BO1BLAW204 Business Law: Analyzing Scenarios of Offer & Acceptance

This case study delves into various scenarios involving offers and acceptances under business law. It examines Jacob's telephonic offer, Iris's message on an answering machine, Hamid's layby offer, and Ranbir's order for sound systems. The analysis applies relevant rules of contract law, including the distinction between offers and invitations to treat, the requirement of communicated acceptance, and the implications of silence as acceptance. The study concludes by determining the rights of each party based on the principles of offer, acceptance, and communication in contract formation. Desklib provides further resources for students seeking solved assignments and study tools.

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

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Table of Contents
Issue 1.............................................................................................................................2
Issue 2.............................................................................................................................3
Issue 3.............................................................................................................................5
Issue 4.............................................................................................................................7
References......................................................................................................................9

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Issue 1
To determine the rights of Jacob pertaining to his offer to buy the Boast Sound
System over a telephonic conversation.
Rule
An offer must be differentiated from an ‘invitation to treat’ which lays down an
person is willing to negotiate with a group of people for a certain purpose, unlike offer where
an offeror makes an offeror to the offeree, either to accept or reject. An invitation to treat is a
type of advertisement which attract offerors to make an offer to the person inviting as held in
Carlill v Carbolic Smoke Ball Company [1892] EWCA 1 where the plaintiff was the one
who accepted the public offer or invitation of the defendant for buying the Carbolic smoke
ball for the purpose that was held in the advertisement.
An offer is a willingness or an intention expressed by the offeror in order to do or not
to do something, thereby looking forward to the acceptance of the person to whom it has been
made (McKendrick 2014). An offer should be negotiated and talked about in order to settle
for the final decision where the offeror and offeree takes a particular decision in order to
either execute the offer or to reject it. An offer is either accepted or rejected by the offeree
and such acceptance must be communicated. Unless the offeree communicates his
willingness to execute the offer made by the offeror, an agreement cannot be established.
Therefore, an offer to which the offeree does not reply back or does not promise to execute
would stand rejected and the offeror cannot claim any rights from such offer. An offer
without a valid acceptance stands no chance (McKendrick 2014).
Application
In this section of the case study, Jacob responded to the advertisement put up by High
Five Systems for selling out Boast Sound System for $2000. Jacob’s offer to buy a sound

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system over a telephonic conversation with Rhonda, the salesperson, without hearing to what
she needed to tell me in return. This implicates that Jacob had not received any form of
acceptance from Rhonda’s end. Therefore it could be held that without a proper
communication of acceptance, the offer stands rejected or does not hold a value. To form an
agreement, it is of utmost importance that there is a proper communication of offer and
acceptance between the parties to the agreement, which severely lacks in this case. There is
no sign of communication of acceptance from the Rhonda’s side stating that she accepts
Jacob’s offer to sells the sound system to him. In such situation, an agreement cannot be said
to have been established, thereby giving no right to Jacob pertaining to his offer
Conclusion
Therefore, it could be held that Jacob has no right pertaining to his offer to buy the
sound system as he did not receive an acceptance of his offer from Rhonda.
Issue 2
To determine the rights of Iris pertaining to her offer to buy the Boast Sound System
by a message sent over a telephone answering machine.
Rule
It is an established rule under the English common law of contract that Silence does
not amount to acceptance or any form of communication of acceptance. Silence of one
person pertaining to an offer implies nothing, neither assertive nor negative and therefore
cannot be taken for an acceptance as held in Felthouse v Bindley [1862] EWHC J35. On the
other hand, it is observed that after a considerable amount of time, silence signifies rejection
of an offer, unless the conduct of the other party indicates otherwise as argues in the case of
Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 52.
Therefore it can be held that an offer as well as an acceptance is valid only when it is
communicated, either by instantaneous or non-instantaneous mode of communication and it

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becomes valid only when it reaches the other party. Otherwise, it does not lead to an
agreement that denotes ‘meeting of minds’ between the parties, that is, an agreement between
the parties to serve a common purpose (Knapp, Crystal and Prince 2019).
However, exception to this principle exists in the form of a unilateral contract where
the offeror gives an offer to the world which is to be accepted by someone somewhere by
conduct, and not by way of communication to the offeror as seen in the case of Carlill v
Carbolic Smoke Ball Company [1892] EWCA 1.
Application
In this section of the case study, Iris made an offer to High Five Systems to purchase
two Boast sound system over a telephone answering machine by saying that he wishes to buy
the two sound systems as described in the advertisement and he would consider this message
as his offer and no reply from High Five System’s side would signify acceptance of his offer.
Although telephonic conversation is an instantaneous mode of communication, however, a
telephone answering machine cannot reply back for the receiver. Iris made an offer over a
telephone answering machine which has no option to answer back or communicate pertaining
to his offer. There is no sign of acceptance from High Five Systems’ end that would establish
a valid agreement between the parties.
Moreover, an offer cannot be made on the basis of the other party’s silence, for
silence is not a valid form of communication between the parties to an agreement. High Five
Systems got Iris’s offer on November 28 and by that time they were sold out. Although the
offer was communicated through a medium, however, it was not based on a correct form of
acceptance. In addition, the offer was received by the seller long after the sound systems were
sold out. Therefore, there would be no agreement of sale between the parties.

