Contract Law

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Part 1

A contract is an agreement between two or more parties, which can be legally enforceable. A contract maybe written or oral, although an oral agreement can be difficult to prove in court. In order for a contract to exist it must include four elements, that being offer, acceptance, intention and consideration. (Sweeney & O’Reilly 2007 pg 160). A contract only exists when an offer has been accepted, an offer has the intention to be legally binding and the willingness to contract on certain conditions (Butt 2004 pg306). Accepting an offer means agreeing to the contract and in essences agreeing to the terms of that contract, an offer can’t be withdrawn or rejected and only the offeree is able to accept the offer, this acceptance must be final and unqualified (Sweeney & O’Reilly 2007 pg 180).

In this case although there was an offer there was no acceptance therefore a valid contract did not exist also because a counter offer occurs it means the first offer has been rejected and no longer exists (Sweeney & O’Reilly 2007 pg 178). As both parties were negotiating terms and forwarding offers there is no actually acceptance just the introduction of new terms, this leaves Mary’s offer open to be accepted by James (Butt 2004 pg101). Therefore in this case an offer will only exist if James agrees to Mary’s counter offer. In this case the price of the toys at $9 is merely an invitation to treat or negotiate, not an offer. It invites someone to make an offer but the offer does not have to be accepted (Gooley & Radan 2006 pg 37). As with the case Grainger & son v Gough [1896] AC 325 the courts stated that the catalogue distributed to consumers with prices of wine was without a doubt an invitation to treat. The advertisement from the Petz R Us store simply states that the toys start at $5 it does not give a customer the right to be able to have the product at that price as its just a statement shops use to invite customers to treat, not a fixed price (Sweeney & O’Reilly 2007 pg167). With relation to Pharmaceutical Society of Great Britain v Boots Cash Chemists [1853] 1 QB 401, the courts ruled that display of a product isn’t an offer but merely an invitation to treat. As discussed in Harvey v Facey [1893] AC 552 the forwarding of a statement of price is usually not an offer so when Mary responded to James letter it was merely supplying James with further information and there was no intention to make an agreement. The only offer that was made was by James when he went on to offer Mary $7 per toy and being merely an invitation to treat Mary does not have to accept James offer by any means (Sweeney & O’Reilly 2007 pg 164).

Therefore the offer between James and Mary wasn’t an agreement as it was merely an invitation to treat and furthermore there was no acceptance by Mary to James offer. The elements involved in making a contract were not able to be met, although both parties may of had the capacity and legality to be able to contract there is not a binding contract without a valid agreement. The element of consideration would have been met if the contract had of existed as James was offering money for the items from Mary, consideration may be provided either as a promise to do something or by an act that is of valve in the eyes of the law (Gooley & Radan 2006 pg 65), as with such cases as Dunton v Dunton [1892] 18 VLR 114 where a promise by the wife to act in a respected manner was held as sufficient consideration when the husband promised to pay certain payments after their separation. Although the intention of the offer between James and Mary would have been seen as being of a business or commercial nature and therefore the courts would presume that the parties did intend to create a legally bound agreement, there still was no agreement.

Part 2

In this case if Mary and James were siblings it would not change the aspects of the agreement, as there was not an agreement in the first place because Mary took no acceptance...
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