Business Law - Case Study

1905 Words Oct 26th, 2008 8 Pages
A. Known Facts John wanted to extend his house and built an office from there. He approached Sue after locating an advertisement from the Yellow Pages. As Sue’s price did not seem reasonable, John then approached Drawit Pty Ltd, which charged a hundred dollar less. John paid a deposit. Later, John went to Franks Hardware and Timber Yard. He made known to Frank, the sole proprietor, the purpose and requirement of the materials and placed an order. John signed a standard form contract and paid a deposit. Two months later, problems arose which caused John to delay his business. John incurred financial losses. B. IDENTIFYING THE ISSUES

1.0 CONTRACT BETWEEN JOHN & FRANK.

It is obvious that there is a contract
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2.0 CONTRACT BETWEEN JOHN & SUE.

2.1 Offer or Invitation to Treat?

First, we need to distinguish offer from invitation to treat. An invitation to treat is an invitation to others to make an offer. Generally, an advertisement amounts to an invitation to treat. This is held in Partridge V Crittenden [1968] 2 All ER 421, where Sue will be inviting John to make an offer.

However, there is an exception. An advertisement can also be an offer. This can be illustrated in Carlill V Carbolic Smoke Ball Co [1893] 1 QB 256 in which Sue might probably argue that it was an offer. This being the case, Sue is the offeror will stressed that the offer was assumed to be accepted by John upon saying “ I think that’ll be okay ”. An offer, once accepted, cannot be revoked. Therefore there will be a binding contract.

Assuming that it is an offer, it can either be a counter offer or a mere request for more information.

2.2 Counter Offer or Mere Request for More Information?

An offer will be rejected if there is a counter offer. A counter offer tampers with the original condition of the offer, it rejects the original offer and can no longer be accepted at later date. Looking at the words used in John’s reply “ I hadn’t expect it to be so high ”, it is possible that this was either an acceptance with a request for more information, or a counter-offer.

If the court found the facts here

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