Law an acceptance, consideration (an invitation to treat)

 

Law for Accounting

Contract law is,
essentially, the imperative necessity in binding a legal agreement between two
or more parties on the basis of a mutual understanding within terms and
conditions of a written or verbal contract. The validity of a contract must
include key factors in order for it to qualify: an acceptance, consideration
(an invitation to treat) and the intent to go through with creating legal
relations. An offeror is typically the party of which presents an offer to an
offeree, one to whom an offer is made and  has the right to accept or reject the
offer. 

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                           An acceptance occurs
when the offeree expressly accepts the offer made by the offeror. To illustrate
the general rule to the case of acceptance is that it must involve
effective communication between the two parties or authorization given to a
third party on their behalf to accept.  An
acceptance can be valid to be accepted orally, via a telephone, or written in
forms of a letter or an email depending on the level of formality of the
contract. The offerer may demand a particular method of communication for the
offeree to accept but a clear acceptance must be made. In the case of Entores Ltd vs Miles Far East Corp- Denning LJ, delivered the leading judgment. He said that the
postal rule could not apply to instantaneous communications, such as telephone
or telex: if a phoneline “went dead” just before the offeree said
“yes”, it would be absurd to assume that the contract was formed and
the parties would not have to call each other back. Lord
Denning  LJ (1955, p.97)  explained “suppose for instance, that I shout
an offer to a man across a river or a courtyard but I do not hear his reply
because it is drowned by an aircraft flying overhead. There is no contract at
that moment. If he wishes to make a contract, he must wait until the aircraft
is gone and then shout back his acceptance so that I can hear what he says. Not
until I have his answer am I bound.”  – It
must be brought to the attention of the offeror when an offer is being
accepted.

If
the method of communication is being requested via postal services, the general
rule states that the acceptance is valid from the moment the letter of
acceptance has been posted, regardless of delays, or incidences of lost, stolen
or damaged packages resulting in a failed delivery to the offeror. In the case
of ‘Adams v Lindsell (1818)’, it
establishes the postal rule which states a letter with a correct address, along
with the correct postage stamp, is classified as an acceptance. This is known
as ‘rule of convenience’, (Duxbury, 2015) and suggests that in the request of a
postal acceptance, as an offeror; all risks associated with the form of
communication must be apprehended beforehand

            An invitation to treat
is an expression of willingness to negotiate which is not to represent an offer
and/or cannot accept as a form to bind a contract. The
courts take an objective approach in deciding whether a statement was an offer
or an invitation to treat. It is essential to understand the difference between
the two; when accepting an offer it automatically signs you up into the binding
contract, whereas an invitation to treat is the introduction to making an
offer. Invitations are some form of an advertisement in a way that it initiates
an invitation to bid or bargain for an item (or service), with these conditions
set, of course, however no party is obliged to continue with the sell or buy.

                                                            

To complete a contract,
aforementioned, one party must make an offer and the second party must accept
the offer. In the case of Pharmaceutical
Society of Great Britain v Boots (1953), the Poison Act 1933 was introduced.
The case explained: all prescribed drugs must be purchased under the
supervision of a qualified pharmacist, (Br Med J 1950;2:455). The arguments in this case,
defendants were being prosecuted due to a pharmacist not being present at the
time of selecting the pharmaceuticals from the shelf. Firstly, the displaying
of goods on the shelves was an invitation to offer without the supervision of
the pharmacist. What constitutes as an offer here was presenting the goods at
the cash register had the intention to purchase the goods, and communicated so.
The contract is accepted the moment the pharmacist accepts the customer’s offer
by taking the cash in exchange for the product. In terms of acceptance
analysis, the goods were displayed being an invitation, therefore the movement
of cash from the customer to the cashier is the offer, and is complete when
payment is taken and processed which implies acceptance.

