Commercial Law Report: Contract Formation, Breach, and Remedies

This report provides a comprehensive analysis of a commercial law case involving contract formation, breach, and alternative dispute resolution (ADR). It begins by outlining the essential elements of a contract, including offer, acceptance, consideration, capacity, intention, and clarity. The report then examines a scenario involving Alan, Bernard, Charleen, and Damien, analyzing whether contracts were formed between them based on their interactions and communications. It delves into issues of offer and acceptance, distinguishing between an offer and an invitation to treat, and considering the impact of counter-offers and the postal rule. The report also addresses the concept of breach of contract, misrepresentation, and the remedies available, such as monetary damages or specific performance. Finally, it explores ADR mechanisms, including arbitration, conciliation, and mediation, as viable alternatives to litigation for resolving contractual disputes. The report concludes by assessing the legal rights and potential claims of each party involved, providing a thorough examination of the legal issues presented.

COMMERCIAL LAW

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Introduction
Contract is generally understood as a promise that has been made by one side or one party to
another to pay the amount or something in exchange of the task or material which the other
party will provide as signed under the contract. In the creation of any contract there are
certain elements presents. These elements are capacity to contract, an offer, value of
consideration, its acceptance, intention of making a contract and clearness of terms (Fifoot,
Seddon, Ellinghaus & RA 2012). A breach of contract is registered, when the promise is not
fulfilled. In such scenarios parties have two option one is to go with the litigation present or
to resolve it by the means of ADR methods. This report will also discuss the similar kind of
cases.
i) Solution
Issue
Here in the below case major challenge is the fact that among which parties the contract was
created and whether the contract was aptly made between those particular parties.
Rule
Invitation to treat and offer
Firstly the element that is first considered while making contract is the offer. Here one person
needs to make some terms. This is essential to make a differentiation among the offers that
has been made and the invitation to treat that was undertaken. Invitation to treat illustrates
that that the party aims to start the negotiation. On the other hand offer illustrates that the
parties aims to generate a relationship on the basis of law. Variation among the two might
become essential when it is associated with advertisements that were published. These
published advertisements consist of unilateral offer that might be accepted through acting on
such published advertisements. This kind of offer can be seen in Carlill v Carbolic Smoke
Ball Company [1893] 1 QB 256. Commonly, this doesn’t happen and advertisements that are
published are believed to be as invitation to treat. This is supported by the case of Partridge v
Crittenden [1968] 1 WLR 1204 (McKendrick, 2014).
Acceptance
When offer is given by one individual it requires to get accepted by the party to which that
offer was provided. It is also critical that offer is taken in the same manner it was made.

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However, if it is altered or changed instead of getting accepted then it would be called as
counter offer (Friedman, 2011). Hyde v. Wrench (1840) 3 Beav 334 gives the fact about
expiry of original offer. Felthouse v Bindley (1862) EWHC CP J35 states that silence might
not be called as effective acceptance.
Another important element in acceptance is the “date of acceptance” and is marked on the
date when acceptance is conveyed to the party that has offered. However the primary
exclusion to this rule is protected under the guidelines provided under the postal rules.
According to this rule, acceptance date is the date on which acceptance letter is sent (Bix &
Bix, 2012). Postal office acts as a root of the validity as it acts as an agent of the party which
has made the offer. At the same time the relevancy of the date becomes negligible when the
letter reaches to the party that has offered. Acceptance rules were stated in Adams v. Lindsell
(1818) 106 ER 250 because of the acceptance of the postal rules (Hillman, 2012).
Consideration
Third major need for formation of contract is that there must be valid consideration for that
contract. It might be anything as big so that it has an economic value (DiMatteo, 2010). In the
case of Chappel & Co Ltd v Nestle Co Ltd [1960] AC 87, court gave three wrappers were
known to be as the rightful consideration because of the present conditions and hence
supporting the validity of contract (Poole, 2016).
Capacity
It was a requirement to illustrate that the individuals on both the sides have capacity to get in
a relation on a basis of the laws. However, parties that are making the contract need to
acquire a legal age and should have a distilled thought for making it (Andrews, 2015).
Intention
Parties must show the intention to create relations on the basis of laws that might attract legal
liability and responsibility.
Clarity
For the contracting parties the contract terms have to be clear as it promotes different
liabilities and rights for the parties (Hogg, 2011).
Application
In the case it is clear that offer was made by the Alan with their FB post made on 1st
November. Motive towards believing it like a offer, roots from its application in a case of

