HI6027 Business and Corporate Law: Contract Law Case Study

This case study analyzes a contract law scenario involving an author, Frederick, and various publishers. The central issue revolves around determining the existence and timing of valid contracts between Frederick and different parties. The analysis examines the principles of contract law, including offer, acceptance, counter-offer, and the postal rule. It assesses the validity of agreements made with Metro publisher, Boswold, Havoc Films, and Pickwick, considering factors such as intention to create legal relations and the timing of acceptance. The case study highlights the importance of clear communication and adherence to contract law principles in business dealings, ultimately concluding that a valid contract was formed between Frederick and Pickwick. The solution references relevant legal cases such as Hyde v. Wrench, Henthorn v Fraser, and Adams v Lindsell to support its analysis.

Running head: CONTRACT LAW
CONTRACT LAW
Name of the Student:
Name of the University:
Author Note:

1CONTRACT LAW
Issue:
The matter of dispute that can be raised from the present case scenario is whether any
valid contract has been entered into by Frederick. Moreover another issue is to be determined is
if any contract exists then and at what time it has been created and with whom.
Rules of law
In the eyes of law contract has validity and enforceability when it is created by giving an
offer to another person who has received it unconditionally. Apart from this other additional
elements must also be present like the consideration, intention of the parties and capacity of the
parties. In addition to this the subject matter related to the contract must also be lawful else such
contract will be rendered void.
In case where all the Essentials have been fully satisfied then a contract will be instituted
in a valid manner which will be binding on the parties and will be legally enforceable.
As stated above the primary condition to be satisfied in order to initiate a contract is the
presence of a valid agreement. An agreement is formed when an offer is made buy one party
which is again accepted by another party to the contract as in Stevenson Jaques & Co. v McLean
(1880) 5 QBD 346. Such acceptance must be corresponding to the offer and it must be
unconditional and unqualified as in Trollope & Colls Ltd. v. Atomic Power Constructions Ltd.
[1963] 1 W.L.R. 333, 337. However if any additional terms and conditions have been imposed
while accepting the offer by the other party then it does not amount to an acceptance but it results
into a counter offer and in such situation the farmer offer does not exist anymore and it is
extinguished . It was observed in Hyde v. Wrench (1840) 3 Beav 334 which is a leading common
law case related to counter offer.

2CONTRACT LAW
Moreover the offer is said to be accepted when the communication of the acceptance
reaches the offeror as in Brogden v Metropolitan Railway (1877) 2 App Cas 666. But the rule is
not same in case of Postal service where when the letter of acceptance is posted it amounts to a
valid acceptance as in Henthorn v Fraser [1892] 2 Ch 27. It is not considered whether or when it
reaches the offeror or whether it is lost or destroyed in the transaction as observed in Adams v
Lindsell [1818] 1B & Ald 681.
One more important element required to result into a contract is the presence of the
intention of the parties to enforce a legal contract as observed in Carlill v Carbolic Smoke Ball
Co [1893] 1 QB 256. It is presumed that in case of any commercial transactions the parties
possess the legal intention. But the situation changes in case of social or domestic agreements
where the parties are devoid of any legal intention as seen in Balfour v Balfour [1919] 2 KB 571.
Application
In the present case it is seen that Frederick was looking for Publishers with the intention
of publishing his second book because he was not ready to work with his first publisher named
Metro publisher as it did not treated him well.
In a party held in February he came across Boswold who was the chief editor, to whom
he expressed his intention to get his second book published by him at a price of minimum 40
Grand. Boswold regarded it to be a reasonable consideration. This can be regarded as a contract
because it is more of a social agreement because of the decision of Ermogenous v Greek
Orthodox Community of SA Inc (2002) 209 CLR 95.
On March, Frederick was then approached by Metro publisher to whom he said that he
would be selling the book to the person who will be bidding the highest amount. This is not an

3CONTRACT LAW
offer but an invitation to offer as in AGC (Advances) Ltd v McWhirter (1977) 1 BLR 9454
(Supreme Court of NSW). In response to it editor of Metro offered him $50,000 which is not
accepted readily by him and thus no contract is formed as the offer is not being accepted.
Frederick then received a letter from Havoc films that made an offer to create a film on
his first book at the consideration of 45000 dollars. This was readily accepted by him but he give
an additional condition that he will be having the authority to select the lead actor of the film.
This amounts to a counter offer which kills the initial offer as laid in Hyde v Wrench.
Later on, on March 10th, he again received a letter from Buswold who made an offer to
publish his book for $40,000 which when bargained by Frederick increased to $45000 and it was
affected by making some manual modification in the form by Frederick.
He then went to the post office where he left the form in the hands of postal worker for
posting it. In the meantime outside the postal office, he met Pickwick, a renowned and famous
publisher and from him he got another offer from him who wanted to publish the book at
$45,000.
Considering his reputation Frederick wanted to accept that offer. He immediately entered
into the postal office and convinced the postal worker to get back his letter left with him. He is
entitled to create the contract by accepting the offer made by Pickwick because the form is not
yet deposited and as a result acceptance to Boswold's offer is not completed. This is because of
the postal rule which states when the letter of acceptance is posted it amounts to a valid
acceptance as in Henthorn v Fraser [1892] 2 Ch 27. Here the letter was yet to be posted.
After this Pickwick handed over a cheque of 45000 to Frederick which results into a valid
contract between them.

4CONTRACT LAW
Conclusion
It can be thus inferred that a valid contract is being created between Fredrick and
Pickwick when the former accepted the cheque and shook hand with Pickwick.

5CONTRACT LAW
Refernces:
Adams v Lindsell [1818] 1B & Ald 681.
AGC (Advances) Ltd v McWhirter (1977) 1 BLR 9454 (Supreme Court of NSW)
Balfour v Balfour [1919] 2 KB 571
Brogden v Metropolitan Railway (1877) 2 App Cas 666
Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256
Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95
Henthorn v Fraser [1892] 2 Ch 27
Henthorn v Fraser [1892] 2 Ch 27
Hyde v. Wrench (1840) 3 Beav 334
Stevenson Jaques & Co. v McLean (1880) 5 QBD 346
Trollope & Colls Ltd. v. Atomic Power Constructions Ltd. [1963] 1 W.L.R. 333, 337