BSB111 Lecture Notes - Lecture 8: Corporate Law, Ticket Machine, Skyways Limited
Week 8 Business law and ethics lecture notes
Contract Law- Agreement, Intention and Consideration
What is a contract?
• Business is about making deals. For example –
o Buyers & sellers
o Wholesalers & retailers
o Banks & borrowers
o Landlord & tenants
• Contract law underpins business transactions: A contract is a legally enforceable
agreement
• How do you know if you have a legally enforceable contract?
• What circumstances will make the contract unenforceable?
• What are the consequences for breaching a contract?
• Most contracts do not need to be in writing. Many contracts are made verbally, and
some contracts are implied by the conduct of the parties.
• Some contracts are formed and performed at the same time. With other contracts,
one or both of the parties make a promise and therefore have an ongoing obligation
once the agreement has been formed.
• Week 8
o Requirement 1: Agreement
o Requirement 2: Intention
o Requirement 3: Consideration
• Week 9
o Enforceability – Lack of consent
o Terms
o Remedies
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Requirement 1: Agreement
• An agreement is a meeting of minds, and exists when two or more people share
understanding and intention.
• An agreement means that there has been a valid offer made and that this offer has
been accepted.
• Once an agreement is reached, the contract comes into existence and the parties
become legally obliged to proceed with the contract. So it is crucial to understand
the rules relating to offer and acceptance.
Offer
• A person makes an offer when they express a willingness to immediately enter into a
contract with the person to whom the offer is directed.
• The person making the offer is called the offeror and the person(s) receiving the
offer is called the offeree.
• The offer can be in writing, made verbally, or implied through oes odut.
• A offer a e ade to oe perso, a people, or the orld at large
Case study 1
• Offer- accepted/ rejected/ revoked
o If the offer is accepted, an agreement comes into existence.
o The offeree can reject the offer or make a counter offer
▪ But this terminates (ends) the original offer (Hyde v Wrench)
o So, if the offer is rejected (or a counter offer is made), the offeree cannot
later change her mind and accept the original offer.
▪ But she can make a new offer (see later slides about counter offer).
o If the offer is not accepted or rejected, the offeror can revoke the offer. But
the timing is important:
▪ The offeror can only revoke the offer if it has not yet been accepted. If
acceptance has already occurred then the offer cannot be revoked.
o The offeror can revoke their offer even if they have promised to keep the
offer open for a particular period,
▪ Uless the offeree has proided osideratio for the offerors
promise to keep the offer open (example by paying a deposit)
o If the offer is not accepted, rejected or revoked, it will lapse and the offer
ends.
▪ For example: If A offers to sell his car to B, stating that the offer would
remain open until midnight on Friday, B cannot accept the offer on
the Saturday morning. The offer lapsed at midnight.
▪ If no time is specified, this depends on the circumstances of each
case. Offers will be short-lived in the case of perishable goods,
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whereas in the case of land, the offer will remain open for a longer
time (but not indefinitely).
Responding to a request for information
• Responding to a request for information is not the same as making an offer.
• For example:
o Jin emails Johnny to ask if Johnny is willing to sell his pizza oven and what
ould e Johs loest prie this is a request for information)
o Johnny emails back to say the lowest price he would sell it for would be
$10,000 (this is responding to the request, and is not itself an offer).
Case 2
• According to the Pharmacy and Poisons Act (1933), the sale of certain drugs had to
be supervised by a registered pharmacist.
• Boots operated a self-service store which included a pharmacy department.
Customers would select items from the shelves and take them to a cashier's desk at
one of the exits where they were paid for.
• The Pharmaceutical Society argued that a drug sale was completed when the
customer took an item from the self and put it in their cart/basket. So, the Society
alleged that Boots infringed the Pharmacy and Poisons Act (1933).
o Who do you think is making the offer, and when do you think acceptance
occurs?
• Pharmaceutical Society of Great Britain v Boots (1953)
o Held that the offer was made by the customer at the checkout and
acceptance was by the pharmacy at the same point.
o The judges oted ho if the “oiets arguet as aepted the
customers, once placing an item in their basket, would have no right to
substitute a different article which she/he preferred. This would be
commercially inconvenient.
o Displaig goods o sheles reflets a illigess to egotiate, a iitatio
to treat, not an offer.
Invitations to treat
• Expressing a willingness to negotiate with someone is an invitation to treat. This is
NOT an offer and cannot be accepted.
• The party who responds to the invitation will be the party making the offer.
• Invitations to treat include:
o Advertisements on television, magazines, posters and on the Internet
o Goods displayed on shop shelves and in shop windows
o Price lists, circulars and catalogues
• What about vending machines such as a ticket machine or a drink machine?
• Vending machines are not considered to be invitations to treat but are actually
offering goods for sale.
o So, when the customer puts the coins into the machine and makes a
selection, the customer is accepting the offer and at this point the contract is
formed
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Document Summary
Week 8 business law and ethics lecture notes. What is a contract: business is about making deals. Many contracts are made verbally, and some contracts are implied by the conduct of the parties: some contracts are formed and performed at the same time. So it is crucial to understand the rules relating to offer and acceptance. Case study 1: offer- accepted/ rejected/ revoked. If the offer is not accepted or rejected, the offeror can revoke the offer. But the timing is important: the offeror can only revoke the offer if it has not yet been accepted. If no time is specified, this depends on the circumstances of each case. Offers will be short-lived in the case of perishable goods, whereas in the case of land, the offer will remain open for a longer time (but not indefinitely). ,000 (this is responding to the request, and is not itself an offer).
