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Business Law Essay

Under the law governing offer and acceptance, a valid offer has been made through an advertisement. In order for an offer to be accepted, the party must entirely accept the offer. The rules governing acceptance has to be positive not passive. Silence does not forms acceptance. The general rule of acceptance is that the acceptance must be received by the offeror, otherwise it has no effect. An offer made to a particular person can be rightfully accepted by him alone and in order to avoid complications, acceptance is to be in writing received by the offeror or if it is orally, it must be heard by the offereor.

In applying the law to the facts of the case before us, Wayne has made a valid offer to sell his house for $2 million dollars. In this case, Wayne is the offeror and Scott, Kyle and Magdelene are the offeree. Scott offers to buy the house for $1. 8 million dollars and Wayne said nothing. In this case, Scott has now become the offeror and Wayne is the offeree as a counter offer has been made. Looking at the principles of acceptance, an acceptance made must be positive not passive.

Wayne said nothing about the offer therefore there was no communication between them of any sort of acceptance. This would highlight that the fact that silence does not form acceptance as per case of Felthouse v Bindly (1862) The offeror cannot impose acceptance just because the offeree does not reject the offer. Therefore, Scott wanting to take legal action towards Wayne is not valid as there was no form of acceptance in either form of writing or orally. When Kyle came to view the property, he agrees to Wayne’s offer of $2 million dollars but “subject to contract”. Wayne agreed.

The definition of subject to contract is that both parties are agreeable to the terms of the offer but propose that they negotiate a formal contract on the basis of the offer. Referring to the case of Yap Eng Thong v Faber Union, the court found the agreement to sell a house “subject to contract” was not binding. Hence, Kyle wanting to take legal action towards Wayne will not be valid as “subject to contract” does not bind anyone to the contract before signature. In this case, Wayne revoked his offer to Scott and Kyle by selling the house to Magdalene.

An offer can be dismissed at any point of time before acceptance s made. In the case of Routledge v Grant (1828), there was offer made to buy the house and acceptance must be made by the offeree in 6 weeks time. In less than 6 weeks, offeror chooses to withdrew his offer, in which he had a right to do so. Furthermore, the revocation is valid as it is communicated to Scott and Kyle since they have heard of it. The notice of revocation does not necessarily come from Wayne himself. In conclusion to the case study, both Scott and Kyle cannot bring Wayne to legal action as the offer was revoked before their acceptance was made.

Revocation was made being communicated and need not come from the offeror himself. Which links to the next point of acceptance must be positive and not passive. Silence does not make up acceptance. Hence, Scott wanting to take legal action against Wayne is not valid. As for Kyle, Wayne has the right to sell his property to anyone as long as a formal contract is not signed by any party. Kyle cannot take legal action against Wayne as “subject to contract” does not guarantee acceptance and either party can withdraw before signing .


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