Sample Business Paper on Contract Questions

Contract Questions

  1. List and explain the elements that must be present for an agreement to qualify as a valid contract?

Offer- A party or offeror makes a promise to another party or offeree to do a thing and be bound if accepted.

Acceptance- This is an oral or written and unambiguous agreement to the offer made.

Consideration- This is the value that enticed the parties to enter into an agreement, parties have to receive something of value.

Legal intention- The parties must have a mutual mind to be bound by set terms or better known as ‘meeting of the mind’.

Capacity- The contacting party must have a sound mind and full age for them to enter into a valid contact subject to exceptions in cases of minors who can contract for necessities.

  1. Is an advertisement an offer or an invitation to treat?  Explain.

An advertisement can be an invitation to treat or offer it depends whether the advertiser intends it to be binding. Invitation to treat occurs where the advertiser invites interested persons to make an offer (Andrews, 2015). However, in the case of Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256 CA the court stated that the wording of the advertisement clearly showed an intention to be bound to anyone accepting.

  1. What is the postal (postbox) rule for acceptance?  What is the ordinary rule for acceptance?

The postal rule for acceptance means a party is deemed to have accepted the offer once the mail is posted (Andrews, 2015). Whereas the ordinarily rule means an acceptance is communicated expressly to the offeror.

  1. Why is a counteroffer a form of rejecting an offer?

A counter offer vanquishes the original and a party cannot backtrack.

  1. Explain the difference between a bilateral contract and a unilateral contract.

Bilateral contract is an agreement between two or more persons while a unilateral contract is allowing one party to make a promise (Andrews, 2015).

  1. Can an offer be accepted by silence?  Explain why or why not.

Silence does not constitute acceptance. However, where a party intimate or says expressly that silence will be the mode of acceptance.

  1. Mr. Hussain, the owner of Industrial Castings Ltd., placed a for sale advertisement in a trade newspaper. The ad read,

“High speed caster 750 for sale for $25,000.00.”

Mr. Yates and Mr. Lee both go to the shop because they want to purchase the machine.  Mr. Yates is the first to arrive and he tells Mr. Hussain, “I accept your offer.  Here is my cheque for $25,000.00.  Mr. Lee overhears this and says, “Here is a cheque for $26,000.00.  I will take your machine.”

Does Mr. Hussain have to sell his machine to Mr. Yates? Explain your answer.

No, because this is an invitation to treat. The buyers will make an offer to Mr. Hussein who may/may not accept it.


Andrews, N. (2015). Contract Law. 2nd edition. Page 19-86.