Business Law Case Study: Offer, Acceptance, and Consideration Analysis

This case study analyzes a business law scenario involving an uncle, Peter, and his nephew, Brett, focusing on the formation of a contract. The core issues revolve around offer and acceptance, consideration, and the potential for mistaken beliefs. The assignment examines whether a family relationship influences the validity of an agreement, the acceptance of an offer through actions, and the adequacy of consideration. The analysis references relevant laws, including the Australian Contract Act, and precedents such as Carlill v Carbolic Smoke Ball, Balfour v Balfour, and Felthouse v Bindley. The case explores whether Brett's actions constituted acceptance, despite the lack of explicit communication, and if his mistaken belief about the car's fuel type could void his obligations. The conclusion clarifies that the intention to create legal relations within a family context is crucial for a binding agreement, actions can imply acceptance, the consideration amount was valid, and Brett could not avoid his obligations because he had used the car.

Running head: BUSINESS LAW
Business law
Name of the student:
Name of the university:
Author note

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(a)
Issue:
The issue of the case is whether there is any provision in law that can identify the
family relationship to create implications in case of any binding agreement or not.
Relevant laws:
The present case is based on the law regarding the offer and acceptance. Contract is a
agreement binding by law. Agreement is a process by which one person promises to do or not
to do anything. All legal agreements are binding in nature. In a valid contract, agreement is
important. In agreement, there is a provision regarding the offer and acceptance. Offer and
acceptance are the essentials of a contract. When a person proposes to do certain things to
other person, he makes an offer to the person. When the person, to whom the offer is created,
accepts the same, it becomes acceptance to the contract. Therefore, offer and acceptance are
the two main provisions of contract. In Carlill v Carbolic Smokeball [1892], it was held that
an unilateral offer can be accepted by performing the terms of the offer. Under the Australian
Contract Act, except offer and acceptance, there need to be certain more essentials to be
present to make a contract legal.
The primary object of the contract is to bind by legal relationship. It is mentioned
under the law that when an offer is accepted, it makes an agreement, but not a contract.
therefore, it can be stated that the primary object of the contract can be offer and acceptance,
but there are certain other essentials to be followed up regarding the same. Meeting of mind
is another essential regarding the contract. In Balfour v Balfour [1919] 2 KB 571, the
principle of legal binding has been followed up. Therefore, it can be stated that the intention
to create legal relation is one of the major requirements regarding the commencement of

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contract. It is the rule that if both the parties are not agreed to the terms of the contract, it
cannot be valid in nature. In Felthouse v Bindley (1862) EWHC CP J 35, it was held that
mere silence cannot be termed as an acceptance. This case made an exception to the basic
rule of acceptance. However, it is the duty of the person to whom offer is made to deny the
offer expressly.
Application:
In the present case, Uncle Peter has made an offer to his nephew Brett regarding a car.
The offer has been made by way of letter. However, the postal rule will not applicable here as
Peter must let his nephew about the offer. In this case, it has been observed that Brett had not
accepted the offer and the postal rule regarding an offer is valid when the offer is accepted.
It was deemed by Peter that if Brett had not reply back until Friday, the offer would
be accepted by silence. However, the said offer should have to be come into the knowledge of
the intended person.
Within family, there can be an agreement and the principle is followed up in Balfour v
Balfour. It has been observed in the case that contract can be done if there is an intention to
bind them legally. In this case, it is clear from the statement of peter that he wanted to make a
contract with his nephew and did not want to bestow the car upon him. Therefore, it can be
stated that Peter wanted to bind in a legal relationship.
Conclusion:
Therefore, it can be stated that if there is a clarification regarding the intention of the
parties to be legally banded, binding agreement can be done within the members of the
family.

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(b)
Issue:
The issue is whether Brett has accepted the offer by his uncle or not.
Relevant rules:
Under the Australian Contract Act, the common rule is, until the contractual parties
have accepted the offer, no contract will be formed. Communication plays an important role
in this case. It is stated that both the offer and acceptance need to be communicated and until
the conditions are fulfilled, contract could not be formed.
In Carlill v Carbolic Smoke Ball, it was held by the court that if the condition of the
offer will be abide by a person, it will be presumed that the offer has been accepted by the
other person. It is a fact that if a person gains certain advantages from the contractual offer,
law to deny the offer will bar him and has to pay compensation regarding the same.
Application:
In the present case, it has been mentioned that the offer had not known to Brett till
Friday. Therefore, it can be stated that there was no acceptance. However, it is mentioned that
Brett knew the fact that Diesel runs the car and knowing the fact, he use the car for four days.
Therefore, it can be stated from the essence of the principle laid down under Carlill v
Carbolic Smoke Ball that Brett had accepted the offer by way of follow the conditions of the
offer. He had gained certain advantages regarding the same as he used to drive the vehicle to
his college. Therefore, it can be stated Brett accepts that offer made by Peter.

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Conclusion:
Therefore, it can be concluded that Brett has accepted the offer as he used the car as
long as he used it.
(c)
Issue:
The issue is whether the consideration made by Peter is valid or not.
Relevant laws:
There are certain principles present in the contract that are mandatory in nature.
Consideration is one of such essentials. By consideration, it is meant that certain things are to
be done in lieu of certain acts or things. It is quite a barter system. A consideration is need not
to be fairly in nature. It is enough if the consideration is fair. It is also stated that the
consideration must be real. The principle had applied in the case of White v Bluett (1853). In
Chappell & Co Ltd v Nestle Co Ltd [1960], it was held that a consideration needed not be
adequate but be fair enough to create a contract. It has been stated by the Court that it is
depended upon the parties to the contract. Inadequate consideration is only applicable where
the acceptance has been made through coercion or undue influence. If there is no provision
regarding the coercion, the question of inadequate consideration will not be valid. In
Roscorla v Thomas [1842], it has been stated that the consideration is not necessarily be
adequate regarding a contract.
Application:
It is stated that the value of the car is $2000. In the present case, the Peter had made
an offer to sell his car at the consideration of $500. It may not seem to be adequate enough

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regarding the costing of a diesel car. However, the consideration is valid as the consideration
amount is fair regarding the direction of Peter. It is the mentality of the parties to the contract.
The offeror wanted to sell his car at that price to his nephew. Therefore, it cannot be stated
that the consideration is inadequate in nature and no contract shall be occurred regarding the
same. it can be stated that the occurrence of a contract does not depend on the value of the
consideration.
Conclusion:
Therefore, it can be stated the consideration amount is valid in this case.
(d)
Issue:
The issue is whether Brett can have the right to avoid the obligation by mistaken
belief.
Relevant rule:
It was held in Bell v Lever Bros. [1932] that the principle of common mistake can be
applied only in the case where the person in same sense as it was made by the offeror cannot
accept the offer. However, if the person gain certain things out of the mistake, he could not be
exempted from the contractual liabilities.
Application:
It is clear from the intention of Brett that he did not want a diesel car but he had used
the car for three weeks. He knew the fact that Diesel and not petrol drive this car. Therefore,

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law to deny the same and evade the liabilities regarding the contract bars him. In his case, the
principle of Bell’s case will be applicable.
Conclusion:
Therefore, by the following rules prescribed herein, it can be stated that Brett cannot
avoid the contractual responsibility regarding the same as he already use the car regarding the
beneficial purpose.

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Reference:
Blackpool & Flyde Aero Club v Blackpool Borough Council [1990] 3 All ER 25
Carlill v Carbolic Smoke Ball Company [1892] EWCA Civ 1
Felthouse v Bindley (1862) EWHC CP J 35.
Popiw v Popiw [1959] VR 197
Wigan v Edwards (1973)