elements of a contract:

• agreement: is there an agreement in existence between the parties

• intention: is any such agreement intended to be legally binding

• consideration: does consideration support the agreement

• formalities: has the contract compiled with any required formalities

offers:

• writing, orally or through an act

• must be known to the offeree

• offer can be withdrawn before being accepted

• invitation to treat - where a pricetag is on goods; an invitation for potential customers to make an offer

termination of offers:

• expiry after a reasonable time

• revocation (taking back the offer before acceptance) - cannot be revoked after accepting without penalty

• counter-offer (where the other party gives a different offer) - very prevalent in real-estate business or when large financial contracts at stake

Carlill v Carbolic Smoke Ball Co [1893] 1 QB 265

• defendant Carbolic Smoke Ball placed an advert in the newspaper for products stating any person who purchased and used their product but still contracted influenza despite properly following the instructions would be entitled to a 100 euro reward

• claimant, Ms Carlill, thu purchased smoke balls and despite proper use contracted influenza and contracted illness and attempted to claim a reward

• defendant contended they could not be bound by the advert as it was an invitation to treat rather than an offer because the advert was mere ‘puff’ and lacking true intent; that an offer could not be made to the world; the claimant had not technically provided acceptance; the wording of the advert was insufficiently precise; and, that there was no consideration as necessary for the creation of a binding contract law

  • issue:

• whether the advert in question constituted an offer or an invitation to treat

  • held:

• the court of Appeal found for the claimant, determining that the advert amounted to the offer for a unilateral contract by the defendants. Ms Carlill provided acceptance when completing the conditions stipulated by the advert. the Court further found that: the advert’s claim to sincerity negated the company’s assertion of lacking intent; an offer could indeed be made to the world; wording need only be reasonably clear to imply terms rather entirely clear; and consideration was identifiable the use of the balls

acceptance:

• occurs when communicated to the person making the offer

• cannot be withdrawn without the agreement of the offerer

• can be by conduct

• silence is NOT an acceptance

• postal acceptance rule - acceptance takes place once the letter is posted

intention:

• the court will look at the behaviour of the parties to determine the intention

• difficulties for a court to determine the intention

• can be gray period / area when it comes to difference between intention and invitation to treat

consideration:

• the value that passes fro one party to another

  • exchange of finance

• the person taking an action must ensure they have given consideration to enforce the contract

  • enforce = contract

• consideration in the form of a promise must be clear

  • word will be heresay -> consideration in the form of a promise is considered heresay

• does not have to be of market value

capacity:

• ability for people to enter into a contract and properly understand their obligations

• non-Australian citizens are required to comply with forein investment rules

• bankrupt and in jail are not allowed to enter into contracts about land, cars, or loans with a bank

important vocab!

• void = no legal affect; essentially does not exist

• voidable = cancelled or returnable

• breach = broken rule or promise

impaired mental capacity:

courts will not enforce if can be proven:

• at time of contract

• the person’s mind was so affected by the impairment

• they were incapable of understanding the nautre of what they were doing

• the person making the agreement with the MIP knew of the impairment

intoxication:

• matthews v baxter (1973) LR 8 Exch 132

  • baxter agreed to purchase a house at auction

  • baxter was drunk at the time

  • when sober aggreed to be bound by the contract, then changed his mind

  • claimed intoxication at the time and the seller should have known that

  • court: since he agreed when sober he had to honur the contract

  • voidable

minors

vocab:

• repudiation: upon becoming an adult, the minor states that they are not prepared to perform their obligations under the contract

• ratification (minors): upon becoming an adult, the minor confirms that they are prepared to perform their obligations under the contract, making the contract legally binding

formalities:

• need to be in writing: sale of land, purchasing an automobile, door-to-door sales and transfers of shares

• copyright act 1968 (cth)

• bills of exchange act 1909 (cth)

terms of a contract:

• express terms (written down details)

• implied terms (

• conditions and warranties (specifics; ‘these are the duties. eg, if you had to work overtime, late nights etc = specific conditions like time and a half)

• clause = written down term (opt out option; cooling off clause; ‘these are the amount of time to give if you want time off’ etc)

express terms:

• usually easily identifiable e.g. contract is both written and oral terms

• Parole Evidence Rule states that court will assume all terms are in the written contract

• can say that party 1 made promises to make party 2 sign

• Representation - a statement made before a contract is entered into that affects matters relating to the contract

to decide whether part of a contract or a representation:

• if long time has passed between when statement was made and the contract was entered into, the statement is probably not a term of a contract

• if statement was made orally and not included in the contract, it is probably nota term

• if the statement was important to a party’s decision to enter the agreement, it probably is a term

• if the person who makes the statement is in a better position than the other person to check the accuracy of the statement, it is likely to be a term

sales talk / mere puffery

• ads may contain statements that are exaggerated and obviously untrue. statements in ads, such as ‘whiter than white’ → ‘puff’ statement is unlikely to be taken seriously, and thus under law a ‘puff’ is not a misrepresentation

exemption clause:

• a term in a contract that seeks to restrict the rights to parties under a contract

implied terms:

• can be implied by common law or statute

• looks at intentions of the parties

• so obvious it goes without saying

conditions and warranties