Principles of Business

Grade 10-5
June 9, 2021
Topic: Legal Aspects of a Business
Sub-topic: Concepts of Offer, Acceptance and Discharge of Contracts

OFFER VS. INVITATION TO TREAT

An invitation to treat is only a declaration of the intention of a person(s) to make an

offer e.g. an ad on tv./newspaper. However the actual offer is what can be accepted
and what the offeror is bound by.

Counter Offer
This is an alternative offer made by the offeree to the offeror. However it
does not have to be accepted.

RULES OF OFFER AND ACCEPTANCE

1. The offer must be communicated to the other party.

2. The offer may be general but must be accepted by a specific person(s)
3. The offer can be revoked at any time before acceptance unless consideration
has been made to keep the offer open.
4. All conditions must be known to the offeree.
5. Acceptance must be unconditional. If not, a refusal and a counter offer is
said to have been made.
6. Acceptance must be made within a reasonable time.
7. An offer lost in the post is NOT AN OFFER.
8. Acceptance is made when the letter is actually posted.
N.B Offer and acceptance may be communicated in writing, spoken or by
conduct

TERMINATION/DISCHARGE OF CONTRACT

1. Mutual agreement
a. Satisfaction
b. Waiver (parties give up their rights under the contract)
c. New agreement formed in place of old
2. Breach
3. One party breaks his side of the contract.
4. Performance
5. Contract is fulfilled.
6. Impossibility
a. Contract was illegal
b. One or both parties find it humanly impossible to comply
7. Death
8. Bankruptcy
9. Time -Non-performance during a specified time period.

Legal Issues

Conditions for a Valid Contract

(Written Contracts)
● It must have a date
● It must be signed, sealed and delivered
● It must be witnessed
● There must be no factual mistakes in it
● Performance time must not lapse
● It must be legal or legitimate
● Performance must be possible
 ● It must be registered
● It must be reasonable and fair

(Oral Contracts)

● The features must be present, active, enforceable or functional

● Performance must be possible
● Time must not lapse
● No minor, mentally ill or learning disabled person should also be noted

In addition to all the above, the following should also be noted:

1. Any exclusion clauses must be made clear

2. Contract is invalid if goods sold/bought were stolen property, whether buyer
was aware of it or not
3. Failure to comply with statutory requirements make the contact invalid
4. If parties become insolvent contract can be voidable/invalid

Cases

Case 1 : (Implied conditions)

Patrick offered a house for sale to Peter, who agreed to buy at the stated price.
Peter was however under the impression that the land on which it stood was a part
of the deal. Patrick gave Peter the title deed for the house but not the land. Peter
took Patrick to court. What was the likely outcome of the case?

Case 2: (Contravention of contract conditions)

Tom bought a new radio on hire purchase (H.P.). He allowed his friend to use it
and it was subsequently damaged and stopped working. Tom returned the radio to
the store, saying that it was still under guarantee and that he wanted either his
money back or a new radio within a week. He did not hear from the company and
decided to sue. What was the likely outcome of the case?

Case 3: (Valid/Invalid Contract?)

John, a little boy, exchanged his bicycle with a man for a radio which belonged to
the man’s son. Can John get his bicycle back if his father takes the man to court?

Case 4: (Offers not accepted?)

Mr. Peters wrote to Mr. King, offering his car for sale for $2000. At the same time,
Mr. King sent Mr. Peters a letter, offering to buy his car for $1000. King took no
further action. Two days later, Mr. Peters sold the car to Mr. Best for $ 2500. Mr.
King took Mr. Peters went to court, saying that there was a contract. What was the
likely outcome of the case?

Case 5:

A Barbadian tourist in Kingston, decided to go to Montego Bay by train. He

bought a ticket and decided to leave his luggage. He was given a left-luggage
ticket, on which was printed the conditions that the railway would accept liability
up to $50. When he returned, his bag was missing, the value of which was $500.
What can the tourist claim?

Case 6 : (Invitation to Treat)

A dress shop had several items on sale in the show window. A customer liked a
particular dress but could not find her size in the store. The one in the show
window was her size and she asked the owner to sell her the dress. He said no,
saying that it was only a display.
Case 7: (Offer )

A drug company claimed in its advertisement that by taking three of the company’s
pills daily for two weeks, customers would not catch influenza. It offered to pay
anyone who did catch the flu, after taking the pills in the manner prescribed, a sum
of $100. To show good faith, it lodged money in a bank account to cover payments.
A woman took the pills as prescribed and still caught the flu and claimed the $100.
The company claimed the advertisement was only an invitation to treat and refused
to pay. The case went to court.

What was the likely outcome of the case?

Case 8: (Employment)

Joe was sacked by his employer after he refused to climb a 10 metre ladder to clear
a blocked drain. Joe was employed by Kingston Motors as a motor mechanic and
worked with the business for three years. His work was always satisfactory. His
employer argued that he was only asked to perform a reasonable and simple duty
and his refusal was against the contract of employment. Joe’s lawyer argued that
climbing ladders was not a normal duty for a mechanic and that he had no training
or skill in performing this task. To dismiss him for refusing to do it was against the
terms of the contract of employment. What do you think the judge decided?