ASSIGNMENT 1

Hanisi Chandler

R2308D17010916

Law of Contract

74896
Mary

In this case, the legal issue revolves around whether Steve's mistakenly posted
price of £5,000 constitutes a binding offer or merely an invitation to treat. Mary,
believing she is entitled to the car at the lower price, insists that a contract was formed.
The key question is whether Steve is legally obligated to sell the car for the incorrect
price or if he can refuse based on the principles of contract law.

While at face value it may seem as though Mary should have the right to enter
into an agreement with Steve based upon his faulty advertisement, he, however,
possesses the right to refuse to enter into any type of agreement with Mary since there
is no legal basis that he should have to engage in such to satisfy any request made by
Mary. This is so because his having up a faulty notice does not constitute an offer for
sale. The notice placed at the front of his enterprise, whether it be faulty or correct,
constitutes an invitation to treat. An invitation to treat is a legal term that indicates to an
offering party that a receiving party or possible offeree party is willing to engage in
negotiations or invite offers (Aust, 2019). Therefore, this type of arrangement does not
indicate or create a legal obligation on any of the parties involved in the negotiation up
until this point. The party creating the invitation to negotiate also retains the right to
reject any offer made that he desires to. Another prerequisite of contract law that was
found to be absent in this situation was that of acceptance. In order for a legal contract
to exist, an offeree party must accept the offer given; if this is not so, it cannot give rise
to a contractual relationship (Hollander, 2020).

The case of Fisher v. Bell (1961) is considered an authority on this situation in

particular. The issue was whether a flick knife with a price displayed in a shop owned by
Mr. Bell constituted an offer for sale, which would have been illegal since it would violate
the Offensive Weapons Act 1959, or if it was just an invitation to treat. The rule that
governed this aspect of contract law stipulated that an invitation to treat could not be
considered an offer. This ultimately led to the court recognizing that an invitation to treat
could not be considered an offer and the display of goods wasn’t enough to constitute
an offer (Aust, 2019).

Therefore, it would be advised to Steve that he did nothing in breach of the law
in his particular situation with Mary, as he had displayed a notice that indicated a
willingness to engage in negotiation, which did not constitute the creation of a legal
obligation or a contract. Mary, on the other hand, would be sensitized on the issue of
invitation to treat and advised accordingly not to proceed with legal action as her claims
would be seen as unfounded based upon current regulation.
Julie

In the second part of the legal issue revolves around whether Julie and Steve
had an agreement that formed a contract. The correct price was displayed in the
storefront to which Julie remarked that she would like to buy but would have to make
arrangements for finance. This statement by Julie did not constitute an offer but a
conditional offer which Steve never responded to since she just expressed a willingness
to negotiate. Her likelihood of purchasing the car is contingent on whether she would be
able to acquire finances. Therefore, no contract can be formed unless there is an
unqualified acceptance of an offer. Since Julie’s acceptance is conditional, there is no
binding contract until she secures financing and agrees to purchase the car without any
further conditions (Hollander, 2020). An offer is a proposal with clear and defined terms
communicated directly to an offeree, which is aimed at the creation of a contract.
Whereas a willingness to buy simply shows readiness to negotiate or enter into
discussions but does not constitute a legal offer that can be accepted to form a contract.

However, as well as there being conditional offers made, there can be no

contract without the acceptance of the offeree; in this case, the offeree, Steve, did not
express any willingness to engage in a contractual relationship with Julie based upon
the conditional offer she made. Additionally, it's important to consider Steve's potential
legal obligations and the significance of his silence in response to Julie’s conditional
offer. Generally, in contract law, silence doesn’t constitute acceptance, meaning Steve
is under no obligation to accept the terms Julie mentioned unless he explicitly agrees.
However, exceptions to this rule can arise, such as in cases where there is a prior
course of dealing between the parties, or if the offeree’s conduct implies consent
(Stone, 2018). These considerations collectively reinforce that, at this stage, no binding
contract exists between Julie and Steve. Julie does not possess any rights to the car
based upon her conditional offer, which was not accepted.

The case of Hyde v. Wrench [1840] 49 ER 132 is a seminal decision in contract

law that exemplifies the concepts of offer, counter-offer, and acceptance. Wrench
proposed to sell his farm to Hyde for £1,000. Hyde subsequently proposed a counter-
offer of £950, which Wrench declined. Consequently, Wrench opted to sell the farm to a
different purchaser, leading Hyde to try to accept the initial offer of £1,000 (Stone,
2018).

The case underscores numerous significant legal principles pertinent to contract

creation. Initially, it illustrates that a counter-offer nullifies the original offer, akin to
Julie’s conditional proposal for the automobile purchase, which signifies a readiness to
negotiate rather than complete acceptance. Secondly, for a contract to be enforceable,
there must be explicit and unambiguous acceptance of the initial offer. Julie’s assertion
regarding the necessity of finance is a conditional acceptance, indicating that no
contract can be established until she obtains the financing and consents to purchase
the vehicle without additional stipulations.
 Ultimately, Hyde v. Wrench underscores the significance of explicit
communication in contractual agreements. Similar to how Hyde's counter-offer
obstructed the acceptance of Wrench's initial offer, Julie's conditional statement
signifies that she has not accepted Steve's proposal to sell the car. This instance
emphasizes that conversations must result in unequivocal acceptance for a binding
contract to be established, reaffirming the ideas examined in the study of Julie and
Steve's circumstances.

Dave

In the final part of the scenario, Dave entered the picture the following day; he
offered Steve the full amount required to purchase the vehicle, to which Steve accepted
and thereafter sold the car to Dave. This interaction highlights the creation of a contract.
Dave’s negotiation consisted of an offer of the full amount set out by the invitation to
treat placed on the notice at Steve’s enterprise. Steve, being satisfied with the amount
of consideration that Dave offered, agreed to provide the car as consideration in return
for the sum of money offered by Dave. The final part of the scenario highlights the key
elements of a traditional contract, which are offer, consideration, acceptance, certainty,
and capacity. In the first instance, a full offer was made by Dave to pay the full asking
price. The offer was further accepted by Steve, showing that it complied with the
acceptance factor. The consideration within this scenario was the vehicle on the side of
the offeree and the money on the side of the offeror. Certainty was provided as the
transaction was done in an immediate manner, as well the spoken terms of the contract
were very direct and finally the situation indicated no inability of both parties to enter into
a contract, which would indicate both parties possessed the capacity to engage in
business dealing (Hollander, 2020).

In the case of Carlill v. Carbolic Smoke Ball Co. (1893), it established crucial
contract provisions, allowing for unambiguous and certain terms. The court emphasized
the importance of offer, acceptance, consideration, certainty, and capability in contract
formation, affirming the existence of a valid contract (Stone, 2018).

In conclusion, this scenarios illustrates some of the key elements of contracts. It

firstly dealt with what constituted an offer and clearly defined and separated invitation to
treat from offers. It further went on to discuss the key elements of an offer and
discussed how conditional offers did not constitute an offer as it lacked certainty, and
finally, I delved into the elements necessary to create a contract, which are offer,
acceptance, consideration, certainty, and capacity.
References

Aust, A. (2019). Contract law. Oxford University Press.

Hollander, J. (2020). Principles of contract law. Cambridge University Press.

Stone, R. (2018). The law of contract. Routledge.

Fisher v. Bell [1961] 1 QB 394.

Hyde v. Wrench [1840] 49 ER 132.

Carlill v. Carbolic Smoke Ball Co. [1893] 1 QB 256.