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Business Law

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Business Law Assignment

Word Count: 1790

Table of Contents

Question A 3-5

Question B 6-8

Bibliography 9

Question A

According to Treitel (Friel, R.J, 2000) a contract is "an agreement giving rise to obligations which are enforced or recognized by law". It can be created orally; or written and include a set of clauses and conditions or by conduct of offeree. In order for a contract to be created, both parties must agree on the specific terms of the contract. Terms in a contract can include time limits, for example certain payment dates, or any other 'rules', which both parties must follow.

The foundation of any agreement is an offer. This is the start of any contract and can be oral, written, or implied by the conduct of the offeror. In our case, Amy has verbally expressed her offer to Claire - she has offered to pay €200 for the sofa and armchairs Claire is replacing. This is an unequivocal bilateral offer to Claire from Amy, which Claire received orally and agreed to think about it. As any response to an offer, the other party must consider the terms of the offer and decide whether to accept it or not.

Acceptance is defined by Robert Clark (2004, p13) as "a final and unequivocal expression of agreement to the terms of an offer". Richards (2007, p28) writes an acceptance to an offer can be expressed or implied the same way as an offer - "orally, in writing, or inferred from conduct".

According to Sir Frederick Pollock (Richards, P, 2007, p60) consideration is "an act or forbearance of one party, or the promise thereof is the price for which the promise of the other is bought, and the promise thus given for value is enforceable". In our case, Amy has offered the consideration which is the price of the sofa and armchairs, which is €200, to Claire.

Two weeks have passed from the day that the offer has been made. when Claire posted a short note to Amy accepting the offer although she haven't spoken or seen her since the offer was proposed. According to Richards (2007, p38) "The rule that acceptance must be communicated to the offeror is overturned when acceptance is sent via the post, since here, the rule is that acceptance takes place as soon as the letter is validly posted". Please refer to Re London and Northern Bank (1900) case.

That would mean that the acceptance note that Claire has sent, formed a binding bilateral contract between Amy and Claire. This type of contract would be called a bilateral contract. Friel (2000) states that "bilateral contracts are addressed to specified individuals and create a contract once accepted, even though the object of that contract has not been performed".

Furthermore, after Claire has posted acceptance note, she received a letter in her post from Amy, which informed her that she had gone away for a few days but had been able to buy a new sofa and armchairs and therefore she was revoking the offer and was no longer interested in purchasing Claire's sofa and armchairs. "In order for revocation to be effective, notice of the withdrawal of the offer must be communicated to the offeree. It should be noted that the postal rule as seen in the context of acceptance has no application here" Writes Richards (2007, p44). Referring to Byrne v Van Tienhoven (1880) case, a revocation would become effective when Claire receives the letter - and that is after she posted a note of acceptance. In accordance to postal rule, Claire's acceptance was effective upon posting and thus a contract was binding. Consequently, revocation by Amy is ineffective as revocation must be communicated before acceptance.

In my opinion the bilateral contract between Amy and Claire has never existed according to (1) The Postal Rule, and (2) Time Lapse rule:

1. Since Amy and Claire's previous communication has taken place orally, it is unreasonable for Claire to use the post. In "Henthorn v Fraser (1892) case it was stated that the postal rule applied only where it was reasonable for the offeree to use the post as a means of communication" according to Richards (2007, p40). Richards (2007,p40) writes that in the case of Quenerduaine v Cole (1883), the view was taken that an offer by way of telegram was an indication that an equally expedient mode of acceptance was required, so that acceptance by post was held not to be valid".

2. Claire accepted the offer after 2 weeks, which is 14 days later. There was no deadline for the acceptance in the offer and therefore "it will in any event lapse after a reasonable time. Reasonable time largely depending onthe subject matter of the offer" states Richards (2007, p49). An example case of Ramsgate Victoria Hotel Co. Ltd v Montefiore (1866) held that there was no contract as there was no acceptance of the offer within a reasonable time. Therefore, in my opinion 14 days may be deemed as unreasonable time as business transaction usually takes 5 to 7 days to proceed and consequently Claire's acceptance is not valid and no contract is binding.


After evaluation of the relevant rules of the formation of contracts and having applied them to the case of the agreement between Claire and Amy concerning the sale of Claire's sofa's to Amy, we determined that there is no contract that legally binds the two parties.

Question B

Exemption Clause




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