LAW6501, SEMESTER 2, 2023

ONLINE ASSIGNMENT

Main issue:

The main issue is whether Xavier has entered a valid simple contract with Yan or Zeb to sell

his model train set under the common law of contracts.

Sub Issues:

1. Was Xavier's sale notice of the train set in the newspaper on May 30th considered an

invitation to treat or an offer?

2. Whether Yan's phone call on June 1st amounted to a legally binding offer to purchase

Xavier's train set If yes, what was the outcome?

3. Is there a counteroffer on 2nd of June between Zeb and Xavier?

4. Did Xavier's cancellation of his offer to Zeb on June 3rd effectively terminate the

possibility of forming a contract with Zeb?

5. Did Yan's email on June 5th constitute an acceptance of Xavier's initial offer to sell the

train set for $2,000 payable immediately?

Sub Issue 1: Was Xavier's sale notice of the train set in the newspaper on May 30th considered

an invitation to treat or an offer?

Rule:

An offer is clear and specific expression of willingness to form a contract. When accepted, it

creates a binding contract. On the other hand, Invitation to treat indicates a willingness to

negotiate or receive offers but does not form a binding contract when accepted. It is a
preliminary step in the negotiation process, inviting others to make offers (James, N. et al,

2020).

Case law, specifically the Pharmaceutical Society of Great Britain v Boots Cash Chemists

(Southern) Ltd (1953)1 QB 401, establishes that the showcasing of a product in a store is

considered an invitation for customers to make offers rather than constituting a direct offer

itself. This means that the party extending the invitation to treat, at this stage, does not intend

to be legally bound. Examples of such invitations include goods and services advertised in

various media like newspapers, catalogues, radio, television, or the internet, as well as price

lists, circulars, and catalogues. A contract is only established when a customer makes an offer

to purchase a product, and that offer is subsequently accepted by a cashier at the counter.

Application:

Xavier’s notice of train set for sale on newspaper for $2,000.00 was merely providing essential

information about the product for customers to examine and, if pleased, to potentially make an

offer. It was an invitation for customers to submit offers, not an offer itself. Consequently,

Xavier would not be legally bound by any contract if a customer expressed a desire to purchase

the product because it is not an offer. This classification aligns with established legal principles,

as demonstrated in the Pharmaceutical Society of Great Britain v Boots Cash Chemists

(Southern) Ltd case, where such advertisements serve as a preliminary step in the negotiation

process and do not create binding contracts upon acceptance.

Conclusion:

Therefore, Xavier’s sale notice of model train set on newspaper for $2,000.00 on 30th May is

an invitation to treat, not an offer.

Sub Issue 2: Whether Yan's phone call on June 1st amounted to a legally binding offer to

purchase Xavier's train set If yes, what was the outcome?

Rule:

“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” (James, N. et al., 2020, p. 130).

An offer must be specific and clear about its terms, and the other party has the option to either

accept or decline the offer. The decision to accept or reject the offer lies with the party to whom

the offer is directed (James, N. et al., 2020).

Application:

Yan initiated a phone call to Xavier on 1st June in which he presented an offer to purchase

Xavier's train set for $2,500.00, with payment to be made in 3 months' time. Yan's

communication fulfills the first element of making an offer, as it clearly indicates his intention

to buy the train set. Additionally, Yan communicated this offer directly to Xavier, meeting the

requirement for communication. It can be reasonably inferred that Yan intended for this offer

to be legally binding, as offers in commercial transactions are typically presumed to be serious

and legally binding unless stated otherwise.

Xavier, as the recipient of the offer, holds the discretion to choose whether to accept or decline

Yan's offer. If Xavier finds the terms of the offer acceptable, he has the option to accept it.

Conversely, if Xavier does not wish to proceed with the deal under these terms, he can reject

the offer. Ultimately, the decision rests with Xavier in response to Yan's offer.
Conclusion:

Yan's phone call on 1st June amounted to a legally binding offer to purchase Xavier's train set.

An offer was made when Yan expressed a clear willingness to buy the train set for $2,500

payable in 3 months' time.

Xavier has the authority to decide whether to accept or decline Yan's offer. And therefore,

rejected this offer, indicating that he needed to make a sale without delay.

Sub Issue 3: Is there a counteroffer on June 2nd between Zeb and Xavier?

Rule:

A counteroffer is a response to an initial offer in which the terms are changed or modified in

some way by the offeree. It essentially rejects the original offer and replaces it with new terms,

creating a new offer. An inquiry seeking additional information about the product, or anything

is not a counteroffer (James, N. et al., 2020).

According to the case, Hyde v Wrench (1840) 3 BEAV 334; 49 ER 132, when a party makes

an offer and the other party responds with a counteroffer, the counteroffer typically supersedes

and terminates the original offer. The original offer is no longer available for acceptance once

a counteroffer has been made, even if the counteroffer is later withdrawn. This principle is

based on the concept that a counteroffer constitutes a rejection of the initial offer, and the

parties cannot revert to the original terms once it has been altered.

Application:

Xavier responded to Zeb's offer by making a counteroffer. He proposed to sell the train set for

$1,800 cash payable within 7 days. In doing so, Xavier essentially rejected Zeb's initial offer

and replaced it with new terms.

