Lantern Solicitors

Lantern Solicitors
Contract Law &
Business Law
Own, Nirmal V Martens
Fiona Myers,Solicitor
5/1/2011

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TABLE OF CONTENTS
Law Applied ..............................................................................................................................................................................5
Introduction................................................................................................................................................................................6
Definition of Contract..............................................................................................................................................................7
Terms and Conditions of a Contract ...............................................................................................................................8
Offer............................................................................................................................................................................................8
The cases that apply to Offer in contract Law: ................................................................................................8
Test 1. – Clear Terms......................................................................................................................................................8
Example Case:............................................................................................................................................................8
Example Act:..................................................................................................................................................................9
Applying it to your case:.............................................................................................................................................9
Test 2. – Intention to do business...............................................................................................................................9
Example Case:..............................................................................................................................................................9
Applying it to your case:.............................................................................................................................................9
Test 3. – Must be communicated to the Offeree....................................................................................................9
Example Case:............................................................................................................................................................10
Applying it to your case:...........................................................................................................................................10
Acceptance .......................................................................................................................................................................10
Case that applies to Acceptance: ..............................................................................................................................10
Test 1 – Mirror Image....................................................................................................................................................10
Example case:.............................................................................................................................................................10
Test 2 – Firm ....................................................................................................................................................................11
Example Case:............................................................................................................................................................11
Applying it to your case ............................................................................................................................................11
Test 3 – Communication of Acceptance .................................................................................................................11
Example Case:............................................................................................................................................................11
Verbal .............................................................................................................................................................................11
Example Cases:..........................................................................................................................................................12

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Electronic ......................................................................................................................................................................12
Example Cases:..........................................................................................................................................................12
Postal..............................................................................................................................................................................12
Example Cases:..........................................................................................................................................................12
Consideration...........................................................................................................................................................................13
Definition of Consideration:............................................................................................................................................13
The cases that applies to Consideration: ...........................................................................................................13
Test 1. Consideration must be past ..........................................................................................................................13
Example Cases:..........................................................................................................................................................14
Test 2. Consideration must be Sufficient .......................................................................................................................14
Example Cases:.............................................................................................................................................................14
Applying it to your case:..............................................................................................................................................14
Test 3. Consideration if not Sufficient ...........................................................................................................................14
Intention....................................................................................................................................................................................15
Definition of Intention:.....................................................................................................................................................15
Presumption 2.....................................................................................................................................................................15
Example Case:...............................................................................................................................................................15
Applying it to your case:.......................................................................................................................................................15
Privity of a Contract ..........................................................................................................................................................15
Definition of Privity of a Contract:.................................................................................................................................15
Example cases:..............................................................................................................................................................16
Capacity....................................................................................................................................................................................16
Definition of Capacity: .....................................................................................................................................................16
People with Limited Capacity .........................................................................................................................................16
Necessary goods and services:....................................................................................................................................16
Incapacitated Persons ...................................................................................................................................................17

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Capacity of Companies ................................................................................................................................................17
What can invalidate a Contract?...........................................................................................................................................17
Duress ..................................................................................................................................................................................17
Definition of Duress:.........................................................................................................................................................18
Example Cases:.............................................................................................................................................................18
Mistake ................................................................................................................................................................................18
Definition of Mistake:.......................................................................................................................................................18
Undue influence .................................................................................................................................................................19
Definition of Undue Influence: .......................................................................................................................................19
Misrepresentation...............................................................................................................................................................19
Definition of Misrepresentation:.....................................................................................................................................19
Fraudulent:..........................................................................................................................................................................19
Nigligent:.............................................................................................................................................................................19
Innocent:..............................................................................................................................................................................20
Example case:................................................................................................................................................................20
Applying it to you case:...............................................................................................................................................20
Void, Voidable and enforcable contracts............................................................................................................................20
Conclusion ...............................................................................................................................................................................21
References & Bibliography...................................................................................................................................................22
Appendices...............................................................................................................................................................................23
Appendices 1......................................................................................................................................................................23
Appendices 2......................................................................................................................................................................23
Appendices 3......................................................................................................................................................................23
Appendices 4......................................................................................................................................................................24
Appendices 5......................................................................................................................................................................24

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Appendices 6......................................................................................................................................................................24
Appendices 7......................................................................................................................................................................24
Appendices 8......................................................................................................................................................................24
Appendices 9......................................................................................................................................................................25
Appendices 10....................................................................................................................................................................25
Appendices 11....................................................................................................................................................................25
Appendices 12....................................................................................................................................................................26
Appendices 13....................................................................................................................................................................26
Appendices 14....................................................................................................................................................................26
Appendices 15....................................................................................................................................................................27
Appendices 16....................................................................................................................................................................27
Appendices 17....................................................................................................................................................................27
Appendices 18....................................................................................................................................................................28
Appendices 19....................................................................................................................................................................28
Appendices 20....................................................................................................................................................................28

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LAW APPLIED
In this report I will be covering the contract laws that apply to your case. These laws will determine
where or if you’ve formed a contract with the two defendants. These laws will come under the areas
of:
- Offer
- Acceptance
- Consideration
- Intention
- Capacity
If you carry on to the report I will then explain these areas more in detail.

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INTRODUCTION
I am a solicitor who works for Lantern Solicitors; I am going to help you identify which contract you
have and who the contract is with. Also I will explain if you have to abide by the terms of the contract
to do this I am going to explain each law that the situation is within at the end you will then know who
the contract is with and if you have to obey.