The same analogy applies
in Fisher v Bell (1961) the lawsuit
where a ‘flick knife’ item was advertised for sale in the shop window and the display
of the product was decided that it was an invitation to treat. Any consumer whom
wished to enter the shop with the intentions of purchasing the knife at the
priced indicated in the shop window. The display was a mere invitation; meaning
that there were no forms of agreement hence no offence being performed,
(Tillotson and Mulcahy, 2004). A bilateral contract is known to have an outstanding
obligation remaining on both sides of the party which an offeror makes a
promise in return for a future bargain from the offeree. The case Partridge
v Crittenden (1968) exhibits
the rule of advertisements for its understanding known as an invitation to
treat. This advertisement was found in the section for classified advertisement
and there was no evidence of the phrases for sale on view.

The Tort of negligence measures
the legal wrong doing where the defendant breached the applicable standard of
care towards an individual. Where contract law focuses on the
contractual agreements between parties, which will outline the responsibilities
and duties of each party, the law of tort strictly governs circumstances of
wrong doings affecting an individual. Duty of care is an area in the
tort of negligence regarding the moral and legal obligation to ensure the
safety or well-being of others across a range of factors including physical,
mental injury and even economic loss. The way Duty of care is tested is with
three fields: forcibility, Proximity and Just and reasonableness. The
level of complexity in torts makes it difficult to define, it can be best
understood as: ‘a tort is conduct which renders the defendant liable unless he
has some defence.’ (Weir,
2002). In the workplace there are legislations such as Health and Safety at Work Act 1974 for
guidance to prevent the amount of injuries caused.

The case of Langley vs Dray (1988) examines forcibility; the
defendant driving a stolen car was chased by a police officer. The officer
slipped and was injured in the process. The court rules that the defendant owed
a duty of care as he knew or ought to have foresaw that the police would be in
pursuit as thus should not have gone so fast. He had a duty not to create such
a risk. For assessing proximity, we take from the Watson v BBBC (1999)
case; the defendant failed to provide sufficient medical care at the ringside.
The claimant suffered severe brain damage following an injury in the ring, but
the evidence suggested his injuries would have been less severe had better
medical attention been available ringside. The court ruled that the sport’s
controlling body owned a duty of care to those who took part. Injury was
foreseeable. The licence system created proximity, it was just fair and
reasonable to impose such a duty.

 

 

 

 

                                                                                                          

Scenario 1 Analysis

 

 

 

Scenario 2 Analysis

 

 

 

 

Introduction to forming a PLC:

Holding a title of a PLC contributes
immensely to the company’s financial status which can be seen as a prestigious
profile within the industry. The main advantage of this is that it holds

There are two mandatory documents
required to registering a public limited company to enable trading- A Memorandum of Association and an
Article of Association

(a)  State the documents necessary
and the procedure to be followed in registering a 

public limited
company and enabling it to start trading: In order to start a public
limited company two documents are essential.. The memorandum of association,
which is often simply referred to as the memorandum is the document that
governs the relationship between the company and outside stakeholders; allowing
prospective investors to know what the company is to be used for and what risks
they will be taking with their money. The memorandum is basically a statement
that the subscribers wish to form a company under the Companies Act 2006 and
have agreed to become members. The article of association outlines the
responsibilities of a director. In order to start trading as a public limited
company a company name would be needed as well as company details i.e the
address of a Director as well as a company address and a statement of capital.
Finally, you would need to incorporate your company whether it be via Formation
Agents or an Accountant.

Duties Involved:

(b)   Explain the duties of an agent that are implied into any contract in
relation to the law of agency: In relation to the law of agency an agent is the
representation of a principal. In order to act accordingly as an agent a duty
of loyalty is expected towards the principal. This simply means the agent
cannot act in his/her own interests or benefits when carrying out an action for
the principal. There is also a duty of care. It is expected that the agent will
exercise a reasonable duty of care when carrying out the duties on behalf of
the principal. It is also expected that the agent keep the principal fully
informed when carrying out an action and to also obey the instructions of the
principal. The only times these duties can be exempted is if an emergency
situation should occur and the agent cannot come in contact with the principal
or if a violation of the law should unfold. A failure to abide by these results
in a breach of contract of Agency and the agent is therefore liable for any
loss sustained by the principle.

 

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