Business and Corporate Law Report: Nikhil vs. Vicky Van Sale Contract

This report analyzes a contract law case centered around a van sale between Nikhil and Vicky. It examines the essential elements of a valid contract, including offer, acceptance, consideration, and the intention to create legal relations. The report meticulously applies these legal principles to the scenario, evaluating the communications between Nikhil and Vicky to determine if a binding contract was formed. The analysis considers the advertisement as an offer, the counteroffer, and the lack of explicit acceptance. It references case law such as Carlill v Carbolic Smoke Ball Co and Albert v MIB to support its findings. The conclusion determines that a valid contract was not formed due to the absence of acceptance of the counteroffer and the lack of intention to create legal relations, ultimately leading to a conclusion that no breach of contract occurred. The report highlights the importance of clear communication and mutual agreement in the formation of a legally enforceable contract.

Business and
Corporate law

Table of Contents
ISSUE...................................................................................................................................................3
LAW.....................................................................................................................................................3
APPLICATION....................................................................................................................................5
CONCLUSION....................................................................................................................................6
REFERENCES.....................................................................................................................................8

ISSUE
 Is there a contract between Nikhil and Vicky.
 Is the contract is valid.
LAW
CONTRACT:
A contract can be defined as a legally enforceable agreement or promises between two
parties. The contracts make the business transaction solid between individual, corporation or sole
traders. The legal contract must be voluntarily made by those having contractual capacity. This
means that the contracting parties must not be minors, intoxicated or mentally incapable.
Elements of valid contracts: To make a valid and legally bound contract for sales the following
conditions and terms must be fulfilled:
Contractual agreement: To form a valid agreement between parties there must be valid
terms of offer and acceptance. One party make offer and the other party accepts the same which
creates a binding contract (Durovic and Janssen, 2018). The offer must be made in such a way that
people can understand it and accept the same.
OFFER:
In case of sales contract the first requirement is that one party must make an offer to sale. An
offer exist when one party, clearly express the willingness to enter into contractual relationship t
that will be bound by the specific set of terms and condition.
Sales proposal through advertisement:
An advertisement is considered to be a valid offer unless it fulfils all following three
elements:
 The terms of same are definite that is clearly express the description, quality, quantity and
prices of the articles offered for sale.
 It is communicated to a specific purpose or a limited group of people.
 The circumstances exist that with publication of the advertisement advertiser have an
intention to enter into a contract.
The main principle governing the regulation of validity of advertisements as offer to sale is
when the parties intent to assign legal responsibility to enter into contract (Contractual agreement -
offer and acceptance , 2018). Generally it is on the discretion of the court to decide the validity of
an advertisement as valid offer.

Case law: Carlill v Carbolic Smoke Ball Co
In this case it was decided by the court that an advertisement to sell smoke ball constitute a
unilateral contract when Carlill accepted to performer as per the terms stated in offer(Carlill v
Carbolic Smoke Ball Co [1893] 1 QB 256 Court of Appeal, 2018). This case it was made clear that
the terms mentions in sales advertisements becomes the contract terms when accepted by the
offeree.
ACCEPTANCE:
An acceptance manes to agree to the terms and condition of the offer made by the offerer.
The parties must agree to receive something. With acceptance of the offer in absolute terms the
result is creation of binding a biding contract between offerer and offeree. The parties accepting the
offer can not substantial change the terms and condition of the offer (Bayern, 2015). It must be
accepted before its expiry. For instance when no time limit is specified it must be accepted within
reasonable time. Once, a valid accepted is made a contract with biding effect is formed. The
elements of valid acceptance are:
 Acceptance must be communicated to the offeree;
 The terms of acceptance must match with terms of original offer;
 The agreement must be certain.
Counter offer and acceptance:
An counter offer is made when the offerree responds to an offer by making changes in terms
of offer or with a different term. This destroys the original offer hence the same is no longer open
for the offerer to accept. An offer made in response of previous offer by the other party during the
negotiation for reaching to final contract (Wilkinson-Ryan and Hoffman, 2015). Making a counter
offer automatically reject the original offer and it requires the acceptance under the terms of counter
offer else these is no contract between the parties.
CONSIDERATION:
This is another essential elements of contract to make it legally binding which is possession
consideration where both sides gives something of value. One party makes a gain or benefits and
the other party accepts the offer to give the corresponding cost. The consideration must be sufficient
it need not to be adequate. The party accepting the offer must give something of value to the offerer.
INTENT TO LEGAL RELATION:
The intention to create legal relation means that parties have an intention to enter into a
legally binding arrangements in which the rights and obligation of the agreements are enforceable.
For the sales contract they must be complied in writing stating the terms and condition of contract
mutually agreed by both the parties (Intention to create legal relations, 2018). An intention to create
legal obligation can be defined as putting it into formal accord, if not done it can simply constitute