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DEFINITION OF CONTRACT
There are two definitions for contract there is the Standard English definition and the Law definition.
As this report is based on Law I will be defining the Law definition of contract which is:
“an agreement with specific terms between two or more persons or entities in which there is a
promise to do something in return for a valuable benefit known as consideration. Since the law of
contracts is at the heart of most business dealings, it is one of the three or four most significant areas
of legal concern and can involve variations on circumstances and complexities. The existence of a
contract requires finding the following factual elements: a) an offer; b) an acceptance of that offer
which results in a meeting of the minds; c) a promise to perform; d) a valuable consideration (which
can be a promise or payment in some form); e) a time or event when performance must be made
(meet commitments); f) terms and conditions for performance, including fulfilling promises; g)
performance.”

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TERMS AND CONDITIONS OF A CONTRACT
In this section I am going to explain the terms and conditions for a contract. This will help you
determine whether the contract you made with the two defendants was valid or invalid. Each term
needs to be met for there to be contract formed between you and them. There is five elements that
make up a valid contract but there is three tests that you can do to check if each of these elements
apply to the contract to see if it’s valid or not. The five elements are: Offer, Acceptance,
Consideration, Intention and Capacity.
OFFER
An offer is how the person(s) show intention to apply certain terms to a contract which is then binded
as soon as it is accepted by the person accepting the contract.
TREITAL’S DEFINITION:
‘An expression of willingness to contract on certain terms, made with the intention it shall be binding
as soon as it is accepted by the person to whom it is addressed.’
For example any product that is for sale by a seller is an offer to the customers.
There are two types of offers Bilateral and Unilateral. Bilateral is an offer between two people (parties)
who know the terms which will ‘bind’ them. Unilateral is an offer that is offered to the whole world but
this means that not all people (parties) know of the terms to which that might ‘bind’ them or not.
An easier way of remembering these two offers are to see Bi as liking two
different things I.e. Bi-lateral, and Uni meaning Universal – to everyone I.e. Uni-lateral.
The cases that apply to Offer in contract Law:
- Carlill – v- Carbolic Smoke ball Company (1803) (See appendices 1 to see
the full case.)
- Hilas – v- Arcos (1932) (See appendices 2 to see full case)
- Fisher – v- Bell (1961) ( See appendices 3)
To apply the three tests to check if there is an offer you have to see if there are clear terms, Intention
to do business and Communication to do business. All these tests have to be passed before you can
carry on to the other elements of a contract.
TEST 1. – CLEAR TERMS
To assess whether there is clear terms within the offer you have to make sure that the offer is clearly
set out to the Offeror and Offeree. If it’s not then the first test has not been passed.
Example Case:
In the case of Carlill – v – Carbolic Smoke ball Company (1803) the terms were set out on paper
when they advertised the Carbolic Smoke ball to the public. There terms was if anyone who brought
the Carbolic Smoke ball and ‘Used the carbolic smoke ball in a particular way for a specified period of
time, but who still caught influenza afterwards, would be entitled to claim £100 from the company’

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EXAMPLE ACT:
The Act that could be applied to this would be The Sales of Goods Act 1979. As Section 8 of the
contract says ‘‘if there is no price on a product then a reasonable price would apply’. this would be
applied to the Case Hailas –v – Harcos as the terms of price was changed
APPLYING IT TO YOUR CASE:
The clear terms that you the Offeror set out for the Offeree was within the advertisement. In the
advertisement you stated “Annual subscription for Sport life delivered to your door, only £200. Special
bonus– subscribes by 20 April and get £50 worth of free sports equipment” you also stated in smaller
print that “Special bonus offer may be withdrawn at any time.”
The terms you set out was clearly stated on the advertisement which means you have passed Test 1.
If you hadn’t clearly set out your terms then you wouldn’t have had a contract with Nirmal or Owen.
This means you can go onto the second test.
TEST 2. – INTENTION TO DO BUSINESS.
For the second test to be passed, you the Offeror, Nirmal and Owen the Offeree must have shown
intention to do business. There are many ways this could be shown through physical or verbal
communication. For example the Offeree can show intention by picking an item off a shelf within a
store and then taking it to the till to be purchased or asking for information about the product and then
taking it to the till to be purchased. And the Offeror can show intention to do business by making an
advertisement for a product and then placing the product within their store.
This can be also be confused with Invitation to Treat. This is where the Offeror can
advertise a product but not have any intention or obligation on selling the product to any consumer.
The case that applies to Invitation to Treat is Fisher – V- Bell (1961)
EXAMPLE CASE:
In the case of Carlill – V- Carbolic Smoke Ball Company (1893) the company showed intention to do
business by making and applying the advertisement for the Smoke Ball but also putting the product
within their store. Carlill showed intention to do business by asking for information about the product
and taking it to the check out to be purchased.
As you the Offeror placed the advertisement within the paper shows that you had intention to do
business. Nirmal and Owen showed intention by sending acceptance letters to you. As you both
showed intention to do business this test has therefore been passed which means you now can go on
to test 3.
TEST 3. – MUST BE COMMUNICATED TO THE OFFEREE
For the third test to be passed you the Offeree must have received some kind of communication of
the Offeror that there are willing to accept the offer that you have shown. This can be shown by the
Offeror taking their shopping to the checkout or putting money into the vending machine.

