Analysis of Contract Law Principles in the Boost Sound System Scenario

This case study examines the application of contract law principles within a business context, specifically focusing on the sale of Boost Sound Systems. The introduction provides an overview of business law and its role in commercial matters. The core of the study comprises four distinct cases, each presenting a unique scenario related to the purchase and order of the sound systems. Case 1 analyzes the concept of an invitation to offer versus an offer, determining that an advertisement is an invitation to treat, and mere acceptance does not form a valid contract. Case 2 explores the importance of communication in contract formation, highlighting that silence does not constitute acceptance. Case 3 examines counteroffers and their role in modifying original offers. Finally, Case 4 discusses the essential elements of a valid contract, including offer, acceptance, and consideration, emphasizing the need for proper communication and agreement before dispatch. The conclusion summarizes the key findings, emphasizing the importance of understanding contract law principles in business transactions. References support the legal arguments presented throughout the analysis.

{"group_name":"Essay","su
bject_name":"Business
Law"}

Table of Contents
INTRODUCTION ..........................................................................................................................1
CASE STUDY.................................................................................................................................1
Case 1 .........................................................................................................................................1
Case 2 .........................................................................................................................................2
Case 3..........................................................................................................................................3
Case 4..........................................................................................................................................4
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
Business law assist in dealing with the people and commercial matters. This essay will
include the application of the contract law in order to advise the different parties regarding their
rights in contract law. Present case study is based on Boost Sound system which is available for
sale $2,000 which is half the price of actual products and only 10 sets are left in the stores. The
whole case study rounds around the purchase and order of the sound system.
CASE STUDY
Case 1
Issue : On 25th November, Jacob called up the number in the advertisement on the very
same day and said that he accept the offer. Rhonda tried to explain something to him but he put
the phone down before he could hear her explanation.
Rule : As per the contract law, The advertisement is the invitation to offer where the
invitation is provided to the public at large to offer for the contract. Invitation of an offer is the
circulation of offer and acceptance of invitation to offer does not make a valid contract. As per
the case, the applicable rule is the invitation to offer of the contract law which defines that the
offer which are made through advertisement are the invitation to offer and the acceptance of this
offer by the party does not form a valid contract (Cheung and et.al., 2014).
As per the case Fisher v Bell, in which the defendant exhibited a flick knife in his shop
window and due to this it was prosecuted under the restriction of offensive weapons for “offering
for sale" an offensive weapon. the conclusion drawn from this case was that the defendant was
not guilty as he had not made an offer as it was an invitation to offer.
Application : In the given case Jacob said that he had accepted the offer for the sale of
sound system. but as per the applicable rule, the advertisement made by the High five systems is
not an offer but it is an invitation to offer. In the case of Jacob it called up the sales person at
High five system and told that he has accepted the offer but as per the rule stated above an
invitation to an offer does not form a valid contract unless and until the intention to form a
contract is made (Smits, 2017). In the given case there have been no contract between Jacob and
High five system for the sale of sound system because there was no offer made by the parties. It
is being identified that the invitation to offer which was made through advertisement does not
provide the party to form a valid contract as the offer was not made by any of the parties and thus
the parties are not bound to perform the terms of the contract.
1

Conclusion : From the above case it has concluded that invitation to offer does not
form a valid contract between the parties which means Jacob and high five system are not under
the contract as there was no offer made by any of the parties for the sale. Invitation to treat does
not account to form a legal obligation under the contract and thus the organisation is not bound
by the terms of contract.
Case 2
Issue : On 25 November, Irish called High five system to place an order but was unable
to speak to any of the salesperson and thus she left a message on the answering machine that if
the company does not reply her back than it will assume that the firm is ready to sale her the
sound system at the price mentioned in the advertisement. But the staff of the company heard
this message on 28 November.
Rule : As per the general rule which state that mere silence does not amount to
acceptance of the offer. As per this rule the offer cannot be accepted by the mere silence of the
other party and thus there is no formation of the contract between the parties. as per the contract
law, it is important to communicate the acceptance of the offer to form the valid contract.
As per the case law Felthouse v Bindley, In which claimant offered to buy a horse from
his nephew John who as selling the farm stock. but the claimant assumed John acceptance
intending to accept (Chaurey, 2015). later on, John instructed the auctioneer to withdraw the sale
but by mistake the auctioneer sold it. the conclusion drawn from this case was that the claimant
was failed as it was unable to prove that he was the owner of horse as John had not
communicated his intention to accept the offer of claimant.
Application : In the case, Irish made an offer on the basis of the invitation to offer in
order to form the contract but was unable to communicate with the company to provide
information regarding the offer for acceptance. As per the rule, it is being identified that for the
formation of legal contract it is important to communicate the acceptance because mere silence
does not amount to acceptance of the offer. Irish assumed that the firm has accepted the offer
which does not create a legal relationship between the parties as it does not form the valid
contract (Brilmayer, Goldsmith and O’Connor, 2015). As per the case, it is identified that high
five system have not communicated their acceptance and so mere silence of the party does not
constitute acceptance of the offer which means the firm is not liable to perform the obligation
under contract as there is no legal formation of the contract between the parties.
2