Xavier's counteroffer creates a new proposal and effectively revokes Zeb's original offer. This

is in accordance with the legal principle from Hyde v Wrench, which states that a counteroffer

supersedes the original offer. Therefore, at this point, there is no binding contract in place

because the parties have not yet reached a mutual agreement on the terms of the sale. Zeb now

has the option to either accept Xavier's counteroffer of $1,800 or decline it. If Zeb accepts the

counteroffer, a contract will be formed based on the new terms. If Zeb declines, there will be

no contract, and the negotiation will end.

Additionally, Zeb's inquiry about the 'Biggin Hill' steam train is not a counteroffer but rather a

request for more information.

Conclusion:

In this scenario, Zeb made an initial offer to purchase Xavier's model train set. Xavier

responded by making a counteroffer. By providing this counteroffer, as a result, there is no

binding contract in place at this stage.

Zeb’s inquiry about the “Biggin Hill” is simply a request for clarification and does not change

the terms of the original offer.

Sub Issue 4: Did Xavier's cancellation of his offer to Zeb on June 3rd effectively terminate the

possibility of forming a contract with Zeb?

Rule:

According to the postal rule: Offer is when an offeror sends an offer by mail, it is generally

effective when it is received by the offeree.

Acceptance is when an offeree sends an acceptance by mail, it is generally effective when it is

posted or deposited in the mailbox, not when it is received by the offeror (James, N. et al.,

2020).

In the case of Adam v Lindsell (1818) 1B & Ald 681; 106 ER 250, the significance lies in

establishing that acceptance by mail, once posted, creates a legally binding contract, even if

the acceptance is in transit and not yet received by the offeror. This rule helps provide clarity

in contract formation when communication occurs via postal services.

Application:

In this case, Lindsell sent an offer to Adam by mail. As per the postal rule, this offer became

legally effective when Lindsell posted it, even though Adam had not yet received it.

Subsequently, when Adam sent an acceptance letter by mail, it was similarly governed by the

postal rule, becoming legally binding upon posting. This meant that a contract had been formed

between the parties when Adam posted the acceptance, regardless of when Lindsell received

it. The delay in the postal service's delivery did not affect the contract's validity. The case serves

as a notable illustration of the application of the postal rule in contract law, emphasizing the

significance of the timing of acceptance letter posted.

Xavier's letter cancelling the $1,800 offer was sent on 3rd June. According to the postal rule,

revocation or cancellation of an offer is effective when the letter is received by Zeb on 7th

June. Therefore, the cancellation can become effective on 7th June when Zeb received the

letter.

Zeb posted a letter on the morning of 6th June, accepting Xavier's $1,800 offer. However, at

that point, Zeb was unaware of Xavier's cancellation because the cancellation letter had not yet

been received.
Conclusion:

Xavier's cancellation of his offer to Zeb on 3rd June did not terminate forming a contract with

Zeb. Xavier's cancellation would only become effective when it was communicated to Zeb,

and in this case, Zeb received the cancellation letter on 7th June. Zeb's acceptance occurred on

6th June, before he was aware of the cancellation. Therefore, a valid contract was formed

between Xavier and Zeb on 6th June.

Sub Issue 5: Did Yan's email on June 5th constitute an acceptance of Xavier's initial offer to

sell the train set for $2,000 payable immediately?

Rule:

Acceptance in contract law refers to the unqualified agreement to all the terms of the offer.

When a party accepts an offer without any changes or conditions, a legally binding contract is

typically formed, provided that all other essential elements of a contract are present.

Acceptance signifies that the offeree agrees to be bound by the terms as originally offered by

the offeror, creating a meeting of the minds and the basis for a contractual relationship (James,

N. et al., 2020).

Application:

Xavier's notice in the newspaper seeking to sell his train set for $2,000 is typically regarded as

an invitation to treat rather than a specific offer. Advertisements like this are generally seen as

an indication of a willingness to negotiate with potential buyers. They are not binding offers.

Yan's email on 5th June can be seen as an acceptance of Xavier's invitation to treat. Yan

communicated his willingness to buy the train set for $2,000 payable immediately. Whether a
valid contract exists depends on whether Xavier accepted Yan's offer. If Xavier accepted Yan's

offer, then a contract would be formed between Xavier and Yan for the sale of the train set.

Conclusion:

Yan's email on 5th June did not constitute an acceptance of Xavier's initial offer. Instead, it can

be seen as Yan initiating negotiations. Xavier's acceptance or rejection of Yan's offer is not

provided in the scenario, so the formation of a contract remains uncertain.

Final Conclusion:

There was a valid contract between Xavier and Zeb on 6th of June when Zeb posted the

letter accepting Xavier's counteroffer of $1,800 cash payable within 7 days. On the

contrary, no contract was formed with Yan because Xavier's acceptance was not provided

in the scenario.
 Reference

James, N., Chapple, E., Wong, A., Baumfield, R., Copp, R., Cunningham, R., Kamalnath, A.,

Watson, K., Harpur, P., & Thomas, T. (2020). Business and company law (2nd ed.).

John Wiley & Sons.