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EXAMPLE CASE:
In the case of Carlill – v – Carbolic Smoke ball Company (1893) there was communication to the
company the moment Carlill took the item to be purchased.
As both Nirmal and Owen both sent letters of acceptance to you the Offeree this has given you the
communication needed to accept the offer that you have shown. As they communicated to you the
Offeree this means that Test 3 has been passed and we now can go onto the second stage of
Contract which is Acceptance.
ACCEPTANCE
Acceptance is the moment when all participants agree to the terms in an offer.
Treital’s Definition:
“ The finial and unqualified assent to the terms on offer”
CASE THAT APPLIES TO ACCEPTANCE:
- Carlill – v- Carbolic Smoke Ball Company (1893) ( see appendices 1)
- Jones – v- Daniel(1894) (see appendices 4)
- Adams – v- Lindsell (1818) ( See appendices 5)
- Felthouse – v- Bindley (1862) ( See appendices 6)
- Errington –v- Errington & Woods [1952] ( see appendices 7)
- Powell – v- Lee (1908) (See appendices 8)
- Byrne -v- Van Tienhoven [1880] ( see appendices 9)
- Adam – v- Lindsell (1818) (See appendices 10)
- Butler Machine Tools ltd -v- Ex-Cell-O ltd (1979) (See appendices 11)
To apply the three tests to check if there is an acceptance you have to see if there are Mirror
Image, Must be firm and Communicated of Acceptance. All these tests have to be passed before
you can carry on to the other elements of a contract.
TEST 1 – MIRROR IMAGE
To form a mirror image the deal must be exactly the same offered as well as being brought. For
example they both have to have a benefit from doing the deal, a debt and both would have to accept
the terms.
EXAMPLE CASE:
In the Case Jones – V- Daniel (1894) (See appendices 4 for full case) the Offeree who received an
offer from the Offeror responded to them by submitting a draft contact that the Offeror had sent them
this included new terms. This then was classed as a counter offer not an acceptance so therefore was
not a Mirror Image of the offer that the Offeror made. If the Offeree accepted the first offer then this
would have been a mirror image of the offer that the Offeror had sent to them.

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As Nirmal or Owen didn’t try and make a counter offer with yourself but accepted the terms to which
you advertised the offer to them. This means that they did show a mirror image of the offer so
therefore the first test of acceptance has been passed so we now can go on the second test of
acceptance.
TEST 2 – FIRM
For the acceptance to be firm there must not be any reason for there to be doubt that either party did
not want to carry out the contract. For example there must be a firm yes or no.
EXAMPLE CASE:
In the case Felthouse – v- Bindley there wasn’t a firm acceptance because the Offeror had not made
any sort of acceptance. Even though he might have intended to accept by asking the auctioneer to
take the horse from sale there wasn’t a definite proof of the acceptance and therefore it was not firm.
APPLYING IT TO YOUR CASE
In your case Nirmal’s and Owens acceptances were clearly shown to be firm because they both sent
letters of acceptance to yourself as well as the £200 in cash. This clearly shows that both had
accepted the term that you had clearly set so therefore means it was a firm acceptance. This means
that the second test has been passed so we can now go onto the third test.
TEST 3 – COMMUNICATION OF ACCEPTANCE
For it to be clearly communicated to the Offeror there are four ways which are Conduct, Verbal,
Electronic and Postal. Each of these have certain laws and terms that everyone has to abide by, I am
now going to explain each of these in detail
CONDUCT
This is the action that the Offeror has accepted an offer. This communication is usually instant which
means the contract would be accepted immediately.
EXAMPLE CASE:
In the case of Errington –v- Errington & Woods (1952) the Offerors showed his acceptance through
conduct by paying of the mortgage payments through the terms within the offer otherwise there would
be no reason for them to pay the mortgage
VERBAL
It is exactly how it is said, for the acceptance to be verbal the words would have to be spoken out
loud. This would only be accepted through face to face encounters not through Telephone calls as
this would be classed as electronic which I will explain later on.

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EXAMPLE CASES:
In the case of Powell – v- Lee (1908) acceptance was made by the defendant verbally but was not
intention to do business.
ELECTRONIC
This is where acceptance is made through electronic devices. For example: Telephone. This would be
classed as a delayed acceptance as it may take a while for the Offeree to accept the offer. This offer
is only final once they have received and read the offer.
EXAMPLE CASES:
In the case of Bryne – v- Van Tienhoven (1880) acceptance was shown when they sent a telegram
and affirmation through letter. As they used both these methods it allowed the claimant to ensure that
the defendant received the acceptance. As sending the acceptance through telegram meant that it
would be delayed.
POSTAL
This is where the acceptance is accepted through the post i.e. Letter. It is different from electronic
acceptance as there is a delay but it is classed as instant acceptance as there is a postal law. This is
where the moment the letter has been posted the acceptance is formed even if the Offereee has
received the letter or not.
EXAMPLE CASES:
In the case of Adams – v- Lindsell (1818) this case was affected by postal law because the claimant
posted his letter on the 5th September, this meant that the contract was formed even though the
defendant did not know that the letter of acceptance was sent he still lost the case.
In the case of Butler Machine Tools LTD – v- Ex-cell-O LTD (1979) the postal acceptance was when
the claimant sent their slip that indicated that they were happy with the contract that the defendant
had formed including their terms; this means that the claimant lost the case.
In your case the method that was used for acceptance is postal is was used by both Offerors
so this means that the Postal Law was would apply to your case. Both Nirmal and Owen
formed a contract with you the moment they had written and posted their acceptance.
Even though you did change the offer on the 15th
of April and technically any letters of
acceptance sent after this point for the special offer as well as annual subscription of
Sportlife should not apply as you had redrawn the special offer but still offered the annual
subscription of Sportlife. You did warn the customer that you could do this at any time.
Which means Owen who sent his letter the day after you redrew the offer should only be
entitled to the annual subscription not the offer. However when Nirmal sent his letter of