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Carlill v Carbolic Smoke Ball Company, because it can be accepted by giving a requested
amount and this could be understood as acceptance through performance.
On FB post of the Alan reply given by the Bernard is also believed as an offer that is made in
counter since there is alteration in the original offer’s term. Basis for it is the case Carbolic
Smoke Ball Company the original post on FB was cancelled. The counter offer was
disallowed by Bernard. As per postal rule, date of acceptance was noted as 4th November. It
might be recognized with the instance of Bernard, when he requested Alan to give attention
to the money. However no other arguments are available to illustrate that elements of the
other contract were absent. It is believed that among Bernard and Alan a contract was made.
Offer is made only between friends of Alan and Students of Alan. Since Charleen was not the
part of the Kaplan or friend of Alan hence a there was establishment of contract. If
Charleen’s communication is believed to be an offer then Alan did not say anything on this
which illustrate that acceptance was absent in this case as per Felthouse v Bindley and hence
contract was formed in this case also.
Since Damien was student of Kaplan hence offer was provided to Damien. He accepted the
offer by taking the cash. Here acceptance date was at the later stage when compared with that
of the Bernard as the acceptance of Damien was on the date of 4th November and hence a
contract was made between Alan and Damien.
Conclusion
This concludes that two contracts are generated (One with Damien and second with Bernard.
ii) Solution
Issue
Bernard rights against Alan breach of contract is understood as an issue here.
Rule
Breach of Contract
On the basis of what is illustrated in the beginning, the lack of fulfilment of terms of contract
is known as contract breach. If this thing happens, the individual that was ready can apply for
damages in monetary terms or other type of similar remedies (Graziano, 2019). For example

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the court can issue an order of injunction with an objective to ensure that specific kind of
performance is achieved.
Misinterpretation
In a case when an individual gives a untrue statement at time of contract negotiation for
attracting the other individual to form a contract then it is called as misinterpretation (Smits,
2017). It provides an opportunity to the party that are ready to break the contract as
misinterpretation makes the contract illegal.
Application
In the given case, Bernard needs to be given books sold by Alan that he received from the
Kalpan together along with notes that is handwritten. Such promise was violated as Bernard
did not receive any handwritten notes. It permits Bernard to start a contract breach case and
take reimbursement from the Alan. It allows for particular kind of injunction or specific
performance where Alan would be said to provide Bernard with hand written notes and will
also be asked to not provide the similar things to Damien. Case of misinterpretation case can
be filed as Alan attracted Bernard by making the false statement.
Conclusion
A case of misinterpretation can be filled by Bernard against Alan for his act of breaching of contract.
iii) Solution
Issue
Major problem in this case is the right of Charleen against the Alan’s contract breach.
Rule
Breach of Contract
Application
As any kind of contract was not made between Alan and Charleen hence no breach of
contract claim could be generated. Although Charleen can request for her money back from
Alan.
Conclusion
It was found that Charleen cannot file a case of contract breach.

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iv) Solution
Issue
Here, major problem is the Damien’s right against contract breach by Alan.
Rule
Misinterpretation and Breach of Contract
Application
Here, promise was broken by Alan that was made to Damien since he was not given the book
which he was promised rather the book purchased from the store was given to them. Due to
this Damien might file a suit against Alan due to violation of contract and ask for monetary
injection or compensation so that Alan could not sell the book that was promised to Bernard
and can take particular kind of injunction to compel Alan for not selling the book to him. He
is also eligible for making the misinterpretation claim as false statement was made to him.
Conclusion
Alan can be sued by Damien for both misinterpretation and contract breach.
v) Solution
In case dispute between the individuals is not resolved through the help of litigation then for
resolving the dispute both the parties can go for alternative dispute resolution mechanism that
involves arbitration, mediation and conciliation (Poole, 2014).
Arbitration
In ADR, the most common method is arbitration where the individuals that are in confict get
covered under the contract and hence arbitration can help an organisation to resolve the
dispute. In arbitration the parties that are under the dispute selects an odd numbers of
arbitration may be one or three. If the parties are unable to choose one arbitrators mutually
chose a these two arbitrators arbitrator mutually selects a third one (Van Zyl, Verster &
Ramabodu, 2010). There are various types of benefits of selecting this method as the
litigation costs can be saved through ADR. On the contrary arbitration award has to be
followed. There are certain disadvantages that are associated in this case is that for stern
execution of arbitration award there is a need for the court order. However when the
arbitration award is given by the authority like court then it is to be taken into consideration
severely.

