Rule of Law


Penny is a keen horse rider and has been thinking of participating in competitive equestrian events for a very long time. She started riding when she was 10 years old and has been taking part in social and community riding events for more than a decade. She has also just saved enough money to buy a horse so she can practise riding and enter competitions. On 1 February, she visited a farm in Bangalow to look for a horse to buy from Ron who owns a beautiful Arabian. Penny took the Arabian for a ride and absolutely loved it. Below is the conversation that transpired between them: Penny: Gee, this is a gorgeous horse! I think I’ll have it. Would you sell at $8000? Ron: I wouldn’t part with it for anything less than $12,000. However, I’m in a good mood today and you can have it for $10,000. Please let me know now or latest in the next day or two. Penny: That’s kind of you. Let me think about it and I’ll let you know soon. On 3 February, Penny wrote the following letter to Ron and posted it in Newcastle: “Dear Ron, I’ve thought about your offer of $10,000 to sell your Arabian horse to me and I’m pleased to accept it. I’m also happy to come round in a week’s time once I’m able to find a horse float to transport the horse and make payment then. Cheers, Penny.” Not having heard from Ron for over a week, on 15 February, Penny decided to check advertisements on Gumtree, the digital website, and spotted a horse sale from the horse-riding school owned by her aunt, Wendy. The advertised horse was one of her favourite ones. She telephoned Aunt Wendy who agreed to sell the horse to her at $6000, subject to a vet check later that day, and delivery in 3 days. Penny was ecstatic and agreed immediately over the telephone to buy it. On the same day on 15 February, Penny received a letter from Ron which he posted in Bangalow on 10 February in which he agreed to sell his Arabian horse to Penny. 


Whether, P will be bound by the letter so sent by R, and 
Whether there is any contract between P and W.

Rule of Law

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Once an offer is accepted, a valid contract forms, and that can only be discharged by fulfilling the obligations.

Analysis and Conclusion

In the present facts of the case, when P offered to buy the horse for $8000, and was turned down by R, with a new amount, then the initial offer so made by P, got already extinguished, since a counter offer extinguishes the original offer (Hyde v Wrench, 1840). Furthermore, there is no contract so formed between P and R, since R only gave the information regarding the price of the horse, so intention to create legal relation is not established (Harvey v Facey , 1893). But again, P opted for posting her letter of acceptance, which is not clear from the instant facts, whether the post is agreed to be the means of communication (Adams v Lindsell , 1818). Thus, due to the absence of any contract between P and R, there is no obligations and binding between them. 
Again, for P and W, there exists all the essential elements required for a contract to for, there is a valid offer, which is well accepted and in verbatim, with a significant consideration, followed by a binding intention to create legal relation, so there is contract between P and W, based on the certainty of the terms so meant (Scammell and Nephew v Ouston , 1941), and the terms based on which they agreed upon is quite clear and without any vagueness (Sudbrook Trading Estate v Eggleton , 1983)


Adams v Lindsell , (1818) 1 B & Ald 681 (1818).
Harvey v Facey , [1893] UKPC 1, [1893] AC 552 (Privy Council 1893).
Hyde v Wrench, (1840) 49 ER 132 (England and Wales High Court (Chancery Division) December 08, 1840).
Scammell and Nephew v Ouston , [1941] AC 251 (House of Lords 1941).
Sudbrook Trading Estate v Eggleton , [1983] AC AC 444 (House of Lords 1983).

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