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acceptance on the 30th
March the contract between you two was made before you had
retracted the special offer which means that Nirmal should get the full offer of an annual
subscription of Sportlife and the special bonus offer.
CONSIDERATION
Consideration is where the value must be passed from one party to another through a
contract. The word ‘Value’ doesn’t necessarily mean money but anything that is financial
value for example when someone put their time and effort into a task. When consideration is
put in place the Offeree’s and O
ffoerors terms are now called promise and promisor.
Definition of Consideration:
‘to constitute a simple contract an agreement must amount to a bargain, each of the parties
paying a price for that which he receives from the other’ (page 98; ninth edition; Osborn’s
concise law dictionary; edited by Sheila Bone)
There are two types of consideration that you will have to remember which are executory
and executed. They both have different meanings they are:
Executory – ‘ Remaining to be carried out into effect. An executor contract is one which
takes form of promises to be formed in the future’ (page 161; ninth edition; Osborn’s concise
law dictionary; edited by Sheila Bone)
Executed – ‘ Done. Of a document, one which is formally signed’ (page 161; ninth edition;
Osborn’s concise law dictionary; edited by Sheila Bone)
THE CASES THAT APPLIES TO CONSIDERATION:
- Mcardle (1951) (See appendices 12)
- Stewart – v- Casey (1892) (see appendices 13)
There are three rules in which must be considered when considering if there has been
consideration within a contract these three rules are Consideration MUST be past,
Consideration MUST be sufficient and consideration IF not sufficient.
TEST 1. CONSIDERATION MUST BE PAST
This test determines whether there is a valid consideration, to determine whether there is
then there must be one made at the first instant that the contract becomes effective or after it
has been made. Never before.

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EXAMPLE CASES:
In the case of Re Mcardle(1951) the promise of paying the brother and wide was not legally
binding as the work that had been done was done before the contract was made between
them, this would then be classed as past consideration.
In the case of Stewart – v- Casey (1892) the court said that the employers has to pay the
employee as the employee worked at their request which made it reasonable for him be
expected to be paid. This is classed as Employee and Employer relationship where past
consideration is allowed.
In your case you formed the contract with Nirmal and Owen the moment they sent the
money in the post, but only so that you would supply them with the subscription you offered
as well as the special bonus. This means that consideration was not past.
TEST 2. CONSIDERATION MUST BE SUFFICIENT
The Word ‘Sufficient’ means that the consideration must be acceptable either by the value of
money or performance that someone has made.
EXAMPLE CASES:
In the case of Alliance bank – v- Broome (1864) it was considered to be sufficient
consideration because they promised that wouldn’t take action to recover the loan if the
defendant had security to give for it. This is classed as sufficient as the defendant and client
both receive something from the contract that they have formed.
In your case you had applied sufficient consideration for Nirmal as the contract you formed
with each other you both benefit from it as Nirmal has given you the money for the £200
Bonus as well as the annual subscription of Sportlife but for Owen there isn’t sufficient
consideration as he had sent off the money to you but does not receive the £200 Bonus but
instead receives the subscription of Sportlife on its own. This means that the test for
Sufficient consideration is not passed when it comes to the case of Owen on his own.
TEST 3. CONSIDERATION IF NOT SUFFICIENT
This is important as you have to be aware that a promise by a creditor to accept sum owed
does not discharge the legal terms that they have to pay the full balance eventually.

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INTENTION
This is the fourth stage of a contract. This is where both parties show an interest within an
offer and then act upon it.
DEFINITION OF INTENTION:
‘The purpose, aim or desire which an act is done’ ( Page;211;Ninth Edition; Osborne’s
Concise Law Dictionary: edited by Shelia Bone)
There is only one test for Intention and that is called Presumption two. I will now explain
what assumption two is.
PRESUMPTION 2.
This means that if both parties both formally agree to any contract with valid consideration,
then this means they both had intention to do so. This does not apply if the contract states
that neither of the parties wish to be legally bound to the contract.
EXAMPLE CASE:
In the case of Rose –v – Crompton (1923) (See appendices 14) there was a section of the
contract that stated that the two parties didn’t want to be legally binded and that the contract
was a record purely for themselves.
In the case of Jones – v- Vernon Pools (1938) (See appendices 15) the statement within the
contract said it was ‘binding in honour only’ which allowed it to be not within legal terms. This
allowed the defendants to only honour the contract if they chose to.
As you nor Nirmal or Owen did not imply that you didn’t wish to be legally bound. This
means that all parties within the contract wished to legally bound to the terms. This means
there was valid intention.
PRIVITY OF A CONTRACT
Privity of contract can also be used to prove intention. The person(s) that are involved with
the contract are the ones who can benefit from it or who can be just involved in the contract
in some way. This means that third parties aren’t usually affected by two other parties.
DEFINITION OF PRIVITY OF A CONTRACT:
‘The doctrine of privity of contract states that a contract cannot usually give rights or impose
obligations on anyone who is not a party to the contract’

