Legally-Binding Contract

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  • Topic: Contract, Invitation to treat, Offer and acceptance
  • Pages : 3 (960 words )
  • Download(s) : 46
  • Published : December 5, 2012
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2nd Assignment: Suggested Answer

1.The legal issue revolving around this case is that whether a valid legally-binding contract has been entered into between David and John, and, if that is the case, whether David is able to sue John for his breach of contract resulting from his sale of the shop to Nancy.

In general, a legally binding contract is an agreement made between two or more persons, by which rights are acquired by one or more to acts or forbearances on the part of the other or others. Negotiating an agreement in the form of an offer and an unqualified acceptance of that offer is one of the prerequisites for the contracting parties to form a valid legally-binding contract, in that an offer is defined as an expression of a willingness to contract on certain terms made with the intention that it shall become binding as soon as it is accepted by the person to whom it is addressed, and that an acceptance is defined as the positive, unqualified assent to all the terms of the offer. An offer, on one hand, may be communicated to an individual or to a class of persons or to the whole world at large, Carlill v Carbolic Smoke Ball Co [1893], and it may be made expressly or by conduct, whereas an acceptance, on the other, must be final, unconditional and communicated to the offeror, either orally, in writing or inferred from conduct.

When John displayed the sign showing the shop for sale, he was making an invitation to treat to potential buyer(s), Patridge v Crittenden [1968]. A valid legally-binding contract would result if David then responds to the invitation by making an offer to buy and John accepts his offer. However, this is not the case here.

Subsequently, John offered to sell the shop at HK$1.5 million. This is a valid offer which, if accepted by David, would constitute a valid legally-binding contract. However, if a communication of an acceptance contains a new term / new terms, it is a counter offer. The party...
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