The issues which arise in this problem are whether Dr Subra is liable for the

offer, counter-offer, revocation of an offer and intention to create legal relation that
breaching his contract towards Dr Kay and his wife, Samantha.

The first element to constitute a valid contract is offer or proposal. An offer is

an expression of willingness to contract on certain terms, made with the intention that
it shall become binding as soon as it is accepted by the person to whom it is addressed
by virtue of Section 2 (a) and section 2 (b) of Contracts Act 1950. An agreement must
happen between two or more parties when there is expression of willingness to enter
into a contract and when it made with a legal intention that it shall be binding. From
that, the contract will legally enforceable by law. In other words, it is important that the
offer itself manifest an intention to be bound. If the offeror is merely feeling his way
towards an agreement, or initiating negotiations from which an agreement might or
might not result, there is no offer.

The second element to constitute a contract is acceptance. By virtue of section

2 (b) of Contracts Act 1950 Act, acceptance is the final expression of assent to the
terms of proposal. When the offeree accepted it becomes a promise. Acceptance is a
final and unqualified expression of assent to the terms of an offer as states in section
7 of Contracts Act 1950. Section 7(a) states that an acceptance must be absolute and
unqualified. Section 7(b) states that an acceptance be expressed in some usual and
reasonable manner unless the offeror expressly provides for the manner of
acceptance. You must accept the offer exactly within the terms, you cannot modify the
terms of offer, unless it is a counter-offer. If the offeree rejects the offer or changes the
terms of the offer, the offer has been destroyed and cannot be accepted at a future
time. In Hyde v. Wrench the defendant offered to sell his farm for 1,000. The plaintiff
agreed to buy, but at 950. A few weeks later the plaintiff accepted the offer of 1,000.
The court held that there was no contract. By stating he would buy the farm for 950
the plaintiff had made a counter-offer, which destroyed the original offer so that it could
no longer be accepted.

However, a mere inquiry about terms of an offer is not a counter offer and
leaves the offer intact. This can be seen in the case of Stevenson v Mclean. MacLean
were iron merchants and they telegraphed Stevenson in which they offered to sell
3800 tons of iron at a price of 40s (shillings) net per ton. The offer was made on
Saturday and the offer was open until Monday. On Monday morning Stevenson
telegraphed McLean and asked if McLean would accept forty for delivery over two
months, or if not, longest limit you would allow. McLean did not reply back to the
enquiry that Stevenson had made and later that day sold the iron to a third party. They
then at 1.25 pm telegraphed Stevenson that all iron had been sold. Stevenson in the
meantime at 1.34 had sent another telegram to McLean accepting the original offer.
Stevenson sued McLean for breach of contract and the issues before the court were
to find out if Stevensons telegram was an enquiry or was a counter offer. The court
held that Stevenson was only making an enquiry and hence the original offer was still
available to them which they later accepted.

In general, for an offer to accepted by offeror, acceptance must be

communicated. Section 4(1) provides that the communication of proposal is complete
when it comes to the knowledge of the offeree. Communication of acceptance is
complete when it is communicated to the offeror. The postal rule however is an
exception to this. If the acceptance is posted, acceptance is complete the moment the
letter is placed in the post box. The postal rule was first set out in Adams v. Lindsell.
Section 4(2) provides an exception when the parties use post as a means of
communication. The offeror is bound when the offeree posts the letter even though
the offeror has no knowledge of the acceptance. When the letter is posted the offeree
has put it in a course of transmission in such a way that he no longer has control over
it. The transaction becomes binding irrespective of any delay or lost in mail. This rule
is known as the postal rule enunciated in the English case of Entores Ltd v Miles Far
East Corporation. Contracts concluded by instantaneous means of communication
like email, telex, telephone, fax, acceptance must be received by the offeror. As in
Entores Ltd, P in London sent a telex to D in Amsterdam offering to buy goods from
D. D sent a telex in return to P accepting the offer. The court held that acceptance
must be received.

An offeror is entitled to revoke his offer at any time until it has been accepted.
Even if the offeror promises to keep his offer open for a certain period, he is still entitled
to revoke. In Routledge v. Grant the offeror promised to keep his offer open for six
weeks but revoked after three. He was then sued for removing the house before six
weeks had ended. The court held that he was entitled to do so. An offeror's promise
to keep his offer open is not legally binding because it is unsupported by consideration.
 Section 5(1) and section 6(a) provide that an offeror may revoke an offer before
it has been accepted, but the revocation must be communicated to the offeree. It is
essential that revocation be communicated to the offeree. The postal rule does not
apply to revocation, therefore a letter of revocation does not take effect until it is
received by the offeree. Revocation need not necessarily be communicated by the
offeror. In Dickinson v. Dodds the defendant offered to sell his house to the plaintiff,
and promised to keep the offer open for two days. The following day a third party told
the plaintiff that the defendant had sold to someone else. The plaintiff immediately
purported to accept the offer. The Court of Appeal held that the offer had been validly
revoked and could not therefore be accepted by the plaintiff.

However, If the offer was made to the entire world, such as in Carlill's case, the
revocation must take a form that is similar to the offer. Section 6 of Contracts Act 1950
states that an offer can be revoked by, first, revocation or rejection. An offer may be
revoked but should comply for some conditions that are, the offeror must give a
notification of revocation and must be communicated to the offeree before acceptance.
There are provisions clearly state pertaining to this matter as in section 6 (b), lapse of
time, if the offeror gives a time limit then that is effective to terminate the offer
when it lapses. Where there is no express time limit, an offer is usually deemed to
remain open for a reasonable time. Whereas, Section 6(c) states that, the offer is
subject to express or implied condition. An offer may be made subject to a condition.
If the condition is not satisfied, the offer cannot be accepted.