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EXAMPLE CASES:
In the case of Pneumatic Tyre Co LTD – v- Selfridge and Co LTD (1915) (see appendices
16) Dunlop was a third party within their contract which meant that Selfridges was unable to
sue Dunlop because they did not have the contract with them they had the contract with
Pheumatic Trye Co LTD.
As there was no third party involved then this section does not apply to you. I have put this
within the report for you to look back at for future reasons.
CAPACITY
This is the final stage this will explain to you whether Owen or Nirmal has the legal power to
enter the contract that you had made with them.
DEFINITION OF CAPACITY:
‘in order to form a wholly valid contract, the parties must have legal capacity’ (page 69: Ninth
Edition; Osborne’s Concise Law Dictionary: edited by Shelia Bone)
There are two types of Capacity there is people with limited and capacity of organisations. I
will now explain in full detail what these two mean.
PEOPLE WITH LIMITED CAPACITY
There are different types of people who have limited capacity. Minors which are children
under the age of 17 cannot enter into any legal contracts unless it is beneficial contracts of
service or it’s the supply of necessary good and services.
NECESSARY GOODS AND SERVICES:
Necessary goods and services are classed as the items that are essential for the minor life.
For example: education. They have made a mobile phone an essential item for a minor’s life
as they have adapted to the times of society. This means that minor can form a legal
contract when purchasing a phone. The items that are not classed as essential to minors are
items that do not affect the minors life in such a way that they cannot carry on living for
example a Nintendo Ds.

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INCAPACITATED PERSONS
Another type of person that have limited capacity. The type of people under this would be
people with mental disability who have been sectioned under the Mental Health Act 1983.
Whoever is sectioned under this act do not have the legal capacity of entering any contract,
even though this is the case the court may want to enter a contract on the person in
questions behalf if the contract was made before the person was diagnosed. Those who
have temporary sanity due to drugs or alcohol can find that the contract they make during
that time frame can be voided if they can prove that they did not have understanding at that
time when they entered the contract.
CAPACITY OF COMPANIES
If a company is registered at Companies House under the Companies Act (1985) allows the
company to have a legal identity of its own and can sue or be sued under its own name, if it
was not registered they do not have any legal power. If anyone acts on the behalf of the
company when it is not registered they will be personally help responsible for any contract
they form. Unincorporated Associations are not legal entities so capacity belongs to all
members of the association this also applies to anyone within a partnership. Local
Authorities who are under the Local Government Act (1972) or the Royal Charter are
separate legal entities and do have capacity to any contract formed in their own right. If they
go beyond their legal rights it is known as ‘Ultra Vires’
When you look at the Capacity of both Nirmal and Owen they both did not have limited
capacity when they entered the contract with you. They were not incapacitated or have a
known disability and both are over the age of 18. This means that they had valid capacity to
enter the contract with you.
WHAT CAN INVALIDATE A CONTRACT?
Even though the five sections above of contract law have been fully assessed and tested
there are still possible factors that could lead to an invalid contract. These such possible
factors are Duress, Mistake, Undue Influence and Misrepresentation. Below I will now
explain each of these in detail.
DURESS
Duress is where the person who has entered the contract had done so due to force from the
other party, for example if the person was blackmailed into entering the contract.

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DEFINITION OF DURESS:
‘unlawful pressure to perform an act.’ (page 144: Ninth Edition; Osborne’s Concise Law
Dictionary: edited by Shelia Bone)
Anyone who is to enter a contract must be willing to enter it on their own without any force.
EXAMPLE CASES:
In the case of Barton – v- Armstrong (1975) ( see appendices 17) the contract was only
signed because he was threatened by Armstrong, this meant that the contract was not valid
due to being under duress.
In the case of D&C –v – Rees (1965) (see appendices 18) the claimant was held to ransom
as they were offered less than what they deserved as they had financial issues they had no
choice but to accept the ransom
As you did not force Nirmal or Owen to enter the contract between you and them then this
means that the contract with them was formed on right terms and therefore there is a
contract between you still.
MISTAKE
A mistake is simply was it is. It’s a misunderstanding that can be taken place.
DEFINITION OF MISTAKE:
‘A mistake may nullify consent e.g. the parties contract on a fundamental mistaken basis or
negative consent e.g. the parties never reach agreement because of the mistake’ (page 254:
Ninth Edition; Osborne’s Concise Law Dictionary: edited by Shelia Bone)
Mistakes most of the time do not have an effect on contracts validness it is also known as
‘Caveat Emptor’ which means buyer beware. For the parties to avoid these situations they
must be aware of the terms laid out in the contract that they want to agree to. If they do not
then this could be there mistake, their fault as they did not take it upon themselves to read
the terms before agreeing to the contract.
As you have stated that both Nirmal and Owen read through the terms that you laid out to
them means that they did not make a mistake in forming the contract with you. Even though
Owen read the terms but did not decipher the fact that you could redraw the special offer at

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any time does not mean that he did not have an invalid contract with you, he just made the
mistake of not reading your terms correctly.
UNDUE INFLUENCE
This is where one of the persons within a contract has a higher part over the other. Usually
they use this to influence the weaker person to form the contract. This may lead the courts in
referring the contract as being invalid.
DEFINITION OF UNDUE INFLUENCE:
‘ the equitable doctrine that where a person enters into an agreement or makes a disposition
of property under such circumstances as to show (Actual undue influence) or give rise to the
presumption that he has not been allowed to exercise a free and deliberate judgement on
the matter’ (page 391: Ninth Edition; Osborne’s Concise Law Dictionary: edited by Shelia
Bone)
As you did not have any influence on Nirmal and Owen to form the contract with you this
section would not affect the contract that you have with them.
MISREPRESENTATION
This where if a person entering a contract states anything that is untrue or any action that
can lead to misrepresentation during discussing the contract can lead to the contract being
invalid.
DEFINITION OF MISREPRESENTATION:
‘a representation that is untrue ; a statement or conduct which conveys a false or wrong
impression’ (Page 253: Ninth Edition; Osborne’s Concise Law Dictionary: edited by Shelia
Bone)
It can also be broken down into three sections these are, Fraudulent, Negligent and
innocent.
FRAUDULENT:
This is where someone has made a statement on purpose knowing that it is false to mislead
the other party within the contract.
NIGLIGENT:
When someone makes a statement that they do not know if true or not.

