Contract Law In Business

Questions: 1.Whether Mike is liable to purchase computers from the Bob? 2.Whether Bob is liable to purchase hard drives from the Tom? 3.Whether there is valid contract between Steve and Bob or not, and bob is liable to give new computer to Steve? 4.Whether Bob is liable to purchase vehicle from Marie because of form signed by Bob? Answers: 1.Offer can be terminated by rejection. In other words, offer cannot be accepted if it was once rejected by the offeree. Rejection can be done in two ways either with direct refusal or with Counter offer. Counter offer is considered as purported acceptance but in different situations. Even terms stated in counter offer is immaterial then also counter offer can be considered as rejection or new offer. For effective rejection it is necessary that it must be communicated. In case Hyde v Wrench (1840) Beav 334 we can understand this concept in more clear way (ACL, n.d.). Application: On 1st January, Bob receives offer from Mike for the purchase of computers from Bob, but on 2nd January bob make counter offer to Mike which was rejected by Mike on 3rd January. Later, on 5th January Bob accepts the offer made by Mike on 1st January and he also send computers to Mike, but Mike Reject to make the payment because he already purchased computers from somewhere else. In the present case, Mike is not bound to make the Payment because counter offer made by Bob on 2nd January is considered as rejection of offer, and once the offer is rejected then offeree cannot accept the offer. Therefore, Mike is not liable to make payment to the Bob. Conclusion: In this there is no contract between Bob and Mike because Bob already reject the offer made by Mike on 2nd January by making counter offer. Therefore, Mike is not liable towards Bob. 2.It is necessary for the effective acceptance that it must be communicated and only the mental decision to accept the offer is sufficient. Agreement is valid only when communication related to acceptance is received. Communication of Acceptance is deemed to be completed when it is given to the person who made the offer, even he did not read it. In case of letters, communication of acceptance is derived from the special rule known as postal rule, and according to this rule communication of acceptance is completed when post is send by the parties. In other words, communication is completed when letter is posted by the parties (Law teacher, n.d.). Application: On 10th January Bob Send offer Letter to Tom for purchasing hard drives from Tom, and on 12th January Tom accept the offer made by Bob by posting the letter but this letter reaches the Bob on 15th January. Later, Bob changes his mind and on 14th January sends email to Tom for the purpose of cancelling the offer made on 10th January. Tom delivers the hard drives to the Bob but he refuses to pay. In this case, postal rule is applied in case of communication of acceptance, and as per this rule communication is complete when letter is posted. Therefore, tom posted acceptance letter on 12th January and there is valid contract between the parties. Conclusion: Bob is liable to pay to Tom because there is valid agreement between the parties as offer made by bob is accepted by Tom. 3.It is not necessary that contract must be in writing, a valid agreement can be made verbally. Oral contract are also legally enforceable but it must include essential elements of the contract that are offer, acceptance, and intention of parties. A valid agreement must contain offer and acceptance, and agreement is enforceable by law when one party gives offer to other party and other party accepts that offer. It is necessary that offer must be clear, definite and complete and it is communicated to the offeree. For valid acceptance it is necessary that it must be communicated to the offeror. It is necessary that, parties to the contract must intend to create legal relations between them, and any contract which is based on social relation is not considered as valid contract because there is no legal relationship between the parties (Find law, n.d.). Application: In the present case, Steve made offer to Bob on 1st February and state that he need new computer for his travel agency. Bob accepts the offer because Steve looked after the cat of bob when bob is on holiday. Later, bob refused to give new computer to the Steve. In this case, all essential elements of the contract are present that is offer, acceptance, consideration and intention to create legal relation. Therefore, bob cannot refuse to give new computer to the Steve. Conclusion: In this case, Bob is liable towards Steve for providing new computer to Steve. 4.It is necessary for valid contract that both parties to the contract must give their free will to the contract, and this element is important for legal enforcement of the contract. In case if any mistake is identified which shows that parties agreed on different things or terms, and in case parties does not understand the contract because of different beliefs then contract may be declared void on the option of the party. Application: In this case, Bob signed the form sent by Marie for purchasing the vehicle, but this form was signed by Bob by mistake and there is absence of genuine consent. As stated above, free consent is the most important element of valid contract, and consent given by Bob is not free. Therefore, there is no contract between the Bob and Marie for purchasing the vehicle (Legal contract, n.d.). Conclusion: There is no valid agreement between the parties because there is absence of free will in the contract signed by Bob. References: ACL. Agreement. Retrieved on 22nd March 2017 from: https://www.australiancontractlaw.com/law/formation-agreement.html#acceptance. Law Teacher. Postal Rule of Acceptance. Retrieved on 22nd March 2017 from: https://www.lawteacher.net/free-law-essays/contract-law/postal-rule-of-acceptance-contract-law-essay.php. Find Law. Is a verbal agreement legally binding. Retrieved on 22nd March 2017 from: https://www.findlaw.com.au/articles/5626/is-a-verbal-agreement-legally-binding.aspx. Legal Contract. Principles of contract law. Retrieved on 22nd March 2017 from: https://legalcontract.wordpress.com/2010/05/11/fundamental-principles-of-contract-law/.