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Conciliation
Under ADR another method is conciliation where a conciliator encounters both the parties
separately and gives efforts to resolve the argument. Several kinds of benefits are associated
with this methodology. This includes the fact that the individuals can recommend the
alternative solution to the dispute and they might come to specific type of solution. A lower
possibility to damage the relationship among two individuals as the conflict is solved
harmoniously with the help of shared consent. In this form of ADR, there is maintaining of
confidentiality and privacy as this form of ADR is unable to be understood as in the case of
court litigations (Baum, 2010). However this methodology has some disadvantages such as
the power of individuals to make solution refusal is provided with the help conciliation and at
the same time there is a failure of accompanying to the shared treaty or situation can be
escalated in the forward direction because of lack of the appropriate party’s advisor.
Mediation
Mediation is the third highly common approach in the ADR where the parties chose a
mediator that takes an attempt to solve the matter after listening to each side with the help of
different types of approaches. Privacy and confidentiality is maintained in the matter and
parties takes control over the outcomes. The mediator is fair. Litigation cost is also higher
when compared with this method. The disadvantages is similarly like other ADR methods as
the mediator order does not binds the parties and they can choose to disregard the mediator
decisions (Baum, 2010). The cost and the time spent in mediation can go in waste if the
parties do not stay with it hence it is always suggested to go for litigation. In mediation
parties are not liable to speak the truth which is very much necessary in the case of courts.
The same is not the case in the court. In the case of mediation the applicability of precedents
is not done and hence at the time when the circumstances along with the facts of two conflicts
are similar, the judgment of such similar case cannot necessarily applied to others which can
be done in the litigation.

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References
Andrews, N. (2015). Contract law. Cambridge University Press.
Baum, C. (2010). The Benefits of Alternative Dispute Resolution in Common Interests
Development Disputes. . John's L. Rev., 84, 907.
Bix, B., & Bix, B. H. (2012). Contract Law: Rules, Theory, and Context. Cambridge
University Press.
DiMatteo, L. A. (2010). Strategic contracting: contract law as a source of competitive
advantage. American Business Law Journal, 47(4), 727-794.
Fifoot, C. H. S., Seddon, N., Ellinghaus, M. P., & RA [VNV] Bigwood. (2012). Cheshire &
Fifoot's law of contract. LexisNexis.
Friedman, L. M. (2011). Contract law in America: a social and economic case study. Quid
Pro Books.
Graziano, T. K. (2019). Comparative contract law: cases, materials and exercises. Edward
Elgar Publishing.
Hillman, R. A. (2012). The richness of contract law: an analysis and critique of
contemporary theories of contract law (Vol. 28). Springer Science & Business Media.
Hogg, M. (2011). Promises and contract law: comparative perspectives. Cambridge
University Press.
McKendrick, E. (2014). Contract law: text, cases, and materials. Oxford University Press
(UK).
Poole, J. (2014). Casebook on contract law. Oxford University Press, USA.
Poole, J. (2016). Textbook on contract law. Oxford University Press.
Smits, J. M. (Ed.). (2017). Contract law: a comparative introduction. Edward Elgar
Publishing.

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Van Zyl, C. H., Verster, J. J. P., & Ramabodu, M. S. (2010, September). Dispute resolution
alternatives: Problems, preference and process. In Paper delivered at the
Construction, Building and Real Estate Research Conference (COBRA) of the Royal
Institution of Chartered Surveyors (RICS) (pp. 2-3).