Issue

There are four different legal issues that Bob need to deal with, the first issue is whether there
is a valid contract between Bob and Mike, the second is whether the contract has formed
between Bob and Tom, the third one is whether any contract between Bob and Steve is valid
and the fourth, is there any contract between Bob and Capital Motors?

Law

A Contract is defined as a valid legally enforceable agreement when it has the three essentials
elements of contract. The first element of a valid contract is agreement for an offer and
acceptance which means that both the parties have agreed to the contract by writing, oral or
by action. The second element is intention to be legally binding where the parties make their
agreement in terms of providing business and commercial deal and intend to be legally
binding but not the family, domestic or social agreements. The third element is consideration
where the parties agree to provide each other in return of price to make the agreement as a
valid contract (CSU LAW504 Modules, 2017, Topic 5)

A valid contract must be followed by specific terms and condition where the parties in
agreement are agreed and can be legally enforceable based on the terms and condition of
offer from the offeror and acceptance by the offeree, any negotiation to the offer will lapse
the original offer. In Hyde v Wrench [1840] 49 ER 132, a counter offer has destroyed the
original offer. In such situation a new terms must be agreed by both the parties for the valid
contract. (CSU LAW504 Modules, 2017, Topic 5)

A contract become valid when the offeror nominates the mode of communication of offer as
a post and the offeree puts the acceptance letter in the post before receiving any further
communication from the offeror. In case of Adams v Lindsell (1818) 106 ER 250 (CSU
LAW504 Modules, 2017, Topic 5)

A contract become valid and legally enforceable by law when the parties have consideration
for the present or future valuable benefit in exchange, past event cannot be considered as a
consideration for an exchange or benefit in present and future.(CSU LAW504 Modules,
2017, Topic 5)

An agreement between parties become valid based on the conduct, where the parties have
communicated the acceptance of an offer made by the offeror, irrespective of their intention

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whether it is intentionally or by an error. In case of Smith v Hughes (1871) LR 6 QB 597 at
607 (CSU LAW504 Modules, 2017, Topic 5)

Application and Conclusion

On 1 January Mike place and offer to Bob for computer, Bob replies with counter offer to
Mike which means that the bob rejected the original offer.

Therefore Mike is not liable to pay to the Bob 9000 dollars as there is no acceptance to the
original offer.

Bob sends Letter as a mode of communication for contract to Tom on 10 January stating to
buy computer hard drives. On 12 January Tom accepts the offer by putting the post stating
the acceptance of offer. Bob find that he no more need the hard drive and send email on 14
January to cancel the offer.

As the offer has been accepted on 12 January and communicated by post by Tom before
receiving the cancellation of offer from Bob, hence Tom and Bob are legally bound to the
contract and Bob is liable to pay 10000 dollars for the hard drives.

Steve ask Bob for a computer and Bob says that he will provide the computer as Steve has
taken care of his pets in his absence, later on Bob does not provide any computer to Steve.

As there is no consideration between Steve and Bob, Bob does not gain any benefit in present
or future from Steve, hence Bob is not liable to Steve.

Bob receives an offer of acceptance form from Mary, manger of capital motors stating that
she offers to sell Bob a Toyota Van, on the top of the form there is an acceptance declaration
with space for signature by unintentionally Bob signs the form without reading and asks Tim
to fax. After few days when Bob receives a call from Marry, Bob realised the fact that he has
signed the agreement in error to buy the Van from Mary which became an acceptance of offer
sent by Mary earlier.

As the contract between Mary and Bob to buy the Van is legally accepted though irrespective
of intention, Hence Bob is liable to pay to Mary for the van or pay Damages for the breach of
contract.

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Bibliography

Cases

Adams v Lindsell (1818) 106 ER 250

Central London Property Trust Ltd v High Trees House Ltd [1947] KB 130

Hyde v Wrench [1840] 49 ER 132

Smith v Hughes (1871) LR 6 QB 597 at 607

Module

CSU LAW504 Module