Contract Law

Topics: Contract, Contract law, Contractual term Pages: 7 (2561 words) Published: May 16, 2010
“The mere existence of the core elements of offer, acceptance, and consideration will not guarantee a legally enforceable contract”. Discuss. A contract is an agreement which normally consists of an 'offer' and an 'acceptance' and involves the 'meeting of the minds' or consensus between two or more parties with the intention to create a legally enforceable binding contract. Therefore in this essay, the four core elements needed for the formation of a contract such as offer, acceptance, and consideration and intention to create legal relations will be discussed briefly. Offer

An offer is a proposal whereby the parties are willing to contract on a specific set of terms, made by the offeror with the intention that, if the offer is accepted, the parties will be bound by a contract. An offer may be made to an individual, group, or even to the world at large as seen in the case of Carlill v. Carbolic Smoke Ball Co. [1893]. However, offer is distinguished from an invitation to treat which is not an offer but an offer to consider offers. Acceptance of an invitation to treat does not lead to a contract and therefore in Pharmaceutical Society of Great Britain v. Boots cash Chemists (Southern) Ltd [1953], the defendant had made an invitation to treat by having his goods display on the shelves and this is not an offer. When the customer picks up goods from the shelf, to the cash register, he makes an offer to buy the goods. Only when the casher accepts the offer by taking the payment from the customer is when a contract is formed. Offers may be terminated in a number of ways such as Revocation, Rejection, Lapse of time, Failure of a condition or Death. Acceptance

An acceptance converts promise by offeror into an agreement in either oral or writing which must exactly reflect the original offer made. The offeree must intend to accept the offer, else no agreement is made by parties. To be effective, acceptance must be communicated. A mental decision to accept is not sufficient. The general rule is that an agreement is concluded when and where communication of acceptance is received and it has to be absolute and unconditional. In relation to instantaneous modes of communication such as by telephone, fax or email, and the Electronic Transactions Act 2000, acceptance is deemed to be received when it is given to the offeror even if they do not read it. This applies in relation to where post is used a special rule called the ‘postal rule’ applies. Under this rule, provided the post is contemplated by the parties both expressly or by implication, acceptance occurs, when and where the letter is posted as in the case of Adams v. Lindsell [1818]. However when doing business, the ‘Silence’ rule is generally not considered an acceptance, even if the offeror sates that it is, unless both parties agreed as in Felthouse v. Bindley [1862]. For cross-offers, contract law states that no acceptance is made as it implies a lack of consensus between the parties at the time of making the offers like in the case of, Tinn v. Hoffman & Co [1873]. Acceptance in the case of unilateral agreements generally takes the form of performing an act. If an agreement is uncertain in a material respect it cannot constitute a binding contract. This might occur if the agreement is 'vague or ambiguous' or incomplete. Consideration

Consideration is the price that is asked by the promisor in exchange for their promise. In many jurisdictions consideration is not an essential element of a contract and it is sufficient that parties have reached a binding agreement. However, the common law requires that, for an agreement to be binding, the promisee must provide consideration for the promise they have received. Thus, gratuitous promises are generally not enforceable. It is for the promisor to stipulate the consideration for his promise either directly or indirectly and is not for the promisee to proffer something and call it consideration. However, provided the...

References: Andy Gibson and Douglas Fraser, 2007, Business Law. Australia: Pearson Education Australia
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