Business Law: FarmOnline Pty Ltd and Livestock Seller Agreement

This business law assignment analyzes a scenario involving FarmOnline Pty Ltd and Livestock Seller to determine if a legally binding contract was formed. The solution examines the principles of offer and acceptance, counteroffers, and the requirements for a valid contract, referencing key legal cases such as Smith v Hughes, Hyde v Wrench, and Harvey v Facey. The assignment explores the initial offer made by Farm, Livestock's inquiry regarding the price, and subsequent communications. It concludes that no contract was formed because Farm revoked its offer before Livestock's acceptance, highlighting the importance of timely acceptance and the offeror's right to withdraw an offer before acceptance. The assignment provides a detailed analysis of the legal principles governing contract formation, illustrating how these principles apply to the given facts and ultimately determine the outcome of the case.

Running head: BUSINESS LAW
Business law
Name of the Student
Name of the University
Author Note

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Issue
The issue in this case is to find out whether there has been an agreement which can bind
FramOnline Pty Ltd (Farm) and Livestock Seller to its terms as per the rules and provisions of
contract law and particularly the rules for offer and acceptance.
Relevant Law
A contract is a legal necessity which is required to make the promises done by two parties
become binding on each other. A contract is a form of agreement which becomes binding legally
only if the parties to it are able to establish that agreement has all the necessary components to
make it a contract. the basic component which would be required by any agreement between the
parties to become legally binding includes a valid offer made by the offeror, valid acceptance
made by the offeree, a consideration to be performed by the parties in relation to a promises
made to each other, the legal capacity of the parties to get into a contract and the intention of the
parties to create a legal relationship (Knapp et al. 2016, p. 03-05).
An offer is a statement through which one party signifies its willingness to get into a
legally binding transaction with another. An offer has certain requirements for the purpose of
being legally valid. Firstly as provided by the landmark case of Smith v Hughes [1871] LR 6 QB
597 an offer for the sale of goods have to be complete which means that it must have elements
like, price, delivery, nature of goods and time of its validity. In case such terms are missing from
an offer the offer would be regarded as an invitation to treat, such invitation has no legal
significance.
An acceptance is the next step towards a contract. An acceptance occurs when the person to
whom the offer has been made signifies a willingness to be bound to the terms of the offer. Just

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like that of an offer the acceptance also has certain legal criteria to be met before it can be
considered as a valid offer. The acceptance primarily has to be totally in accordance to the terms
which have been provided by the offer. For instance of the offer provides for the sale of X goods
for $20 each on Monday, than a proper acceptance cannot take place if the offeree signifies to
purchase X goods for $ 19.9 each on Monday. Thus a mirror image of the offer has to be created
through the acceptance by the offeree. In addition the acceptance has to be expressly signified by
the offeree to the offeror through the process of due communication. In case a particular mode if
acceptance has been asked for by the offeror than only such mode of acceptance can be utilized
to make a valid acceptance (Poole, 2016, p. 34).
An offer can also come to an end as soon as the time provided in relation to its validity
lapses as provided by McKendrick (2014, p. 122).
Where an acceptance has not been made according to the terms of the offer and there are
additional terms which are added to the acceptance which were not present in the offer the
acceptance itself becomes a counter offer and the offeree becomes the offeror. In addition as
soon as a counter offer in relation to the original offer has been made the original offer is rejected
and comes to an end. This means that the offer is no longer open to be accepted. These principles
had related to offer acceptance and counter offer had been discussed in the case of Hyde v
Wrench (1840)

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In the case of Gibson v MCC (1979) it had been provided by the court that the
correspondence between both the parties have to be considered in order to determine whether the
parties had reached an agreement among them or not.
Stevenson v McLean (1880) in this case the court ruled that mere inquires cannot be
treated as a counter offers. In this case the attempt of the party to incorporate a credit term by
merely requesting was not considered as a counter offer by the court.
In the case of Payne v Cave (1789) it was held by the court that till an acceptance in the
proper form has been signified by the offeree, the offeror can withdraw the offer anytime. In this
case the auctioneer’s bid which accounted to an offer was allowed to be withdrawn before the
acceptance was properly made.
In the land mark case of Harvey v Facey (1893) the plaintiff had asked the defendant to
sell pens at the lowest cash price. The defendant replied that the lowest price was $900. The
plaintiff in return sent a post which stated that the plaintiff accepted the offer to buy the pen at
$900. However it was held by the court that the post of the defendant was not an offer but was
only indicating the minimum price which would have been wanted by the defendants if they has
a plan to sell the pens. Thus the post of the plaintiff cannot be taken as an acceptance.
Application
In the given situation it can be seen that the Farm and Livestock were into a negotiation
related to an agreement for purchase of beef. The agreement as per the above discussed rules
would only be binding legally on the parties and become a contract if all the essential elements
of the contract particularly offer and acceptance have been met.

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An offer had been made by Farm on 1st October for the sale of 80 cattle with a price of
$1500 per head. In addition the offer stated that the buyer Livestock have to reply within 14th
October. It has been discussed above that if a particular time has been provided by the offer it
comes to an end as soon as the time elapses.
In this case on 4th October the buyer had made an inquiry that whether such price would
be reduced or not to 1200 per head. In such a situation the inquiry may be regarded as a counter
offer. This is because the original offer states a price of $1500 per head and the buyer wanted a
price of $1200 which is not in accordance to the original price of the offer. Thus the offer has not
been accepted according unequivocally. However applying the principles of McLean’s case in
this situation it can be said that the price of $1200 inquired by the buyer was a mere inquiry
which cannot be accounted as a counter offer but as not acceptance was made the offer was not
formed.
A new offer had been made however by Farm which provided the price to be $1400 per
head. This expressly ended the first offer made by farm and the new offer cannot be head to be
valid till 14th October. As there was no reply from Livestock farm had got into another contract.
Livestock had tried to enter into a contract on 14th October by signifying acceptance to the offer
worth $1400. It has been discussed above that the offeror can withdraw the offer any time before
the acceptance had been made as per the case of Payne. As in this case Farm had got into another
contract for the sale of cattle as no acceptance was made by livestock it signified that they had
revoked the offer. Thus as the offer was not present it cannot be accepted resulting in no legally
binding agreement.
Conclusion

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As the offer had been revoked by Farm it was not available to be accepted by Livestock
and thus no contract was formed between them.

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References
Gibson v Manchester City Council [1979] UKHL 6
Harvey v Facey [1893] UKPC 1
Hyde v Wrench. (1840) Beav 334
Knapp, C.L., Crystal, N.M. and Prince, H.G., 2016. Problems in Contract Law: cases and
materials. Wolters Kluwer Law & Business.
McKendrick, E., 2014. Contract law: text, cases, and materials. Oxford University Press (UK).
Payne v Cave (1789) 3 TR 148
Poole, J., 2016. Textbook on contract law. Oxford University Press.
Smith v Hughes [1871] LR 6 QB 597
Stevenson, Jaques, & Co v McLean [1880] 5 QBD 346