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INNOCENT:
Is where someone makes a statement about the contract that they truly believed was true.
Each of these could lead to contracts being revoked or the other party for being sued for
damages.
EXAMPLE CASE:
In the case of Spice Girls LTD – v- Aprilia World Services BV (2000) (See appendices 19) as
the spice girls represented that no-one intentionally want to leave the group which means
this was classed at misrepresentation which led to the Spice Girls LTD losing the case. As
Aprilia wouldn’t have entered the contract if they knew that one of the members was going to
leave the group.
In the case of Hedley Bryne & Co LTD – v- Heller & Partners (1964) (See appendices 20)
Heller and Heller both stated that Hedley’s Business were financially okay so when they
went to court they were said to be the ones with the duty of care to Hedley as it negligently
misrepresented the companies status.
APPLYING IT TO YOU CASE:
Reading through your case suggests that there is no incline of you misrepresenting yourself
to Nirmal or Owen when the contract was being formed. This means that these sections do
not apply to your case.
VOID, VOIDABLE AND ENFORCABLE CONTRACTS
Void contracts have no binding effect at all it is a contradiction of terms. Lawyers use it to
describe a situation in a contract where there’s inconvenience. Voidable contract allows one
party to have a right to dismiss a contract. Enforceable contract is valid but it cannot be
enforced when it comes to the court of law by either party if one tries to refuse to obey by the
contract. (The Law of contract: Smith and Keens: English law; Denis Keens)

21 | P a g e
CONCLUSION
After accessing your case and applying all the aspects of Contract law. I have concluded
that you have a contract with both Nirmal and Owen as all five stages were passed within
the contract.
The contract that you have with Nirmal is that he gets the Annual Subscription and the
Special Bonus Equipment as he entered for this before the bonus got revoked whereas
Owen’s contract with you is only for the Annual Subscription as he made the mistake of
knowing you can revoke the offer at any point but still tried to form the contract with you after
the date you did revoke the contract. This is a mistake on his part only not yours as he was
warned by a friend to that you had revoked the offer.

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REFERENCES & BIBLIOGRAPHY
References Bibliography
http://legal-
dictionary.thefreedictionary.com/contract
http://legal-
dictionary.thefreedictionary.com/contract
Ninth Edition; Osborne’s Concise Law
Dictionary: edited by Shelia Bone)
The Law of contract: Smith and Keens:
English law; Denis Keens
Seventh edition: The company’s constitution
and powers; Cases and Materials in
company law: Ls sealy
Making contract: English law text and cases:
Smith and Keenans
Shears 1998: Law for GCSE
Gulshan s & Kapoor: Business law including
company law
Richards,Dransfield and Govmer 2010: Btec
level 3 business book 2.

23 | P a g e
APPENDICES
APPENDICES 1.
Carlill – v- Carbolic Smoke Ball Company (1893) (Page 118: The company’s constitution and
powers: Cases and Materials in company law: 7th
Edition: Ls Sealy)
The Carbolic Smoke Ball Company advertised in the Pall Mall Gazette in 1891 that their
Carbolic Smoke Ball was a cure for flu, bronchitis, coughs, colds, headaches, hay-fever,
whooping cough, laryngitis and sore throats amongst others.
It was so confident of the usefulness of the carbolic smoke ball and it ability not only
to cure but also to prevent someone from getting the flu that it advertised on the following
basis: anyone who used the carbolic smoke ball in a particular way for a specified period of
time, but who still caught influenza afterwards, would be entitled to claim £100 from the
company.
The advertisement went on to say that the company had gone so far as to
deposit £1000 in the Alliance Bank in the event of any such claims. The Claimant (Mrs
Carlill) saw the advertisement and decided to buy one of the carbolic smoke balls. She used
it exactly as advised, but still caught influenza.
Carbolic Smoke Ball refused to pay and Carlill sued for damages arising from breach of
contract. Judgement for 100 pounds was entered for Carlill and Carbolic Smoke Ball
appealed.
Held, affirming the decision of Hawkins, J, that the above facts established a contract by
the defendants to pay the plaintiff 100 in event which had happened
APPENDICES 2.
Hilas – v- Arcos (Page 737: Making the contract: English Law Text and Cases: Smith and
Keenans)
A detailed agreement for the supply of timber by RR to AA during 1930 also contained an
option clause, allowing AA to buy more timber during 1931 but omitting details such as the
type of wood, the sizes required, and the ports to which it was to be shipped. The House of
Lords said there was still a binding contract in respect of the later year; it showed a clear
intention to be bound, and the details not resolved in the document could be supplied by
reference to the previous dealings between the parties and the normal practices of the
timber trade. The contract was to buy 22,000 standards of softwood of fair specification.
The court ruled that fair specification was not sufficiently vague to void the contract, as the
companies had done business before and each would have known the others' intentions.
APPENDICES 3.
Fisher- v- Bell (1961) (Page 198: Shears 1998:)