Conclusion : From the above case it has concluded that the Irish have made the offer
but the firm high five system has not provided their acceptance regarding the offer made by Irish
which means there have been no legal formation of the contract and thus the party does not form
any legal obligation against each other. This case has provide understanding that the offer must
be communicated with the party in order to get the acceptance to form the legal contract. The
mere silence of the party does not constitute the acceptance of offer and thus it is identified that
the party is no liable to perform the contract.
Case 3
Issue: As on 26th November, Hamid went to High five Systems to buy the Boast Sound system
and ask to pay the money after a month. Rhonda, the salesperson tell him, that she had to ask her
boss about the lay by mode payment and after the next she called up to Hamid that her boss
defuse to accept the payment. As Hamid said that he will collet the system when he pay all the
money tomorrow but Rhonda commit that all the set of sound system get dispatched by Jimmy.
As Hamid insists that they had accepted the offer a day earlier and at least one sound system is to
be sold to him.
Rules: As per this case study the rules is related to counter offer under the contract law. In this
there is an amendment or changes in the previous offer until the contract reaches to final term
(Australian Contract Law, 2015). To enter into the counter offer, it automatically rejects the
previous offer and the new offer is made between the parties.
As the case of Hyde V Wrench (1840), Hyde offered to sell his farm of $1,000 but
Wrench at that time ready to buy at $950 but after few days he agrees to pay the full price. In this
case they use counter offer to make a new contract.
Application:
The above case states that if the Jimmy cancel the order which he booked for all the
availability of 10 sets than in that case Hamid can use the counter offer to enter into a valid
contract. In the above case study Hamid not entered into the contract as through the invitation of
offer, Hamid decided to buy the sound system. As if any offer is made through advertisement
that they cannot enter into the contract (Savelyev, 2017). If the order which is delivered by
Jimmy is cancelled until the contract is not finished than he is liable to buy the sound system. As
under the contract law it is essential that the contract is made between two parties and they are
3

legally bound to follow the rules and the contract must be with consideration. Thus, all contract
are agreement but all agreement are not contract. If the contract is made through invitation to
offer than it can not considered to be valid.
Conclusion:
From the above study it can be concluded that very business had there different polices to
enter into the contract and if the contract is made through invitation to offer than it can be
declared to be unenforceable by the court on various grounds. It is concluded that counter offer is
useful in cases when the new changes are committed to be done on previous contract to impose
the stability of the contract and such changes can be made with the consent of both the parties.
Case 4
Issue: Ranbir places an order for 10 sets on 27th November morning and their contract is made
with Jimmy, the another sales person of the company. Jimmy assure Ranbir that h will dispatch
the sound system in evening before the order cancel, Ranbir call Jimmy that he want to cancel
the order and till than the order is already dispatched.
Rules: As per this case study, the rights of contract law is that both the parties enter into the
contract and one party offer the proposal to the other party and other party accept such proposal.
They both are legally binding by the rules of law (chwartz and Scott, 2016). To have a valid
contract, two parties are required and there must be consideration to enter into the contract.
As the cases of Re Stewart V Casey, Casey contributed many hours to commit some
invention for Re Stewart, and he promises to pay some money after the work is completed. As
thus both enter into the contract as there is some exchange of consideration which make them to
enter into the valid contract. As this result in future consideration which proves to be valid
contract.
Application: From the above case issue, to enter into the valid contract some transaction are to
be made in terms of consideration and such can be any in terms of valuable things or money.
This can be sort to be a valid contract. As both the parties offer and accept the proposal regarding
buying and selling of sound system. But the contract is not valid is the offer is not made through
consideration amount and both the parties agree with that amount. In this case the parties didn't
discuss about the availability of the orders and didn't communicate the acceptance regarding that
4

orders (Von Heland and Folke, 2014). They dispatch the sound system without communicating
of proper acceptance of order.
The contract is executed if the communication is made at the time of offer and acceptance
of contract. If the communication is made when the time lapse of such contract is termed to be
void and they are not legal in the eyes of law.
Conclusion: From the above study it can be concluded that to enter into a business contract is
must and if the contract is made between the two parties than it involves proper agreement which
is to executed before the time lapsed. Communication is the major aspect before the approval of
any contract. As both the parties sit together to execute a proper contract so that no result of
break to the contract is executed. At the time of execution of contract, no party claim to be
committed fraud as both parties offers and accept the contract and they both are legally bound to
follow the contract.
CONCLUSION
From the above case study it can conclude that all contract can be termed under the
agreement but all agreement are not contract. As when parties enter into the contract they are
legally bound by the laws to follow such terms and condition which are imposed under the
contract. To invite a party to enter into the contract it depends upon the offer whether the offer is
directly made to parties or through Advertisement or social media. As offer made through
invitation cannot be terms to be valid to the contract. Thus, both the parties before offering or
accepting the proposal shall communicate with each other.
5

REFERENCES
Books and journals
Bai, X., Sheng, S. and Li, J. J., 2016. Contract governance and buyer–supplier conflict: The
moderating role of institutions. Journal of Operations Management. 41. pp.12-24.
Brilmayer, R. L., Goldsmith, J. L. and O’Connor, E. O. H., 2015. Conflict of laws: cases and
materials. Wolters Kluwer Law & Business.
Chaurey, R., 2015. Labor regulations and contract labor use: Evidence from Indian firms. Journal
of Development Economics. 114. pp.224-232.
Smits, J.M. ed., 2017. Contract law: a comparative introduction. Edward Elgar Publishing.
Cheung, M. A. and et.al., 2014. Benefits contract providing a bundle of benefits. U.S. Patent
8.655.776.
Savelyev, A., 2017. Contract law 2.0:‘Smart’contracts as the beginning of the end of classic
contract law. Information & Communications Technology Law. 26(2). pp.116-134.
Schwartz, A. and Scott, R. E., 2016. The Common Law of Contract and the Default Rule
Project. Va. L. Rev. 102. p.1523.
Von Heland, J. and Folke, C., 2014. A social contract with the ancestors—culture and ecosystem
services in southern Madagascar. Global Environmental Change. 24. pp.251-264.
Online
Australian Contract Law. 2015. [Online]. Available through:
<https://www.australiancontractlaw.com/law/formation-agreement.html>.
6