Legal Analysis: Contract Formation between Magda and Avinash

This document presents a detailed case study analysis of a contract law scenario involving Magda, a photographer, and Avinash. The analysis meticulously examines the key elements required for contract formation, including offer, acceptance, legal intention, consideration, and capacity, within the context of Australian contract law. The case revolves around Magda's advertisement for a portrait and subsequent negotiations with Avinash, highlighting the distinction between an offer and an invitation to treat, as well as the implications of counteroffers. The analysis references key legal precedents such as Carlill v Carbolic Smoke Ball Co, Byrne v Van Tienhoven, Dickinson v Dodds, Partridge v Crittenden, Hyde v Wrench, Balfour v Balfour, Chappell & Co Ltd v Nestle Co Ltd, and Nash v Inman to support the arguments and conclusions. The document concludes that, based on the sequence of offers, counteroffers, and revocations, no valid contract was ultimately formed between Magda and Avinash. The document also includes a comprehensive bibliography of relevant legal resources.

1
Contents
Solution 1....................................................................................................................................................2
Bibliography................................................................................................................................................4

2
Solution 1
In Australia, in order to formulate any contract it is necessary that the prime elements of the
contracts must be complying with. The main elements of the contract comprise of offer,
acceptance, legal intention, consideration and capacity.
In order to advice whether there is a valid contract amid Magda and Avinash it is very important
to understand all the elements in the light of the stated facts.
It is submitted that Magda is a photographer and she sells her work through website or through
her store. Through her website she is selling ‘Elite Sports’ which is a limited edition.
Now, it is first important to understand contractual elements
The first element which results in the formation of any contract is offer.
An offer is a proposal which is made by an offeror to an offeree wherein the term are specified
by the offer which he wants the offeree to comply with and is held in Carlill v Carbolic
Smoke Ball Co [1893]. If the offeror wants to cancel the contract then the same must be
made before the same is accepted and is held in Byrne v Van Tienhoven (1880). (Latimer
2011)
Further, in Dickinson v Dodds (1876), it was held that if the offer is open then in order to make it
binding it must be supported with some money value called consideration.
In Partridge v Crittenden [1968] an offer is distinguished from an invitation to treat. in an
invitation the inviter invites the offer from general public and if the same are confirmed
then it results in contract formation.
Now,
Is found that Magda has made an advertisement on her website wherein she was found willing to
sell the portrait of Paris Hilton for $2000.
Now, it is advice to Avinash that as per Partridge v Crittenden an advertisement is an invitation.
Thus, Magda has invited people to make an offer to her for the purchase of the portrait.
Avinash on 19th February has made an offer to buy the portrait @ $1600. So, an offer is made by
Avinash which must be accepted by Magda to make a valid contract.
As per law, when any offer is made then it is necessary that the offer must be accepted by the
offeree in order to make it valid in law.
But, as per Hyde v Wrench (1840) when the offer is not accepted but the terms of the acceptance
are changed by the offeree then it is counter offer in law which cancels the ordinal offer.
Now, as per the facts, The offer which was made by Avinash on 19th February is not accepted.
Rather, the terms of the offer are changed and she submitted her willing to sell the portrait at
$1800.

3
Thus, it is advised to Avinash that the offer made by him is rejected by the counter offer of
Magda.
So, now the offer which is valid is made by Magda @ $1800.
Apart from offer and acceptance, another element is the legal intonation of the parties. The
parties to the contract must be willing to abide by the contract under the court of law and is held
in Balfour v Balfour [1919].
Now, The offer made by Magda is for @ 1800. But, he submitted that he can only confirm the
offer by 21st February after a discussion with wife. Magda approved of the same. On 20th
February, Avinash confirms the offer but submitted that he requires the certificate of
authenticity.
Now, the offer is accepted but the acceptance is conditional and thus is a counter offer in nature
which revokes the offer of Magda. Now, it is the offer of Avinash which is valid.
This offer is accepted by Magda again with a condition that if Avinash is willing then he must
send his confirmation by 4 PM.
Thus, it is advised to Avinash and Magda that both of them are willing to abide by the contract
legally and thus there is legal intention of both the parties.
Further, the contract must be supported with some benefit which is called consideration and is
held in Chappell & Co Ltd v Nestle Co Ltd [1960]. (McKendrick & Liu 2015)
Since the contract is supported with the value of $1800 which is a valid consideration.
Also, it is necessary that the parties must be major and of sound mind as per Nash v Inman
[1908]. It is advised to Avinash and Magda that both are major and of sound mind. Thus are
capable.
Now, no acceptance is received by Magda till 4 PM. Before the confirmation Magda revoked her
offer.
Thus, there is no contract amid the parties.

4
Bibliography
Books/Articles/Journals
McKendrick & Liu, 2015, Contract Law: Australian Edition.
Paul Latimer. 2011. Australian Business Law 2012. CCH Australia Limited.
Case laws
Balfour v Balfour [1919] 2 KB 571.
Byrne v Van Tienhoven (1880) LR 5 CPD 344.
Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256.
Chappell & Co Ltd v Nestle Co Ltd [1960] AC 87.
Dickinson v Dodds (1876) 2 Ch.
Hyde v Wrench (1840) Beav 334.
Nash v Inman [1908] 2 KB 1.
Partridge v Crittenden [1968] 1 WLR 1204.