often used by the
defendant in case of tortious acts, but not in case of breach of contract directly. The principle
of vicarious liability makes the employer or a person of superior position liable for the act of
his employees or his subordinate who may have acted in the course of their employment in
such a way that may have caused certain loss or injury to another person (Bell 2013).
Application
In this case, the Robert purchased two tickets for watching a play with his wife, which
was initially starred by his favourite actor, Alfonso Pereira in the leading role that was one of
the greatest driving factor for Robert to purchase the tickets. However, on a later date it was
intimated to the audience that Alfonso Pereira was being replaced by some other actor as he
was unwell. This incident drove Robert to decide that he was no longer interest to watch the
show for he would miss his favourite actor. He demanded to refund his tickets which was
declined as the policy mentioned of not refunding for such claims. However, the incident of
water flooding inside the theatre that took place before the night of the show due to the

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breakage of a water main on the road caused a dilemma for the audience to claim for a
refund. Even in such situation the owner of the theatre refused to refund the tickets, thereby
giving rise to a legal suit for refund of tickets.
In this situation, the defence of impossibility or impracticability needs to be
considered. The occurrence of an unplanned and sudden event or incident is taken into
consideration which did not allow the defendant to carry out his duty to execute the contract.
When certain accidental or adverse situation occurs after the contract has been formed which
affects the performance or execution of the contract, the party who failed to perform his part
due to such incident would have a defence of impossibility or impracticability to claim.
However, the defendant must prove that such an adverse situation affecting the performance
of the contract was nothing that occurred due to his faults and that it was beyond his
capability to prevent. It needs to be established that no reasonable man could foresee the
occurrence of such incident and could prevent.
The defendant could cite the defence as he had no knowledge that something like that
could happen out of nowhere just before the night of the show. Any man of ordinary
prudence could not have predicted or foresee such a risk that would jeopardize the show on
the next day or rather the contract that was formed when the audience bought the ticket from
the owner of the theatre for watching the show. This is clearly an impracticable situation
which could not have been prevented, unless there were prior intimation about the risk. It can
be established that no reasonable man could foresee the occurrence of such incident and
could prevent it. It can also be proved that the owner of the theatre was looking forward to
perform or execute the contract as decided and therefore had taken all the necessary
precaution to prevent any adverse situation that could have been though of by any man of
ordinary prudence. In addition, the non-occurrence of such adverse incident was actually
what was basically assumed by the defendant as well as the plaintiff. Not just the owner of

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the threat, even the plaintiff had not assumed the occurrence of such risk that would
jeopardize the show, thereby wasting their money.
However, if the flood had not caused by the breakage of the water main on the road
and instead due to the act of the cleaner for smoking in the auditorium and was therefore
unable to turn off the sprinklers, then in that case, the owner of the theatre would have been
left with no defence. In such a situation, the owner of the theatre would have been held liable
under the principle of vicarious liability, making the owner liable for the action of his
employee. In such circumstance, the owner would have been made liable to refund all the
tickets that he had sold for the show.
Conclusion
Therefore, it can be concluded that for the actual case, Robert would not be able to
claim damages or the price of the tickets from the theatre. However, had it been the fault of
the cleaner smoking in the auditorium and was therefore unable to turn off the sprinklers, the
owner of the theatre could have been held liable for the act of his employee and therefore
would have made to refund the tickets.

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References
Bell, J., 2013. The basis of vicarious liability. The Cambridge Law Journal, 72(1), pp.17-20.
Bressan v Squires [1974] 2 NSWLR 46
Henthorn v Fraser [1892] 2 Ch 27
Hillman, R.A., 2014. The Future of Fault in Contract Law. Duq. L. Rev., 52, p.275.
Hough, T. and Kuhnel-Fitchen, K., 2014. Offer and Acceptance. In Optimize Contract Law
(pp. 23-50). Routledge.
Knapp, C.L., Crystal, N.M. and Prince, H.G., 2019. Problems in Contract Law: cases and
materials. Wolters Kluwer.
Krell v Henry [1903] 2 KB 740
McElroy, R.G., 2014. Impossibility of Performance. Cambridge University Press.
McKendrick, E., 2014. Contract law: text, cases, and materials. Oxford University Press
(UK).
Smith v Hugh [1871] LR 6 QB 597
Taylor v Caldwell [1863] EWHC QB J1