24 | P a g e
It was statutory offence under the Restriction of offensive Weapons Act 1959 to offer for
sale any of various items, including flick-knives.
A Bristol shopkeeper such a knife in his window with a ticket reading “ejector knife – 4s”
(4 shillings = 20p)
APPENDICES 4.
Jones – v- Daniel (Page 19: Gulshan s & Kapoor)
An offer to buy a property was accepted upon a condition that the buyer signed an
agreement which contained special terms as to the payment of the deposit, making out title
completion date, the agreement having been returned unsigned by the buyer.
APPENDICES 5.
Adams – v- Lindsell (1818) Arcos (Page 742: Making the contract: English Law Text and
Cases: Smith and Keenans)
‘The rule began with this case where wool was offered for sale, an acceptance by post was
requested and sent, but not received until long after the wool had been sold.’
APPENDICES 6.
Felthouse – v- Bindley (1862) Arcos (Page 739: Making the contract: English Law Text and
‘In Felthouse -v- Bindley (1862), the plaintiff wrote to his nephew offering to buy a horse for
£30, and “if I hear no more I consider the horse to be mine”. The nephew did not reply but
ordered Bindley, the auctioneer, to withdraw the horse from sale. In error the horse was
auctioned and Felthouse sued for his loss. The court held that, as the nephew had not
communicated his acceptance of the offer, no contract existed and Felthouse had no right of
action’
APPENDICES 7.
Errington – v- Errington & Woods (1952) (The company’s constitution and powers: Cases and
Materials in company law: 7th
Edition: Ls Sealy)
‘A father bought a house and mortgaged it in his own name. He promised his son and
daughter-in-law that it would become theirs when they had paid off the mortgage. When the
father died and other members of the family wanted possession of the house their action
failed.’
APPENDICES 8.
Powell – v- Lee (1908)( The company’s constitution and powers: Cases and Materials in company
law: 7th
Edition: Ls Sealy)

25 | P a g e
‘The plaintiff applied for a job as a head teacher and the school managers decided to
appoint him. One of the managers, acting without authority, told the plaintiff he had been
appointed. The plaintiff sued for breach of contract. It was held that the plaintiffs offer had
not been officially accepted and so there was no contract.’
APPENDICES 9.
Bryne –v – Van Tienhoven (1880) (The company’s constitution and powers: Cases and Materials
in company law: 7th
Edition: Ls Sealy)
‘On 1 October the defendants in Cardiff posted a letter to the claimants in New York offering
to sell them tin plate. On the 8 October the defendants wrote revoking the offer. On 11
October the claimants received the defendants offer and immediately telegraphed their
acceptance. On 15 October the claimants confirmed their acceptance by letter. On 20
October the defendant’s letter of revocation reached the claimants who had by this entered
into a contract to resell the tin plate.’
APPENDICES 10.
Adam – v- Lindsell (1818)( The company’s constitution and powers: Cases and Materials in
company law: 7th
Edition: Ls Sealy)
‘The defendants were wool dealers in business at St Ives, Huntington. By letter dated 2
September they offered to sell wool to the claimants who were wool and manufacturers at
Bromsgrove, Worcestshire. The defendants’ letter asked for a reply ‘ in course of post’ but
was misdirected, being addressed to Bromsgrove , Leicestershire. The offer did not reach
the claimants until 7pm on 5 September. The same evening the claimants accepted the
offer. This letter reached the defendants on 9 September. If the offer had not been
misdirected, the defendants could have expected a reply on 7 September, and accordingly
they sold the wool to a third party on 8 September. The claimants sued for breath of contract’
APPENDICES 11.
Butler Machine Tools LTD – V- Ex-Cell-O (1979) (The company’s constitution and powers: Cases
and Materials in company law: 7th
Edition: Ls Sealy)
‘On the 23 May 1969 Butler quoted a price for a machine took of £75,535, delivery to be
within 10 months of order. The quotation gave terms and conditions which were stated
expressly to prevail over any terms and conditions contained in the buyer’s order.One of the
terms was price variation clause which operated if costs increased before delivery. Ex-cell-o
ordered the machine on 27 May 1969, its order stating that the contract was to be on the
basis of Ex-Cell-O’s terms and conditions as set out in the order. These terms and
conditions did not include a price variation clause but did contain additional items to the
Butler Quotation, including the face that Ex-Cell-O wanted installation of the machine for
£3,100 and the date of delivery of 10 months was changed to 10 – 11 months. Ex-Cell-O’s
order form contained a tear off slip which said: ‘Acknowledgement: please sign and return to
Ex-Cell-o’s. We accept your order on the terms and conditions stated therein – and
undertake to deliver by .. date..signed’ This slip was completed and signed on behalf of