a mere negotiation between parties. It is important or the parties wishing to create legal boundation
for performance of contract that a proper written documents must be formed stating clearly terms of
agreement so that there can be no disagreement as to the intention of the parties to contract.
Case law:
Albert v MIB [1971] 3WLR 291
It was held I this case the offer was under commercial context regarding services as giving
lift to different people over a period of time. The house of lords state that there was an intention to
create legal obligation.
Coward v MIB [1963] 1 QB 359
In this person dies who took lift form his friend and due to the negligence of latter person
the his friend died, in this case t was held by the court of appeal that on contract of hire and reward
was formed giving same a legal status (Coward v MIB [1963] 1 QB 359 Court of Appeal,2018).
The widow of the disease was not entitled to compensation of basis of commensement of legal
contract.
VERBAL PROMISES AND LEGAL BOUNDING EFFECTS:
A contract need not to be written to be legally enforceable as it can either be verbal or
written. For a contract in verbal formate there are certain elements that must be met to give effect
of legal enforceability, these are:
 There need to be offer and acceptance: There must be an offer and it must be accepted
by the other party, When someone makes an offer and other accepts it then a verbal
agreement legally binding.
 The principle of consideration: No all the agreement with offer and acceptance are legally
bound, only those which have a specific consideration are legal (Deep, Singh and Ahmad,
2017). The law considers only those agreements as legal under which parties promises to
provide something of value in exchange for other valuable item. The value need to in
monetary value, it can be anything that consist values in eyes of the law.
 Intention: Both the parties must show an intention to create legal binding effect to be
recognised by the courts as legal. This is decided by courts with looking at the surrounding
circumstances. In cases where something of values has been exchanges it is considered that
parties have an intention to create the agreement legally bound.
BREACH OF CONTRACT:
A breach occurs when a person or organisation deny or revoked to perform a pre determined
agreed term. In contract when either of the parties refuses to oblige with any terms or condition
mentioned in the written agreement is constituted breach (Theriot and Lowndes, 2016). For
commencement of breach there are certain conditions that must be fulfilled, there must be a valid

offer and acceptance, consideration and parties are legally bound to perform the contract obligation.
APPLICATION
With application of the rules and laws related with the contract law in the given case
scenario the following things are determined:
Firstly the offer to sale for selling the van is made through advertisement by Nikhil by
pasting the advertisements in back window on his van (Petty,2015). It described the condition of
van along with the sales price of £5000 the advertisement fulfils all the requirement of a valid offer,
hence the offer is valid and absolute with taking reference from the decided case law of Carlill v
Carbolic Smoke Ball Co.
The acceptance was made by Vicky on 5th march with a counter offer to purchase the Van
for £4000. This made the original offer lapse but for the same Nikhil did not give the acceptance
rather he holds the offer for 2 days from the date the counter offer was made that is 7th march. This
can be seen that the counter offer made by Vicky was not immediately accepted by Nikhil instead a
time window of two days was given to him to accept the counter offer to sell the Van for £4000.
The another condition to form as valid contract is presence of consideration. In the given
case scenarios Nikhil want ot sell his 6 years old van for an amount of £5000. The van is
consideration for the offerer and the sum that will be paid by offerer for purchasing the Van is
consideration for offeree.
The element which give a valid agreement a power of legal enforceability under the law is
the intention of the parties make each other legally obliged to perform the terms and condition
mutually agreed by the parties to agreement. As defined in the above case there was no intention
expressed by with of the parties to create the legal obligation about the enforcement of the condition
of selling the van at £4000 by Nikhil to Vicky. Moreover, as per the above defined condition of
verbal agreerment there was a offer but no acceptance of the counter offer by Nikhil. Furthermore,
nothing if the values that is on a single penny was given by Vicky to Nikhil making the legal intent
of party effective. So t can be state be states the parties to sales of van agreement did not create a
contract. An valid agreement was alos not formed between both of then beause for the counter offer
there was no acceptance given by Nikhil and same was on hold for a period of 2 days.
With applying the ruling of case Albert v MIB [1971] 3WLR 291, it can be stated that the
parties did not have created any legal intention hence in the present case as well with no legal
internation and valid acceptance there is not valid contract was formed between parties for sale of
van constituting on legal and valid contract.
For the breach of the contract there must be first existence of legal and valid contract which
required fulfilment of all the elements to constitutes a contract. In this case there is no valid contract
formed between Nikhil and Vicky so no question arises related to breach of the contract.

