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Law for Accounting

Paper Type: Free Assignment Study Level: University / Undergraduate
Wordcount: 2041 words Published: 10th Nov 2020

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Acceptance is a very important part of any contract.  To make a contract valid there has to be an offer and acceptance. A valid acceptance is an agreement to all terms and conditions of the offer.  There is a general rule which says that acceptance must be communicated to the offeror. There will be no acceptance, or an agreement earlier than acceptance been communicated. If there is a specific method of communication of acceptance, the offeree supposes to communicate by that method or other efficient or useful method. If the acceptance is made by post, communication will be successful now the acceptance is posted even if it is delayed or lost entirely in the post. If there is a delay due to the offeree's carelessness, for example by not giving their correct details. In these situations, posting will be not approved as acceptance. Example of acceptance is shown in the case of Brogden v Metropolitan Railway Co 1877[1]:

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The facts: For several years' claimant supplied coat to the defendant. The defendant's agent sent a sketch agreement to the claimant for deliberation. The point of the matter was that the parties based their business contacts on the terms of the draft contract, but they never actually signed a final report. The claimant later rejected that there was any agreement between them. Decision: The court held in Brogden v Metropolitan Railway Co that the conduct of the parties was only understandable on the belief that both parties agreed to the terms of the plan.

Invitation to treat is a suggestion that a person is ready to accept offers to join into a binding agreement. An invitation to treat cannot be accepted to create a binding contract. As an advertisement, this is not an offer and distribution of a price list this is not an offer or goods exhibited for sale in a shop this is not an offer this all is an invitation to treat. For example, when a person bought a product with a certain price and goes to the counter and the price is different the person cannot sue the shop as the price was only an invitation to treat.

Fisher v Bell [1961] QB 394 Facts The defendant seller exhibited in his shop window a flick knife supplemented by a price tag displayed behind it. He was accused of offering for sale a flick knife. The question was whether the display of the knife was an offer for sale or an invitation to treat. Held The court held that in agreement with the general standards of contract law, the presentation of the knife was not an offer of sale but only an invitation to treat, and as such, the suspect had not offered the knife for sale within the meaning of s1(1) of the Act. It is well created in contract law that the exhibition of an item in a shop window is an invitation to possible customers to treat. The defendant was consequently not guilty of the assault with which he had been accused.

Consideration is the third important aspect of a contract. Whatever each party offers or decides to give to the other party, generally payment or a promise to do somewhat in return. There are 3 types of consideration: Executed - valid consideration: A completed act in return for a promise. For example, payment for goods at the time those goods are delivered. Executory - valid consideration something given for a something. For example, a promise to pay for furniture which are to be delivered and paid for later. Past consideration - something which has previously been done now the promise is produced for example where someone has taken the goods and then promises to pay for them later. This is a past consideration. Consideration need not be satisfactory that is, the same in cost to the consideration obtained in return. Consideration should be adequate. It should have some worth to be deemed by the law.

Majorie McArdle took out certain upgrades and repairs on a small house. The bungalow developed part of the property of her husband's father who had died giving the property to his wife for life and then on trust for Majorie's husband and his four-family member. After the work had been done the brothers and sisters signed a paper declaring in consideration of you carrying out the renovations, we decide that the executors pay you £480 from the advances of sale. However, the compensation was never made. Held: The promise to make payment fell after the consideration had been completed therefore the pledge to make payment was not binding. Past consideration is not valid.

In relation to the tort of negligence a claimant needs to prove Duty - There are two types of duty that a defendant could be obliged the claimant. The first is the usual "duty of care". The duty of care is basically a duty to behave as a rational person, acting under related conditions, would behave himself. In any negligence match we look at the defendant’s activities and try to establish whether a reasonable person would have behaved the way the defendant behaved had the reasonable person been in the same positions that the defendant was in. If the defendant’s actions meet the reasonable man’s actions the defendant has completed his duty of care. If the defendant’s charges fall below what a court defines the reasonable man’s behaviour would have been the defendant has breached his duty. The second duty is a "special duty" required by statute or case law which may happen both in additional to, or in place of the usual duty of care. Breach – when person determinate the duty, you must decide whether the defendant has breached his duty. A defendant can breach his duty both by behaving in a certain way or by neglecting to act in a certain way. Defendant can breach his duty either one by behaving in a way that harm the reasonable man test, or by not behaving in a position where he is legally obliged to act. , Cause – when person proved that the defendant owed a duty to the claimant and that the defendant violated that duty, you must prove that the breach was both the real and immediate cause of the claimant’s harm. Harm – person must show that the plaintiff experienced harm because of the defendant’s breach. If a plaintiff does not suffer harm, he is not entitled sue for negligence. Case that is showing the perfect example of negligence is Donoghue v Stevenson [1932] AC 562 Facts: Mrs Donoghue went to a coffee shop with a friend. The friend gave her an ice cream and a bottle of ginger beer. The ginger beer came in a thick bottle so that the substances could not be seen. Mrs Donoghue poured half the ginger beer of the bottle on top of her ice cream and drank some from the bottle. After consuming part of the ice cream, she then poured the lasting ginger beer of the bottle on the ice cream and a musty snail appeared from the bottle. Mrs Donoghue experienced personal damage as a result. She started a claim against the manufacturer of the ginger beer. Held: Her appeal was successful. This case recognized the modern law of negligence and created the neighbour test.