26 | P a g e
Butler and returned with a covering letter to Ex-Cell-O on 5 June 1969.The machine was
ready by September 1970 , but Ex-Cell-O could not take delivery until November 1970
because it had to rearrange its production schedule. By the time Ex-Cell-o took delivery,
costs had increased and Butler claimed £2,892 as due under the price variation clause. Ex-
Cell-O refused to regard the variation clause as a term of the contract. ‘
APPENDICES 12.
Re Mcardle (1951) (Page 749: Making the contract: English Law Text and Cases: Smith and
Keenans)
‘certain children are were entitled under their fathers will to a house, However their mother
has a life interest in the property and during her lifetime one of the children and his wife
came to live in the house with the mother. The wife carried out certain improvements to the
property, and, after she had done so, the children signed a document addressed to her
stating: ’in consideration if your carrying out certain alterations and improvements to the
property..at present occupied by you, the beneficiaries under the Will of William Edward
McArdle hereby agree that the executors, the National Provincial Bank Ltd.,...Shall repay to
you from the said estate when so distributed the sum of £488 in settlement of the amount
spend on such improvements…’ on the death of the testator’s widow the children refused to
authorise payment of the sum of £488,and this action was brought to decide the validity of
the claim’
APPENDICES 13
Stewart – v- Casey (1892) (Page 749: Making the contract: English Law Text and Cases:
Smith and Keenans)
‘Patents were granted to Stewart and another in respect of an invention concerning
appliances and vessels for transporting and storing inflammable liquids. Stewart entered into
an arrangement with Casey, whereby Casey was to introduce the patents. Casey spent two
years ‘pushing’ the invention and then the joint owners of the patent rights wrote to him as
follows: ‘ in consideration of your services as the pratical manager working both patents we
hereby agree to give you one-third share of the patents’ Casey also received the letters
patent. Sometime later Stewart died and the executors claimed the recovery of the letters
patent from Casey, suggesting that he had no interest in them because the consideration for
the promise gave him a one-third share was past’
APPENDICES 14
Rose –v – Crompton (1925) (Page 759: Making the contract: English Law Text and Cases:
Smith and Keenans)
‘In 1913 the claimant an American Company, entered into an agreement with the defendant,
an English company, whereby the claimant was appointed sole agent for the sale in the USA
of paper tissues supplied the defendant. The contract was for a period of three years with an
option to extend the that time. The agreement was extended to March 1920, but in 1919 the
defendant terminated it without notice. The defendant had received a number of orders for

27 | P a g e
tissues before the termination of the contract, and it refused to execute the. The claimant
sued for breach of contract and for non-delivery of the goods actually ordered. The
agreement of 1913 contained an ‘honourable pledge clause’ drafted as follows: ‘this andum
written as a formal or legal agreement and shall not be subject to legal jurisdiction in the
courts of the United States of America or England…’ it was held by the House of Lords that
the 1913 agreement was not binding on the parties, but that in so far as the agreement had
been acted upon by the defendant’s acceptance of orders, the said orders were binding
contracts of sale. Nevertheless, the agreement was not binding for the future,
APPENDICES 15
Jones – v- Vernon Pools (1938) (Page 758: Making the contract: English Law Text and
‘The claimant said that he had sent the defendants a football coupon on which the penny
points pool was all correct. The defendants denied having received it and relied on a clause
printed on every coupon. The said clause provided that the transaction should not ‘give rise
to any legal relationship…or be legally enforceable..but..binding in honour only’. The court
held this clause was a bar to any action in a court of law.’
APPENDICES 16
Dunlop Pneumatic Tyre Co LTD – v- Selfridge and Co LTD (The company’s constitution and
powers: Cases and Materials in company law: 7th
Edition: Ls Sealy)
‘In the contract Dew & Co, wholesalers, agree to buy tyres from Dunlop. They did so on the
express understanding that they would not sell below certain fixed prices. They also
undertook to obtain the same price fixing agreements from their clients. Dew sold tyres on to
Selfridge on these terms but Selfridge broke the agreement and sold tyres at discount
prices. Dunlop sought an injection. They failed for lack of privity.’
APPENDICES 17
Barton – v- Armstrong (1975) (The company’s constitution and powers: Cases and Materials in
company law: 7th
Edition: Ls Sealy)
‘A former chairman of a company threatened the current managing director with death
unless the managing director paid a large sum of money for the former chairman’s shares. It
was shown in the case that the managing director was actually quite happy to buy shares
and would have do so without the threats Nevertheless they had been made and were
therefore sufficient to amount to duress vitiating the agreement they had reached as a result.
’

28 | P a g e
APPENDICES 18
D&C –v – Rees (Page 206: Shears 1998)
‘The builders’ promise to accept £300 in full settlement of a debt of £482 was not binding on
them, and they could successfully sure for the balance.’
APPENDICES 19
Spice Girls LTD – v- Aprilia World Services BV (Page 90: Richards, Dransfield & Goymer
2010)
‘Spice Girls Ltd (SGL) was formed to promote the band the Spice Girls. At the beginning of
May 1998 SGL entered into a contract with Aprilia World Service BV, an Italian company
which manufactures motorcycles and scooters. The Spice Girls agreed to take part in a TV
commercial advertising the scooters. The contract was signed at the beginning of May and
Geri Halliwell left the group at the end of May. A month before the contract was signed Geri
had told the group that she would be leaving the band The group did not disclose this
information to Aprilia World Service BV and the contract was signed. The Spice Girls went
ahead with the shoot even though they knew Geri would have left by the time the
commercial went on air.’
APPENDICES 20
Hedley Bryne & Co LTD – v- Heller & Partners (1964) (Page 90: Richards, Dransfield and
Govmer 2010)
‘Hedley Byrne & Co, an advertisement agency, needed financial advice on a particular
companies standing and approached the company’s bankers, Heller & Heller Partners, for
credit information. The defendants stated that the company was financially sound. A short
time later, the company went into liquidation.’

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