CONCLUSION
With application of the rules, laws and rulings of case laws in the given circumstances of
given case law of sales contract between Nikhil and Vicky, it can be conclude that there was no
legal and valid contract formed between them. The conclusion is reached with application of the
rules in each situation, which states that the offer made by Nikhil was valid and the communication
of acceptance over the telephone was verbal one. But instead of making an complete acceptance
Vicky made a counter offer making the original offer null. But this does not constitute that the
agreement can not be made rather a counter offer is made as negotiation over terms of contact but
for the same acceptance must be received for the person who have made offer in the first place, in
present case Nikhil. Here no acceptance was given by him over the counter offer of selling the van
for £4000.
With absence of valid agreements there is no situation where a legal and valid contract can
be formed. As given in the case scenario Nikhil sold the van to Brian for £5000 and they enter in to
legal formal contract as well, binding both the parties to perform the contract obligation. Fro the
present case it can be clearly stats the parties to the agreement did not have any intention of creation
of legal binding effect of the sales contract and the valid agreements was not formed as well
because no acceptance was conveyed by Nikhil over the counter offer made by Vicky rather it was
kept on hold for 2 days. In mean time another person accepted the offer of Nikhil in original terms
as same was entered in formal written contract.

REFERENCES
Books and Journals
Bayern, S., 2015. Offer and Acceptance in Modern Contract Law: A Needles Concept. Calif. L.
Rev.103. p.67.
Deep, S., Singh, D. and Ahmad, S. A., 2017. A review of contract awards to lowest bidder in Indian
construction projects via case based approach. Open Journal of Business and
Management. 5(01). pp.159-168.
Durovic, M. and Janssen, A., 2018. The Formation of Blockchain-based Smart Contracts in the
Light of Contract Law. European Review of Private Law. 26(6). pp.753-771.
Petty, R. D., 2015. Contracts. Wiley Encyclopedia of Management, pp.1-4.
Theriot, C. V. and Lowndes, J. S., 2016. Declaring An Early Victory: Effectively Using Declaratory
Judgment to Timely Resolve Fundamental Contract Interpretation Disputes on Federal
Government Contracts. Constr. Law. 36. p.23.
Wilkinson-Ryan, T. and Hoffman, D. A., 2015. The common sense of contract formation. Stan. L.
Rev. 67. p.1269.
Online
Contractual agreement - offer and acceptance . 2018. [Online]. Available through :<http://e-
lawresources.co.uk/Offer-and-acceptance-contract.php>.
Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256 Court of Appeal
. 2018. [Online]. Available through :<http://e-lawresources.co.uk/Carlill-v-Carbolic-Smoke-Ball-
Co.php>.
Coward v MIB [1963] 1 QB 359 Court of Appeal. 2018. [Online]. Available through
:<http://www.e-lawresources.co.uk/Coward-v-MIB.php>.
Intention to create legal relations. 2018. [Online]. Available through :<http://e-
lawresources.co.uk/Intention-to-create-legal-relations.php >.