LW2903 Business and Law

Assignment

Student Name: Tsui Yi, Kelvin

Student Number: 51448802
Seminar Group: S05
(Seminar Time: Monday 0930 – 1220)
Name of Lecturer: Vicky Lam
Number of Words: 1,147
Contract is an agreement between two or more parties that is legally binding or a promise

or set of promises which the law will enforce. A contract could be made in writing, orally

or by conduct. There are four essential elements in order to form a valid contract: Offer

and Acceptance, Consideration and Intention to create legal relation.

First issue: For window matter, does Alex have obligation to add an extra layer on

window to prevent sunlight reflection?

Alex’s window replacement causes reflected sunlight to shine on Bob’s home. Because of

this, Alex would go to the court for Alex’s windows replacement. And Alex promised that

he will apply an extra layer on those windows to avoid sunlight reflection if Bob agree

not to go to the court for an injunction .Finally they instructed their solicitors to put the

oral agreement into a written contract.

Before giving advises to Alex and Bob, we should first consider whether a contract is

formed between them.

For the offer, Alex has promised Bob that he would add an extra layer on the window in

exchange of Bob not to sue him. Both Alex and Bob instruct their own solicitors to put

the oral agreement into a written contract, therefore it fulfills both the acceptance and

intention to create legal relation in the contract.

In the definition of contract, consideration is the price one pays for another's promise. It

can take a number of forms: money, property, a promise, the doing of an act. In this case,
Bob’s consideration is the forbearance to sue and Alex’s consideration is adding an extra

layer on window. From the case Cook v. Wright1, with a reasonable claim, the forbearance

to sue may be a good consideration, although litigation has not been actually commenced.

Assume that the reflection of sunlight by Alex’s is illegal under law, and hence Bob has a

reasonable claim to sue Alex for the disturbance. Therefore, forbearance to sue is a valid

and good consideration. The case fulfills 4 elements of a contract, as a result, there is an

enforceable contract between Alex and Bob.

Conclusion – Advice for Alex and Bob:

According to the contract, Alex has to add an extra layer on the window and Bob

promises not to sue him. However, the case does not clearly define how Bob threaten

Alex. So, the Alex can argue for this and hence the contract maybe void. On the other

hand, if the reflection of sunlight is legal under law, the forbearance to sue is no longer a

valid consideration. According to the case Wade v Simeon 2, a promise in consideration of

forbearance is not good, where there was originally no cause of action. From Bob point

of view, there is no ground for him to sue Alex and Alex does not receive any benefit

from the action of Bob (forbearance to sue). Therefore, no legally binding contract is

formed between Bob and Alex.

1
(1861) 1 B & S 559.
2
((1846) 2 CB 548
Second issue: For the bookstore issue, is there any sale and purchase bookstore

contract made between Alex and Bob?

Alex wants to sell his bookstore located in Kowloon Tong for HK$ 380,000 and he posts

an advertisement on the Newspaper.

First, we need to identify whether the advertisement is an invitation to treat or an offer.

An offer is a definite promise or proposal to be bound on specific terms and it has to be

definite, not vague. An offer may be made orally, in writing or by conduct. In this

advertisement, it just mentions the price HK$ 380,000 and terms are not negotiable, these

two are definite terms. However, the advertisement does not mention the details about the

exact address in Kowloon Tong, the size of the shop and etc. According to the case

Partridge v. Crittenden3, the newspaper advertisement without sufficient details was held

to be an invitation to treat only. Without the crucial details like the address and size which

is relevant for buyer’s decision making, it is concluded that the advertisement should be

an invitation to treat only.

After reading the advertisement, Bob made an appointment to inspect the bookstore.

From the conversation between Alex and Bob, we can conclude that the detail which is

not included in the advertisement is confirmed. Hence, Alex has made an offer to Bob for

the sale of bookstore. On 5th January 2010, Bob decided not to buy the bookstore and

3
[1968] 2 All ER 421
posted a letter to Alex. According to postal rule, the acceptance is concluded when the

properly stamped and addressed letter of acceptance is posted, even it does not reach

offeror. The letter of rejection letter is valid since Bob put in post office. Thus, we can

conclude that the original offer by Alex is destroyed.

After posting the letter by Bob, he later changed his mind and telephoned Alex on the

same day and leaved a message. Because of the failure of Alex’s answering machine, it

never played back the message and Alex did not know about Bob’s message. In the

message, Bob said that he would like to buy it in two installments if possible and want to

discuss the installments arrangement and complete the necessary documentation as soon

as possible. From the message, we can conclude that there is an offer made by Bob to

Alex. Bob offers two installments to Alex for purchasing the bookstore. Also, it shows

that he has a strong intention to treat by the sentence “completes the necessary

documentation as soon as possible”. However, Alex did not know about Bob’s message

due the failure of answering machine. According to the case Entores Ltd. v Miles Far

Fast Corp4, acceptance must be communicated by the offeror to the offeree, Even though

the modes of instantaneous communication such as telephone, acceptance is effective

only when it reaches the offeree. In this case, there is no acceptance since the message

did not reach Alex. After that, there was no effective communication between Alex and
4
[1955] 2 Q.B. 327
Bob on the bookstore issue. It is because Bob has a misunderstanding that Alex has

instructed his solicitor for the sale of bookstore. To conclude, even the message is an

offer, because of the ignorance of Alex, no enforceable contract was formed.

Conclusion:

Advice for Alex

Since there is no acceptance between Alex and Bob about the sale of bookstore, so the

contract is void. Therefore, Alex can prepare the sale contract for his bookstore to David.

Advice for Bob

From previous analysis, Bob did not receive any acceptance from Alex. So, there is no

contractual relationship between Alex and Bob. In this case, there is not ground for Bob

to sue Alex for breach of contract. So, Bob should not go to the court for injunction.