Offer, Acceptance, Intention to Create Legal Relationship

Question 1(a)

Contract law is essentially considered as an agreement which is made between two or more parties towards a particular subject. In order for a contract to be established, the following four components have to be present. Namely, offer, acceptance, consideration and an intention to create legal relations. If any of the four components are absent, then there is no contractual agreement.

The main objectivity of the question is “consideration must be sufficient but it need not be adequate”. The fundamental element of consideration in a contract is that an exchange will have to take place. Consideration is sufficient if it is something that has economic value such as money or some other item with a monetary value. In Currie v Misa (1875), consideration was defined as “….some right, interest, profile or benefit accruing to one party, or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the other”.

Another legal term used is “adequate”, which means fair price. There are two reasons to why the law does not require consideration to be adequate. The first reason is that the law will not interfere with the bargain made by the parties. The fact of paying too little or too much is not a concern to the court. The second is that if the court is to inquire into such matters, it would mean that the price control is in the hands of the court and the court will have to come up with a system of whole range of transactions.

In the case of Chappell v Nestle (1959), Nestle was giving away records of “Rocking Shoes” by The King Brothers which was owned by Chappell & Co Ltd to people who can send in three wrappers by purchasing the 6d chocolate bars. The Copyright Act 1956 states that a 6.25% royalty needed to be paid based on the “ordinary retail selling price” to the owners of copyrights. However, Chappell argues that the royalty were much more and subsequently Nestle was sued. The tables were turned on numerous occasions...