Scenario one Facts: Marlene Johnson, a client of Wilberforce & Wilberforce LLP, put an advertisement in her local paper to sell her Ford business minivan for £3,200. She gave a post office box private number as her contact details. Jacinta saw the advert and wrote to Marlene saying she would buy the minivan at the price presented in the Newspaper. Marlene received a few replies stating interest. On 5 May she wrote to Jacinta and told her that she now wanted £3,700 for the same mini-van and would keep her offer open for one week. Jacinta received the letter on 6 May and wrote back to Marlene saying she would accept the offer. She posted the letter on 7 May. Sadly, due to post-office delays, Marlene did not get the letter until 13 May. On 7 May Marlene met her friend Miranda. Miranda told Marlene she would really like to have the van for her new business but did not have enough money. Marlene told Miranda she could have the van for £2,800 if she would look after Marlene’s kids on weekends nights.

To legally advice our client Mrs Marlena Johnson it is very important to mention that her advertisement she put in the local newspaper was only and invitation to treat and she was able to change the price of the car. After Jacinta accepted her offer to take the car for £3,700, they were into a binding contract. Even though that the acceptance letter was not delivered till 13 May due to post-office delays. As in the contract law there is an exception called ‘postal rule’ which means that acceptance is completed as soon as it is posted. That means Mrs Marlena cannot enter a contract whit her friend Miranda. Similar case is Adam v Lindsell where the defendant contacted the claimant proposing to sell them some wool. The letter was suspended in the post. On accepting the letter, the claimant sent a letter of acceptance the same day. Due to the delay the defendants had thought the claimant was not interested in the wool and sold the wool. The plaintiff sued for breach of contract. The court held that there was a valid contract between the parties as soon as the letter of acceptance was put in the post box.

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Scenario Two: Computer Direct Group is completely owned by Mr Ashby. Mr Benn was hired by Mr Ashby ‘s company to deliver IT Software and business consultancy services. Mr Benn set up a meeting in a pub with Mr Ashby and two other members of Computer Direct, Mr Ashby (after drinking copious pints of beer, and in high spirit) had promised to pay a £5 million bonus to Mr Benn if he could ensure that Computer Direct’s share price moved above £4 per share. It was common ground between the parties that the meeting in the pub had been an informal social setting. Mr Benn insisted that Mr Ashby had nonetheless made him an offer, intending to be legally bound and that Mr Benn had accepted that offer. Consequently, the share price of Computer Direct did rise above £4 per share. Mr Ashby denied paying Mr Benn money he promised. Mr Benn is now warning to sue Mr Ashby in the High Court to recover the sum.

In this case Mr Benn can not sue Mr Ashby as there was not a binding contract between them. This is obvious that no reasonable person would consider Mr Ashby words as an offer. As the situations had a place in the pub after alcohol influence the contract could not be binding. We can see similarity in the case of Balfour v Balfour [1919] 2 KB 571 Facts: A husband operated overseas and decided to send money to his wife. At the time of the contract the partners were in good relationship. The marriage later ruined, and the husband ended making the payments. The wife requested to implement the agreement. Held that the agreement was an entirely social and internal agreement and therefore it was believed that the parties did not expect to be legally bound.

To register a Public Limited company, it is necessary to provide Memorandum of association, Application stating name which in case of Public company there must be PLC included in the name. Residence and planned address of listed agency. Statement telling the liability of the members as limited. Public company need to have a capital share of minimum £50,000. The company also needs articles of suggestion, Statement of capital and initial shareholding Statement of proposed directors, Statement of compliance.  Public company need at last 2 directors and 2 members. Public company also needs a qualified secretary.

The duties of an agent that are implied into a contract I relation to Law of Agency are: to follow principal’s training and practice attention and carefulness in taking his work and use such skill as he has. Also, to make proper accounts when needed and pay to his principal all money collected on his behalf. He needs to properly communicate. Cannot allowed let his own interest conflict with his duty. Also, he cannot make a confidential income out of the presentation of his duty and cannot to reveal private information or documents.


  • Charman, M. (2007). Contract Law. 4th ed. London: Taylor & Francis, pp.8-65.
  • Pettet, B. G. (2007). Company Law. 2nd ed. Harlow, England, pp.16-25


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