BTEC Business, Unit 21 Aspects of Contract and Business Law, Pass 1 and 2, Merit 1 / P1 P2 M1
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Course
Unit 21 - Aspects of Contract and Business Law
Institution
PEARSON (PEARSON)
This is my assignment for Aspects of Contract and Business Law, Unit 21 Level 3 BTEC Business. This is the work I did to achieve Pass 1 and 2, and Merit 1.
What is a Standard Form Contract?
Standard form contract is a written contract which everyone signs, for example the
terms and conditions box. It means that if someone goes to court regarding the contract,
everyone signed the same contract is entitled to the same rights, for example if someone
was getting compensation, everyone who had signed the same contract that also had the
same issue (etc.) occur would also get conspenation.
How contracts are formed and negotiated
(1) Invitation to treat
Invitation to treat is an indication that a person is prepared to receive offers, this
includes the display of goods with a price ticket attached, products in advertisements,
and the company prospectus. An example of this with netflix is any ads advertising their
service, or being able to purchase a subscription on their site.
A problem that can occur with invitations to treat are if someone thinks it is an offer, or
if the seller denies the person the ability to offer. A problem occurred in a case
Pharmaceutical Society of Great Britain V Boots Cash Chemists [1953], customers were
now able to pick up drugs off of the shelves and pay for them at the till, beforehand they
had been stored behind the counter, it was being argued that someone putting the items
in their basket was unlawful practice as a pharmacist needed to supervise agt the point
where the sale is effected, PSGB argued that the offer was the items being on display and
someone putting them in their basket was an acceptance of the offer, the point where the
sale was effected. It was ruled that the display of goods was not offer, and in fact putting
the goods in their basket was the customer making an offer and this could either be
accepted or rejected at the pharmacist desk.
Invitation to treat in a necessary stage because it shows that the business is open to
receiving offers, without an invitation to treat a customer would not be able to make an
offer. It also allows customers to see the prices of things before they make an offer. It also
gives staff the opportunity to reject your offer and not let you buy the item, for example if
the person is not old enough to buy it.
(2) Offer
An offer is a definite promise of an intention to make a valid agreement, an offer has to
be communicated and cannot just be assumed, silence is not acceptance. If a counter
offer is made, it takes away the original offer, for example on eBay where someone
making a higher offer takes away your offer so it cannot be accepted. If someone makes
an offer to the world at large, usually in reward cases, it can be accepted by anyone who
sees it and acceptance does not need to be communicated. For example, if there was a
poster put out offering a reward for the return of their missing dog, someone does not
need the call you up and tell you they accept your offer to look for a dog in return for a
reward, etc. The person accepts the offer by looking out for the dog or a person or
whatever the reward case regards. An example of an offer with Netflix is when the buyer
signs up with Netflix and wants to buy a subscription.
Offer is an important stage because it means that the customer is showing the intention
to buy, and that it will become legally binding as soon as the other party accepts their
offer. It is a definite promise from one of the parties to the agreement made. This is also
an important stage because it allows a counter offer to be made, which can be very
important on sites such as eBay and small businesses such as people selling at markets
or a carboot sale.
(3) Acceptance
, Acceptance is when the seller agrees to your offer, it is a necessary stage because an
offer must be accepted in order to make a valid agreement, and the acceptance but be
communicated, silence is not acceptance. It must be accepted in the form specified, if
specified to accept by email you cannot then accept by text. If no form is specified then it
must be accepted by an appropriate form. When Netflix allows you to create an account,
they have accepted your offer as you signing up is your offer and they have allowed you
to do this, they deny the offer if you don’t tick the terms of use when signing up.
However there are exceptions to this, one of which is acceptance by post. If the specified
form is by post, the acceptance takes place when the letter is sent not when it arrives.. If
the letter is lost or delayed and there is proof it was sent then acceptance will have still
taken place. An example of this is the Adams V Lindsell [1818] case, where the person
offering’s letter arrived late and therefore the acceptance letter in return was later that
the offerer expected to receive it and so he sold the wool to someone else. It was ruled
that the acceptance took place when the letter was sent not when it was received.
The second exception is in reward cases, an offer made to the world at large can be
accepted by anyone by seeing the offer and the offer must not be too vague so the
person knows what they are agreeing to. An example of this is in the case of Carlill V
Carbolic Smoke Ball Co. [1892] where Carbolic Smoke Ball Co. were selling a flu remedy
and the manufacturer advertised buyers who found it didn’t work could be rewarded £100.
Carbolic Smoke Ball Co. argued that it was a serious offer, however it was ruled that the
advertisement was a legally binding contract because it was an offer and they had to pay
Mrs Carlill the £100.
This stage is necessary because once an offer has been accepted a contract has been
formed. Acceptance of an offer is absolute and without condition, and a change in the
acceptance cancels the original offer and become a counter offer, therefore the original
offer becomes irrelevant. The contract is not effective until the offer is accepted, so it is
the stage which forms the contract and the offer can be withdrawn at any time before the
offer is accepted.
(4) Consideration
Consideration is that both parties are benefitting from the agreement, it cannot be one
sided however it does not have to be equal. This is shown in the case of Chappell and co
V Nestle. When the customer pays for Netflix and they in return get to use the
subscription, consideration has taken place as both parties have benefitted.
Consideration is necessary because valid consideration must occur for the contract to
be legally binding; there are two types of consideration, executed consideration and
executory consideration. Executed consideration an act in exchange for a promise (such
as when you are buying something at a shop) and executory consideration is a promise
for the future (such as promising you will pay for something part by part every week, for
example £10 a week until the full amount is paid off).
This stage is necessary because consideration is needed in order for the contract to be
valid, therefore is a needed stage because without it an agreement would not be
considered a valid contract. If only one party benefits from the agreement it is not
considered a contract but instead is considered a gift, therefore parties do not have the
same rights as they would in a contract. Consideration is important in ensuring that
parties have the same rights that they would have in a contract.
What are contract terms?
Representation
This is something that is said during a contract signing, it is not usually legally binding
but it can turn into a term if it is made clear that this is important and it therefore
becomes part of the contract.
Express Terms
These are things which are written in a contract which are agreed by the parties, they are
legally binding.
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