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Conclusion
Iris shall not be able to claim the sound systems from High Five Systems as firstly,
silence cannot be held as mode of communication and secondly, there was no acceptance of
the offer.
Issue 3
To determine the rights of Hamid pertaining to his offer to buy the Boast Sound
System on layby at first and then by cash which was too late as the sound systems were sold
off by then.
Rule
A negotiation of an offer that contains doubts and dilemma cannot be considered to
be an offer in itself; it is just the decision making stage before moving forward with the main
offer and acceptance of the agreement. Even a grain of doubt pertaining to the offer would
fail the element of ‘common intention’ of the parties to make it a valid agreement. Therefore,
a party to the agreement should not consider the negotiation of the offer as an offer itself and
should not purport to enforce it as an agreement (Knapp, Crystal and Prince 2019).
After the stage of negotiation, when the offeror communicates his lack of interest or
inconvenience to carry forward the negotiation, it should be considered as an end to any
further communication pertaining to the same negotiation.
In addition, an acceptance of an offer cannot be maintained at a time when such offer
has extinguished by virtue of a prolonged period of time or due to the unavailability of a
material thing or if such offer depended on a contingency which does not exist anymore as
discussed in Goldsbrough, Mort & Co Ltd v Quinn [1910] HCA 20. For example: an offer
cease to exist when it offeror dies; the offeror revokes or an offeree rejects. Therefore, in such
an adverse situation, the offeree cannot claim to enforce his right to acquire the goods, as

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there was no confirmation to form an agreement from the offeror’s side, firstly due to
unfavourable conditions and secondly due to unavailability of the product.
Application
This section of the case study involves Hamid who approached Rhonda, the
salesperson of High Five Systems to buy a Boast sound system on layby and the pay the
remaining amount after a month; to this Rhonda exclaimed that she would have to ask her
boss about layby purchase as she was unaware of it. This signifies that there was no
agreement between the parties as they were on the stage of negotiation and discussion
regarding the purchase. Although there was the element of offer in the form of an ‘invitation
to treat’ from the seller’s end, however Hamid’s counter offer to purchase the sound system
was not accepted readily as there was an element of doubt regarding the way of payment.
After checking with her boss, Rhonda informed Hamid the next day that they do not
sell on layby basis, hearing which Hamid agreed to pay at once for the sound system. Rhonda
informed him that the sound systems were sold out that morning. In addition to the above
situation that lacks acceptance or confirmation of the seller to sell the sound system, the
unavailability of the product extinguished the negotiation between the parties and Hamid’s
counter offer to pay in cash could not change it. Here, it would be unreasonable for Hamid to
ask High Five systems to sell him a sound system as he accepted their offer/advertisement a
day before as such an acceptance would be denied by the seller as it was doubtful and was not
confirmed by the seller.
Conclusion
Therefore, Hamid would have no right over the offer of the sale of the sound systems
for firstly his counter offer was not confirmed by the seller and secondly, as the sound
systems were sold out by the time he wished to pay in cash and procure the sounds system.

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Issue 4
To determine the rights of Ranbir pertaining to his offer to purchase the Boast Sound
System and then rejecting them.
Rule
The agreement between the parties must involve a proper offer and an acceptance. An
acceptance of the offeree signifies that the offeree agrees to the proposal of the offeror. When
there are doubts regarding an offer or its confirmation, an offeree has the right to reject it
readily. Therefore, even with an existence of such doubt or dilemma in an offer, when an
offeree agrees to it, it would signify that the offeree had wilfully agreed to it and therefore
would be bound by the terms of the agreement (McKendrick 2014). An acceptance to an offer
signifies a binding agreement which cannot be ignored or rejected by the offeree on a later
occasion. An offeree can only reject an offer when it was first served to him. He could also
revoke his acceptance after communicating it, however it should be right before such
communication reaches the offeror. After the communication of acceptance has been made
and it has reached the offeror, the offeree cannot cancel it as he would be barred by the
principle of Promissory Estoppel (McKendrick 2014).
However, it is known that silence does not amount to acceptance but it is also
considered that silence does amounts to acceptance when the conduct of the other party
indicates so as argues in the case of Empirnall Holdings Pty Ltd v Machon Paull Partners
Pty Ltd (1988) 14 NSWLR 52.
Application
In this section of the case scenario, Ranbir placed an order to purchase 10 sets of the
Boast sound system from High Five Systems on the morning of November 27. He was
informed by Jimmy, a salesperson that he was not sure whether the sets were still available,
however he would enquire about it and would send it to his place if available. Ranbir did not

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object to this arrangement promised by Jimmy. He was quiet when Jimmy told that he would
check with the stock and then send him the sets to his place in the evening if they are
available. Although it was fulfilled with doubt and should not be considered as a promise,
however, Jimmy’s conduct speak for his confirmation of the arrangement suggested by
Jimmy. Jimmy’s conduct pertaining to this arrangement states that he agreed to it and
accepted it with his silence. Therefore, after accepting the offer, Ranbir is not entitled to
cancel it. He could have cancelled it exactly when Jimmy told him about check with the stock
and sending the sets to him in the evening, but at that point he choose to keep quiet which
signifies acceptance.
Conclusion
Therefore, Ranbir would have no such right under the contract law available with him
and instead he would be liable to accept the delivery of the sound systems as agreed with
Jimmy.

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References
Carlill v Carbolic Smoke Ball Company [1892] EWCA 1
Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 52
Felthouse v Bindley [1862] EWHC J35
Goldsbrough, Mort & Co Ltd v Quinn [1910] HCA 20
Knapp, C.L., Crystal, N.M. and Prince, H.G., 2019. Problems in Contract Law: cases and
materials. Wolters Kluwer.
McKendrick, E., 2014. Contract law: text, cases, and materials. Oxford University Press
(UK).